EXHIBIT (c)
PROXY VOTING POLICY
MBIA CAPITAL MANAGEMENT CORP.
Introduction
This Proxy Voting Policy ("Policy") for MBIA Capital Management Corp.
("MBIA-CMC") reflects our duty as a fiduciary under the Investment Advisers Act
of 1940 (the "Advisers Act") to vote proxies in the best interests of our
clients. In addition, the Department of Labor views the fiduciary act of
managing ERISA plan assets to include the voting of proxies. Proxy voting
decisions must be made solely in the best interests of the pension plan's
participants and beneficiaries. The Department of Labor has interpreted this
requirement as prohibiting a fiduciary from subordinating the retirement income
interests of participants and beneficiaries to unrelated objectives. The
guidelines in this Policy have been formulated to ensure decision-making
consistent with these fiduciary responsibilities.
Any general or specific proxy voting guidelines provided by an advisory
client or its designated agent in writing will supercede the specific guidelines
in this Policy. MBIA-CMC will disclose to our advisory clients information about
this Policy as well as disclose to our clients how they may obtain information
on how we voted their proxies. Additionally, MBIA will maintain proxy voting
records for our advisory clients consistent with the Advisers Act. For those of
our clients that are registered investment companies, MBIA-CMC will disclose
this Policy to the shareholders of such funds and make filings with the
Securities and Exchange Commission and make available to fund shareholders the
specific proxy votes that we cast in shareholder meetings of issuers of
portfolio securities in accordance with the rules and regulations under the
Investment Company Act of 1940.
Registered investment companies that are advised by MBIA-CMC as well as
certain of our advisory clients may participate in securities lending programs,
which may reduce or eliminate the amount of shares eligible for voting by
MBIA-CMC in accordance with this Policy if such shares are out on loan and
cannot be recalled in time for the vote.
Implicit in the initial decision to retain or invest in the security of
a corporation is approval of its existing corporate ownership structure, its
management, and its operations. Accordingly, proxy, proposals that would change
the existing status of a corporation will be reviewed carefully and supported
only when it seems clear that the proposed changes are likely to benefit the
corporation and its shareholders. Notwithstanding this favorable predisposition,
management will be assessed on an ongoing basis both in terms of its business
capability and its dedication to the shareholders to ensure that, our continued
confidence remains warranted. If it is determined that management is acting on
its own behalf instead of for the well being of the corporation, we will vote to
support shareholder proposals, unless other mitigating circumstances are
present.
Additionally, situations may arise that involve an actual or perceived
conflict of interest. For example, we may manage assets of a pension plan of a
company whose management is soliciting proxies, or a MBIA-CMC employee may have
a close relative who serves as a director or executive of a company that is
soliciting proxies. In all cases, the manner in which we vote proxies must be
based on our clients' best interests and not the product of the conflict.
This Policy and its attendant recommendations attempt to generalize a
complex subject. It should be clearly understood that specific fact situations,
including differing voting practices in jurisdictions outside the United States,
might warrant departure from these guidelines. In such instances, the relevant
facts will be considered, and if a vote contrary to these guidelines is
indicated it will be cast and the reasons therefore recorded in writing.
The provisions of this Policy will be deemed applicable to decisions
similar to voting proxies, such as tendering of securities, voting consents to
corporate actions, and solicitations with respect to fixed income securities,
where MBIA may exercise voting authority on behalf of clients.
Section I of the Policy describes proxy proposals that may be
characterized as routine and lists examples of the types of proposals we would
typically support. Section II of the Policy describes various types of
non-routine proposals and provides general voting guidelines. These non-routine
proposals are categorized as those involving:
A. Social Issues,
B. Financial/Corporate Issues, and
C. Shareholder Rights.
Finally, Section III of the Policy describes the procedures to be
followed casting a vote pursuant to these guidelines.
SECTION I
ROUTINE MATTERS
Routine proxy proposals, amendments, or resolutions are typically
proposed by management and meet the following criteria:
1. They do not measurably change the structure, management control, or
operation of the corporation.
2. They are consistent with industry standards as well as the corporate
laws of the state of incorporation.
Voting Recommendation
MBIA-CMC will normally support the following routine proposals:
1. To increase authorized common shares.
2. To increase authorized preferred shares as long as there are not
disproportionate voting rights per preferred share.
3. To elect or re-elect directors.
4 To appoint or elect auditors.
5. To approve indemnification of directors and limitation of directors'
liability.
6. To establish compensation levels.
7. To establish employee stock purchase or ownership plans.
8. To set time and location of annual meeting.
SECTION II
NON-ROUTINE PROPOSALS
A. Social Issues
Proposals in this category involve issues of social conscience. They are
typically proposed by shareholders who believe that the corporation's internally
adopted policies are ill advised or misguided.
Voting Recommendation
If we have determined that management is generally socially responsible, we will
generally vote against the following shareholder proposals:
1. To enforce restrictive energy policies.
2. To place arbitrary restrictions on military contracting.
3. To bar or place arbitrary restrictions on trade with other countries.
4. To restrict the marketing of controversial products.
5. To limit corporate political activities.
6. To bar or restrict charitable contributions.
7. To enforce a general policy regarding human rights based on arbitrary
parameters.
8. To enforce a general policy regarding employment practices based on
arbitrary parameters.
9. To enforce a general policy regarding animal rights based on arbitrary
parameters.
10. To place arbitrary restrictions on environmental practices.
B. Financial/Corporate Issues
Proposals in this category are usually offered by management and seek
to change a corporation's legal, business or financial structure.
Voting, Recommendation
We will generally vote in favor of the following management proposals provided
the position of current shareholders is preserved or enhanced:
1. To change the state of incorporation.
2. To approve mergers, acquisitions or dissolution.
3. To institute indenture changes.
4. To change capitalization.
C. Shareholder Rights
Proposals in this category are made regularly both by management and
shareholders. They can be generalized as involving issues that transfer or
realign board or shareholder voting power.
We typically would oppose any proposal aimed solely at thwarting
potential takeover offers by requiring, for example, super-majority approval. At
the same time, we believe stability and continuity promote profitability. The
guidelines in this area seek to find a middle road, and they are no more than
guidelines. Individual proposals may have to be carefully assessed in the
context of their particular circumstances.
Voting Recommendation
We will generally vote for the following management proposals:
1. To require majority approval of shareholders in acquisitions of a
controlling share in the corporation.
2. To institute staggered board of directors.
3. To require shareholder approval of not more than 66.7% for a proposed
amendment to the corporation's by-laws.
4. To eliminate cumulative voting.
5. To adopt anti-greenmail charter or by-law amendments or to otherwise
restrict a company's ability to make greenmail payments.
6. To create a dividend reinvestment program.
7. To eliminate preemptive rights.
8. To eliminate any other plan or procedure designed primarily to
discourage a takeover or other similar action (commonly known as a
"poison pill").
We will generally vote against the following management proposals:
1. To require greater than 66 2/3% shareholder approval for a proposed
amendment to the corporation's by-laws ("super-majority provisions").
2. To require that an arbitrary fair price be offered to all shareholders
that is derived from a fixed formula ("fair price amendments").
3. To authorize a new class of common stock or preferred stock which may
have more votes per share than the existing common stock.
4. To prohibit replacement of existing members of the board of directors.
5. To eliminate shareholder action by written consent without a
shareholder meeting.
6. To allow only the board of directors to call a shareholder meeting or
to propose amendments to the articles of incorporation.
7. To implement any other action or procedure designed primarily to
discourage a takeover or other similar action (commonly known as a
"poison pill").
8. To limit the ability of shareholders to nominate directors.
We will generally vote for the following shareholder proposals:
1. To rescind share purchases rights or require that they be submitted for
shareholder approval, but only if the vote required for approval is not
more than 66 2/3%.
2. To opt out of state anti-takeover laws deemed to be detrimental to the
shareholder.
3. To change the state of incorporation for companies operating under the
umbrella of anti-shareholder state corporation laws if another state is
chosen with favorable laws in this and other areas.
4. To eliminate any other plan or procedure designed primarily to
discourage a takeover or other similar action.
5. To permit shareholders to participate in formulating management's proxy
and the opportunity to discuss and evaluate management's director
nominees, and/or to nominate shareholder nominees to the board.
6. To require that the board's audit, compensation, and/or nominating
committees be comprised exclusively of independent directors.
7. To adopt anti-greenmail charter or by-law amendments or otherwise
restrict a company's ability to make greenmail payments.
8. To create a dividend reinvestment program.
9. To recommend that votes to "abstain" not be considered votes "cast" at
an annual meeting or special meeting, unless required by state, law.
10. To require that "golden parachutes" be submitted for shareholder
ratification.
We will generally vote against the following shareholder proposals:
1. To restore preemptive rights.
2. To restore cumulative voting.
3. To require annual election of directors or to specify tenure.
4. To eliminate a staggered board of directors.
5. To require confidential voting.
6. To require directors to own a minimum amount of company stock in order
to qualify as a director or to remain on the board.
7. To dock director pay for failing to attend board meetings.
SECTION III
VOTING PROCESS
MBIA-CMC will designate a portfolio manager (the Proxy Voting Portfolio
Manager), who is responsible for voting proxies for all advisory accounts and
who will generally vote proxies in accordance with these guidelines. Where
MBIA-CMC is serving as investment adviser or sub-adviser for a registered
investment company (the "Fund"), the Proxy Voting Portfolio Manager will be a
portfolio manager for the Fund. In circumstances in which 1) the subject matter
of the vote is not covered by these guidelines, 2) a material conflict of
interest is present or, 3) we believe it may be necessary, in the best interests
of shareholders, to vote contrary to our general guidelines, the Proxy Voting
Portfolio Manager will discuss the matter with the President and Chief
Investment Officer of MBIA-CMC, who will be responsible for making the
definitive determination as to how the proxy matter will be voted. The
President/Chief Investment Officer may consult with the General Counsel, the
CCO, or other investment personnel in making this determination.
Determinations of the Committee with respect to proxy votes involving
material conflicts of interest shall be documented in writing and maintained for
a period of at least six years.
Any questions regarding this Policy may be directed to the General Counsel of
MBIA-CMC.