By Sam Mamudi

NEW YORK (Dow Jones) -- As the public fumes over multimillion dollar salaries for corporate executives, attention has turned to the role mutual funds play in approving the big payouts.

Often the largest shareholders in a company, a fund's vote can play an important part in determining whether pay plans are passed.

A study published Monday analyzed the votes made by mutual fund companies in the past two years, and named the firms that most often sided with management in pay votes.

AllianceBernstein Holding (AB), Barclays Global Investors, a unit of Barclays PLC (BCS), Ameriprise Financial Inc. (AMP), and Bank of America Corp. (BAC) fund arm Columbia Management were the four firms with the most pro-management voting records, according to the study.

"The worst ranked funds are accomplices in the overpayment of CEOs," said Gerald McEntee, president of the American Federation of State, County and Municipal Employees. "They should be protecting the assets of their clients by demanding that CEOs get paid for performance, rather than supporting runaway pay."

The study, carried out by the AFSCME, The Corporate Library and the Shareowner Education Network, looked at how the largest mutual funds voted in compensation issues in 2007 and 2008.

AllianceBernstein led all firms, backing management pay plans more than 90% of the time, while it supported shareholder proposals just 2% of the time.

"We vote shares in a manner consistent with our fiduciary duty, which is in the best interest of our clients," said John Meyers, spokesman at AllianceBernstein.

The study also found that across the fund industry support for management pay proposals was 84% in 2008, up from 75.8% in 2006. By contrast, support for pay-related shareholder proposals was 40% in 2008, a drop from 46.5% in 2006.

"It was surprising to see mutual funds becoming more supportive of management positions, given the uproar over outsized executive pay and distorted incentives," said Beth Young, senior research associate at The Corporate Library.

Withholding votes

"One bright spot [the study found] was the willingness of mutual funds to withhold votes from directors associated with irresponsible compensation practices," said Young.

Fund firms have increased the frequency with which they withhold support for individual directors, to 52% in 2008 from 42% in 2007.

The study also found that some fund firms are very supportive of shareholder attempts to limit pay.

Funds from Franklin Resources Inc. (BEN), T. Rowe Price Group (TROW) and Charles Schwab & Co. (SCHW) were found to have voted for shareholder proposals designed to limit executive pay an average of 78% of the time.

"These firms also voted against directors on compensation committees at pay offending companies at a higher rate than other funds," noted the study.

The study recommends that the Securities and Exchange Commission, which regulates mutual funds, should make funds state plainly their proxy voting records in letters sent to investors.

"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," said Young.