Intra-Firm Inequality & Say-on-Pay Votes
How Major Asset Managers’ Index Funds Voted in 2025
Intra-firm disparities between executives and workers are a key driver of systemic inequality risk. Among other things, exorbitant CEO pay inhibits human capital formation, depresses consumer spending by shrinking labor’s share of income, and decreases economic productivity by preventing corporate profits from being reinvested into value-creating initiatives.
The CEO pay ratio—the ratio of the total CEO compensation to median employee pay—is an important barometer of intra-firm power disparities. A high CEO pay ratio indicates not only excessive executive compensation but also concerning levels of workplace inequality and potential mismanagement of human capital risks. Since 2018, publicly traded companies have had to report their CEO pay ratios in their proxy statements or 10-K filings. While the metric itself has limitations, it is useful because it is easily available to shareholders and facilitates rules-based proxy voting.
Shareholders at most publicly traded companies cast annual advisory votes on executive compensation (“say-on-pay”). Shareholders seeking to mitigate systemic inequality risk can and should vote against say-on-pay proposals at companies whose CEO pay ratios exceed a specified threshold.¹⁷ Yet to date, investors have rarely considered the CEO pay ratio in their deliberations on executive compensation, choosing to instead base their say-on-pay votes on the structure of pay packages and factors such as special awards and lack of performance-based metrics.¹⁸
Majority Action examined how funds voted on say-on-pay proposals at S&P 500 companies with extreme levels of intra-firm inequality relative to their peers.¹⁹ In 2024, the median CEO pay ratio in the S&P 500 was 332:1. Our analysis focused on 18 companies whose CEO pay ratios ranked in the top decile of index participants ( > 1037:1). The worst offender was Starbucks, where the CEO pay ratio is an astounding 6,666:1 and where 12,000 unionized workers have been fighting for a first contract for over four years.²⁰
Our analysis found that European managers and managers of mid-size funds were once again more likely to vote against say-on-pay proposals than managers of large and mega funds. The largest index fund managers, Fidelity and Vanguard, supported 94% and 100% of say-on-pay proposals, respectively. Meanwhile, managers of mid-size funds such as Dimensional, Empower, SEI, and BNY Mellon supported less than a quarter of all proposals. JPMorgan was the best performing among large fund managers (83%), while BlackRock was the best performing among mega fund managers (91%). European managers of funds based in Europe outperformed all US-based funds, with Amundi and LGIM supporting only 11 and 18% of say-on-pay proposals, respectively.
