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 carry out its fiduciary responsibilities 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 those instance, the Proxy Committee shall periodically review and evaluate the voting recommendations of such Outside Service to ensure that recommendations are consistent with TCW’s clients’ best interests. 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. In the event that TCW inadvertently receives any proxy materials on behalf of a client that has retained proxy voting responsibility, and where it is reasonably feasible for TCW to determine the identity of the client, TCW will promptly forward such materials to the client.
As a matter of firm policy, TCW does not disclose to unaffiliated third parties how it expects to vote on upcoming proxies and does not disclose the way it voted proxies without a legitimate need to know such information.
Philosophy
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. Generally, proposals will be voted in accordance with the Guidelines and any applicable guidelines provided by TCW’s clients. 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.
Proxy Voting Overrides
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 abstain on a vote or override the Guidelines must deliver a written rationale for each such decision to TCW’s Proxy Specialist (the “Proxy Specialist”), who will maintain such 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 written rationale, he/she will obtain the approval of TCW’s Director of Research (the “Director of Research”) for the written rationale before submitting it. The Director of Research will review the portfolio manager’s written rationale and make a determination. If the Director of Research believes it appropriate, he/she may elect to convene the Proxy Committee for its independent consideration as to how the vote should be cast.
Conflicts of Interest
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 according to the Guidelines and any applicable guidelines provided by TCW’s clients, as outlined below. If a potential conflict of interest arises and there is no predetermined vote, or the Guidelines (or any applicable TCW client guidelines) themselves refer such vote to the portfolio manager for decision, or the portfolio manager would like to override a predetermined vote, then TCW will undertake the following analysis:
Where 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 based on the level of assets under management and other relevant facts and circumstances. Where the relationship is deemed material, 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.
Where an employee of TCW sits on the Board of a public company, the Proxy Specialist will determine whether such Board member is the portfolio manager for the account holding the security, or whether the Board member has spoken with the portfolio managers for the account holding the security. If 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.
When the issuer is a key vendor or broker of TCW, the Proxy Specialist will determine if the portfolio manager for the account(s) holding the security has spoken with the key vendor or broker about the upcoming proxy vote. If there has been communication concerning the proxy vote between the portfolio manager and the key vendor or broker, the relationship will be deemed material. The Proxy Specialist will provide the Proxy Committee with the relevant facts and the Proxy Committee will vote the proxy.
Where the issuer is an affiliate of TCW, 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.
Where 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 to the Proxy Specialist, 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 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, including proxy overrides delivered to the Proxy Specialist and decisions of the Proxy Committee. 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.
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 and management 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 |
| | • | | Generally for routine management proposals |
| | • | | For amendments to the company’s certificate of incorporation or bylaws, except against if an amendment would have the effect of reducing shareholders’ rights |
Capital Structure
| | • | | Generally for reasonable changes in authorized common stock |
| | • | | For the issuance of common stock or preferred stock, except against if the shares have voting rights superior to those of other common or preferred shareholders, as applicable |
| | • | | For approving the issuance or exercise of stock warrants |
| | • | | For authorizing preferred stock and making reasonable changes to authorized preferred stock, except against if the board has unlimited rights to set the terms and conditions of the shares |
| | • | | For amending or canceling a class or series of preferred stock |
| | • | | Against authorizing and for eliminating or amending dual or multiple classes of common stock |
| | • | | For a stock repurchase program |
| | • | | For a reverse stock split, except against if the company does not intend to proportionally reduce the number of authorized shares |
Mergers and Restructuring
| | • | | Generally for mergers and restructurings, including recapitalization, bankruptcy restructurings, liquidations, reincorporating in a different state, leveraged buyout of the company, spinning off certain company operations or divisions, the sale of assets |
| | • | | Against adopting or preserving 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 |
Anti-Takeover Provisions
| | • | | Generally against the concept of a classified board |
| | • | | Generally against the concept of a shareholder rights plan (poison pill) |
| | • | | Against eliminating or limiting shareholders’ right to call a special meeting |
| | • | | For restoring shareholders’ right to call a special meeting |
| | • | | Against eliminating or limiting shareholders’ right to act by written consent |
| | • | | For restoring shareholders’ right to act by written consent |
| | • | | Against establishing or maintaining a supermajority vote provision to (i) approve a merger or other business combination, (ii) 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 fair price provisions |
| | • | | For limiting the payment of greenmail |
| | • | | Against adopting advance notice requirements |
| | • | | Against opting into a state takeover statutory provision |
Compensation
| | • | | Generally in favor of reasonable compensation and bonus plans proposed by management, including one-time stock options and deferred compensation plans |
| | • | | For adopting, amending or adding shares to a stock incentive, purchase or award plan for employees and non-employee directors, provided that outstanding common stock is not overly diluted |
| | • | | For limiting per-employee option awards |
| | • | | For extending the term of a stock incentive plan for employees |
| | • | | Refer on assuming stock incentive plans |
| | • | | With management on “say on pay” proposals |
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 |
| | • | | Generally against making changes to board or chairman election, composition or eligibility requirements |
| | • | | Against changing the annual meeting location or date |
| | • | | For increasing disclosure regarding the board’s role in the development and monitoring of the company’s long-term strategic plan |
| | • | | Against urging the creation of a shareholder committee |
| | • | | For adopting cumulative voting |
| | • | | 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 |
| | • | | Generally against supermajority provisions |
| | • | | Against repealing fair price provisions |
| | • | | For restoring shareholders’ right to call a special meeting or 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 |
| | • | | Generally against restricting executive or director compensation, but for reasonable enhanced disclosure of executive compensation |
| | • | | 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 |
| | • | | Generally for the creation of a compensation and a nominating committee |
| | • | | For increasing the independence of key committees |
Social Issue Proposals
| | • | | Generally for proposals that ask a company to review operations or impacts or disclosure activities or impacts, except against if the proposal calls for action beyond reporting |
| | • | | Generally against proposals that ask the company to implement changes in procedure, including the development of social, economic, environmental or ethical criteria to govern contracts and production |
Additional Information
A description of TCW’s policies and procedures relating to proxy voting and class actions can also be found in the firm’s Part 2A of Form ADV. A copy of TCW’s Form ADV is available to clients upon request to the Proxy Specialist.
