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Reining in Excessive CEO Compensation

Because we believe that excessive CEO compensation encourages risk-taking and can damage the long-term value of our investments, the Domini Funds have consistently taken a strong stand against excessive executive compensation. At the same time that we have witnessed the steady growth of CEO compensation, the wages of rank-and-file employees have stagnated. A new rule adopted by the SEC may help to fix this long-standing problem. The new rule, included in the Dodd-Frank financial reform act, will require corporations to disclose the ratio between the CEO’s compensation and the compensation paid to the median employee. We view this new disclosure as potentially transformative, and expressed our support in a letter to the SEC.