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BlackRock, Vanguard less likely to vote against CEO compensation – report

Large money managers BlackRock (BLK) and Vanguard Group continue to be among the mutual fund companies more likely to vote with management on CEO compensation, according to a report Thursday from As You Sow, an organization that promotes corporate environmental and social responsibility through shareholder advocacy.

At the S&P 500 companies BlackRock and Vanguard voted on between July 1, 2016, and June 30, 2017, the money managers each opposed 3% of the CEO pay packages at those companies, up from 1.7% and 1.8% the previous year, respectively, the report said. By comparison, the typical manager with $500 billion or more in assets under management voted against 12%, the report said.

Also, of what the report identifies as the 100 most overpaid CEOs in the S&P 500, As You Sow found that BlackRock voted against only 11% of the pay packages and Vanguard, 12%.

On the flip side, large non-U.S. money managers and pension funds are more likely to vote against CEO pay packages, As You Sow said.

Allianz Global Investors, for instance, voted against 79% of the pay packages As You Sow identified as overpaid, and PGGM, 97.2%. PGGM is the manager of the €206.1 billion ($255.7 billion) Pensioenfonds Zorg en Welzijn, Zeist, Netherlands.

The companies with the most overpaid CEOs, according to As You Sow, include Oracle Corp., Comcast Corp., Exxon Mobil Corp., BlackRock and Willis Towers Watson. ​

Total compensation for Oracle CEOs Safra A. Catz and Mark Hurd was listed at $82 million combined, while total compensation for Comcast CEO Brian Roberts was listed at $33 million; former Exxon Mobil CEO Rex Tillerson, $27.4 million; BlackRock CEO Laurence D. Fink, $25.5 million; and Willis Towers Watson CEO John Haley, $28.8 million.

"We believe that a substantial portion of executive compensation should be tied to relevant financial and/or operational outcomes that (a) reflect the decisions and effort of those being compensated, and (b) contribute to the creation of value over the long term," a Vanguard spokeswoman said in an email in response to the report. "Vanguard engages with companies when we believe severance packages for executives are inconsistent with this philosophy. Our activities extend beyond simply voting at shareholder meetings; in many cases, our direct discussions with company management and board members, more so than voting, lead to material changes that improve long-term value for investors."

A BlackRock spokesman could be reached for comment by press time.

As You Sow's report and methodology is available on its website.