Ethics Newsline®

NEW YORK
Longtime critics of lavish CEO pay packages may soon gain some powerful allies: leading pension fund managers, who say they are considering joining shareholder efforts to curb runaway pay.

At recent annual meetings, shareholders have tried to pass resolutions that would rein in executive pay, targeting firms that include Bank of America, EMC Corp., and Jones Apparel Group.

Nearly 40 percent of such efforts won shareholder approval this year, a sharp gain over the previous record of 25 percent, the Baltimore Sun reported.

Last week, the two men in charge of state pension funds for New York and North Carolina said they are considering joining such efforts to improve corporate governance and limited CEO pay.

As the sole trustees of their states’ pension funds, North Carolina Treasurer Richard Moore and New York Comptroller H. Carl McCall say they have a duty to shareholders to protect their funds.

One possible way of doing that, they say, is by controlling excessive CEO pay and corporate conflicts of interest — using their $172 billion in combined assets as leverage, according to a report last week from the Associated Press.

“If we set up standards that individual companies must comply with in order for their stocks to be purchased, then the free market will go a long way toward rectifying some of these problems,” Moore told the AP.

Last week, Fidelity Investments said it, too, is exploring the option of using its $557 billion in stock fund assets to fight golden parachutes used by corporate heads fleeing poorly managed companies.

“We don’t consider it a widespread issue, but it’s something we should look at,” Fidelity spokeswoman Anne Crowley told USA Today.