EX-99.(c) – Proxy Voting Policies and Procedures
Proxy Voting Guidelines and Procedures
Introduction
Certain affiliates of The TCW Group, Inc. (these affiliates are collectively referred to as “TCW”) act as investment advisors for a variety of clients, including mutual funds. If TCW has responsibility for voting proxies in connection with these investment advisory duties, or has the responsibility to specify to an agent of the client how to vote the proxies, TCW exercises such voting responsibilities for its clients through the corporate proxy voting process. TCW believes that the right to vote proxies is a significant asset of its clients’ holdings. In order to provide a basis for making decisions in the voting of proxies for its clients, TCW has established a proxy voting committee (the “Proxy Committee”) and adopted these proxy voting guidelines and procedures (the “Guidelines”). The Proxy Committee generally meets quarterly (or at such other frequency as determined by the Proxy Committee), and its duties include establishing proxy voting guidelines and procedures, overseeing the internal proxy voting process, and reviewing proxy voting issues. The members of the Proxy Committee include TCW personnel from the investment, compliance, legal and marketing departments. TCW also uses outside proxy voting services (each an “Outside Service”) to help manage the proxy voting process. An Outside Service facilitates TCW’s voting according to the Guidelines (or, if applicable, according to guidelines submitted by TCW’s clients) and helps maintain TCW’s proxy voting records. All proxy voting and record keeping by TCW is, of course, dependent on the timely provision of proxy ballots by custodians, clients and other third parties. Under specified circumstances described below involving potential conflicts of interest, an Outside Service may also be requested to help decide certain proxy votes. In certain limited circumstances, particularly in the area of structured financing, TCW may enter into voting agreements or other contractual obligations that govern the voting of shares. In the event of a conflict between any such contractual requirements and the Guidelines, TCW will vote in accordance with its contractual obligations.
Philosophy
The Guidelines provide a basis for making decisions in the voting of proxies for clients of TCW. When voting proxies, TCW’s utmost concern is that all decisions be made solely in the interests of the client and with the goal of maximizing the value of the client’s investments. With this goal in mind, the Guidelines cover various categories of voting decisions and generally specify whether TCW will vote for or against a particular type of proposal. TCW’s underlying philosophy, however, is that its portfolio managers, who are primarily responsible for evaluating the individual holdings of TCW’s clients, are best able to determine how to further client interests and goals. The portfolio managers may, in their discretion, take into account the recommendations of TCW management, the Proxy Committee, and an Outside Service.
Overrides and Conflict Resolution
Individual portfolio managers, in the exercise of their best judgment and discretion, may from time to time override the Guidelines and vote proxies in a manner that they believe will enhance the economic value of clients’ assets, keeping in mind the best interests of the beneficial owners. A portfolio manager choosing to override the Guidelines must deliver a written rationale for each such decision to TCW’s Proxy Specialist (the “Proxy Specialist”), who will maintain such
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documentation in TCW’s proxy voting records and deliver a quarterly report to the Proxy Committee of all votes cast other than in accordance with the Guidelines. If the Proxy Specialist believes there is a question regarding a portfolio manager’s vote, she will obtain the approval of TCW’s Director of Research (the “Director of Research”) for the vote before submitting it. The Director of Research will review the portfolio manager’s vote and make a determination. If the Director of Research believes it appropriate, she may elect to convene the Proxy Committee.
It is unlikely that serious conflicts of interest will arise in the context of TCW’s proxy voting, because TCW does not engage in investment banking or the managing or advising of public companies. In the event a potential conflict of interest arises in the context of voting proxies for TCW’s clients, the primary means by which TCW will avoid a conflict is by casting such votes solely in the interests of its clients and in the interests of maximizing the value of their portfolio holdings. In this regard, if a potential conflict of interest arises, but the proxy vote to be decided is predetermined hereunder to be cast either in favor or against, then TCW will vote accordingly. On the other hand, if a potential conflict of interest arises, and there is no predetermined vote, or the Guidelines themselves refer such vote to the portfolio manager for decisions, or the portfolio manager would like to override a predetermined vote, then TCW will undertake the following analysis.
First, if a potential conflict of interest is identified because the issuer soliciting proxy votes is itself a client of TCW’s (or because an affiliate of such issuer, such as a pension or profit sharing plan sponsored by such issuer, is a client of TCW’s), then the Proxy Specialist will determine whether such relationship may be deemed not to be material to TCW. A relationship will be deemed not to be material, and no further conflict analysis will be required, if the assets managed for that client by TCW represent, in the aggregate, 0.25% (25 basis points) or less of TCW’s total assets under management. On the other hand, if the assets managed for that client by TCW exceed in the aggregate, 0.25% (25 basis points) of TCW’s total assets under management, then the Proxy Committee will investigate whether the relationship should be deemed to be material under the particular facts and circumstances. If the relationship is deemed not to be material, then no further conflict analysis will be required. If a material conflict is deemed to have arisen, then TCW will refrain completely from exercising its discretion with respect to voting the proxy with respect to such vote and will, instead, refer that vote to an Outside Service for its independent consideration as to how the vote should be cast.
Second, a potential conflict of interest may arise because an employee of TCW sits on the Board of a public company. The Proxy Specialist is on the distribution list for an internal chart that shows any Board seats in public companies held by TCW personnel. If the Proxy Specialist confirms that such Board member is not the portfolio manager and, that the portfolio manager has not spoken with such Board member, then such conflict of interest will not be deemed to be material and no further conflict analysis will be required. If, on the other hand, either the particular Board member is the portfolio manager or there has been communication concerning such proxy vote between the portfolio manager and the particular Board member, then the Proxy Specialist will provide the Proxy Committee with the facts and vote rationale so that it can determine and vote the securities. The vote by the Proxy Committee will be documented.
Third, a potential conflict of interest may arise if the issuer is an affiliate of TCW. It is currently not anticipated that this would be the case, but if this were to arise TCW will refrain completely from exercising its discretion with respect to voting the proxy with respect to such a vote and will, instead, refer that vote to an Outside Service for its independent consideration as to how the vote should be cast.
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Finally, if any other portfolio manager conflict is identified with respect to a given proxy vote, the Proxy Committee will remove such vote from the conflicted portfolio manager and will itself consider and cast the vote.
Proxy Voting Information and Recordkeeping
Upon request, TCW provides proxy voting records to its clients. These records state how votes were cast on behalf of client accounts, whether a particular matter was proposed by the company or a shareholder, and whether or not TCW voted in line with management recommendations. TCW is prepared to explain to clients the rationale for votes cast on behalf of client accounts. To obtain proxy voting records, a client should contact the Proxy Specialist.
TCW or an Outside Service will keep records of the following items: (i) these Proxy Voting Guidelines and any other proxy voting procedures; (ii) proxy statements received regarding client securities (unless such statements are available on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system); (iii) records of votes cast on behalf of clients (if maintained by an Outside Service, that Outside Service will provide copies of those records promptly upon request); (iv) records of written requests for proxy voting information and TCW’s response (whether a client’s request was oral or in writing); and (v) any documents prepared by TCW that were material to making a decision how to vote, or that memorialized the basis for the decision. Additionally, TCW or an Outside Service will maintain any documentation related to an identified material conflict of interest.
TCW or an Outside Service will maintain these records in an easily accessible place for at least five years from the end of the fiscal year during which the last entry was made on such record. For the first two years, TCW or an Outside Service will store such records at its principal office.
International Proxy Voting
While TCW utilizes these Proxy Voting Guidelines for both international and domestic portfolios and clients, there are some significant differences between voting U.S. company proxies and voting non-U.S. company proxies. For U.S. companies, it is relatively easy to vote proxies, as the proxies are automatically received and may be voted by mail or electronically. In most cases, the officers of a U.S. company soliciting a proxy act as proxies for the company’s shareholders.
For proxies of non-U.S. companies, however, it is typically both difficult and costly to vote proxies. The major difficulties and costs may include: (i) appointing a proxy; (ii) knowing when a meeting is taking place; (iii) obtaining relevant information about proxies, voting procedures for foreign shareholders, and restrictions on trading securities that are subject to proxy votes; (iv) arranging for a proxy to vote; and (v) evaluating the cost of voting. Furthermore, the operational hurdles to voting proxies vary by country. As a result, TCW considers whether or not to vote an international proxy based on the particular facts and circumstances. However, when TCW believes that an issue to be voted is likely to affect the economic value of the portfolio securities, that its vote may influence the ultimate outcome of the contest, and that the benefits of voting the proxy exceed the expected costs, TCW will make every reasonable effort to vote such proxies.
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Guidelines
The proxy voting decisions set forth below refer to proposals by company management except for the categories of “Shareholder Proposals” and “Social Issue Proposals.” The voting decisions in these latter two categories refer to proposals by outside shareholders.
Governance
• | For director nominees in uncontested elections |
• | For management nominees in contested elections |
• | For ratifying auditors, except against if the previous auditor was dismissed because of a disagreement with the company or if the non-audit services exceed 51% of fees |
• | For changing the company name |
• | For approving other business |
• | For adjourning the meeting |
• | For technical amendments to the charter and/or bylaws |
• | For approving financial statements |
Capital Structure
• | For increasing authorized common stock |
• | For decreasing authorized common stock |
• | For amending authorized common stock |
• | For the issuance of common stock, except against if the issued common stock has superior voting rights |
• | For approving the issuance or exercise of stock warrants |
• | For authorizing preferred stock, except against if the board has unlimited rights to set the terms and conditions of the shares |
• | For increasing authorized preferred stock, except against if the board has unlimited rights to set the terms and conditions of the shares |
• | For decreasing authorized preferred stock |
• | For canceling a class or series of preferred stock |
• | For amending preferred stock |
• | For issuing or converting preferred stock, except against if the shares have voting rights superior to those of other shareholders |
• | For eliminating preemptive rights |
• | For creating or restoring preemptive rights |
• | Against authorizing dual or multiple classes of common stock |
• | For eliminating authorized dual or multiple classes of common stock |
• | For amending authorized dual or multiple classes of common stock |
• | For increasing authorized shares of one or more classes of dual or multiple classes of common stock, except against if it will allow the company to issue additional shares with superior voting rights |
• | For a stock repurchase program |
• | For a stock split |
• | For a reverse stock split, except against if the company does not intend to proportionally reduce the number of authorized shares |
Mergers and Restructuring
• | For merging with or acquiring another company |
• | For recapitalization |
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• | For restructuring the company |
• | For bankruptcy restructurings |
• | For liquidations |
• | For reincorporating in a different state |
• | For a leveraged buyout of the company |
• | For spinning off certain company operations or divisions |
• | For the sale of assets |
• | Against eliminating cumulative voting |
• | For adopting cumulative voting |
Board of Directors
• | For limiting the liability of directors |
• | For setting the board size |
• | For allowing the directors to fill vacancies on the board without shareholder approval |
• | Against giving the board the authority to set the size of the board as needed without shareholder approval |
• | For a proposal regarding the removal of directors, except against if the proposal limits the removal of directors to cases where there is legal cause |
• | For non-technical amendments to the company’s certificate of incorporation, except against if an amendment would have the effect of reducing shareholders’ rights |
• | For non-technical amendments to the company’s by laws, except against if an amendment would have the effect of reducing shareholder’s rights |
Anti-Takeover Provisions
• | Against a classified board |
• | Against amending a classified board |
• | For repealing a classified board |
• | Against ratifying or adopting a shareholder rights plan (poison pill) |
• | Against redeeming a shareholder rights plan (poison pill) |
• | Against eliminating shareholders’ right to call a special meeting |
• | Against limiting shareholders’ right to call a special meeting |
• | For restoring shareholders’ right to call a special meeting |
• | Against eliminating shareholders’ right to act by written consent |
• | Against limiting shareholders’ right to act by written consent |
• | For restoring shareholders’ right to act by written consent |
• | Against establishing a supermajority vote provision to approve a merger or other business combination |
• | For amending a supermajority vote provision to approve a merger or other business combination, except against if the amendment would increase the vote required to approve the transaction |
• | For eliminating a supermajority vote provision to approve a merger or other business combination |
• | Against adopting supermajority vote requirements (lock-ins) to change certain bylaw or charter provisions |
• | Against amending supermajority vote requirements (lock-ins) to change certain bylaw or charter provisions |
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• | For eliminating supermajority vote requirements (lock-ins) to change certain bylaw or charter provisions |
• | Against expanding or clarifying the authority of the board of directors to consider factors other than the interests of shareholders in assessing a takeover bid |
• | Against establishing a fair price provision |
• | Against amending a fair price provision |
• | For repealing a fair price provision |
• | For limiting the payment of greenmail |
• | Against adopting advance notice requirements |
• | For opting out of a state takeover statutory provision |
• | Against opt into a state takeover statutory provision |
Compensation
• | For adopting a stock incentive plan for employees, except decide on a case-by-case basis if the plan dilution is more than 15% of outstanding common stock or if the potential dilution from all company plans, including the one proposed, is more than 20% of outstanding common stock |
• | For amending a stock incentive plan for employees, except decide on a case-by-case basis if the minimum potential dilution from all company plans, including the one proposed, is more than 20% of outstanding common stock |
• | For adding shares to a stock incentive plan for employees, except decide on a case-by-case basis if the plan dilution is more than 15% of outstanding common stock or if the potential dilution from all company plans, including the one proposed, is more than 20% of outstanding common stock |
• | For limiting per-employee option awards |
• | For extending the term of a stock incentive plan for employees |
• | Refer on assuming stock incentive plans |
• | For adopting a stock incentive plan for non-employee directors, except refer if the plan dilution is more than 5% of outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of outstanding common equity |
• | For amending a stock incentive plan for non-employee directors, except refer if the minimum potential dilution from all plans, including the one proposed, is more than 10% of outstanding common equity |
• | For adding shares to a stock incentive plan for non-employee directors, except refer if the plan dilution is more than 5% of outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity |
• | For adopting an employee stock purchase plan, except against if the proposed plan allows employees to purchase stock at prices of less than 75% of the stock’s fair market value |
• | For amending an employee stock purchase plan, except against if the proposal allows employees to purchase stock at prices of less than 75% of the stock’s fair market value |
• | For adding shares to an employee stock purchase plan, except against if the proposed plan allows employees to purchase stock at prices of less than 75% of the stock’s fair market value |
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• | For adopting a stock award plan, except refer if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity |
• | For amending a stock award plan, except against if the amendment shortens the vesting requirements or lessens the performance requirements |
• | For adding shares to a stock award plan, except refer if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity |
• | For adopting a stock award plan for non-employee directors, except refer if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity |
• | For amending a stock award plan for non-employee directors, except refer if the minimum potential dilution from all plans is more than 10% of the outstanding common equity. |
• | For adding shares to a stock award plan for non-employee directors, except refer if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity |
• | For approving an annual bonus plan |
• | For adopting a savings plan |
• | For granting a one-time stock option or stock award, except refer if the plan dilution is more than 15% of the outstanding common equity |
• | For adopting a deferred compensation plan |
• | For approving a long-term bonus plan |
• | For approving an employment agreement or contract |
• | For amending a deferred compensation plan |
• | For exchanging underwater options (options with a per-share exercise price that exceeds the underlying stock’s current market price) |
• | For amending an annual bonus plan |
• | For reapproving a stock option plan or bonus plan for purposes of OBRA |
• | For amending a long-term bonus plan |
Shareholder Proposals
• | For requiring shareholder ratification of auditors |
• | Against requiring the auditors to attend the annual meeting |
• | Against limiting consulting by auditors |
• | Against requiring the rotation of auditors |
• | Against restoring preemptive rights |
• | For asking the company to study sales, spin-offs, or other strategic alternatives |
• | For asking the board to adopt confidential voting and independent tabulation of the proxy ballots |
• | Against asking the company to refrain from counting abstentions and broker non-votes in vote tabulations |
• | Against eliminating the company’s discretion to vote unmarked proxy ballots. |
• | For providing equal access to the proxy materials for shareholders |
• | Against requiring a majority vote to elect directors |
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• | Against requiring the improvement of annual meeting reports |
• | Against changing the annual meeting location |
• | Against changing the annual meeting date |
• | Against asking the board to include more women and minorities as directors. |
• | Against seeking to increase board independence |
• | Against limiting the period of time a director can serve by establishing a retirement or tenure policy |
• | Against requiring minimum stock ownership by directors |
• | Against providing for union or employee representatives on the board of directors |
• | For increasing disclosure regarding the board’s role in the development and monitoring of the company’s long-term strategic plan |
• | For increasing the independence of the nominating committee |
• | For creating a nominating committee of the board |
• | Against urging the creation of a shareholder committee |
• | Against asking that the chairman of the board of directors be chosen from among the ranks of the non-employee directors |
• | Against asking that a lead director be chosen from among the ranks of the non-employee directors |
• | For adopting cumulative voting |
• | Against requiring directors to place a statement of candidacy in the proxy statement |
• | Against requiring the nomination of two director candidates for each open board seat |
• | Against making directors liable for acts or omissions that constitute a breach of fiduciary care resulting from a director’s gross negligence and/or reckless or willful neglect |
• | For repealing a classified board |
• | Against asking the board to redeem or to allow shareholders to vote on a poison pill shareholder rights plan |
• | For eliminating supermajority provisions |
• | For reducing supermajority provisions |
• | Against repealing fair price provisions |
• | For restoring shareholders’ right to call a special meeting |
• | For restoring shareholders’ right to act by written consent |
• | For limiting the board’s discretion to issue targeted share placements or requiring shareholder approval before such block placements can be made |
• | For seeking to force the company to opt out of a state takeover statutory provision |
• | Against reincorporating the company in another state |
• | For limiting greenmail payments |
• | Against advisory vote on compensation |
• | Against restricting executive compensation |
• | For enhancing the disclosure of executive compensation |
• | Against restricting director compensation |
• | Against capping executive pay |
• | Against calling for directors to be paid with company stock |
• | Against calling for shareholder votes on executive pay |
• | Against calling for the termination of director retirement plans |
• | Against asking management to review, report on, and/or link executive compensation to non-financial criteria, particularly social criteria |
• | Against seeking shareholder approval to reprice or replace underwater stock options |
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• | For banning or calling for a shareholder vote on future golden parachutes |
• | Against seeking to award performance-based stock options |
• | Against establishing a policy of expensing the costs of all future stock options issued by the company in the company’s annual income statement |
• | Against requesting that future executive compensation be determined without regard to any pension fund income |
• | Against approving extra benefits under Supplemental Executive Retirement Plans (SERPs) |
• | Against requiring option shares to be held |
• | For creating a compensation committee |
• | Against requiring that the compensation committee hire its own independent compensation consultants-separate from the compensation consultants working with corporate management-to assist with executive compensation issues |
• | For increasing the independence of the compensation committee |
• | For increasing the independence of the audit committee |
• | For increasing the independence of key committees |
Social Issue Proposals
• | Against asking the company to develop or report on human rights policies |
• | For asking the company to review its operations’ impact on local groups, except against if the proposal calls for action beyond reporting |
• | Against asking the company to limit or end operations in Burma |
• | For asking management to review operations in Burma |
• | For asking management to certify that company operations are free of forced labor |
• | Against asking management to implement and/or increase activity on each of the principles of the U.S. Business Principles for Human Rights of Workers in China. |
• | Against asking management to develop social, economic, and ethical criteria that the company could use to determine the acceptability of military contracts and to govern the execution of the contracts |
• | Against asking management to create a plan of converting the company’s facilities that are dependent on defense contracts toward production for commercial markets |
• | Against asking management to report on the company’s government contracts for the development of ballistic missile defense technologies and related space systems |
• | Against asking management to report on the company’s foreign military sales or foreign offset activities |
• | Against asking management to limit or end nuclear weapons production |
• | Against asking management to review nuclear weapons production |
• | Against asking the company to establish shareholder-designated contribution programs |
• | Against asking the company to limit or end charitable giving |
• | For asking the company to increase disclosure of political spending and activities |
• | Against asking the company to limit or end political spending |
• | For requesting disclosure of company executives’ prior government service |
• | Against requesting affirmation of political nonpartisanship |
• | For asking management to report on or change tobacco product marketing practices, except against if the proposal calls for action beyond reporting |
• | Against severing links with the tobacco industry |
• | Against asking the company to review or reduce tobacco harm to health |
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• | For asking management to review or promote animal welfare, except against if the proposal calls for action beyond reporting |
• | For asking the company to report or take action on pharmaceutical drug pricing or distribution, except against if the proposal asks for more than a report |
• | Against asking the company to take action on embryo or fetal destruction |
• | For asking the company to review or report on nuclear facilities or nuclear waste, except against if the proposal asks for cessation of nuclear-related activities or other action beyond reporting |
• | For asking the company to review its reliance on nuclear and fossil fuels, its development or use of solar and wind power, or its energy efficiency, except vote against if the proposal asks for more than a report. |
• | Against asking management to endorse the Ceres principles |
• | For asking the company to control generation of pollutants, except against if the proposal asks for action beyond reporting or if the company reports its omissions and plans to limit their future growth or if the company reports its omissions and plans to reduce them from established levels |
• | For asking the company to report on its environmental impact or plans, except against if management has issued a written statement beyond the legal minimum |
• | For asking management to report or take action on climate change, except against if management acknowledges a global warming threat and has issued company policy or if management has issued a statement and committed to targets and timetables or if the company is not a major emitter of greenhouse gases |
• | For asking management to report on, label, or restrict sales of bioengineered products, except against if the proposal asks for action beyond reporting or calls for a moratorium on sales of bioengineered products |
• | Against asking the company to preserve natural habitat |
• | Against asking the company to review its developing country debt and lending criteria and to report to shareholders on its findings |
• | Against requesting the company to assess the environmental, public health, human rights, labor rights, or other socioeconomic impacts of its credit decisions |
• | For requesting reports and/or reviews of plans and/or policies on fair lending practices, except against if the proposal calls for action beyond reporting |
• | Against asking the company to establish committees to consider issues related to facilities closure and relocation of work |
• | For asking management to report on the company’s affirmative action policies and programs, including releasing its EEO-1 forms and providing statistical data on specific positions within the company, except against if the company releases its EEO-1 reports |
• | Against asking management to drop sexual orientation from EEO policy |
• | Against asking management to adopt a sexual orientation non-discrimination policy |
• | For asking management to report on or review Mexican operations |
• | Against asking management to adopt standards for Mexican operations |
• | Against asking management to review or implement the MacBride principles |
• | Against asking the company to encourage its contractors and franchisees to implement the MacBride principles |
• | For asking management to report on or review its global labor practices or those of its contractors, except against if the company already reports publicly using a recognized standard or if the resolution asks for more than a report |
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• | Against asking management to adopt, implement, or enforce a global workplace code of conduct based on the International Labor Organization’s core labor conventions |
• | For requesting reports on sustainability, except against if the company has already issued a report in GRI format |
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