United Church Funds (UCF), along with a coalition of institutional investors, is calling for stronger oversight, transparency and accountability around excessive executive compensation.
According to the Economic Policy Institute, CEO pay has skyrocketed since 1978. In 2024, CEOs were paid 281 times as much as a typical worker — in contrast to 1965, when they were paid 21 times as much as a typical worker.
UCF and other investors representing over $113 billion in assets under management have formed a working group on this issue and signed an investor statement questioning the current state of executive compensation and its implications for long-term value creation.
Matthew Illian, UCF’s Director of Responsible Investing, said” “For too long, investors have either looked the other way or rubber-stamped excessive executive pay packages. Income inequality is a systemic risk, and it is critical that investors take a hard look at how we are voting on this issue.”
A comprehensive report issued by the Interfaith Center on Corporate Responsibility (ICCR), “Excessive Executive Compensation: Investor Guidance,” highlights the ways that status quo executive compensation trends are distorting the wider economy.
The report flags several critical areas where current compensation practices and investor stewardship are falling short:
- Misalignment between Pay and Performance: Research suggests a weak or even negative correlation between the explosive growth of executive pay and actual shareholder performance. Numerous performance goals are criticized for being insufficiently challenging, lacking transparency or being prone to self-serving manipulation by executives.
- High “Say-on-Pay” Approval Rates: Despite these growing concerns and performance issues, shareholder support for these management pay proposals averaged over 90%, largely driven by support from major asset managers.
- Need for Clearer Voting Thresholds: The report also showcases investors who have adopted quantitative cutoffs, such as voting against any pay package where the CEO-to-median-worker ratio exceeds 100-to-1, or where total executive compensation exceeds $10 million.
Illian, who contributed to the report, said that “There are many organizations in the ICCR community that have worked on this issue for decades, and this Investor Guidance offers both a historical perspective and forward-looking insights for responsible investors.”
Gina Falada, Associate Director of the Advancing Worker Justice program at the ICCR, said: “CEO pay that far outpaces the earnings of working people raises serious concerns for the long-term health of our economy and society. Our report showcases examples of investors who are already addressing these concerns in their stewardship frameworks and details the ways investors can strengthen their own proxy voting guidelines to ensure compensation issues are being addressed appropriately.”
UCF’s participation and contribution to the working group behind the initiative reflects its commitment to responsible investing and long-term stewardship. As a faith-based institutional investor, UCF continues to seek to use its voice to encourage corporate practices that support a more just and sustainable world.
Download the report here and read the investment statement here.