AllianceBernstein, Ameriprise, Barclays and Columbia Top List of Mutual Funds Supporting Excessive CEO Pay

New Report Examines Mutual Fund Proxy Voting Patterns on CEO Salaries

WASHINGTON, April 6 /PRNewswire-USNewswire/ -- A new report reveals
that mutual funds have contributed to excessive executive compensation
by voting in favor of management proposals that increase executive pay
packages and voting against shareholder proposals that seek to align
pay with performance. In the wake of outrage over the millions of
dollars financial firms such as AIG and Merrill Lynch have distributed
to top executives despite poor performance, the report makes several
recommendations, including a call for the Securities and Exchange
Commission to require mutual funds to distribute a Plain English report
on proxy voting to investors.

In a report released today, "Compensation Accomplices: Mutual Funds
and the Overpaid American CEO," the American Federation of State,
County and Municipal Employees (AFSCME), The Corporate Library and the
Shareowner Education Network (SEN) analyzed mutual fund voting patterns
on compensation issues in 2007 and 2008. The report found that mutual
funds are increasingly supportive, as a group, of management positions
on proposals dealing with executive pay.

"Given the performance of many companies, investors in mutual funds
should be outraged that their assets are being used to prop up CEO pay
that is too often undeserved and unearned," said AFSCME International
President Gerald W. McEntee. "The worst ranked funds are accomplices in
the overpayment of CEOs. They should be protecting the assets of their
clients by demanding that CEOs get paid for performance, rather than
supporting runaway pay."

The mutual fund industry's four consistently worst "pay enablers,"
judged most complicit in consistently enabling runaway CEO pay, are
AllianceBernstein, Ameriprise Financial, Barclays Global Investors and
Columbia Management. According to the AFSCME/The Corporate
Library/Shareholder Education Network analysis, AllianceBernstein was
the worst offender, supporting management compensation proposals over
90 percent of the time while its support for shareholder proposals
decreased to 2 percent.

Templeton, T. Rowe Price and Schwab consistently came out at the top
of the ratings as most likely to vote to constrain pay. These funds
voted for shareholder proposals designed to constrain executive
compensation at an average of 78 percent. They also voted against
directors on compensation committees at pay offending companies at a
higher rate than other funds.

The report found that the average level of support for management
proposals on compensation issues was 82 percent in 2007 and 84 percent
in 2008, a steady increase from 75.8 percent in 2006. The average level
of support for the categories of compensation-related shareholder
proposals was 42 percent in 2007 and 40 percent in 2008, a significant
decrease from the 46.5 percent in 2006. Mutual funds did show they were
more willing to withhold votes from directors over compensation issues,
increasing the average level of withheld support for certain directors
from 42 percent in 2007 to 52 percent in 2008.

"The Shareowner Education Network is pleased to be part of this
effort to inform the retail shareholder market about mutual fund voting
patterns on pay issues," said Shareowner Education Network director
John Wilcox. "The mutual fund industry plays a critical role in
protecting the retirement security of America's citizens. Retail
investors choosing mutual funds for their 401Ks and pension assets need
to understand how these assets are being affected by mutual fund
policies and proxy voting decisions." Wilcox added, "One of the first
projects we are undertaking for the SEN website is to give public
access to the proxy voting records of mutual funds on CEO pay and
provide a link to register concerns."

"It was surprising to see mutual funds becoming more supportive of
management positions, given the uproar over outsized executive pay and
distorted incentives," noted Beth Young, Senior Research Associate at
The Corporate Library, "though one bright spot was the willingness of
mutual funds to withhold votes from directors associated with
irresponsible compensation practices." Ms. Young added, "Despite hints
that the SEC might require more standardized formatting of the N-PX
filings, that has not come to pass, making it much more difficult than
it should be to extract and analyze this data. The SEC should take
action to make this important information more accessible to investors
by requiring mutual funds to issue a plain English report on their
corporate governance philosophy and voting record each year."

"Compensation Accomplices: Mutual Funds and the Overpaid American
CEO" examined the voting records of 26 of the largest mainstream mutual
fund families on executive compensation-related proposals at corporate
annual meetings from July 1, 2006 to June 30, 2007 and from July 1,
2007 to June 30, 2008. The report used data that the mutual funds are
required to disclose to the Securities and Exchange Commission in their
N-PX filing. The report ranked the fund families according to how they
voted in director elections, on management compensation proposals, and
on shareholder compensation-related proposals in several different
categories including performance-based equity compensation, shareholder
advisory votes on CEO pay, and caps on severance payments. The Report
offers four action recommendations:

1. Mutual funds that are the "pay enablers" should revise their proxy
   voting policies to ensure that they promote responsible compensation
   programs.


2. Mutual funds should have clear mechanisms for establishing and
   communicating their view of pay to compensation committee directors.


3. Retail investors in mutual funds should evaluate how their mutual
   funds vote on pay issues and hold those funds accountable for votes
   that enable pay abuses.


4. The SEC should require funds to distribute a Plain English report
   on proxy voting to their investors and revise and improve the N-PX data
   disclosure.
   

This is the third report produced by The Corporate Library and
AFSCME examining mutual fund proxy voting patterns and CEO pay. Now in
its tenth year, The Corporate Library is the leading independent source
for corporate governance and executive compensation research and risk
analysis. A copy of the report is available in The Corporate Library's
online store at www.thecorporatelibrary.com. AFSCME is the
largest union for workers in public service with 1.6 million members
nationwide. AFSCME members' retirement assets are invested by public
pension systems, with combined assets totaling more than $1 trillion.
For the second time, this report is also being co-sponsored by the
Shareowner Education Network, a nonprofit organization dedicated to
educating and promoting patient, long-term investment strategies for
retail investors and the financial institutions that serve them. An
interactive copy of the report is available on SEN's website at www.shareowners.org.

AFSCME's 1.6 million members provide the vital services that make America
happen. With members in hundreds of different occupations -- from
nurses to corrections officers, child care providers to sanitation
workers -- AFSCME advocates for fairness in the workplace, excellence
in public services and prosperity and opportunity for all working
families.