A new report shows mutual funds as a group are increasingly taking the side of management when it comes to executive pay proposals.

The report from the AFSCME, The Corporate Library and the Shareowner Education Network is calling on the SEC to require mutual funds to distribute a Plain English report on proxy voting to investors. The report analyzed mutual fund voting patterns on compensation issues in 2007 and 2008.

“Given the performance of many companies, investors in mutual funds should be outraged that their assets are being used to prop up CEO pay that is too often undeserved and unearned,” said AFSCME International President Gerald W. McEntee. “The worst ranked funds are accomplices in the overpayment of CEOs. They should be protecting the assets of their clients by demanding that CEOs get paid for performance, rather than supporting runaway pay.”

The four worst offenders, according to the report, are AllianceBernstein, Ameriprise Financial, Barclays Global Investors and Columbia Management. AllianceBernstein was the worst, supporting management compensation proposals more than 90 percent of the time while its support for shareholder proposals decreased to 2 percent.

Templeton, T. Rowe Price and Schwab consistently came out at the top of the ratings as most likely to vote to constrain pay. These funds voted for shareholder proposals designed to constrain executive compensation at an average of 78 percent. They also voted against directors on compensation committees at pay offending companies at a higher rate than other funds.

The report found that the average level of support for management proposals on compensation issues was 82 percent in 2007 and 84 percent in 2008, a steady increase from 75.8 percent in 2006. The average level of support for the categories of compensation-related shareholder proposals was 42 percent in 2007 and 40 percent in 2008, a significant decrease from the 46.5 percent in 2006. Mutual funds did show they were more willing to withhold votes from directors over compensation issues, increasing the average level of withheld support for certain directors from 42 percent in 2007 to 52 percent in 2008.

View the full report here.