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Large U.S. companies accused of overpaying their chief executives faced few critical proxy votes from top index fund firms last year, a new report found on Tuesday, even as other asset managers got tougher with their ballots.

BlackRock Inc. and Vanguard Group, the two largest U.S. index fund firms, cast advisory votes against the pay of excessively compensated S&P 500 CEOs just 8 per cent and 10 per cent of the time last year, according to the study by activist shareholder organization As You Sow.

Those figures were close to the firms’ levels of opposition in prior years, while a number of other large asset managers including several in Europe cast critical votes more frequently during the 12-month proxy season ended June 30, 2019, according to the report and data from its author, Rosanna Landis-Weaver.

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For instance, BNP Paribas Asset Management opposed pay packages termed excessive 91 per cent of the time last year, up from 69 per cent in 2018, and Allianz Global Investors opposed the excessive pay packages 93 per cent of the time last year, up from 78 per cent in 2018.

Ms. Landis-Weaver said the findings suggest the top passive fund managers have room to vote critically more often even as they hold talks with companies. “They prioritize engagement to an extent that they fail to take the steps they should in voting,” she said.

As You Sow defined the 100 “most overpaid” CEOs of the S&P 500 by comparing their compensation with shareholder returns over the past five years, the level of shareholder support for the pay and the ratio between CEO and worker pay.

BlackRock and Vanguard have both said they emphasize private engagements before casting critical votes. BlackRock representatives did not comment on As You Sow’s report.

A Vanguard spokeswoman said executive pay came up in nearly half the talks it held with 868 companies last year. While proxy voting is important, “it doesn’t always give the complete picture of our engagements,” she said.

Executive pay has become a focus of investors amid a broader debate over U.S. inequality. According to the AFL-CIO union federation, the average CEO received US$14.5-million in 2018 at S&P 500 companies and at those companies the average ratio of CEO pay to worker pay was 287 to 1.

The study cited as belonging to the most overpaid group the co-CEOs of Oracle Corp., Mark Hurd and Safra Catz, who received a combined US$216.6-million in 2018. An Oracle spokesman declined to comment.

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Both BlackRock and Vanguard funds voted “against” Oracle’s pay that year, disclosures showed.

In another high-profile case of what As You Sow termed an “overpaid” executive, both fund giants supported the US$65.6-million pay package of Walt Disney Co. CEO Robert Iger at the company’s annual meeting in March, 2019.

A Disney spokesman said Iger’s 2018 pay was atypical because of a one-time award. Disney’s latest proxy from January showed Iger’s pay fell to US$47.5-million last year, as the company made adjustments to his compensation “in light of investor feedback,” the document states.

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