Increasing the light on proxy voting

Earlier this year, we released our report, 100 Most Overpaid CEOs, analyzing trends in executive compensation and examining how pension votes vote on CEO pay. As we work on the second edition of this report, we have updated data on how pension funds vote. Check out this new, important data: “Public Pension Funds and Executive Compensation”

Justice Louis Brandeis famously said, “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” This theory that exposing information to public scrutiny may improve the behavior of the actors is one reason we focused on whether funds supported compensation votes in our report last year.

Beginning in 2004, the SEC required all mutual funds votes to report their proxy votes in a public manner.  Shade structures were erected; the disclosure is obscure and difficult for someone without expertise in N-PX to access. Last winter when we first published The 100 Most Overpaid CEOs,  a major focus was to shine light on whether the mutual funds voted in an engaged manner or rubber-stamped pay.

As covered in The Wall Street Journal, the report found a range “from nearly always siding with management to doing so just over half the time.” The median level of support from mutual funds was approximately 80%.

In the upcoming report, we are placing a special emphasis on broadening the coverage how rigorously other funds – public funds, foundation and endowment funds – vote on compensation issues.

In the spirits of good governance and transparency, many pension funds do the same and provide beneficiaries and the public with the opportunity to review their shareholder proxy votes. Indeed, we were able to include several last year.

As the Canadian Pension Plan Investment Board states on its website, “One of the most effective mechanisms we have to engage with public companies is voting our proxies. As an engaged owner, we are transparent in our voting activities and implement the leading practice of posting our individual proxy vote decisions in advance of meetings.”

Over the summer we’ve been digging into the issue of how pension funds vote their proxies and how those votes are disclosed. Some states delegate their votes to money managers, others vote directly. Some reveal only the vaguest guidelines, while others include not only specific votes but the rationale behind those votes.

Here’s a list of funds that maintain searchable data on votes on their websites and links to those sites:

British Columbia



Canadian Pension Plan Investment Board (CPPIB)

Colorado Public Employees’ Retirement Association (PERA)

Connecticut Retirement Plans and Trust Funds (CRPTF)

Employees Retirement System of Texas (ERS)

Florida State Board of Administration

Ohio Public Employee Retirement System (OPERS)

Pennsylvania: Public School Employee Retirement System (PSERS)

Teacher Retirement System of Texas (TRS)

Washington State Investment Board (WSIB)

State of Wisconsin Investment Board (SWIB)


Other funds may make available data upon request, and still others upon a more official Freedom of Information Act (FOIA) letter.

The new searches allowed us to look at additional funds and their voting records on the overpaid CEOs we identified last year. The range of voting records can be found here.

The relatively high level of support received on compensation matters is often used by compensation consultants to rationalize existing pay levels and structures. More often it is simply a reflection of votes cast insulated from the opinion of actual investors.