Social investors have long been interested in executive compensation. The pay packages of CEOs occasionally attract attention from the mainstream press, too, and the June 12 issue of The Economist weighs in on the issue.

Three different articles consider executive pay, and they follow different paths to the same general conclusion. Yes, the authors agree, it’s possible that companies overpay their executives – especially in the U.S. – but it’s hard to say how much compensation is too much. The first article, “Pay Attention,” includes this sweeping statement:

“It is near impossible, of course, to determine the correct absolute level of executive pay.”

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A growing number of KLD’s clients serve high-net-worth investors (HNWI), commonly defined as individuals whose investable assets exceed $1 million. Nelle Coady, Assistant Manager of Client Services at KLD, reports that “the next generation of money” is concerned with the social impact of their investments.

“Young, high net worth investors are looking to be more proactive,” Nelle explains. “Our institutional clients tell us that social responsibility is a priority for more and more of their younger investors.”

The wider investment community, in the U.S. and abroad, has recognized this trend. American Banker reports: “Major custody banks are increasingly adding socially responsible investment factors into their monitoring services.”

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At the end of July, the US federal government passed bills in the House of Representatives that would provide legal protections to investment managers who sell holdings in companies involved in key sectors of Iran’s or Sudan’s economy.

Several weeks ago, Florida became the first US state to pass a law requiring their state pensions funds to divest from companies operating in Iran’s oil and mining sectors. Other states including Michigan, Texas, and Illinois are seeking to pass similar legislation.

This comes on the heels of a very successful Sudan divestment movement that started in Illinois and has since been implemented in various forms in over a dozen states.

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Why should companies engage KLD? What are KLD’s boundaries in talking with the companies we research about environmental, social and governance (ESG) issues? These questions – more than any others – come up when we talk to companies. They have come increasingly from the media and the public.

KLD’s position on engaging with companies has changed very little since its founding in 1988. We began by being clear about:

• whose interests we represented – social investors and their fiduciaries and agents;

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I had great fun teasing Peter Kinder today about a typo in an article published by Forbes. The piece mentions that KLD’s Domini 400 Index has averaged an annual return of 12.7% since its inception back in 1009. I asked Peter if William the Conqueror was an original investor.

Kidding aside, the Forbes piece is interesting as it mentions that while interest in hedge fund investing by wealthy individuals has dropped 10% over the past year, SRI assets acquired by the same group have tripled since 2005.

I never thought I would see the day when Forbes would downplay hedge funds to boost “SRI and ethical investing”.

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I am very pleased to introduce to you KLD Research and Analytics’ new Blog.  We will be posting news, commentary and updates on issues relevant to integrating environmental, social and governance data into investment decision making.

Sincerely,

Peter D. Kinder, President and Co-Founder