Robert Monks, veteran US corporate governance campaigner, says pension funds must work harder to control over-ambitious chief executives.

Monks: governance grip 'Through control over their boards of directors, compensation committees, consultants, accountants and even governments, chief executives can pay themselves as much as they wish,' he says.

'I am not sure that pension funds will welcome additional responsibility, but it really is up to them, as global investors, to make sure that governance is properly exercised.'

Monks, 69, has become a legend within the movement to make corporates behave in a more responsible fashion, most recently through activist group Lens, backed by investment manager Hermes.

He has just published a book outlining his view on the responsibilities of pension funds called The New Global Investors*.

Trained as a lawyer, and some-time New York messenger boy with Paine Webber, Monks gained his first serious position as chief executive of fuel distributor CH Sprague.

At the outset, he scarcely gave a thought to corporate governance, but, one morning in 1979, his attention was caught by 'some white fluff' floating down the River Pennobscott in Bangor, Maine.

'I found it was refuse produced by International Paper. It disturbed me that we were supplying fuel to its plant, and I felt something should be done to stop the refuse being produced.

'Some while later, as chairman of The Boston Company, I came across a proxy statement for International Paper, and I suddenly realised that I could do something about it.'

Monks went on to start Institutional Shareholder Services (ISS), setting out to analyse proxy statements, and advising investment clients on how they should vote.

He later sold ISS to Thomson, which is now seeking to resell it: 'My son is interested in buying the firm, which is nice,' Monks says.

The views of ISS on how pension funds should vote on such issues as remuneration have developed clout: 'It was quite a shock when it once said that investors should vote against one of the proxy statements I lodged at Lens against another company.'

Monks, a Republican ('of the Jefford school') later became trustee to the Federal Employees Retirement System, then a Department of Labor administrator, exercising jurisdiction over the US pension system.

He was responsible for a law which ensured that trustees should look after investments solely for the benefit of beneficiaries.

Monks's new book develops his belief that pension funds should exercise proper stewardship over corporates which have gained increasing amounts of power, often at the expense of society, and even their own customers.

Harm done by tobacco corporates particularly irritates Monks, as do the way corporates lobby for influence over government policy.

He greets with weary resignation a decision by the $100bn (€119bn) pension fund sponsored by Jeb Bush's State of Florida which lifts a four-year ban on investment in tobacco stocks: 'Commercial interests in the US have become too powerful.'

He has also been suspicious of the support given by the likes of Exxon Mobil to George Bush, who has only belatedly shown some concern about global warming after huge international and environmental pressure.

Monks argues in his book that intimate corporate involvement in the workings of government should be curtailed.

He argues that sky-rocketing chief executive salaries demonstrate that 'resources are enriching corporate leaders rather than providing returns to owners, and thus to society.'

Monks does not begrudge the monies paid to the likes of Jack Welch of General Electric, who has undeniably built a great organisation, even though it is currently under strain due to recession.

'I guess you could say a $180m package recently collected by Dennis Kozlowski at Tyco is a lot of money. I'm kind of glad I don't serve on his remuneration committee any more.

'But he's done a great job, and he deserves his salary much more than 80% of chief executives who don't deserve 1% as much.'

One of Monks' least favourite chief executives is Linda Wachner, who drew $3.5m, prior to the recent filing of her clothing company Warnaco, for Chapter 11 bankruptcy protection. 'I just don't see how she deserved that money.'

In order to chart greed, Monks has helped long-standing associate Nell Minow to set up a web site called www.thecorporatelibrary.com. It pulls together details on executive salaries from proxy statements filed by corporates.

When it comes to balancing corporate greed with the pursuit of social good, Monks reckons UK institutions demonstrate greater subtlety than their US cousins.

'You've got your priorities in better order,' he says. 'People such as Adrian Cadbury have made UK corporate governance the best in the world.'

He feels that Alastair Ross Goobey's campaign against rolling contracts at Hermes was ground-breaking.

'I've never seen anything as clear thinking as the Myners report on how trustees should be empowered to reach sensible investment decisions.

'The Universities Superannuation Scheme is about to start an important initiative on how to deal with global warming, which will be without parallel.'

Apart from achieving social good, Monks argues that effective corporate governance, plus social awareness, leads to efficiency and better investment performance.

'We proved that by starting Lens, which has beaten the S&P 500 by 100% over the last three years. We proved that again in Europe, with Hermes, whose Lens fund really brought the turkey home for its people this Christmas.'

Monks accepts that it is harder to prove that socially responsible investments (SRIs) outperform. Data used in his book suggesting outperformance by ecologically sensitive stocks in the two years to the pre-technology crash in March 2000 looks particularly suspect.

But Monks correctly points out that research, and investment interest, is increasing at a rate of knots. KPMG, for example, is supporting a campaign by the Centre for Tomorrow's Company calling for leadership indices and social awareness score cards.

'When people like KPMG show interest, you can tell things are moving.'

Monks's book is a remorseless read. It could have been usefully tempered by interviews with pension funds about their reaction to the author's wish to foist global responsibilities on their weary shoulders. That said, there's no doubt Monks has moved the governance and SRI debate up another notch.

And next? Monks doesn't feel the need to move back onto the corporate and fund management stage. But he wants to keep the governance debate rolling via his website www.ragm.com, which is well worth a look. He also wants to get more involved in academia.

He says: 'Oh, and I'm writing another book. It's a novel this time, which I'm calling Hostile Takeover.'

No prizes for guessing the theme.

*The New Global Investor is published by Capstone, price £19.99. Tomorrow's Company is available from Mark Hamilton at KPMG on 020 7694 6190.