More large shareholders – including large asset managers and pension funds – are voting against CEO pay packages, according to US non-profit As You Sow.

However, although shareholders have become more successful in voting down excessive pay proposals, overall CEO remuneration has continued to rise, the organisation said.

Its fifth annual report included a survey of CEO remuneration at companies listed on the S&P 500, which revealed that average pay for an S&P 500 CEO rose from $11.5m (€10.1m) in 2013 to $13.6m in 2017. The highest paid chief executives were at infrastructure company CSX Corporation ($151m) and software firm Broadcom ($103m).

At CSX, this equated to 1,539 times the average pay of an employee.

Pension funds were more critical on pay packages, As You Sow found, and European investment funds voted more often against remuneration than US-based ones.

As You Sow also reported that Dutch asset managers MN and PGGM voted against almost all pay recommendations, opposing proposals in 99.6% and 97.6% of cases, respectively. This compared with 24.3% and 58.8% in 2013.

Last year, Achmea IM, NN IP and Robeco/RobecoSAM voted against 69.6%, 49.6% and 42.3% of pay packages, respectively, compared with 16.7%, 9.8% and 16.2%, respectively, in 2013.

However, the ngo noted that at the €463bn Dutch asset manager APG the percentage of rejected proposals had dropped from 61.8% to 53.8% in the same period.

APG declined to comment on the findings, but emphasised that it actively engaged on executive remuneration issues with the companies in its portfolio.

Asset managers’ votes against executive pay packages

* Data from 2014
** Data from 2015

 2013 2018 
Achmea IM  16.7%* 69.6%
Allianz Global Investors 11.1% 76.6%
APG  61.8% 53.8%
Aviva Investors 27.7% 79.7%
HSBC GAM 20% 97.1%
LGIM 11.5%** 46%
MN  24.3%  99.6%
NN Investment Partners  9.8% 49.6%
PGGM  58.8% 97.6%
Robeco/RobecoSAM  16.2% 42.3%
Royal London AM 97.2%* 71.4%

Speaking to IPE’s Dutch sister publication Pensioen Pro, the €130bn asset manager MN said that most remuneration proposals at US firms didn’t meet the “stricter than average” voting rules that it had agreed with its main clients, the metal and engineering sector schemes PMT and PME.

MN’s voting policy stipulates that remuneration must meet a company’s long-term goals, that the short-term bonus can’t be larger than one-third of the entire pay package, and that performance-related pay must be capped and target-linked.

In addition, pay conditions must have a clause to enable the company to claw back performance pay in case of incorrect or fraudulent information.

Mountain View: Google’s headquarters in the US

Mountain View: Google’s headquarters in the US

The asset manager said it applied these criteria worldwide, resulting in voting against 70% of remuneration proposals. These often comprised US firms, including Alphabet/Google, ExxonMobil and American Express.

Achmea IM said it voted against pay packages at Mondelez, Mattel and Comcast last year.

Robeco added that remuneration proposals had become much more complex in the past few years.

UK-based Aviva Investors increased its opposition to proposed pay packages at US firms from 27.7% to 79.7% between 2013 and 2018. HSBC Global Asset Management voted against 97.1% of packages in 2018, from 20% in 2013.

Legal & General Investment Management’s rejection of remuneration increased from 11.5% to 46% of cases since 2015.

As You Sow reported that, if the votes of the world’s three largest asset managers – BlackRock, Vanguard and State Street Global Advisors, which tend to approve almost every CEO pay proposal – were excluded, the approval rate would drop dramatically.

The organisation said that the three asset managers together controlled 15-20% of the shares of every public company in the US.

This article was updated on 25 February to add a comment from APG.