If it does nothing else, Fidelity Investments is at least winning positive press by hinting that it may crack down on companies that spend too lavishly on executive pay. The Boston Behemoth has let the word out that it is examining how its votes proxies on these issues. Perhaps it will change its ways, perhaps not.

Either way Fidelity has caught an issue that is at the forefront of the business press and has little downside for the fund giant. In the past fund firms have taken the pragmatic approach of selling shares of a company that had poor oversight rather than weigh in on corporate governance. That approach also greased relations between company management and fund analysts.

This passive approach, though, may not sit as well with fund investors now that a new high profile CEO scandal seems to hit the press almost daily (today's target is Martha Stewart).

Recently the issue took a higher profile as Vanguard legend Jack Bogle leaked word that he wants to bring together the largest passive investors to form a committee to weigh in on issues. His inspiration for the idea was reportedly the Calpers retirement system which has become well-known for its attempts to influence policies in which it invests. Targets for the committee include Fidelity, as well as Barclays, Deutsche Bank and Vanguard.

The issue was also raised by SEC Chairman Harvey Pitt at the ICI's General Membership meeting in Washington last month. He noted that how fund firms vote their proxies will be something examined by the commission (assuming Pitt can find the time while battling his own troubles). He also told reporters at the meeting that the key test will be whether those votes are cast in the best interest of shareholders.

Fidelity Investments told the media, including USA Today, that it will consider flexing the muscle created by its half billion in fund assets to weigh in on excessive executive pay. Representatives of the firm say that the fund giant is exploring the issue.

"We don't consider it a widespread issue, but it's something we should look at," the paper quotes a Fidelity spokeswoman as saying. Fidelity's proxy-voting rules are technically set by each fund's directors.

The firm already has proxy-voting guidelines in place that oppose some golden parachute and poison pill provisions. The paper adds that while Fidelity trustees are examining the issues, they may not make any changes.

Whether it does crack down or not, give the House that Ned Built points on the public relations front. 

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