* CEO pay rose 14 pct in 2011 vs 23 pct in 2010
* AFL-CIO presidents says Citigroup pay vote "a bell-ringer"
* Mutual funds still vote with management on most pay votes
* BlackRock with management on pay in 97 pct of votes
By Ross Kerber
April 19 Compensation of top executives at
publicly traded companies rose by 14 percent on average in 2011,
a sharp slowdown from the prior year amid growing shareholder
pressure on pay and performance, the AFL-CIO said in a report on
The results demonstrate that shareholders are beginning to
focus on executive pay and corporate boards are paying
attention, Richard Trumka, president of the AFL-CIO, the largest
U.S. labor group, said during a conference call to present the
"The good news is that after 15 years, shareholders are
beginning to protest," he said.
Compensation for top executives in 2010 had risen on average
by 23 percent, the ALF-CIO said.
The union released the study two days after Citigroup
shareholders shocked the giant bank's board with a vote on no
confidence on its executive pay package for 2011, which
included $14.8 million for Chief Executive Vikram Pandit. In an
advisory "say on pay" vote required by the Dodd-Frank law, 55
percent of voting shareholders opposed the pay plan.
The surprise rejection vote was "a bell-ringer" showing how
investors are giving companies tougher reviews, Trumka said.
"Shareholders are more concerned, and hopefully that will have
an even more moderating effect," he added.
The study by the AFL-CIO, a federation of 56 unions that
represent more than 12 million workers, reviewed the pay for the
chief executives of about 300 companies in the Standard & Poor's
500 index that so far had disclosed 2011 compensation in
proxies filed with the U.S. Securities and Exchange Commission.
The results were generally consistent with surveys done by
Total pay as reported in company "summary compensation
tables" rose by 2 percent in 2011 compared with a 24 percent
gain the prior year, according to a survey of about 225
companies in the Fortune 1000 that filed proxies by late March,
Fr an k Glassner, partner of Meridian Compensation Partners, said.
Compensation growth slowed amid the flat financial
performance of many companies because boards of directors have
added new measures to link executive pay more closely with
actual results, Glassner said. "Pay for performance is starting
to be engaged," he said.
Also, "say on pay" votes like the one at Citigroup, though
only advisory, are adding public pressure for more corporate
responsiveness, Glassner said.
The AFL-CIO study also analyzed how large mutual fund
families vote on pay questions. As major shareholders, the firms
often decide the outcome of proxy contests, yet rarely discuss
their voting. As a result, the regulatory filings they make each
summer provide a rare window on their thinking.
Among 40 fund firms last year, the median level of support
for "say on pay" questions was 12 percent.
BlackRock, the world's largest money manager with
about $3.7 trillion of assets under management, was dubbed a
"pay enabler" by union officials. BlackRock voted against
management on "say on pay" votes just 3 percent of the time last
year, the study found.
Some smaller firms voted with management even more often,
including Harbor Funds and the fund unit of Goldman Sachs Group
. Both opposed only about 1 percent of "say on pay"
Officials of BlackRock, Harbor and Goldman Sachs were not
immediately available for comment.