The Oakland, California, nonprofit found the average returns for the 100 S&P 500 companies it previously identified as having the most questionable pay went on to underperform the index by 2.9 percentage points over a roughly two-year period ended on January 31.
As You Sow flagged as "overpaid" a number of chief executive officers known for high compensation despite the mixed performance of their companies' shares over the period.
For example, Discovery Communications Inc CEO David Zaslav received $32.4 million in 2015, according to the company's most recent proxy filing. During the study period, Discovery shares fell 12 per cent.
Discovery representatives did not respond to requests for comment.
Rosanna Landis Weaver, the lead author of the Study, said investors could have used the findings of a similar report from 2015 to short the shares of companies giving their CEOs outsized rewards. Selling shares short is bet that a company's shares will decline in price.
"If you have a CEO whose primary interest is increasing his own wealth, that's not going to be good for shareholders," Ms Weaver said in an interview.
High executive pay has been controversial at a time of rising inequality. But investors routinely approve compensation at most large US companies, with boards often saying they have linked it to performance metrics.
First, the group looked at factors that raised questions about how a board set compensation, such as whether pay exceeded that of peers.
Second, it made a financial prediction of what each CEO might have been paid based on shareholder returns. Companies with the most red flags and biggest gaps between their actual and predicted compensation were judged the most overpaid.
The study also found many large fund firms often approved pay at the 100 "most overpaid" S&P 500 companies. For instance BlackRock, the world's largest asset manager, opposed pay just 7 per cent of the time in the group.
BlackRock spokesman Ed Sweeney said that among the highest-paid US CEOs, BlackRock funds voted against pay and/or against compensation committee members 20 per cent of the time, and raised pay concerns with another 38 per cent of those companies.
Pay disconnected from company performance "is a symptom of broader governance failures", Mr Sweeney said.