Wellington Management has adopted and implemented policies and procedures that it believes are reasonably designed to ensure that proxies are voted in the best economic interests of clients for whom it exercises proxy-voting discretion.
Wellington Management’s Proxy Voting Guidelines (the “Guidelines”) set forth broad guidelines and positions on common proxy issues that Wellington Management uses in voting on proxies. In addition, Wellington Management also considers each proposal in the context of the issuer, industry and country or countries in which the issuer’s business is conducted. The Guidelines are not rigid rules and the merits of a particular proposal may cause Wellington Management to enter a vote that differs from the Guidelines.
Statement of policy
| Wellington Management: |
| 1) | Votes client proxies for which clients have affirmatively delegated proxy-voting authority, in writing, unless it determines that it is in the best interest of one or more clients to refrain from voting a given proxy. |
| 2) | Votes all proxies in the best interests of the client for whom it is voting, i.e., to maximize economic value. |
| 3) | Identifies and resolves all material proxy-related conflicts of interest between the firm and its clients in the best interests of the client. |
Responsibility and oversight
The Investment Research Group (“Investment Research”) monitors regulatory requirements with respect to proxy voting and works with the firm’s Legal and Compliance Group and the Investment Stewardship Committee to develop practices that implement those requirements. Investment Research also acts as a resource for portfolio managers and research analysts on proxy matters as needed.Day-to-day administration of the proxy voting process is the responsibility of Investment Research. The Investment Stewardship Committee is responsible for oversight of the implementation of the Global Proxy Policy and Procedures, review and approval of the Guidelines and for providing advice and guidance on specific proxy votes for individual issuers.
Procedures
| Use of Third-Party Voting Agent |
Wellington Management uses the services of a third-party voting agent to manage the administrative aspects of proxy voting. The voting agent processes proxies for client accounts, casts votes based on the Guidelines and maintains records of proxies voted.
| Receipt of Proxy |
If a client requests that Wellington Management votes proxies on its behalf, the client must instruct its custodian bank to deliver all relevant voting material to Wellington Management or its voting agent.
| Reconciliation |
Each public security proxy received by electronic means is matched to the securities eligible to be voted and a reminder is sent to any custodian or trustee that has not forwarded the proxies as due. Although proxies received for private securities, as well as those received innon-electronic format, are voted as received, Wellington Management is not able to reconcile these proxies to holdings, nor does it notify custodians ofnon-receipt.
| Research |
In addition to proprietary investment research undertaken by Wellington Management investment professionals, Investment Research conducts proxy research internally, and uses the resources of a number of external sources to keep abreast of developments in corporate governance and of current practices of specific companies.
| Global proxy policy and procedures | 2 |
| Proxy Voting |
Following the reconciliation process, each proxy is compared against the Guidelines, and handled as follows:
| • | Generally, issues for which explicit proxy voting guidance is provided in the Guidelines (i.e., “For”, “Against”, “Abstain”) are reviewed by Investment Research and voted in accordance with the Guidelines. |
| • | Issues identified as“case-by-case” in the Guidelines are further reviewed by Investment Research. In certain circumstances, further input is needed, so the issues are forwarded to the relevant research analyst and/or portfolio manager(s) for their input. |
| • | Absent a material conflict of interest, the portfolio manager has the authority to decide the final vote. Different portfolio managers holding the same securities may arrive at different voting conclusions for their clients’ proxies. |
Wellington Management reviews regularly the voting record to ensure that proxies are voted in accordance with these Global Proxy Policy and Procedures and the Guidelines; and ensures that documentation and reports, for clients and for internal purposes, relating to the voting of proxies are promptly and properly prepared and disseminated.
Material conflict of interest identification and resolution processes
Wellington Management’s broadly diversified client base and functional lines of responsibility serve to minimize the number of, but not prevent, material conflicts of interest it faces in voting proxies. Annually, the Investment Stewardship Committee sets standards for identifying material conflicts based on client, vendor, and lender relationships, and publishes those standards to individuals involved in the proxy voting process. In addition, the Investment Stewardship Committee encourages all personnel to contact Investment Research about apparent conflicts of interest, even if the apparent conflict does not meet the published materiality criteria. Apparent conflicts are reviewed by designated members of the Investment Stewardship Committee to determine if there is a conflict and if so whether the conflict is material.
If a proxy is identified as presenting a material conflict of interest, the matter must be reviewed by designated members of the Investment Stewardship Committee, who will resolve the conflict and direct the vote. In certain circumstances, the designated members may determine that the full Investment Stewardship Committee should convene.
Other considerations
In certain instances, Wellington Management may be unable to vote or may determine not to vote a proxy on behalf of one or more clients. While not exhaustive, the following are potential instances in which a proxy vote might not be entered.
| Securities Lending |
In general, Wellington Management does not know when securities have been lent out pursuant to a client’s securities lending program and are therefore unavailable to be voted. Efforts to recall loaned securities are not always effective, but, in rare circumstances, Wellington Management may recommend that a client attempt to have its custodian recall the security to permit voting of related proxies.
| Share Blocking andRe-registration |
Certain countries impose trading restrictions or requirements regardingre-registration of securities held in omnibus accounts in order for shareholders to vote a proxy. The potential impact of such requirements is evaluated when determining whether to vote such proxies.
| Lack of Adequate Information, Untimely Receipt of Proxy Materials, or Excessive Costs |
Wellington Management may abstain from voting a proxy when the proxy statement or other available information is inadequate to allow for an informed vote, when the proxy materials are not delivered in a timely fashion or when, in Wellington Management’s judgment, the costs exceed the expected benefits to clients (such as when powers of attorney or consularization are required).
Additional information
Wellington Management maintains records related to proxies pursuant to Rule204-2 of the Investment Advisers Act of 1940 (the “Advisers Act”), the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and other applicable laws. Wellington Management provides clients with a copy of its Global Proxy Policy and Procedures, including the Guidelines, upon written request. In addition, Wellington Management will make specific client information relating to proxy voting available to a client upon reasonable written request.
1 January 2018
| ©2018 Wellington Management CompanyLLP. All rights reserved. | G3224_1 |
Upon a client’s written request, Wellington Management CompanyLLP (“Wellington Management”) votes securities that are held in the client’s account in response to proxies solicited by the issuers of such securities. Wellington Management established these guidelines to document positions generally taken on common proxy issues voted on behalf of clients.
These guidelines are based on Wellington Management’s fiduciary obligation to act in the best economic interest of its clients as shareholders. Hence, Wellington Management examines and seeks to vote each proposal so that the long-term effect of the vote will ultimately increase shareholder value for our clients. Because ethical considerations can have an impact on the long-term value of assets, our voting practices are also attentive to these issues, and votes will be cast against unlawful and unethical activity. Further, Wellington Management’s experience in voting proposals has shown that similar proposals often have different consequences for different companies. Moreover, while these guidelines are written to apply globally, differences in local practice and law make universal application impractical. Therefore, each proposal is evaluated on its merits, taking into account its effects on the specific company in question and on the company within its industry. It should be noted that the following are guidelines, not rigid rules, and Wellington Management reserves the right in all cases to vote contrary to guidelines where doing so is judged to represent the best economic interest of our clients.
Following is a list of common proposals and the guidelines on how Wellington Management anticipates voting on these proposals. The “(SP)” after a proposal indicates that the proposal is usually presented as a shareholder proposal.
| Wellington Management Global Proxy Voting Guidelines | 2 |
Voting guidelines
| Composition and role of the board of directors | ||||
Elect directors | Case by case | |||
We believe that shareholders’ ability to elect directors annually is the most important right shareholders have. We generally support management nominees, but will withhold votes from any director who is demonstrated to have acted contrary to the best economic interest of shareholders. We believe that a diverse board is in the best interest of shareholders, so we consider board diversity as part of our assessment. We may also withhold votes from directors who failed to implement shareholder proposals that received majority support, implemented dead-hand orno-hand poison pills, or failed to attend at least 75% of scheduled board meetings. |
| |||
Declassify board of directors | For | |||
Adopt director tenure/retirement age (SP) | Against | |||
Adopt director and officer indemnification | For | |||
We generally support director and officer indemnification as critical to the attraction and retention of qualified candidates to the board. Such proposals must incorporate the duty of care. | ||||
Allow special interest representation to board (SP) | Against | |||
Require board independence | For | |||
We believe that boards are best-positioned to represent shareholders’ interests when they have a sufficient quantity of independent directors in the boardroom. We believe that, in the absence of a compelling counter- argument or prevailing market norms, at leasttwo-thirds of a board should be composed of independent directors, with independence defined by the local market regulatory authority. Expressing our support for these levels of independence may include withholding approval fornon-independent directors, as well as votes in support of shareholder proposals calling for independence. To determine the appropriate minimum level of board independence, we look to the prevailing market best practice — for example,one-third independent in Japan,two-thirds independent in the US, and majority independent in the UK and France. | ||||
Require key board committees to be independent | For | |||
Key board committees are the nominating, audit, and compensation committees. Exceptions will be made, as above, with respect to local market conventions. | ||||
Require a separation of chair and CEO or require a lead director (SP) | For | |||
Approve directors’ fees | Case by case | |||
Approve bonuses for retiring directors | Case by case | |||
Approve board size | For | |||
Elect supervisory board/corporate assembly/statutory auditors | Case by case | |||
Companies in certain markets are governed by multitiered boards, with each tier having different powers and responsibilities. We hold supervisory board members to similar standards described above under “Elect directors,” subject to prevailing local governance best practices. | ||||
Majority vote on election of directors (SP) | For | |||
We believe that the election of directors by a majority of votes cast is the appropriate standard for companies to adopt and therefore generally will support those proposals that seek to adopt such a standard. Our support for such proposals will extend typically to situations where the relevant company has an existing resignation policy in place for directors that receive a majority of “withhold” votes. We believe that it is important for majority voting to be defined within the company’s charter and not simply within the company’s corporate governance policy. | ||||
Generally we will not support proposals that fail to provide for the exceptional use of a plurality standard in the case of contested elections. Further, we will not support proposals that seek to adopt a majority of votes outstanding (i.e., total votes eligible to be cast as opposed to actually cast) standard. | ||||
| Wellington Management Global Proxy Voting Guidelines | 3 |
Adopt proxy access | For | |||
We generally support proposals that allow significant and long-term shareholders the right to nominate director candidates on management’s proxy card. That being said, we may vote against a proxy access proposal if it is shareholder-sponsored and it requests that the company adopt proxy access without reasonable constraints or in a way that markedly differs from prevailing market norms. |
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Contested director election | Case by case | |||
| Compensation | ||||
Adopt/amend stock option plans | Case by case | |||
While we believe equity compensation helps align plan participants’ and shareholders’ interests, we will vote against plans that we find excessively dilutive or costly. Additionally, we will generally vote against plans that allow the company to reprice options without shareholder approval. We will also vote against plans that allow the company to add shares to the plan without shareholder approval, otherwise known as an “evergreen” provision. | ||||
Adopt/amend employee stock purchase plans | Case by case | |||
We generally support employee stock purchase plans, as they may align employees’ interests with the interests of shareholders. That being said, we typically vote against plans that do not offer shares to a broad group of employees (i.e., only executives are allowed to participate) or plans that offer shares at a significant discount. | ||||
Approve/amend bonus plans | Case by case | |||
In the US, bonus plans are customarily presented for shareholder approval pursuant to section 162(m) of the omnibus budget reconciliation act of 1992 (“OBRA”). OBRA stipulates that certain forms of compensation are not tax deductible unless approved by shareholders and subject to performance criteria. Because OBRA does not prevent the payment of subject compensation, we generally vote “for” these proposals. Nevertheless, occasionally these proposals are presented in a bundled form seeking 162(m) approval and approval of a stock option plan. In such cases, failure of the proposal prevents the awards from being granted. We will vote against these proposals where the grant portion of the proposal fails our guidelines for the evaluation of stock option plans. | ||||
Approve remuneration policy | Case by case | |||
Approve compensation packages for named executive officers | Case by case | |||
Determine whether the compensation vote will occur every one, two, or three years | One year | |||
Exchange underwater options | Case by case | |||
We may support value-neutral exchanges in which senior management is ineligible to participate. | ||||
Eliminate or limit severance agreements (golden parachutes) | Case by case | |||
We will oppose excessively generous arrangements, but may support agreements structured to encourage management to negotiate in shareholders’ best economic interest. | ||||
Approve golden parachute arrangements in connection with certain corporate transactions | Case by case | |||
Shareholder approval of future severance agreements covering senior executives (SP) | Case by case | |||
We believe that severance arrangements require special scrutiny, and are generally supportive of proposals that call for shareholder ratification thereof. But we are also mindful of the board’s need for flexibility in recruitment and retention and will therefore oppose placing additional limitations on compensation where we feel the board as already demonstrated reasonable respect for industry practice and overall levels of compensation have historically been sensible. | ||||
Adopt a clawback policy (SP) | Case by case | |||
We believe that companies should have the ability to recoup incentive compensation from members of management who received awards based on fraudulent activities or an accounting misstatement. Consequently, we may support shareholder proposals requesting that a company establish a clawback provision if the company’s existing policies do not cover these circumstances. | ||||
| Wellington Management Global Proxy Voting Guidelines | 4 |
| Reporting of results | ||||
Approve financial statements | For | |||
Set dividends and allocate profits | For | |||
Limitnon-audit services provided by auditors (SP) |
| Case by case | ||
We follow the guidelines established by the public company accounting oversight board regarding permissible levels ofnon-audit fees payable to auditors.
| ||||
Ratify selection of auditors and approve their fees | Case by case | |||
We will generally support management’s choice of auditors, unless the auditors have demonstrated failure to act in shareholders’ best economic interest.
| ||||
Shareholder approval of auditors (SP) | For | |||
| Shareholder voting rights | ||||
Adopt cumulative voting (SP) | Against | |||
As an exception, we may support cumulative voting proposals at “controlled” companies (i.e., companies with a single majority shareholder) or at companies withtwo-tiered voting rights.
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Shareholder rights plans | Case by case | |||
Also known as poison pills, we believe these plans do not encourage strong corporate governance, since they can entrench management and restrict opportunities for takeovers. That being said, we recognize that limited poison pills can enable boards of directors to negotiate higher takeover prices on behalf of shareholders. Consequently, we may support plans that include: | ||||
• Shareholder approval requirement | ||||
• Sunset provision | ||||
• Permitted bid feature (i.e., bids that are made for all shares and demonstrate evidence of financing must be submitted to a shareholder vote) | ||||
Because boards generally have the authority to adopt shareholder rights plans without shareholder approval, we are equally vigilant in our assessment of requests for authorization of blank check preferred shares (see below).
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Authorize blank check preferred stock | Case by case | |||
We may support authorization requests that specifically proscribe the use of such shares for anti-takeover purposes.
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Establish right to call a special meeting | For | |||
A reasonably high ownership threshold should be required to convene special meetings in order to ensure that they address broadly-supported shareholder interests.
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Establish the right to act by written consent (SP) | Case by case | |||
We will generally oppose written consent proposals when the company already offers the shareholders the right to call a special meeting.
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Increase supermajority vote requirement | Against | |||
We likely will support shareholder and management proposals to remove existing supermajority vote requirements.
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Adopt anti-greenmail provision | For | |||
Adopt confidential voting (SP) | Case by case | |||
As an exception, we require such proposals to include a provision to suspend confidential voting during contested elections so that management is not subject to constraints that do not apply to dissidents. | ||||
| Wellington Management Global Proxy Voting Guidelines | 5 |
Increase authorized common stock | Case by case | |||
We generally support requests for increases up to 100% of the shares currently authorized, so long as the new authority respects preemption rights. Exceptions will be made when the company has clearly articulated a reasonable need for a greater increase. Conversely, at companies trading in less liquid markets, we may impose a lower threshold. | ||||
Approve merger or acquisition | Case by case | |||
Approve technical amendments to charter |
| Case by case | ||
Opt out of state takeover statutes | For | |||
Eliminate multiclass voting structure (SP) | For | |||
We believe that shareholders’ voting power should be reflected by their economic stake in a company. | ||||
| Capital structure | ||||
Authorize share repurchase | For | |||
Approve stock splits | Case by case | |||
We approve stock splits and reverse stock splits that preserve the level of authorized but unissued shares. | ||||
Approve recapitalization/restructuring | Case by case | |||
Issue stock with or without preemptive rights | Case by case | |||
Issue debt instruments | Case by case | |||
| Environmental and social issues | ||||
Environmental and social issues typically appear on ballots as shareholder-sponsored proposals. We support these proposals in situations where we believe that doing so will improve the prospects for long-term success of a company and investment returns. For example, we generally support proposals focused on improved assessment and disclosure of climate risks when we believe they may be material to a company’s long-term performance and management has not sufficiently addressed them. At a minimum, we expect companies to comply with applicable laws and regulations with regards to environmental and social standards. | Case by case | |||
| Miscellaneous | ||||
Approve other business | Against | |||
Approvere-incorporation | Case by case | |||
Approve third-party transactions | Case by case | |||
13 March 2019
| ©2019 Wellington Management CompanyLLP. All rights reserved. | G2813_1 |