Domini Social Investments Continues Push for Increased Corporate AccountabilitySocially Responsible Firm Publishes 7th Annual Proxy Voting Guidelines Tightening Auditor Independence Requirements in Wake of Enron Collapse
New York, NY – Domini Social Investments, manager of the Domini Social Equity Fund (NASDAQ: DSEFX), announced today the publication of its seventh annual Proxy Voting Guidelines and Shareholder Activism booklet. Three years ago, the firm became the first mutual fund company in America to publish the actual votes it casts for each company in its portfolios. Most of the nation's mutual funds do not publish proxy-voting guidelines or disclose how they vote on particular issues at annual shareholder meetings.
"We think mutual fund shareholders have a right to know how we intend to vote their shares on important issues of corporate governance and social and environmental responsibility," said Amy Domini, Founder and a Managing Principal of Domini Social Investments. "In light of the Enron fiasco, we think increased disclosure and transparency are more important than ever."
Domini's Proxy Voting Guidelines describe the firm's voting policy on more than 95 types of corporate resolutions ranging from environmental reporting to executive compensation to labor relations at home and abroad. The firm updates the Guidelines on an annual basis to address emerging issues. The 2002 Guidelines include new proxy-voting policies aimed at supporting auditor independence, curbing executive compensation and requiring in-person annual shareholder meetings. Some companies have attempted to replace in-person shareholder meetings with online meetings, a practice that Domini believes would diminish shareholder influence and reduce accountability on the part of corporate managers. In addition, Domini has adopted new proxy-voting policies supporting the issuance of corporate sustainability reports and the phasing out of mercury-containing devices.
Several revisions to this year's Guidelines concern issues that arose during the Enron scandal:
Domini revised the Guidelines to provide that it will vote "No" on corporate resolutions proposing the appointment of auditors who are not sufficiently "independent," in order to avoid conflicts of interest such as those that arose in the Enron-Andersen relationship.
"The Enron-Andersen scandal clearly demonstrates that conflicts can arise when accounting firms provide collateral consulting services to the companies they audit," said Ms. Domini. "We know these conflicts of interest can be disastrous for shareholders, employees and the public. Henceforth, we will vote our proxies against all proposals to appoint auditors who are not sufficiently independent. We will also support shareholder resolutions requesting that these functions be performed by separate firms."
Domini also revised its Guidelines to provide that it will support resolutions tying executive compensation, and specifically stock options, to corporate performance. "Shareholders need to take action to prevent future Enrons, where corporate managers enriched themselves while Enron's employees and other shareholders saw their shares plummet," continued Ms. Domini. "Tying management stock options to corporate performance is one way to accomplish this, and we intend to support such efforts."
Finally, Domini tightened its guidelines regarding independence on corporate Boards of Directors as well. Domini will now withhold its support for board slates that do not consist of a majority of independent directors, and will oppose the nomination of company insiders to key committees, such as the audit and nominating committees. Domini has had a long-standing policy of opposing board slates that do not include women or people of color.
Domini's Proxy Voting Guidelines & Shareholder Activism booklet is distributed free of charge and is posted on the firm's website (www.domini.com). The booklet also contains a historical overview of the firm's shareholder activism program, detailing how Domini has leveraged its shares to influence corporations to improve their social and environmental performance. The firm has filed more than 60 shareholder resolutions with more than 30 corporations over the past nine years. Visitors to the web site can also choose any of the 400 companies in the Domini Social Equity Fund's portfolio, see a brief description of the issue being voted on, and view Domini's vote. The web site is updated periodically as proxy materials for each company become available. The firm's policy is to post its votes approximately two weeks prior to each company's annual meeting.
Domini Social Investments manages more than $1.9 billion in assets for individual and institutional investors seeking to create positive change by integrating social and environmental values into their investment decisions. Its flagship fund, the Domini Social Equity Fund, was the first socially and environmentally screened index fund and is the nation's largest socially responsible index fund. The Fund includes companies with positive records in community involvement, the environment, diversity and employee relations, and excludes companies deriving significant revenues from alcohol, tobacco, gambling, nuclear power and weapons contracting. In addition to the Domini Social Equity Fund, the company also offers the Domini Social Bond Fund (NASDAQ: DSBFX) and the Domini Money Market Account, an FDIC-insured money market account (in partnership with ShoreBank), both of which focus on community economic development.
Investors seeking additional information on the Fund, or a free copy of the firm's 44 page Proxy Voting Guidelines & Shareholder Activism booklet, may call 1-800- 762-6814, or visit the firm's web site (www.domini.com). The Guidelines were developed in cooperation with Domini Social Investments' social research providers at KLD Research & Analtyics, Inc. (KLD) of Boston, Massachusetts, with assistance from the Interfaith Center on Corporate Responsibility.