UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-PX
ANNUAL REPORT OF PROXY VOTING RECORD OF REGISTERED MANAGEMENT
INVESTMENT COMPANY
Investment Company Act file number 811-03462
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The Flex-funds
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Exact name of registrant as specified in charter)
6125 Memorial Drive, Dublin, Ohio 43017
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(Address of principal executive offices) (Zip code)
Wesley F. Hoag, 6125 Memorial Drive, Dublin, Ohio 43017
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(Name and address of agent for service)
Registrant's telephone number, including area code: 614-766-7000
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Date of fiscal year end: December 31, 2003
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Date of reporting period: June 30, 2004
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Form N-PX is to be used by a registered management investment company, other
than a small business investment company registered on Form N-5 (ss.ss. 239.24
and 274.5 of this chapter), to file reports with the Commission, not later than
August 31 of each year, containing the registrant's proxy voting record for the
most recent twelve-month period ended June 30, pursuant to section 30 of the
Investment Company Act of 1940 and rule 30b1-4 thereunder (17 CFR 270.30b1-4).
The Commission may use the information provided on Form N-PX in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-PX, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-PX unless the
Form displays a currently valid Office of Management and Budget ("OMB") control
number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to the
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington,
DC 20549-0609. The OMB has reviewed this collection of information under the
clearance requirements of 44 U.S.C. ss. 3507.
SEC 2451 (4-03) Persons who are to respond to the collection of
information contained in this form are not required to
respond unless the form displays a currently valid OMB
control number.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Investment Company Act of 1940, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
(Registrant) The Flex-funds
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By (Signature and Title)* /s/ Wesley F. Hoag, Vice President
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Date August 23, 2004
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* Print the name and title of each signing officer under his or her signature.
(a) (b) (c) (d) (e) (f) (g) (h) (i)
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Issuer Ticker Cusip Meeting Date Description of Vote Issuer v. Voted? Vote For/Against
SH Cast Mgmt
THE FLEX-FUNDS' DYNAMIC GROWTH FUND
AIM Basic Value Fund -
Class A GTVLX 00141M747 12/21/03 Elect Directors Issuer Yes For Management
Amend Trust to allow Board to
Fidelity Phillips authorize fund mergers without
Street Trust: Fidelity shareholder approval and
Cash Reserves FDRXX 316067107 6/16/04 election of Trustees Issuer No
THE FLEX-FUNDS' AGGRESSIVE GROWTH FUND
Amend Trust to allow Board to
Fidelity Phillips authorize fund mergers without
Street Trust: Fidelity shareholder approval and
Cash Reserves FDRXX 316067107 6/16/04 election of Trustees Issuer No
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VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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07/11/03 - A BEA SYSTEMS, INC. *BEAS* 073325102 05/27/03
1 Elect Directors For Split Mgmt
1.1 Elect Director William T. Coleman III ---
For
1.2 Elect Director Dale Crandall --- For
1.3 Elect Director William H. Janeway ---
Withhold
Mr. Janeway is a member of the Company's compensation
and nominating committees and is Vice Chairman of a firm
involved in a related party transaction with the company.
Dresdner RCM does not favor the election of affiliated
directors who serve on key board committees and therefore
votes were withheld.
2 Approve Executive Incentive Bonus Plan For For Mgmt
3 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
07/18/03 - A DELL INC. *DELL* 247025109 05/23/03
1 Elect Directors For Split Mgmt
1.1 Elect Director Michael A. Miles --- Withhold
Mr. Miles serves on the company's compensation and
nominating committees and has an interlocking directorship
with another board member. Dresdner RCM does not favor the
election of affiliated directors who serve on key board
committees and therefore votes were withheld.
1.2 Elect Director Alex J. Mandl --- For
1.3 Elect Director Morton L. Topfer --- For
2 Declassify the Board of Directors For For Mgmt
Dresdner RCM supports management for submitting this
proposal, which demonstrates a commitment to shareholders
interests.
3 Change Company Name For For Mgmt
4 Approve Executive Incentive Bonus Plan For For Mgmt
08/11/03 - A COMPUTER SCIENCES CORPORATION *CSC* 205363104 06/13/03
1 Elect Directors For For Mgmt
Page 1
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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08/15/03 - A MICROCHIP TECHNOLOGY, INC. *MCHP* 595017104 06/20/03
1 Elect Directors For For Mgmt
1.1 Elect Director Steve Sanghi --- For
We recommend a vote FOR the directors.
1.2 Elect Director Albert J. Hugo-Martinez ---
For
1.3 Elect Director L.B. Day --- For
1.4 Elect Director Matthew W. Chapman --- For
1.5 Elect Director Wade F. Meyercord --- For
2 Amend Employee Stock Purchase Plan For For Mgmt
ISS approves of this item because the plan complies with
Section 423 of the Internal Revenue Code, the number of
shares being added is relatively conservative, the
offering period is reasonable, and there are limitations
on participation.
3 Amend Employee Stock Purchase Plan For For Mgmt
ISS approves of this item because the plan complies with
Section 423 of the Internal Revenue Code, the number of
shares being added is relatively conservative, the
offering period is reasonable, and there are limitations
on participation.
08/21/03 - A SYMANTEC CORP. *SYMC* 871503108 07/08/03
1 Elect Directors For For Mgmt
1.1 Elect Director Tania Amochaev --- For
We recommend a vote FOR the directors.
1.2 Elect Director William Coleman --- For
1.3 Elect Director Dr. Per-Kristian Halvorsen
--- For
1.4 Elect Director David Mahoney --- For
1.5 Elect Director Robert S. Miller --- For
1.6 Elect Director Bill Owens --- For
1.7 Elect Director George Reyes --- For
1.8 Elect Director Daniel H. Schulman --- For
1.9 Elect Director John W. Thompson --- For
Page 2
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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2 Increase Authorized Common Stock For Against Mgmt
The company did not provide a specific reason for this
large (200%) increase. In addition, we believe this
increase is excessive, even if the company decides to use
it for a stock split. We believe the potential dilution
for shareholders is too high.
3 Amend Stock Option Plan For Against Mgmt
Annual dilution and and the total cost of the company's
plans is excessive.
4 Approve Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Moreover, preservation of the
full deductibility of all compensation paid reduces the
company's corporate tax obligation.
5 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
08/26/03 - A QLOGIC CORP. *QLGC* 747277101 07/01/03
1 Elect Directors For For Mgmt
1.1 Elect Director H.K. Desai --- For
1.2 Elect Director Larry R. Carter --- For
1.3 Elect Director James R. Fiebiger --- For
1.4 Elect Director Balakrishnan S. Iyer --- For
1.5 Elect Director Carol L. Miltner --- For
1.6 Elect Director George D. Wells --- For
2 Amend Omnibus Stock Plan For Against Mgmt
Annual dilution and the total cost of the company's
plans is excessive.
3 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
09/24/03 - S UTSTARCOM, INC. *UTSI* 918076100 08/15/03
1 Increase Authorized Common Stock For Against Mgmt
The requested increase of 500,000,000 shares, is above the
allowable threshold of 387,500,000 shares. We recommend a
vote AGAINST Item 1.
Page 3
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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09/26/03 - A SINA CORP. (FORMERLY SINA.COM) *SINA* G81477104 None
1 Elect Yongji Duan and Yan Wang as Directors For For Mgmt
2 Approve Increase in Authorized Ordinary For For Mgmt
Shares to 150,000 from 75,000
3 Ratify Pricewaterhousecoopers as Auditors For For Mgmt
10/13/03 - A ORACLE CORP. *ORCL* 68389X105 08/21/03
1 Elect Directors For For Mgmt
1.1 Elect Director Lawrence J. Ellison --- For
Oracle is among the highest scoring companies in our
financial quality matrix. Especially, given Larry's large
holdings in Oracle (26.3%, we beleive that his and the
board's interests are properly aligned with shareholder
interests. The backgrounds of each of the members is quite
impressive and each bring valuable perspectives, and we do
not question their independence.
1.2 Elect Director Donald L. Lucas --- For
1.3 Elect Director Michael J. Boskin --- For
1.4 Elect Director Jeffrey O. Henley --- For
1.5 Elect Director Jack F. Kemp --- For
1.6 Elect Director Jeffrey Berg --- For
1.7 Elect Director Safra Catz --- For
1.8 Elect Director Hector Garcia-Molina --- For
1.9 Elect Director Joseph A. Grundfest --- For
1.10 Elect Director H. Raymond Bingham --- For
2 Approve Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Also, preservation of the full
deductibility of all compensation paid reduces the
company's corporate tax obligation.
Page 4
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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3 Ratify Auditors For For Mgmt
4 Amend Non-Employee Director Omnibus Stock For Against Mgmt
Plan
Annual dilution for this plan, as well as the total cost
of the company's existing plans, exceeds our guidelines
and could not be supported.
SHAREHOLDER PROPOSAL
5 Implement China Principles Against Against ShrHoldr
Since the company has had no significant controversies or
violations regarding its operations in China and has an
established workplace code of conduct, we believe this
issue is best left to the judgement of management.
10/29/03 - A SEAGATE TECHNOLOGY *STX* G7945J104 None
1-01 Elect David Bonderman as Director For Withhold Mgmt
Seagate Technology (Cayman Islands) has a board that is
only 27% independent and five insiders sit on the
compensation and nominating committees. Also, due to
recent performance related to corporate governance issues,
votes were withheld from affiliated directors serving on
key board committees.
1-02 Elect William W. Bradley as Director For For Mgmt
1-03 Elect James G. Coulter as Director For Withhold Mgmt
1-04 Elect James A. Davidson as Director For Withhold Mgmt
1-05 Elect Glenn H. Hutchins as Director For Withhold Mgmt
1-06 Elect Donald E. Kiernan as Director For For Mgmt
1-07 Elect Stephen J. Luczo as Director For For Mgmt
1-08 Elect David F. Marquardt as Director For Withhold Mgmt
1-09 Elect John W. Thompson as Director For For Mgmt
1-10 Elect William D. Watkins as Director For For Mgmt
1-11 Elect Edward J. Zander as Director For For Mgmt
2 Approve Section 162(m) Incentive Bonus Plan For For Mgmt
The primary objective of this proposal is to avoid tax
Page 5
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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deduction limitations imposed by Section 162(m) of the
Internal Revenue Code. Plan performance targets and
measures are appropriate and therefore this proposal was
supported.
3 Ratify Ernst & Young LLP as Auditors For For Mgmt
This is a routine item.
11/11/03 - A CISCO SYSTEMS, INC. *CSCO* 17275R102 09/12/03
1 Elect Directors For Split Mgmt
1.1 Elect Director Carol A. Bartz --- Withhold
Votes withheld for interlocking directorship. Carol Bartz
is Chairman of CSCO's compensation committee (the
individual most responsible for recommending option
grants) and also serves as compensation committee chair
for Network Appliance. Donald Valentine, CSCO's Vice
Chairman also serves as Network Appliance's Chairmain of
the Board.
1.2 Elect Director Larry R. Carter --- For
1.3 Elect Director John T. Chambers --- For
1.4 Elect Director Dr. James F. Gibbons --- For
1.5 Elect Director Dr. John L. Hennessy --- For
1.6 Elect Director Roderick C. McGeary ---
Withhold
Votes withheld from Mr. Mc Geary, member of the audit
committee, for approving an excessive amount of non-audit
fees.
1.7 Elect Director James C. Morgan --- For
1.8 Elect Director John P. Morgridge --- For
1.9 Elect Director Donald T. Valentine ---
Withhold
Votes withheld for interlocking directorship. Donald
Valentine, CSCO's Vice Chairman also serves as Network
Appliance's Chairmain of the Board. Carol Bartz is
Chairman of CSCO's compensation committee (the individual
most responsible for recommending option grants) and also
serves as compensation committee chair for Network
Appliance.
1.10 Elect Director Steven M. West --- Withhold
Votes withheld from Mr. West, member of the audit
committee, for approving an excessive amount of non-audit
fees.
1.11 Elect Director Jerry Yang --- Withhold
Votes withheld from Mr. Yang, member of the audit
committee, for approving an excessive amount of non-audit
fees.
Page 6
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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2 Amend Employee Stock Purchase Plan For Against Mgmt
This stock purchase plan amendment was not approved as
dilution exceeds our guidelines.
3 Ratify Auditors For Against Mgmt
Non-audit fees including fees for tax services are
excessive.
SHAREHOLDER PROPOSALS
4 Report on Company Products Used by the Against Against ShrHoldr
Government to Monitor the Internet
In the absence of compelling evidence that a proposal will
have a positive economic impact, Dresdner RCM believes
that these matters are best left to the judgment of
management.
5 Report on Pay Disparity Against Against ShrHoldr
In this case, while top executives appear to have high
compensation relative to their peers, the company has
exceptional performance relative to its peers. Also, the
company already provides information about its
compensation levels in the proxy statement and we do not
see how an additional report would be beneficial to
shareholders. Therefore, in this case, we believe that
this matter is best left to the judgment of management.
11/11/03 - A MICROSOFT CORP. *MSFT* 594918104 09/12/03
1 Elect Directors For Split Mgmt
1.1 Elect Director William H. Gates, III --- For
We recommend a vote FOR the directors with the exception
of Jon A. Shirley. We recommend that shareholders WITHHOLD
votes from Jon A. Shirley for standing as an affiliated
outsider on the Audit Committee.
1.2 Elect Director Steven A. Ballmer --- For
1.3 Elect Director James I. Cash, Jr., Ph.D.
--- For
1.4 Elect Director Raymond V. Gilmartin --- For
1.5 Elect Director Ann McLaughlin Korologos ---
For
Page 7
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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1.6 Elect Director David F. Marquardt --- For
1.7 Elect Director Charles H. Noski --- For
1.8 Elect Director Dr. Helmut Panke --- For
1.9 Elect Director Wm. G. Reed, Jr. --- For
1.10 Elect Director Jon A. Shirley --- Withhold
Votes withheld from Jon A. Shirley for standing as an
affiliated outsider on the Audit Committee.
2 Amend Omnibus Stock Plan For For Mgmt
This proposal requests shareholder approval to launch a
new compensation program that will award restricted stock
instead of stock options. Dresdner RCM generally favors
performance-based restricted stock over fixed price option
plans, as we believe that restricted stock is a better
means to align interests of shareholders and employees.
Also, restricted stock is required to be expensed on the
income statement, which we believe improves financial
transparency, by providing a clear measure of the cost of
the plan.
3 Amend Non-Employee Director Stock Option For For Mgmt
Plan
We believe this proposal to decrease the maximum number of
shares available for issuance and to permit restricted
stock grants to directors is in the best interest of
shareholders.
SHAREHOLDER PROPOSAL
4 Refrain from Giving Charitable Contributions Against Against ShrHoldr
In the absence of compelling evidence that a proposal will
have a positive economic impact, Dresdner RCM believes
that these matters are best left to the judgment of
management. Furthermore, the company is in compliance with
current laws and regulations regarding charitable
contributions.
11/13/03 - A MAXIM INTEGRATED PRODUCTS, INC. 57772K101 09/15/03
*MXIM*
1 Elect Directors For Split Mgmt
1.1 Elect Director James R. Bergman --- Withhold
Votes withheld from audit committee member James Bergman
for approving excessive non-audit fees.
1.2 Elect Director John F. Gifford --- Withhold
Votes withheld from insider John Gifford for failure to
establish an independent nominating committee.
Page 8
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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1.3 Elect Director B. Kipling Hagopian ---
Withhold
Votes withheld from audit committee member Kipling
Hagopian for approving excessive non-audit fees.
1.4 Elect Director M. D. Sampels --- For
1.5 Elect Director A. R. Frank Wazzan ---
Withhold
Votes withheld from audit committee member Frank Wazzan
for approving excessive non-audit fees.
2 Amend Stock Option Plan For Against Mgmt
Annual dilution and the total cost of the company's plans
is excessive.
3 Amend Employee Stock Purchase Plan For For Mgmt
This plan complies with Section 423 of the Internal
Revenue Code, the number of shares being added is
relatively conservative, the offering period is
reasonable, and there are limitations on participation.
4 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
03/25/04 - A NOKIA CORP. 654902204 01/30/04
MEETING FOR HOLDERS OF ADRS
1 APPROVAL OF THE INCOME STATEMENTS AND THE For For Mgmt
BALANCE SHEETS.
2 APPROVAL OF A DIVIDEND OF EUR 0.30 PER For For Mgmt
SHARE.
3 APPROVAL OF THE DISCHARGE OF THE CHAIRMAN, For For Mgmt
THE MEMBERS OF THE BOARD OF DIRECTORS AND
THE PRESIDENT FROM LIABILITY.
4 Elect Directors For For Mgmt
5 Ratify Auditors For For Mgmt
6 APPROVAL OF THE PROPOSAL OF THE BOARD TO For For Mgmt
REDUCE THE SHARE CAPITAL THROUGH
CANCELLATION OF NOKIA SHARES HELD BY THE
COMPANY
7 APPROVAL OF THE AUTHORIZATION TO THE BOARD For For Mgmt
TO INCREASE THE SHARE CAPITAL OF THE
COMPANY.
8 APPROVAL OF THE AUTHORIZATION TO THE BOARD For For Mgmt
TO REPURCHASE NOKIA SHARES.
Page 9
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
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9 APPROVAL OF THE AUTHORIZATION TO THE BOARD For For Mgmt
TO DISPOSE NOKIA SHARES HELD BY THE COMPANY.
10 APPROVAL OF THE PROPOSAL OF THE BOARD TO For For Mgmt
INCREASE THE CAPITAL OF THE FOUNDATION OF
NOKIA CORPORATION.
11 MARK THE FOR BOX IF YOU WISH TO INSTRUCT None Against Mgmt
THE DEPOSITARY TO GIVE A PROXY TO ANY ONE
OF MARIANNA UOTINEN-TARKOMA, ESA
KAUNISTOLA, BOTH LEGAL COUNSELS OF NOKIA
CORPORATION, TO AUTHORIZE ANY OF THEM (WITH
FULL POWER OF SUBSTITUTION) TO VOTE, IN
THEIR DISCR
As we cannot know the content of these issues, we do not
recommend that shareholders approve this request.
04/13/04 - A THE BANK OF NEW YORK CO., INC. *BK* 064057102 02/23/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Amend Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Moreover, preservation of the
full deductibility of all compensation paid reduces the
company's corporate tax obligation.
4 Report on Political Contributions Against Against ShrHoldr
In light of the potential costs associated with the
requested report, we recommend that shareholders oppose
this request.
5 Limit Executive Compensation Against Against ShrHoldr
Page 10
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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The Compensation Committee is composed entirely of
independent directors and currently sets and reviews the
company's executive compensation program. We believe that
the Compensation Committee should have the flexibility to
determine an executive's pay based on a number of factors,
rather then have an arbitrary cap to determine executive
compensation. Although we agree with the proponent that
the restricted share program should utilize justifiable
performance criteria and challenging performance
benchmarks, the proposed caps on restricted stock grants,
severance payments, salary and bonus, would be unduly
restrictive. Thus, we do not support this proposal.
6 Limit Composition of Committee to Against Against ShrHoldr
Independent Directors
According to ISS definition, the members on the Risk
Committee are independent outside directors. The board is
also majority independent according to ISS definition.
Therefore we believe, in this case, the proposal does not
warrant shareholder support at this time.
7 Submit Shareholder Rights Plan (Poison Against For ShrHoldr
Pill) to Shareholder Vote
Because poison pills greatly alter the balance of power
between shareholders and management, shareholders should
be allowed to make their own evaluation of such plans.
04/15/04 - A NOVELL, INC. *NOVL* 670006105 02/20/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Albert Aiello --- Withhold
We recommend a vote FOR the directors. Serves on the audit
committee and approved excessive non-audit fees.
1.2 Elect Director Fred Corrado --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.3 Elect Director Richard L. Crandall ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.4 Elect Director Wayne Mackie --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
Page 11
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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1.5 Elect Director Claudia B. Malone --- For
1.6 Elect Director Jack L. Messman --- For
1.7 Elect Director Richard L. Nolan --- For
1.8 Elect Director Thomas G. Plaskett ---
Withhold
Serves on the nominating and compensation committees and
has an interlocking directorship with Novell's CEO on
another board. RCM does not support the election of
affiliated directors who serve on key board committees and
therefore votes were withheld.
1.9 Elect Director John W. Poduska, Sr. --- For
1.10 Elect Director James D. Robinson, III ---
For
We recommend a vote FOR the directors.
1.11 Elect Director Kathy Brittain White ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
2 Expense Stock Options Against For ShrHoldr
3 Performance-Based/Indexed Options Against Against ShrHoldr
RCM generally votes in favor of shareholder proposals
requesting a significant portion of the company's awards
to be performance-based. In this case, the proposal
requests 75% of future stock option grants to senior execs
to be performance-based. While we agree with the direction
of the proposal in increasing the linkages between
performance and compensation, we believe the details of
the proposal are overly restrictive. Furthermore, we note
that none of the senior management team received cash
bonuses last year as the company failed to achieve the
objectives it initially set out, this despite the stock
price rising 215% (outperforming the NASDAQ by 165%). In
addition, options grants to senior executives was also
diminished for this reason.
4 Prohibit Auditor from Providing Non-Audit Against For ShrHoldr
Services
In this case, non-audit fees make up 41.79% of the total
fees paid to the auditor. Also, auditors are not on the
ballot for shareholder ratification. RCM believes that
excessive non-audit fees may create a conflict of interest
and therefore this proposal was supported.
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Jul 01, 2003 - Jun 30, 2004
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04/15/04 - A PEOPLE'S BANK *PBCT* 710198102 03/01/04
1 Elect Directors For For Mgmt
1.1 Elect Director Janet M. Hansen --- For
We recommend a vote FOR the directors.
1.2 Elect Director Jeremiah J. Lowney, Jr. ---
For
1.3 Elect Director Jack E. Mcgregor --- For
2 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's plans
of 3.17 percent is within the allowable cap for this company
of 6.68 percent. ISS notes that there is a high ratio of
32.75 percent of total grants to named executives in the
past fiscal year.
3 Increase Authorized Common Stock For For Mgmt
The requested increase of 50,000,000 shares is below the
allowable threshold of 100,000,000 shares.
04/15/04 - A * TEXAS INSTRUMENTS INC. *TXN* 882508104 02/17/04
1 Elect Directors For Split Mgmt
1.1 Elect Director James R. Adams --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.2 Elect Director David L. Boren --- For
1.3 Elect Director Daniel A. Carp --- Withhold
Mr. Carp serves on the nominating committee and has an
outside affiliation with 2 other TXN board members,
including the TXN's Chairman and CEO, on The Business
Roundtable and The Business Council. RCM does not support
the election of affiliated director who serve on key board
committees and therefore votes were withheld.
1.4 Elect Director Thomas J. Engibous --- For
1.5 Elect Director Gerald W. Fronterhouse ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.6 Elect Director David R. Goode --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
Page 13
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.7 Elect Director Wayne R. Sanders --- For
1.8 Elect Director Ruth J. Simmons --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.9 Elect Director Richard K. Templeton ---
Withhold
Votes withheld from COO Richard Templeton, as we generally
believe that employees serving on the board with the CEO
may not be objective and independent representatives of
shareholder interests.
1.10 Elect Director Christine Todd Whitman ---
For
2 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
3 Expense Stock Options Against For ShrHoldr
RCM votes in favor of shareholder proposals requesting
companies to disclose the cost of stock options as an
expense on their income statement, to clarify the
company's earnings and profitability to shareholders
04/16/04 - S JUNIPER NETWORKS, INC. *JNPR* 48203R104 03/10/04
1 Issue Shares in Connection with an For For Mgmt
Acquisition
04/19/04 - A CYPRESS SEMICONDUCTOR CORP. *CY* 232806109 03/01/04
1 Elect Directors For For Mgmt
1.1 Elect Director T.J. Rodgers --- For
We recommend a vote FOR the directors.
1.2 Elect Director Fred B. Bialek --- For
1.3 Elect Director Eric A. Benhamou --- For
1.4 Elect Director John C. Lewis --- For
1.5 Elect Director Alan F. Shugart --- For
1.6 Elect Director James R. Long --- For
1.7 Elect Director W. Steve Albrecht --- For
2 Amend Omnibus Stock Plan For Against Mgmt
Page 14
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
V. Vote Recommendation. The total cost of the plan of 29.96
percent is above the allowable cap for this company of 12.74
percent.
3 Ratify Auditors For For Mgmt
04/19/04 - A TEXAS REGIONAL BANKSHARES, INC. 882673106 03/12/04
*TRBS*
1 Elect Directors For Split Mgmt
1.1 Elect Director Morris Atlas --- For
We recommend a vote FOR the directors with the exception
of affiliated outsider Frank N. Boggus. We recommend that
shareholders WITHHOLD votes from Frank N. Boggus for
standing as an affiliated outsider on the Audit, Stock
Option & Compensation and Nominating committees.
1.2 Elect Director Frank N. Boggus --- Withhold
1.3 Elect Director Robert G. Farris --- For
1.4 Elect Director C. Kenneth Landrum, M.D ---
For
1.5 Elect Director David L. Lane --- For
1.6 Elect Director Jack H. Mayfield, Jr. --- For
1.7 Elect Director Joe Penland, Sr. --- For
1.8 Elect Director Joseph E. Reid --- For
1.9 Elect Director G.E. Roney --- For
1.10 Elect Director Julie G. Uhlhorn --- For
1.11 Elect Director Walter Umphrey --- For
1.12 Elect Director Mario Max Yzaguirre --- For
2 Approve Stock Option Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 1.11 percent is within the allowable cap for this
company of 19.68 percent.
3 Approve Stock Option Plan For For Mgmt
VI. Vote Recommendation. The total cost of the company's
plans of 1.11 percent is within the allowable cap for this
company of 19.68 percent.
4 Approve Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Moreover, preservation of the
full deductibility of all compensation paid reduces the
company's corporate tax obligation.
Page 15
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
5 Ratify Auditors For For Mgmt
04/20/04 - A CITIGROUP INC. *C* 172967101 02/27/04
1 Elect Directors For Split Mgmt
1.1 Elect Director C. Michael Armstrong --- For
Citigroup's board is only 53% independent and
therefore, with the exception of the CEO and Chairman,
votes were withheld from all remaining insiders and
affiliated outsiders. We believe that insiders serving on
the board with the CEO may not be objective and
independent representatives of shareholder interests.
1.2 Elect Director Alain J.P. Belda --- For
1.3 Elect Director George David --- For
1.4 Elect Director Kenneth T. Derr --- For
1.5 Elect Director John M. Deutch --- For
1.6 Elect Director Roberto Hernandez Ramirez
--- Withhold
Affiliated outsider
1.7 Elect Director Ann Dibble Jordan ---
Withhold
Affiliated outsider
1.8 Elect Director Dudley C. Mecum --- For
1.9 Elect Director Richard D. Parsons --- For
1.10 Elect Director Andrall E. Pearson --- For
1.11 Elect Director Charles Prince --- For
CEO
1.12 Elect Director Robert E. Rubin --- Withhold
Insider
1.13 Elect Director Franklin A. Thomas ---
Withhold
Affiliated outsider
1.14 Elect Director Sanford I. Weill --- For
Chairman
Page 16
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.15 Elect Director Robert B. Willumstad ---
Withhold
Insider
2 Ratify Auditors For For Mgmt
3 Limit Executive Compensation Against Against ShrHoldr
We believe that taking away the company's ability to
grant stock options is an arbitrary and excessively
restrictive proposal that could potentially prohibit the
company from compensating employees based upon their
individual and company-wide performance.
4 Report on Political Contributions/Activities Against Against ShrHoldr
In the case of Citigroup, we note that the company follows
all state and local laws regarding contributions to
political candidates or organizations. Additionally, the
scope of the disclosure requested in this proposal may not
be substantially different from information currently
available, and could prove costly and difficult for the
company to publish in a formal report. As such, it does
not appear that preparing and publicizing such reports in
the manner requested by the proponent would be the most
effective use of shareholder funds.
5 Prohibit Awards to Executives Against Against ShrHoldr
We believe this proposal is too restrictive, as it would
prohibit the executives from being remunerated with stock
options and severance payments regardless of the
company's performance.
6 Separate Chairman and CEO Positions Against Against ShrHoldr
In this case, the company has independent key committees,
established governance guidelines, and a lead director
with clearly defined duties, and therefore we can accept a
combined title.
04/21/04 - A BURLINGTON NORTHERN SANTA FE CORP. 12189T104 02/27/04
*BNI*
1 Elect Directors For Split Mgmt
1.1 Elect Director Alan L. Boeckmann --- For
We recommend a vote FOR the directors with the exception
of affiliated outsiders Marc F. Racicot and Vilma S.
Page 17
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
Martinez. We recommend that shareholders WITHHOLD votes
from Marc F. Racicot and Vilma S. Martinez for standing as
affiliated outsiders on the Directors and Corporate
Governance Committee, which serves as the nominating
committee.
1.2 Elect Director Vilma S. Martinez ---
Withhold
1.3 Elect Director Marc F. Racicot --- Withhold
1.4 Elect Director Roy S. Roberts --- For
1.5 Elect Director Matthew K. Rose --- For
1.6 Elect Director Marc J. Shapiro --- For
1.7 Elect Director J.C. Watts, Jr. --- For
1.8 Elect Director Robert H. West --- For
1.9 Elect Director J. Steven Whisler --- For
1.10 Elect Director Edward E. Whitacre, Jr. ---
For
1.11 Elect Director Michael B. Yanney --- For
2 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's
plans of 5.21 percent is within the allowable cap for this
company of 7.25 percent.
3 Ratify Auditors For For Mgmt
04/21/04 - A FMC TECHNOLOGIES, INC. *FTI* 30249U101 02/27/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Asbjorn Larsen --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees (43.88%). We also note
that auditors are not included on the ballot for
shareholder ratification.
1.2 Elect Director Joseph H. Netherland --- For
1.3 Elect Director James R. Thompson ---
Withhold
Votes withheld from Mr. Thomson for serving as an
affiliated outsider on the compensation and nominating
committees.
04/21/04 - A SOUTHTRUST CORP. *SOTR* 844730101 02/20/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Carl F. Bailey --- For
We recommend a vote FOR the directors.
1.2 Elect Director John M. Bradford --- For
1.3 Elect Director William C. Hulsey ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
Page 18
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.4 Elect Director Wallace D. Malone, Jr. ---
For
CEO/Chairman.
2 Ratify Auditors For Against Mgmt
Non-audit fees make up 51.99% of the total fees paid to
the auditor. While the company has issued an 8-K stating
that their non-audit fees would not exceed the amount paid
for audit services, RCM prefers a cap of 20% non-audit
fees. We believe non-audit services, including certain tax
services, are a profitable revenue for audit firms, and
excessive fees may create a conflict of interest.
3 Approve Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Moreover, preservation of the
full deductibility of all compensation paid reduces the
company's corporate tax obligation.
4 Approve Omnibus Stock Plan For For Mgmt
Annual dilution, the total cost of the plan, and the
features of the plan are within RCM guidelines.
04/21/04 - A THE COCA-COLA COMPANY *KO* 191216100 02/23/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Herbert A. Allen --- For
We recommend a vote FOR the directors with the exception
of Warren E. Buffett. We recommend that shareholders
WITHHOLD votes from Warren E. Buffett for standing as an
affiliated outsider on the Audit Committee.
1.2 Elect Director Ronald W. Allen --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
Page 19
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.3 Elect Director Cathleen P. Black ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.4 Elect Director Warren E. Buffett ---
Withhold
Votes withheld from serving as an affiliated outsider on
the audit and for approving excessive non-audit fees.
Warren Buffett is CEO of Berkshire Hathaway and four
Berkshire Hathaway subsidiaries maintain various
transactional relationships with the company. RCM does not
support the election of affiliated directors who serve on
key board committees.
1.5 Elect Director Douglas N. Daft --- For
1.6 Elect Director Barry Diller --- For
1.7 Elect Director Donald R. Keough --- Withhold
Votes withheld from Don Keogh ' who was brought on board
without shareholder consent, is 77, beyond the up till
just recently changed age limit for board participation.
Keogh is chairman of Allen & Co. which is too tight with
KO, Buffet and is already represented by Herb Allen, CEO
of that company.
1.8 Elect Director Susan Bennett King --- For
1.9 Elect Director Maria Elena Lagomasino ---
For
1.10 Elect Director Donald F. Mchenry --- For
1.11 Elect Director Robert L. Nardelli ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.12 Elect Director Sam Nunn --- For
1.13 Elect Director J. Pedro Reinhard ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.14 Elect Director James D. Robinson III --- For
1.15 Elect Director Peter V. Ueberroth ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.16 Elect Director James B. Williams --- For
Page 20
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
2 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
3 Report on Operational Impact of HIV/AIDS For For ShrHoldr
Pandemic
4 Report on Stock Option Distribution by Race Against Against ShrHoldr
and Gender
5 Prohibit Awards to Executives Against Against ShrHoldr
6 Submit Executive Compensation to Vote Against For ShrHoldr
KO's stock award program is excessive and out of touch
with investor expectations.
7 Submit Executive Compensation to Vote Against Against ShrHoldr
8 Implement China Principles Against Against ShrHoldr
9 Separate Chairman and CEO Positions Against For ShrHoldr
RCM generally supports proposals requiring the position of
Chairman to be filled by an independent director, because
a combined title can make it difficult for the board to
remove a CEO that has underperformed, and harder to
challenge a CEO's decisions.
04/22/04 - A CARNIVAL CORP. *CCL* 143658300 02/23/04
MEETING FOR HOLDERS OF ADRS
1 Elect Directors For For Mgmt
1.1 Elect Director Micky Arison --- For
ISS prefers that boards contain a majority of
non-executives who are considered to be independent. In
addition, we prefer that key committee membership is
limited to independent non-executives only. Despite these
shortcomings, director elections are standard proposals at
annual meetings, and these concerns would not be enough to
lead us to oppose these candidates.
1.2 Elect Director Amb Richard G. Capen Jr ---
For
1.3 Elect Director Robert H. Dickinson --- For
1.4 Elect Director Arnold W. Donald --- For
1.5 Elect Director Pier Luigi Foschi --- For
1.6 Elect Director Howard S. Frank --- For
1.7 Elect Director Baroness Hogg --- For
1.8 Elect Director A. Kirk Lanterman --- For
1.9 Elect Director Modesto A. Maidique --- For
1.10 Elect Director John P. Mcnulty --- For
Page 21
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.11 Elect Director Peter Ratcliffe --- For
1.12 Elect Director Sir John Parker --- For
1.13 Elect Director Stuart Subotnick --- For
1.14 Elect Director Uzi Zucker --- For
2 Ratify Auditors For For Mgmt
3 TO AUTHORIZE THE AUDIT COMMITTEE OF For For Mgmt
CARNIVAL PLC TO AGREE THE REMUNERATION OF
THE INDEPENDENT AUDITORS.
4 TO RECEIVE THE ACCOUNTS AND REPORTS FOR For For Mgmt
CARNIVAL PLC FOR THE FINANCIAL PERIOD ENDED
NOVEMBER 30, 2003.
5 TO APPROVE THE DIRECTORS REMUNERATION For For Mgmt
REPORT OF CARNIVAL PLC.
6 TO APPROVE LIMITS ON THE AUTHORITY TO ALLOT For For Mgmt
SHARES BY CARNIVAL PLC.
7 TO APPROVE THE DISAPPLICATION OF For For Mgmt
PRE-EMPTION RIGHTS FOR CARNIVAL PLC SHARES.
04/22/04 - A JOHNSON & JOHNSON *JNJ* 478160104 02/24/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Gerard N. Burrow --- For
We recommend a vote FOR the directors.
1.2 Elect Director Mary S. Coleman --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.3 Elect Director James G. Cullen --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.4 Elect Director Robert J. Darretta ---
Withhold
RCM generally does not support the election of employee
directors who serve on the board with the CEO. We believe
that insider directors may not be objective and
independent representatives of shareholder interests and
therefore votes were withheld.
1.5 Elect Director M. Judah Folkman --- For
1.6 Elect Director Ann D. Jordan --- For
1.7 Elect Director Arnold G. Langbo --- For
Page 22
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.8 Elect Director Susan L. Lindquist --- For
1.9 Elect Director Leo F. Mullin --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.10 Elect Director Steven S Reinemund --- For
1.11 Elect Director David Satcher --- For
1.12 Elect Director Henry B. Schacht --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.13 Elect Director William C. Weldon --- For
CEO
2 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
3 Cease Charitable Contributions Against Against ShrHoldr
04/22/04 - A LOCKHEED MARTIN CORP. *LMT* 539830109 03/01/04
1 Elect Directors For Split Mgmt
1.1 Elect Director E.C. 'Pete' Aldridge, Jr.
--- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.2 Elect Director Nolan D. Archibald ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.3 Elect Director Norman R. Augustine ---
Withhold
Former CEO and serves on the nominating committee. RCM
does not support the election of affiliated directors who
serve on key board committees and therefore votes were
withheld.
1.4 Elect Director Marcus C. Bennett --- For
1.5 Elect Director Vance D. Coffman --- For
CEO/Chairman.
1.6 Elect Director Gwendolyn S. King ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.7 Elect Director Douglas H. McCorkindale ---
For
Page 23
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.8 Elect Director Eugene F. Murphy --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.9 Elect Director Joseph W. Ralston ---
Withhold
Serves on the nominating committee and provides consulting
services to the company. RCM does not support the election
of affiliated directors who serve on key committees and
therefore votes were withheld.
1.10 Elect Director Frank Savage --- For
Removed from the audit committee.
1.11 Elect Director Anne Stevens --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.12 Elect Director Robert J. Stevens --- For
1.13 Elect Director James R. Ukropina ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.14 Elect Director Douglas C. Yearley ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
2 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
3 Report on Executive Ties to Government Against Against ShrHoldr
In this case, the company states that it has specific
policies in place to avoid conflicts of interest. When
appointing high profile hires from the government, the
company has generally issued a press release at the time
of hire. In addition, according to the company, the
government issues statements from agency ethics officials
on conflicts of interest or restrictions. Moreover, the
production of such a report annually could be costly
without providing substantial benefit to shareholders.
4 Submit Shareholder Rights Plan (Poison Against Against ShrHoldr
Pill) to Shareholder Vote
In this case, the company does not have a poison pill and
has no plans to adopt one. In response to proponent's
argument, however, the board states in the proxy that it
would seek shareholder ratification within 12 months if it
were to adopt a pill. The company has indicated that it
will also include this view as a formal provision in its
Corporate Governance Guidelines at the next meeting of its
board.
Page 24
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
5 Prohibit Auditor from Providing Non-Audit Against For ShrHoldr
Services
In this case, we support this proposal as non audit fees
make up 42.86% of the total fees paid to the auditor,
which we believe creates a conflict of interest.
6 Develop Ethical Criteria for Military Against Against ShrHoldr
Contracts
Lockheed Martin already discloses substantial information
that is being requested by this proposal, both through
public filings and the company web site. Topics addressed
in these forums include a formal code of ethics,
information on community and philanthropic initiatives,
diversity programs, an environment, health and safety
(EHS) report, disclosure on company policies related to
government contract bidding, and appropriate financial
information on military or weapons related programs.
04/22/04 - A PFIZER INC. *PFE* 717081103 02/27/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Michael S. Brown --- For
We recommend a vote FOR the directors.
1.2 Elect Director M. Anthony Burns --- Withhold
1.3 Elect Director Robert N. Burt --- Withhold
1.4 Elect Director W. Don Cornwell --- Withhold
1.5 Elect Director William H. Gray III ---
Withhold
1.6 Elect Director Constance J. Horner --- For
1.7 Elect Director William R. Howell ---
Withhold
1.8 Elect Director Stanley O. Ikenberry --- For
1.9 Elect Director George A. Lorch --- Withhold
1.10 Elect Director Henry A. Mckinnell --- For
Page 25
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.11 Elect Director Dana G. Mead --- For
1.12 Elect Director Franklin D. Raines --- For
1.13 Elect Director Ruth J. Simmons --- For
1.14 Elect Director William C. Steere, Jr. ---
For
1.15 Elect Director Jean-Paul Valles --- Withhold
2 Ratify Auditors For Against Mgmt
3 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's plans
of 4.88 percent is within the allowable cap for this company
of 6.79 percent. Additionally, this plan expressly forbids
repricing.
4 Report on Operational Impact of HIV/AIDS, Against Against ShrHoldr
TB, and Malaria Pandemic
In this case, we believe that the company has taken
certain actions to help address the affects of this
healthcare crisis in emerging markets. These actions are
similar in nature and scope to those taken by industry
peers and competitors, and represent an acknowledgement of
the effect that the HIV/AIDS, TB, and malaria pandemic
could have on company strategy and operations. As such,
when considering the scope of Pfizer's initiatives to
address this crisis and current level of disclosure, we do
not believe that the report requested in this proposal
will provide information to shareholders commensurate with
the potential difficulties and expenses of preparing the
report. Therefore, we do not recommend shareholder support
for the resolution at this time.
5 Cease Political Contributions/Activities Against Against ShrHoldr
Interaction between corporate America and the political
process has been a topic of debate for several years.
Increasing scrutiny during and election year and in the wake
of corporate scandals has led to a surge in shareholder
activism on issues of political contributions. Opponents of
corporate political contributions argue that companies
spending scarce resources on expensive lobbying efforts and
donating to PACs would be better off investing that money on
new procedures that will better position the company to deal
with the coming regulations or improve its operations.
Conversely, corporate responses tend to suggest that company
involvement in the political process can be beneficial to
the business interests of the company and, ultimately,
shareholder value. When reviewing requests for proposals on
political contributions, ISS takes into account the scope
and nature of the request, the company's adherence to laws
and regulations governing political contributions, and
company policies and additional disclosure on such
contributions. In this case, the proponent has requested
that the company completely refrain from political
contributions without providing a business case for the
resolution. Moreover, we note that the company complies with
all appropriate state and federal laws regarding campaign
contributions. Therefore, based on the level of government
oversight on political contributions and lack of supporting
information for this proposal, ISS recommends that
shareholders vote against this item.
Page 26
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
6 Report on Political Contributions/Activities Against Against ShrHoldr
When reviewing requests for proposals on political
contributions, ISS takes into account the scope and nature
of the request, the company's adherence to laws and
regulations governing political contributions, and company
policies and additional disclosure on such contributions.
In the case of Pfizer, we note that the company follows
all state and local laws regarding contributions to
political candidates or organizations. Additionally,
interested parties can view information on the company's
political contributions and donations on a report
published at the end of each election cycle. Finally, the
scope and nature of the information requested in this
proposal may not be substantially different from data
currently available and could prove costly and difficult
for the company to publish in a formal report. As such, it
does not appear that preparing and publicizing such
reports in the manner requested by the proponent would be
the most effective use of shareholder funds.
7 Establish Term Limits for Directors Against Against ShrHoldr
Under an effective corporate governance system,
shareholders have the right to express their preferences
each year by voting on directors at the annual meeting.
Thus, shareholders can remove or reelect directors as they
see fit.
8 Report on Drug Pricing Against Against ShrHoldr
When evaluating drug-pricing proposals, ISS considers the
economic benefits of providing subsidized drugs (e.g.,
public goodwill) against the potential costs in terms of
reduced profits, lower R&D spending, and harm to
competitiveness. Additionally, the company's current
policies are taken into account, including any existing
subsidy or donor programs that make life-saving
pharmaceuticals more accessible to financially needy
patients. Finally, we consider the degree to which peer
companies have implemented price restraints. Specifically,
this proposal calls for the company to limit price
increases to a level below that of the annual inflation
rate, and report to shareholders on these initiatives.
While ISS generally supports increased disclosure that may
help shareholders better evaluate their investment, the
cost and difficulty in generating this information should
be offset by benefits gained from the report. In this
case, we also note that the structure of the proposal
includes commitment to a pricing policy along with the
report. Pfizer has implemented several programs to
assist in increasing accessibility to their products for
the financially needy. Additionally, the company provides
information on these discount, subsidy, and assistance
programs in its public filings and on the company website.
Finally, ISS agrees with the company that linking drug
pricing to the inflation rate may place the company at a
competitive disadvantage by artificially discounting
prices below those of competitors' products and limiting
resources to invest in research and development.
Therefore, ISS recommends that shareholders vote against
this proposal.
Page 27
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
9 Limit Awards to Executives Against Against ShrHoldr
10 Amend Animal Testing Policy Against Against ShrHoldr
In this case, Pfizer has developed a policy that calls for
utilizing in vitro testing wherever possible provided it
complies with regulations and does not effect the analysis
of treatment effectiveness or patient safety.
Additionally, in some cases alternative methods of testing
may be not feasible or meet criteria established by the
government. Moreover, the level of live animal testing at
Pfizer appears to be consistent with industry standards on
the topic. As such, ISS does not recommend shareholder
support for the resolution at this time.
04/22/04 - A SILICON VALLEY BANCSHARES *SIVB* 827064106 02/24/04
1 Elect Directors For For Mgmt
2 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's
plans of 11.29 percent is within the allowable cap for
this company of 14.91 percent. Additionally, this plan
expressly forbids repricing.
Page 28
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
3 Ratify Auditors For For Mgmt
04/22/04 - A WENDY'S INTERNATIONAL, INC. *WEN* 950590109 03/01/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 7.49 percent is within the allowable cap for this
company of 12.60 percent. Additionally, this plan expressly
forbids repricing.
04/22/04 - A WYETH *WYE* 983024100 03/12/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Clifford L. Alexander, Jr.
--- For
1.2 Elect Director Frank A. Bennack, Jr. --- For
1.3 Elect Director Richard L. Carrion ---
Withhold
Serves on the audit and compensation committees and has
interlocking directorships, on another board, with two
other key committee members.
1.4 Elect Director Robert Essner --- For
1.5 Elect Director John D. Feerick --- For
1.6 Elect Director Robert Langer --- For
1.7 Elect Director John P. Mascotte --- For
1.8 Elect Director Mary Lake Polan --- For
1.9 Elect Director Ivan G. Seidenberg ---
Withhold
Serves on the compensation committee and has interlocking
directorships, on another board, with two other key
committee members.
1.10 Elect Director Walter V. Shipley ---
Withhold
Serves on the audit and compensation committees and has
interlocking directorships, on another board, with two
other key committee members.
1.11 Elect Director John R. Torell III --- For
2 Ratify Auditors For For Mgmt
Page 29
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
3 Report on Drug Pricing Against Against ShrHoldr
Despite compelling evidence that this proposal would have
a positive economic impact, we believe this matter is best
left to the judgement of management. Futhermore, in this
case, we note that the company has initiated programs
aimed at increasing the accessibility and decreasing the
cost of its products through subsidies, discounts, and
donations for qualifying individuals. Also, the company
supports several international organizations in the effort
to distribute its products to people who could not
otherwise afford these medications. Finally, the company
has disclosure available on its website, comparable to
that of industry peers, that discusses the Wyeth stance on
drug accessibility and pricing, and initiatives that the
company has taken both domestically and internationally to
address this issue.
4 Amend Animal Testing Policy Against Against ShrHoldr
In this case, Wyeth has developed a policy that calls for
minimizing live animal testing wherever possible. However,
certain types of research may benefit from these tests
when alternative methods may not be available or practical
in light of the complexity of the subject research.
Additionally, in some cases alternative methods of testing
may be not feasible or meet criteria established by the
government.
04/23/04 - A ABBOTT LABORATORIES *ABT* 002824100 02/25/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Roxanne S. Austin --- For
We recommend a vote FOR the directors.
1.2 Elect Director H.Laurance Fuller --- For
1.3 Elect Director Richard A. Gonzalez ---
Withhold
1.4 Elect Director Jack M. Greenberg --- For
1.5 Elect Director Jeffrey M. Leiden ---
Withhold
1.6 Elect Director David A. Lord Owen --- For
1.7 Elect Director Boone Powell Jr. --- For
1.8 Elect Director Addison Barry Rand --- For
1.9 Elect Director W.Ann Reynolds --- For
1.10 Elect Director Roy S. Roberts --- For
1.11 Elect Director William D. Smithburg --- For
1.12 Elect Director John R. Walter --- For
1.13 Elect Director Miles D. White --- For
2 Ratify Auditors For For Mgmt
Page 30
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
3 Drug Pricing Against Against ShrHoldr
4 Report on Political Contributions/Activities Against Against ShrHoldr
5 Prohibit Awards to Executives Against Against ShrHoldr
6 Report on Operational Imact of HIV/AIDS, Against Against ShrHoldr
TB, and Malaria Pandemic
04/23/04 - A DELTA AIR LINES, INC. *DAL* 247361108 03/01/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Restore or Provide for Cumulative Voting Against For ShrHoldr
In this case, the company does not allow shareholders to
call special meetings and requires unanimous written
consent. We note that the company has published its
corporate governance principles in the proxy statement and
has outlined its director nomination process. However, the
company's stock has underperformed its peers over one-,
three- and five- year periods. We recognize that Delta has
implemented a profit improvement program designed to
reduce costs and increase revenues by leveraging new
technology and improving productivity while enhancing
customer service. However, since the company fails to meet
all of the aforementioned corporate governance and the
stock performance criteria, the proposal warrants
shareholder support.
4 Limit Awards to Executives Against Against ShrHoldr
5 Submit Executive Pension Benefit To Vote Against For ShrHoldr
6 Limit Executive Compensation Against Against ShrHoldr
04/23/04 - A MERRILL LYNCH & CO., INC. *MER* 590188108 02/24/04
1 Elect Directors For Withhold Mgmt
1.1 Elect Director David K. Newbigging ---
Withhold
We recommend a vote FOR the directors. Votes withheld for
serving on the audit committee and approving excessive
non-audit fees.
1.2 Elect Director Joseph W. Prueher ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
2 Ratify Auditors For Against Mgmt
Non-audit fees make up 37.73% of the total fees paid to
the auditor.
3 Restore or Provide for Cumulative Voting Against Against ShrHoldr
In this case, the company fails to meet some of the
aforementioned corporate governance criteria.
Specifically, the board is not annually-elected and
shareholders do not have the ability to call special
meetings or act by written consent. Accordingly, the
proposal warrants shareholder support. In this case, we
believe that MER's established corporate governance
practices have been effective in ensuring shareholder
accountability. We would prefer that the company had an
annually elected board, but because the board is almost
entirely independent and all key committees are composed
of independent directors, we do not believe shareholder
support is warranted for this proposal. Management and the
board show regard for shareholders and there are no
shareholders holding super voting shares.
Page 31
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
4 Separate Chairman and CEO Positions Against Against ShrHoldr
Merrill Lynch has more than 2/3 independent outsiders on
its board and all-independent key committees, has
established governance guidelines. However, the company
has not designated a lead director with clearly delineated
duties. Instead, the company states that the executive
sessions are chaired by the independent committee chairs
on a rotating basis at least four times a year. From ISS's
viewpoint, the duties of the chairs do not meet all of our
minimum requirements for a lead/rotating director. Absent
an offsetting governance structure, we believe that a
company of this size should be able to find two qualified
people willing to serve in the separate positions of
chairman and CEO president. Merrill Lynch's outside
independent directors meet at regularly-scheduled
quarterly executive sessions that are not attended by
management. Also, each chair of the board committees
presides over the private sessions, on a rotating basis,
and communicates frankly and frequently with the CEO.
Although we prefer the lead director role not to be split
between 3 individuals, in MER's case, this governance
structure has been effective and performance remains
strong. Furthermore, the board is 88% independent, all key
committees are entirely independent, and the company has
established corporate governance guidelines, and therefore
we do not support this proposal.
Page 32
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
04/26/04 - A HONEYWELL INTERNATIONAL, INC. *HON* 438516106 02/27/04
1 Elect Directors For Split Mgmt
1.1 Elect Director James J. Howard --- Withhold
Votes withheld for failure to implement the shareholder
proposal to eliminate the supermajority vote requirement
for the past two years.
1.2 Elect Director Bruce Karatz --- Withhold
Votes withheld for failure to implement the shareholder
proposal to eliminate the supermajority vote requirement
for the past two years.
1.3 Elect Director Russell E. Palmer ---
Withhold
Votes withheld for failure to implement the shareholder
proposal to eliminate the supermajority vote requirement
for the past two years. Also serves on the audit and
nominating committees and has interlocking directorships
with other committee members. RCM does not favor the
election of affiliated director who serve on key board
committees.
1.4 Elect Director Ivan G. Seidenberg ---
Withhold
Votes withheld for failure to implement the shareholder
proposal to eliminate the supermajority vote requirement
for the past two years. Also serves on the compensation
and nominating committees and has interlocking
directorships with other committee members. RCM does not
favor the election of affiliated director who serve on key
board committees.
1.5 Elect Director Eric K. Shinseki --- For
2 Ratify Auditors For For Mgmt
3 Declassify the Board of Directors Against For ShrHoldr
RCM supports shareholder proposal to declassify the board,
as we prefer directors to be elected annually to
discourage entrenchment.
4 Amend Vote Requirements to Amend Against For ShrHoldr
Articles/Bylaws/Charter
As a matter of policy, we recommend that shareholders vote
for all proposals that eliminate supermajority vote
requirements, as they serve as entrenchment devices for
management and therefore are not in the shareholders' best
interest.
Page 33
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
5 Submit Severance Agreement Against For ShrHoldr
(Change-in-Control) to Shareholder Vote
In this case there is no requirement for prior shareholder
approval that could limit negotiating flexibility and
therefore this proposal was supported.
6 Report on Pay Disparity Against Against ShrHoldr
In this case, we do not believe that preparation of the
requested report would yield meaningful information to
shareholders regarding the executive compensation policies
and practices of the company. We also note that the
compensation committee is comprised of entirely
independent directors.
7 Provide for Cumulative Voting Against For ShrHoldr
We support this proposal, because in this case, the
company does not have a strong record of corporate
governance policies and has not responded to majority
approved shareholder proposals for the last 2 years.
04/27/04 - A FORTUNE BRANDS, INC. *FO* 349631101 02/27/04
1 Elect Directors For Withhold Mgmt
1.1 Elect Director Anne M. Tatlock --- Withhold
We recommend withholding votes from all of the nominees.
We recommend that shareholders WITHHOLD votes from
independent outsiders Peter M. Wilson and Anne M. Tatlock
and insider Norman H. Wesley for failure to implement the
proposal to submit the company's shareholder rights plan
to a shareholder vote.
1.2 Elect Director Norman H. Wesley --- Withhold
1.3 Elect Director Peter M. Wilson --- Withhold
2 Ratify Auditors For For Mgmt
3 Submit Shareholder Rights Plan (Poison Against For ShrHoldr
Pill) to Shareholder Vote
Although the company's rights plan contains a TIDE
provision, the pill was not approved by shareholders nor
does it embody the above features that ISS recommends. We
therefore agree with the proponent that the current pill
should be put to a shareholder vote or redeemed, and that
any future pill be put to a shareholder vote.
Page 34
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
04/27/04 - A MERCK & CO., INC. *MRK* 589331107 02/24/04
1 Elect Directors For For Mgmt
1.1 Elect Director Peter C. Wendell --- For
We recommend a vote FOR the directors.
1.2 Elect Director William G. Bowen --- For
1.3 Elect Director William M. Daley --- For
1.4 Elect Director Thomas E. Shenk --- For
1.5 Elect Director Wendell P. Weeks --- For
2 Ratify Auditors For For Mgmt
3 Declassify the Board of Directors For For Mgmt
ISS commends management for submitting this proposal,
which demonstrates a commitment to shareholders' interests.
4 Prohibit Awards to Executives Against Against ShrHoldr
5 Develop Ethical Criteria for Patent Against Against ShrHoldr
Extension
6 Link Executive Compensation to Social Issues Against Against ShrHoldr
7 Report on Political Contributions Against Against ShrHoldr
8 Report on Operational Impact of HIV/AIDS, Against Against ShrHoldr
TB, and Malaria Pandemic
04/27/04 - A VF CORP. *VFC* 918204108 03/09/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Edward E. Crutchfield ---
Withhold
Votes withheld for failure to implement a majority
approved shareholder proposal to declassify the board, for
the past 2 years.
1.2 Elect Director George Fellows --- Withhold
Votes withheld for failure to implement a majority
approved shareholder proposal to declassify the board, for
the past 2 years. Also, serves on the audit committee and
approved excessive non-audit fees.
1.3 Elect Director Daniel R. Hesse --- Withhold
Votes withheld for failure to implement a majority
approved shareholder proposal to declassify the board, for
the past 2 years.
1.4 Elect Director Clarence Otis, Jr. --- For
2 Amend Omnibus Stock Plan For For Mgmt
3 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
Page 35
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
4 Declassify the Board of Directors Against For ShrHoldr
RCM favors proposals to declassify the board, as we prefer
annual election of directors to discourage entrenchment.
5 Adopt ILO Based Code of Conduct Against Against ShrHoldr
In this case, the company has already adopted a code of
conduct and vendor standards that substantially address
the concerns noted by the proposal. Also, the company
participates in external monitoring processes with
respected third party organizations to assist in
monitoring compliance.
04/27/04 - A WELLS FARGO & COMPANY *WFC* 949746101 03/09/04
1 Elect Directors For Split Mgmt
1.1 Elect Director J.A. Blanchard III --- For
We recommend a vote FOR the directors with the exceptions
of affiliated outsiders Michael W. Wright, Judith M.
Runstad, and Donald B. Rice. We recommend that
shareholders WITHHOLD votes from Judith M. Runstad for
standing as an affiliated outsider on the Audit Committee,
Michael W. Wright and Donald B. Rice for standing as
affiliated outsiders on the Human Resources and Governance
& Nominating committees.
1.2 Elect Director Susan E. Engel --- For
1.3 Elect Director Enrique Hernandez, Jr. ---
For
1.4 Elect Director Robert L. Joss --- For
1.5 Elect Director Reatha Clark King --- For
1.6 Elect Director Richard M. Kovacevich --- For
1.7 Elect Director Richard D. McCormick --- For
1.8 Elect Director Cynthia H. Milligan --- For
1.9 Elect Director Philip J. Quigley --- For
1.10 Elect Director Donald B. Rice --- Withhold
Votes withheld for serving as an affiliated outsider on
the compensation and nominating committees.
1.11 Elect Director Judith M. Runstad ---
Withhold
Votes withheld for serving as an affiliated outsider on
the audit committee.
1.12 Elect Director Stephen W. Sanger --- For
Page 36
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.13 Elect Director Susan G. Swenson --- For
1.14 Elect Director Michael W. Wright ---
Withhold
Votes withheld for serving as an affiliated outsider on
the compensation and nominating committees.
2 Approve Retirement Plan For For Mgmt
This proposal would allow employees receive a reasonable
matching contribution in stock on compensation that would
have not been eligible for a match under the regular
401(k) because of Code limitations or deferrals.
Furthermore, the dilution arising from stock issuance
under this plan is minimal. As such, we recommend a vote
for this benefit plan.
3 Ratify Auditors For For Mgmt
4 Expense Stock Options Against For ShrHoldr
RCM supports shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company's earnings and
profitability to shareholders.
5 Limit Executive Compensation Against Against ShrHoldr
While we do like some of the elements of the restricted
stock proposal, such as granting restricted stock based on
achievement of performance criteria and disclosure of
actual hurdle rates for the performance criteria, we
believe the proposal is restrictive given the fact that
the proponent asks for a complete substitution of options
with restricted stock.
6 Link Executive Compensation to Social Issues Against Against ShrHoldr
In view of the company's controversies regarding predatory
lending practices, we believe that this shareholder
proposal warrants careful consideration, but should be
considered alongside the company's current policies
regarding the issue. Based on the company's disclosure of
policies to address concerns of predatory lending, the
independence of the compensation committee, and the
absence of controversy surrounding current executive
compensation we do not believe that this review and a
subsequent report are necessary at this time.
7 Report on Political Contributions/Activities Against Against ShrHoldr
When reviewing requests for proposals on political
contributions, ISS takes into account the scope and nature
of the request, the company's adherence to laws and
regulations governing political contributions, and company
policies and additional disclosure on such contributions.
In the case of Wells Fargo, we note that the company
complies with federal, state, and local laws regarding
contributions to political candidates or organizations.
Additionally, the company has instituted and published a
policy that does not authorize corporate contributions to
political candidates or related entities. While ISS notes
that the company amended its reply to this proposal based
on information received after the distribution of the
proxy statement showing corporate campaign contributions
from a subsidiary of the company, we believe that the
updated policy for 2004 as stated on the company website
clearly and publicly addresses the issue. Finally, the
extensive scope of the reports requested in this proposal
may not be substantially different from information
currently available and could prove costly and difficult
for the company to publish in a formal report. As such, it
does not appear that preparing and publicizing such
reports in the manner requested by the proponent would be
the most effective use of shareholder funds.
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
04/28/04 - A ANHEUSER-BUSCH COMPANIES, INC. *BUD* 035229103 03/01/04
1 Elect Directors For Split Mgmt
1.1 Elect Director August A. Busch III --- For
1.2 Elect Director Carlos Fernandez G. --- For
Designee of controlling shareholder.
1.3 Elect Director James R. Jones --- Withhold
Also serves on the board of the Grupo Modelo. RCM believes
one board member to represent the controlling shareholder
will more effectively represent the interests of all
shareholders.
1.4 Elect Director Andrew C. Taylor --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.5 Elect Director Douglas A. Warner III ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
2 Ratify Auditors For Against Mgmt
Non-audit fees make up 32% of the total fees paid to the
auditor, which we believe is excessive and may create a
conflict of interest.
Page 38
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
04/28/04 - A CHEVRONTEXACO CORP. *CVX* 166764100 03/01/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Samuel H. Armacost --- For
1.2 Elect Director Robert E. Denham --- For
1.3 Elect Director Robert J. Eaton --- For
1.4 Elect Director Sam Ginn --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.5 Elect Director Carla Anderson Hills --- For
1.6 Elect Director Franklyn G. Jenifer ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.7 Elect Director J. Bennett Johnston --- For
1.8 Elect Director Sam Nunn --- For
1.9 Elect Director David J. O'Reilly --- For
CEO/Chairman
1.10 Elect Director Peter J. Robertson ---
Withhold
We believe that insider directors who serve on the board
with the CEO may not be objective and independent
representatives of shareholder interests and therefore
votes were withheld.
1.11 Elect Director Charles R. Shoemate ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.12 Elect Director Carl Ware --- For
2 Ratify Auditors For Against Mgmt
Non-audit fees are excessive.
3 Adopt Shareholder Rights Plan (Poison Pill) For For Mgmt
Policy
Given that the company currently does not maintain a
poison pill, approval of this item enhances shareholders'
rights by establishing a clear process to submit poison
pills to a shareholder vote.
Page 39
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
4 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 3.87 percent is within the allowable cap for this
company of 5.89 percent. Additionally, this plan expressly
forbids repricing.
5 Report on Operational Impact of HIV/AIDS, Against Against ShrHoldr
TB, and Malaria Pandemic
In this case, we note that Chevron Texaco provides
information on its policies and programs related to
HIV/AIDS and other infectious diseases in its Corporate
Responsibility report on the company website.
Additionally, the company currently has healthcare plans
that improve accessibility to treatment for employees in
Africa. We further note that the company has engaged
several local and international organizations in efforts
to help address the concerns associated with this health
care crisis. These actions and the subsequent disclosure
are comparable to industry norms and assist in maintaining
ongoing corporate awareness of the impact of this
healthcare crisis on operations in certain emerging
markets and therefore we do not support this proposal at
this time.
6 Report on Political Contributions/Activities Against Against ShrHoldr
In the case of Chevron Texaco, we note that the company
follows all state and local laws regarding contributions
to political candidates or organizations. Shareholders can
also request further information on political
contributions and donations from the company or gather the
information from certain government or privately managed
websites. Finally, the extensive scope of the reports
requested in this proposal may not be substantially
different from information currently available and could
prove costly and difficult for the company to publish in a
formal report and therefore this proposal was not
supported.
7 Require Affirmative Vote of a Majority of Against Against ShrHoldr
the Shares to Elect Directors
Given that: (1) the plurality voting threshold is the
accepted standard for the election of directors of
publicly traded companies, (2) approval of this item could
disrupt board operations and the company's financial
performance in the event certain or all of the director
nominees do not receive majority support and do not get
elected, (3) requiring a majority vote of the outstanding
shares in effect provides for a supermajority of votes
cast, which would adversely affect shareholders' ability
to elect directors in a contested election, and (4) the
proposed provision may diminish the likelihood of a
successful open access campaign by providing for an
increased vote requirement in the election of directors,
we do not believe that the proposed amendment warrants
shareholder support at this time.
Page 40
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
8 Report on Health and Environmental Against Against ShrHoldr
Initiatives in Ecuador
In this case, we note that the company has made
significant efforts to provide interested parties with
information on the situation in Ecuador. Also, since
litigation on this matter is still pending, certain
disclosure may not be appropriate. Considering these
factors, we believe that the current level of disclosure
on this matter is appropriate and that any further action
on the matter is best left to the legal system in Ecuador
and therefore this proposal was not supported.
9 Report on Renewable Energy Against Against ShrHoldr
In this case, we note that the company has taken several
recent steps to invest in renewable energy, and has
undertake initiatives to develop cleaner technologies and
communicate these initiatives to the public. The company
provides information on these topics, in some detail, in
its Corporate Responsibility Report, in press releases,
and in certain sections of the corporate website. We
believe that these initiatives and the associated
disclosure represent an effort by the company to address
issues related to the potential impact that renewable
energy sources may have on the company, and therefore we
do not support this proposal at this time.
04/28/04 - A CITY NATIONAL CORP. *CYN* 178566105 03/01/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Russell Goldsmith --- For
We recommend a vote FOR the directors with the exception
of affiliated outsider Ronald L. Olson. We recommend that
shareholders WITHHOLD votes from Ronald L. Olson for poor
attendance.
1.2 Elect Director Michael L. Meyer --- For
1.3 Elect Director Ronald L. Olson --- Withhold
Votes withheld for attending less than 75% of board
meetings without a valid excuse.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
2 Amend Omnibus Stock Plan For Against Mgmt
Annual dilution exceeds RCM guidelines.
3 Amend Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Moreover, preservation of the
full deductibility of all compensation paid reduces the
company's corporate tax obligation.
04/28/04 - A CLEAR CHANNEL COMMUNICATIONS, INC. 184502102 03/08/04
*CCU*
1 Elect Directors For Split Mgmt
1.1 Elect Director Alan D. Feld --- Withhold
Votes withheld for serving as an affiliated outsider on
the compensation committee.
1.2 Elect Director Thomas O. Hicks --- For
1.3 Elect Director Perry J. Lewis --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.4 Elect Director L. Lowry Mays --- For
CEO/Chairman
1.5 Elect Director Mark P. Mays --- Withhold
RCM does not support the election of insider directors who
serve on the board with the CEO as we believe they may not
be objective and independent representatives of
shareholder interests.
1.6 Elect Director Randall T. Mays --- Withhold
RCM does not support the election of insider directors who
serve on the board with the CEO as we believe they may not
be objective and independent representatives of
shareholder interests.
1.7 Elect Director B.J. Mccombs --- Withhold
Votes withheld for serving as an affiliated outsider on
the compensation and nominating committees.
Page 42
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.8 Elect Director Phyllis B. Riggins ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.9 Elect Director Theordore H. Strauss ---
Withhold
Serves on the audit committee and approved excessive
non-audit fees.
1.10 Elect Director J.C. Watts --- For
1.11 Elect Director John H. Williams --- Withhold
Serves on the audit committee and approved excessive
non-audit fees.
2 Ratify Auditors For Against Mgmt
Non-audit fees exceed RCM guidelines.
04/28/04 - A GENERAL ELECTRIC CO. *GE* 369604103 03/01/04
1 Elect Directors For Split Mgmt
1.1 Elect Director James I. Cash, Jr. ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.2 Elect Director Dennis D. Dammerman ---
Withhold
We believe that employee directors who serve on the board
with the CEO may not be objective and independent
representatives of shareholder interests and therefore
votes were withheld.
1.3 Elect Director Ann M. Fudge --- For
1.4 Elect Director Claudio X. Gonzalez ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.5 Elect Director Jeffrey R. Immelt --- For
CEO/Chairman
1.6 Elect Director Andrea Jung --- Withhold
Ms. Jung serves on the compensation committee and has
interlocking directorships at another company with two
other GE board members including the CEO. RCM does not
favor the election of affiliated outsiders who serve on
key board committees and therefore votes were withheld.
Page 43
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.7 Elect Director Alan G. Lafley --- For
1.8 Elect Director Kenneth G. Langone ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.9 Elect Director Ralph S. Larsen --- For
1.10 Elect Director Rochelle B. Lazarus --- For
1.11 Elect Director Sam Nunn --- Withhold
Votes withheld for serving as an affiliated outsider on
the compensation committee. Although Mr. Nunn has recently
retired as partner of a firm that currently provides legal
services to the company, he is not independent by RCM
guidelines. RCM does not favor the election of affiliated
directors who serve on key board committees and therefore
votes were withheld.
1.12 Elect Director Roger S. Penske --- For
1.13 Elect Director Robert J. Swieringa ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.14 Elect Director Douglas A. Warner III ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.15 Elect Director Robert C. Wright --- Withhold
We believe that employee directors who serve on the board
with the CEO may not be objective and independent
representatives of shareholder interests and therefore
votes were withheld.
2 Ratify Auditors For Against Mgmt
Non-audit fees exceed RCM guidelines.
3 Amend Omnibus Stock Plan For For Mgmt
We support the addition of revenue growth rate to the pool
of performance measures applicable to long-term
performance awards. We also applaud the company's decision
to shift a substantial portion of its executive grants to
restricted stock units and performance based awards. Such
practice should reduce dilution and provide effective
incentives for superior performers who remain with the
company during periods of stock market fluctuations in
which stock options may have no realizable value. In
addition, restricted stock units and long-term performance
awards more closely align executives' interests with
investors' long term interests as these awards are paid
out only to executives who remain with the company for
extended periods.
Page 44
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
4 Provide for Cumulative Voting Against Against ShrHoldr
Given the company's record of good corporate governance
policies and practice, we do not support this proposal.
5 Eliminate Animal Testing Against Against ShrHoldr
Elimination of testing may not be feasible or may fail to
meet criteria established by the government, however the
company has developed a policy to live animal testing to
the least extent possible.
6 Report on Nuclear Fuel Storage Risks Against Against ShrHoldr
In this cases we do not believe this report would provide
enough meaningful information to shareholders to justify
the time and assets necessary to prepare this report. In
the absense of evidence that this report would have a
positive economic impact, we believe this matter is best
left to the judgement of management.
7 Report on PCB Clean-up Against For ShrHoldr
RCM generally supports requests for further information
from the company that may impact the long term value of
the company.
8 Report on Foreign Outsourcing Against Against ShrHoldr
ISS generally supports proposals that call for increased
disclosure on matters of importance to shareholders. Such
transparency can assist shareholders in better evaluating
the business risks associated with their investment.
However, the benefits derived from this disclosure must be
weighed against the cost and burden of preparing the
information and the potential impacts that the disclosure
may have on company strategy or operations. When
evaluating proposals to review and report on outsourcing
or off-shoring, ISS looks at the nature and scope of
operations that a company is opting to outsource as well
as potential risks and benefits associated with such a
policy. Additionally, we consider industry norms with
regards to the type and number of positions that are
outsourced. Finally, we consider the degree to which
publishing a detailed report on company outsourcing
policies may provide strategic insight to competitors
while not disclosing substantial, useful information to
shareholders. In this case we note that GE does outsource
some service and technical positions to foreign markets
where the company has determined that cost savings would
ultimately benefit the company and increase shareholder
value. Further we note that several of the company's peers
and competitors have outsourced similar jobs.
Additionally, detailed disclosure on the company's
policies regarding job outsourcing may not provide
benefits to shareholders commensurate with the cost of
preparing this report. As such, we do not recommend
support for the proposal at this time.
Page 45
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
9 Prepare Sustainability Report Against Against ShrHoldr
ISS generally supports proposals that seek additional
disclosure, as shareholders should be provided with
sufficient information in key business areas to fully
assess the risks associated with their investment. When
evaluating resolutions calling for a sustainability
report, ISS reviews the current reporting policies of the
company as they relate to sustainability issues.
Specifically, we examine the existence and substance of an
EHS or similar report, code of corporate conduct, and
diversity or equal opportunity data, or a consolidated
sustainability report based on a widely accepted standard
such as the GRI. In this case, ISS notes that GE currently
has significant discussion of many sustainability issues
on the company website. This disclosure includes an EHS
report, diversity information, the GE Integrity Policy,
and information on community involvement and philanthropic
initiatives. Moreover, the company has committed to
publishing a consolidated report on issues regarding
environmental performance, social initiatives, economic
achievement, and corporate citizenship in 2004. Therefore,
while we will continue to monitor the scope and level of
disclosure at GE, we believe that the company has
substantially addressed many of the issues noted by the
proponent. As such, we do not recommend support for the
proposal at this time.
10 Limit Composition of Management Development Against For ShrHoldr
and Compensation Committee to Independent
Directors
RCM supports the definition of independent directors
provided in this proposal. Futhermore, because one of the
current compensation committee members does not meet our
criteria for independence, we support this proposal.
11 Report on Pay Disparity Against Against ShrHoldr
In the case of this proposal, we note that the proponent
is specifically asking for a comparison of the
compensation of the company's top executives with that of
its lowest compensated workers on a nationwide basis and a
report on any recommendations regarding changing the
current level of executive pay. Though the disparity
between the pay levels of entry-level and executive
employees has undoubtedly grown at many U.S. companies
over the past few decades, we note that it is unlikely
that the requested report would produce a meaningful gauge
for shareholders of whether GE's compensation policies and
pay levels are appropriate and effective for employees at
the senior executive level. While we understand the
proponent's concerns with escalating CEO pay, we note that
GE's compensation committee is composed entirely of
independent directors. Based on our concerns regarding the
utility of the proposed report and the independence of the
company's compensation committee, we do not believe that
preparation of the requested report would yield meaningful
information to shareholders regarding the efficacy of the
company's executive compensation policies and practices.
Page 46
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
12 Limit Awards to Executives Against Against ShrHoldr
In light of the recent measures taken by the company to
make its executive and director equity compensation
practices more shareholder friendly (see Items 3 and 16),
we believe that the proponent's request of a cessation of
all executive stock option programs and bonus programs is
unreasonable.
13 Limit Board Service for Other Companies Against Against ShrHoldr
Setting a 3 board limit does not necessily guarantee the
independence or effectiveness of a director.
14 Separate Chairman and CEO Positions Against Against ShrHoldr
In this case, the company has a lead director who presides
over regularly scheduled non-management meetings.
15 Hire Advisor/Maximize Shareholder Value Against Against ShrHoldr
Given that the company regularly reviews its businesses in
terms of global competitiveness, and makes adjustments
when warranted in order to maximize long-term value for
shareholders, we do not believe it should be required to
engage the service of an investment bank to explore the
sale of the company at this time.
16 Adopt a Retention Ratio for Executives and Against Against ShrHoldr
Directors
Given that the company already has sufficient mechanisms
and policies in place to ensure the alignment of director
and officer interests we do not believe this item warrants
shareholder support.
Page 47
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
17 Require 70% to 80% Independent Board Against For ShrHoldr
RCM supports shareholder proposals requiring the board to
consist of at least a substantial majority of independent
directors.
18 Report on Political Contributions/Activities Against Against ShrHoldr
When reviewing requests for proposals on political
contributions, ISS takes into account the scope and nature
of the request, the company's adherence to laws and
regulations governing political contributions, and company
policies and additional disclosure on such contributions.
In the case of GE, we note that the company complies with
federal, state, and local laws regarding contributions to
political candidates or organizations. Additionally, much
of the information requested by the proponent is available
on both government and privately managed websites.
Therefore, the scope of the disclosure requested in this
proposal may not be substantially different from
information currently available, and may not provide any
significant benefit to shareholders. As such, it does not
appear that preparing and publicizing such reports in the
manner requested by the proponent would be the most
effective use of company assets.
04/28/04 - A NATIONAL COMMERCE FINANCIAL 63545P104 03/01/04
CORPORATION *NCF*
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
04/29/04 - A ALTRIA GROUP, INC. *MO* 02209S103 03/08/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Elizabeth E. Bailey ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.2 Elect Director Mathis Cabiallavetta --- For
1.3 Elect Director Louis C. Camilleri --- For
1.4 Elect Director J. Dudley Fishburn ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
Page 48
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.5 Elect Director Robert E. R. Huntley ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.6 Elect Director Thomas W. Jones --- For
1.7 Elect Director Lucio A. Noto --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
1.8 Elect Director John S. Reed --- For
1.9 Elect Director Carlos Slim Helu --- For
1.10 Elect Director Stephen M. Wolf --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees.
2 Ratify Auditors For Against Mgmt
Non-audit fees are excessive (40.86% of the total fees
paid to the auditor).
3 Report on Product Warnings for Pregnant Against Against ShrHoldr
Women
We believe that the level of disclosure currently provided
by the company is appropriate, and agree that increased
information specifically directed towards pregnant women
would be better addressed by public health agencies.
4 Report on Health Risks Associated with Against Against ShrHoldr
Cigarette Filters
In this case, we agree with the company that public
healthcare organizations are better placed to evaluate the
risks associated with cigarette filters. We also note that
the structure of this proposal calls for the formation of
an independent panel of experts and subsequent report that
could be costly to the company.
5 Political Contributions/Activities Against Against ShrHoldr
In the case of Altria, we note that the company follows
all federal, state and local laws regarding contributions
to political candidates or organizations. Additionally,
the company utilizes a formal review process to ensure
legal compliance, and evaluate the business affects of
their political contributions. Also, the extensive scope
of the reports requested in this proposal may not be
substantially different from information currently
available and could prove costly and difficult for the
company to publish in a formal report, and therefore this
proposal was not supported.
Page 49
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
6 Cease Use of Light and Ultra Light in Against Against ShrHoldr
Cigarette Marketing
In this case, the company provides information addressing
this topic on its website and has supported increased
regulation domestically and internationally on the issue.
We also agree with the company that public health and
regulatory organizations are best able to address these
issues by regulation across the industry as opposed to
requiring that an action taken by a single company,
potentially placing it at a competitive disadvantage.
7 Place Canadian Style Warnings on Cigarette Against Against ShrHoldr
Packaging
We believe that issues regarding increased warnings on the
health risks associated with cigarettes are generally
better addressed by public health agencies rather than
individual companies.
8 Separate Chairman and CEO Positions Against For ShrHoldr
RCM supports shareholder proposals requiring the position
of Chairman to be filled by an independent director,
because a combined title can make it difficult for the
board to remove a CEO that has underperformed, and harder
to challenge a CEO's decisions.
05/04/04 - A BAXTER INTERNATIONAL INC. *BAX* 071813109 03/05/04
1 Elect Directors For Split Mgmt
1.1 Elect Director John D. Forsyth --- For
1.2 Elect Director Gail D. Fosler --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
1.3 Elect Director Carole J. Uhrich --- For
2 Ratify Auditors For Against Mgmt
Non-audit fees make up 30% of the total fees paid to the
auditor which we believe creates a conflict of interest.
3 Provide for Cumulative Voting Against Against ShrHoldr
In this case, the board is a supermajority independent,
key committees are entirely independent, and the corporate
governance score is 81% compared to companies in the index.
Page 50
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
05/04/04 - A GANNETT CO., INC. *GCI* 364730101 03/05/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's
plans of 6.42 percent is within the allowable cap for this
company of 7.28 percent. Additionally, this plan expressly
forbids repricing.
4 Limit Executive Compensation Against Against ShrHoldr
The Compensation Committee is composed of majority
independent directors and currently sets and reviews the
company's executive compensation program. We believe that
the Compensation Committee should have the flexibility to
determine an executive's pay based on a number of factors,
rather then have an arbitrary cap to determine executive
compensation. Although we agree with the proponent that
the restricted share program should utilize justifiable
performance criteria, the proposed caps on restricted
stock grants, severance payments, salary and bonus, would
be unduly restrictive. Thus, we do not support this
proposal.
05/05/04 - A AMERADA HESS CORP. *AHC* 023551104 03/15/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Nicholas F. Brady ---
Withhold
We recommend a vote FOR the directors with the exception
of independent outsider Nicholas F. Brady. We recommend
that shareholders WITHHOLD votes from Nicholas F. Brady
for poor attendance.
1.2 Elect Director J. Barclay Collins II --- For
1.3 Elect Director Thomas H. Kean --- For
1.4 Elect Director Frank A. Olson --- For
2 Ratify Auditors For For Mgmt
3 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 5.31 percent is within the allowable cap for this
company of 7.43 percent. Additionally, this plan expressly
forbids repricing.
Page 51
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
4 Establish Other Board Committee Against For ShrHoldr
We agree with the proponent on the importance of
establishing clear mechanisms for communication between
shareholders and independent directors. While the company
complies with existing SEC and NYSE rules on this matter,
it appears that the corporate secretary, who is an
employee of the company, plays an important role in
conveying such communication either internally or to the
board. The proposed Office of the Board would ensure a
direct communication with the independent directors of the
board, without involving the corporate secretary.
Furthermore, in the absence of an independent
chairman in the case of Amerada Hess, the presiding
director does not facilitate communication with
shareholders as part of his lead director role. Also, the
company has a classified board, which insulates directors
from shareholder communications because shareholders are
not able to register aggregate support or dissatisfaction
with all directors on an annual basis. We recommend in
favor of the proposal.
05/05/04 - A GENERAL DYNAMICS CORP. *GD* 369550108 03/12/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Nicholas D. Chabraja --- For
1.2 Elect Director James S. Crown --- Withhold
Mr. Crown serves on the Company's Audit, Compensation and
Nominating Committees and is an executive of Henry Crown &
Co., a diversified investment firm, along with two other
GD board members, one who also serves on the Company's
Compensation Committee. A subsidiary of GD also maintains
a lease agreement with a subsidiary of Henry Crown.
Dresdner RCM does not favor the election of affiliated
directors who serve on key board committees and therefore
votes were withheld.
1.3 Elect Director Lester Crown --- For
1.4 Elect Director William P. Fricks --- For
1.5 Elect Director Charles H. Goodman ---
Withhold
Mr. Goodman serves on the Company's Compensation Committee
and is an executive of Henry Crown & Co., a diversified
investment firm, along with two other GD board members. A
subsidiary of GD also maintains a lease agreement with a
subsidiary of Henry Crown. Dresdner RCM does not favor the
election of affiliated directors who serve on key board
committees and therefore votes were withheld.
Page 52
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.6 Elect Director Jay L. Johnson --- For
1.7 Elect Director George A. Joulwan --- For
1.8 Elect Director Paul G. Kaminski --- Withhold
Mr. Kaminski serves on the Company's Nominating Committee
and provided consulting services to the Company in the
past year. Dresdner RCM does not favor the election of
affiliated directors who serve on key board committees and
therefore votes were withheld.
1.9 Elect Director John M. Keane --- For
1.10 Elect Director Lester L. Lyles --- For
1.11 Elect Director Carl E. Mundy, Jr. --- For
1.12 Elect Director Robert Walmsley --- For
2 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 4.95 percent is within the allowable cap for this
company of 7.91 percent. Additionally, this plan expressly
forbids repricing.
3 Submit Shareholder Rights Plan (Poison Against For ShrHoldr
Pill) to Shareholder Vote
Because poison pills greatly alter the balance of power
between shareholders and management, shareholders should
be allowed to make their own evaluation of such plans.
4 Report on Foreign Military Sales Against Against ShrHoldr
In view of the facts that the company already complies
with government controls and disclosure requirements for
its foreign military sales, that some additional,
appropriate information on foreign sales is already
publicly available, and that disclosure of sensitive and
confidential information could put the company at a
competitive disadvantage in the contract bidding process,
we do not believe that this proposal is in the best
economic interests of shareholders.
05/05/04 - A PEPSICO, INC. *PEP* 713448108 03/12/04
1 Elect Directors For Split Mgmt
1.1 Elect Director John F. Akers --- For
Page 53
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.2 Elect Director Robert E. Allen --- For
1.3 Elect Director Ray L. Hunt --- For
1.4 Elect Director Arthur C. Martinez --- For
1.5 Elect Director Indra K. Nooyi --- Withhold
RCM generally believes that employees serving on the board
with the CEO may not be objective and independent
representatives of shareholder interests and therefore
votes were withheld.
1.6 Elect Director Franklin D. Raines --- For
1.7 Elect Director Steven S. Reinemund --- For
CEO
1.8 Elect Director Sharon Percy Rockefeller ---
For
1.9 Elect Director James J. Schiro --- For
1.10 Elect Director Franklin A. Thomas --- For
1.11 Elect Director Cynthia M. Trudell --- For
1.12 Elect Director Solomon D. Trujillo --- For
1.13 Elect Director Daniel Vasella --- For
2 Ratify Auditors For For Mgmt
3 Approve Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before cash awards
are paid to participants. Moreover, preservation of the
full deductibility of all compensation paid reduces the
company's corporate tax obligation.
4 Report on Political Contributions/Activities Against Against ShrHoldr
In this case, the company notes that its contributions to
political entities and the related disclosure comply with
all applicable laws on this topic. The proposal asks that
this report should be published within five business days
of the annual meeting, and that reports disclosing the
recipient and amount of each political contribution be
made in a series of local and national newspapers. While
we believe that increased disclosure is generally
beneficial, it does not appear that the cost of preparing
and publicizing such reports in the manner requested by
the proponent would be the most effective use of
shareholder funds.
Page 54
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
5 Report on Operational Impact of HIV/AIDS, Against Against ShrHoldr
TB, and Malaria Pandemic
In this case, the company has taken certain actions to
help address the affects of the healthcare crisis in
emerging markets. These actions represent an
acknowledgement of the effect that the HIV/AIDS, TB, and
malaria pandemic could have on company strategy and
operations. Also, the company already provides some
information related to this topic on their website. In the
absence of compelling evidence that this proposal would
have a positive economic effect we believe this matter is
best left to the judgement of management.
05/07/04 - A RYDER SYSTEM, INC. *R* 783549108 03/12/04
1 Elect Directors For For Mgmt
1.1 Elect Director John M. Berra --- For
We recommend a vote FOR the directors.
1.2 Elect Director David I. Fuente --- For
1.3 Elect Director Eugene A. Renna --- For
1.4 Elect Director Abbie J. Smith --- For
1.5 Elect Director Christine A. Varney --- For
2 Ratify Auditors For For Mgmt
05/11/04 - A 3M CO *MMM* 88579Y101 03/12/04
1 Elect Directors For For Mgmt
1.1 Elect Director Edward A. Brennan --- For
Research provided by ISS indicated that a majority
approved shareholder proposal to submit future poison
pills to a shareholder vote was implemented by the
company, although the policy amendment contains a
fiduciary out provision. The SEC, however, issued a "no
action" letter, as they determined that the company has
substantially implemented the proposal. This issue was
discussed with the company, and given our analyst's
continued confidence in management, we believe these
directors have demonstrated a commitment to creating
shareholder value.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.2 Elect Director Michael L. Eskew --- For
1.3 Elect Director W. James McNerney, Jr. ---
For
1.4 Elect Director Kevin W. Sharer --- For
2 Ratify Auditors For For Mgmt
3 Increase Authorized Common Stock For For Mgmt
The requested increase of 1,500,000,000 shares, is below
the allowable threshold of 2,025,000,000 shares. We
recommend a vote FOR Item 3.
4 Separate Chairman and CEO Positions Against For ShrHoldr
RCM supports shareholder proposals requiring the position
of Chairman to be filled by an independent director,
because a combined title can make it difficult for the
board to remove a CEO that has underperformed, and harder
to challenge a CEO's decisions. Also, in this case, the
company's outside directors do not hold
regularly-scheduled non-management meetings with a
powerful and independent Lead Director and therefore we
favor separation of titles.
05/12/04 - A DIRECT GENERAL CORP. *DRCT* 25456W204 03/29/04
1 Elect Directors For For Mgmt
1.1 Elect Director William C. Adair, Jr. --- For
We recommend a vote FOR the director.
05/13/04 - A AMGEN, INC. *AMGN* 031162100 03/19/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Frank J. Biondi, Jr. ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
1.2 Elect Director Jerry D. Choate --- Withhold
Votes withheld for serving as an affiliated outsider on
the audit and compensation committees. Votes also withheld
for serving on the audit committee and approving excessive
non-audit fees paid to the auditor.
1.3 Elect Director Frank C. Herringer --- For
1.4 Elect Director Gilbert S. Omenn --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
Page 56
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
2 Ratify Auditors For Against Mgmt
Non-audit fees make up 38.55% of the total fees paid to
the auditor. RCM generally believes that auditor
independence is compromised when fees for non-audit
services exceed 20%, and therefore do not support the
ratification of auditors.
3 Prepare Glass Ceiling Report Against Against ShrHoldr
4 Expense Stock Options Against For ShrHoldr
RCM supports shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company's earnings and
profitability to shareholders.
05/13/04 - A JANUS CAPITAL GROUP INC. *JNS* 47102X105 03/18/04
1 Elect Directors For For Mgmt
1.1 Elect Director G. Andrew Cox --- For
We recommend a vote FOR the directors.
1.2 Elect Director James P. Craig, III --- For
1.3 Elect Director Deborah R. Gatzek --- For
2 Ratify Auditors For For Mgmt
05/13/04 - A NORFOLK SOUTHERN CORP. *NSC* 655844108 03/05/04
1 Elect Directors For For Mgmt
1.1 Elect Director Alston D. Correll --- For
We recommend a vote FOR the directors.
1.2 Elect Director Landon Hilliard --- For
1.3 Elect Director Burton M. Joyce --- For
1.4 Elect Director Jane Margaret O'Brien --- For
2 Ratify Auditors For For Mgmt
05/13/04 - A PIONEER NATURAL RESOURCES CO. *PXD* 723787107 03/17/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
05/18/04 - A GUIDANT CORP. *GDT* 401698105 03/11/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Maurice A. Cox, Jr. ---
Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
1.2 Elect Director Nancy-Ann Min DeParle --- For
1.3 Elect Director Ronald W. Dollens --- For
1.4 Elect Director Enrique C. Falla --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
1.5 Elect Director Kristina M. Johnson, Ph.D.
--- For
2 Ratify Auditors For Against Mgmt
RCM generally believes that auditor independence is
compromised when fees for non-audit services exceed 20%,
and therefore do not support the ratification of auditors.
3 Expense Stock Options Against For ShrHoldr
RCM supports shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company s earnings and
profitability to shareholders.
05/18/04 - A NORTHROP GRUMMAN CORP. *NOC* 666807102 03/22/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Lewis W. Coleman --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
1.2 Elect Director J. Michael Cook --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
1.3 Elect Director Philip A. Odeen --- For
1.4 Elect Director Aulana L. Peters --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.5 Elect Director Kevin W. Sharer --- For
2 Ratify Auditors For Against Mgmt
RCM generally believes that auditor independence is
compromised when fees for non-audit services exceed 20%,
and therefore do not support the ratification of auditors.
3 Develop Ethical Criteria for Military Against Against ShrHoldr
Contracts
In the absence of compelling evidence that this proposal
will have a positive economic impact, RCM believes that
this matters are best left to the judgment of management.
4 Declassify the Board of Directors Against For ShrHoldr
RCM supports proposals to declassify the board, as we
prefer annual election of directors to discourage
entrenchment.
05/18/04 - A PRIDE INTERNATIONAL, INC. *PDE* 74153Q102 03/22/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Robert L. Barbanell --- For
We recommend a vote FOR the directors with the exception
of affiliated outsider Ralph D. McBride. We recommend that
shareholders WITHHOLD votes from Ralph D. McBride for
standing as an affiliated outsider on the Compensation and
Nominating committees.
1.2 Elect Director Paul A. Bragg --- For
1.3 Elect Director David A.B. Brown --- For
1.4 Elect Director J.C. Burton --- For
1.5 Elect Director Jorge E. Estrada --- For
1.6 Elect Director William E. Macaulay --- For
1.7 Elect Director Ralph D. Mcbride --- Withhold
1.8 Elect Director David B. Robson --- For
2 Approve Non-Employee Director Stock Option For For Mgmt
Plan
V. Vote Recommendation The total cost of the company's
plans of 5.98 percent is within the allowable cap for this
company of 11.03 percent. In 2003, the company granted
over 25 percent of its total grants to the company's top
five executive officers.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
3 Ratify Auditors For For Mgmt
05/19/04 - A INTEL CORP. *INTC* 458140100 03/22/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Craig R. Barrett --- For
CEO
1.2 Elect Director Charlene Barshefsky --- For
1.3 Elect Director E. John P. Browne --- For
1.4 Elect Director Andrew S. Grove --- For
1.5 Elect Director D. James Guzy --- For
1.6 Elect Director Reed E. Hundt --- For
1.7 Elect Director Paul S. Otellini --- Withhold
RCM generally does not support the election of employee
directors who serve on the board along with the CEO, as
they may not be objective and independent representatives
of shareholder interests.
1.8 Elect Director David S. Pottruck --- For
1.9 Elect Director Jane E. Shaw --- For
1.10 Elect Director John L. Thornton --- For
1.11 Elect Director David B. Yoffie --- For
2 Ratify Auditors For For Mgmt
3 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's
plans of 7.39 percent is within the allowable cap for this
company of 12.68 percent. Additionally, this plan
expressly forbids repricing.
4 Expense Stock Options Against For ShrHoldr
RCM supports shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company's earnings and
profitability to shareholders.
5 Limit/Prohibit Awards to Executives Against For ShrHoldr
RCM favors stock compensation in the form of
performance-based restricted stock over fixed price option
plans. In this case, the company currently does not use
performance-vesting awards in its compensation plans for
senior executives. Although the proponent in its
supporting statement is critical of fixed-price options,
it does not appear that the proposal advocates replacement
of options with performance-based restricted stock. The
proposal requests the the company use performance-vesting
stock in development of future equity awards for senior
executives.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
6 Performance- Based/Indexed Options Against For ShrHoldr
RCM generally supports proposals requesting that at least
a significant portion of the company's awards are
performance-based. Preferably, performance measures should
include long term growth metrics.
05/19/04 - A JUNIPER NETWORKS, INC. *JNPR* 48203R104 03/22/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Pradeep Sindhu --- For
We recommend a vote FOR the directors with the exception
of Kenneth Levy. We recommend that shareholders WITHHOLD
votes from Kenneth Levy for poor attendance.
1.2 Elect Director Robert M. Calderoni ---
Withhold
Votes withheld for serving on the audit committee and
approving an excessive amount of non-audit fees paid to
the auditor.
1.3 Elect Director Kenneth Levy --- Withhold
Votes withheld from this compensation and nominating
committee member for attending less than 75% of board
meetings without a valid excuse.
2 Ratify Auditors For Against Mgmt
Non-audit fees make up 38% of the total fees paid to the
auditor. RCM generally believes that auditor independence
is compromised when fees for non-audit services exceed
20%, and therefore do not support the ratification of
auditors.
05/19/04 - A MERCURY INTERACTIVE CORP. *MERQ* 589405109 03/22/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Amnon Landan --- For
1.2 Elect Director Igal Kohavi --- Withhold
Mr. Kohavi serves on the audit and nominating committees
and has an interlocking directorship with a member of the
audit and compensation committees. RCM does not support
the election of affiliated directors who serve on key
board committees and therefore votes were withheld.
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.3 Elect Director Clyde Ostler --- For
1.4 Elect Director Yair Shamir --- Withhold
Mr. Shamir serves on the audit and compensation committees
and has an interlocking directorship with a member of the
audit and nominating committees. RCM does not support the
election of affiliated directors who serve on key board
committees and therefore votes were withheld.
1.5 Elect Director Giora Yaron --- For
1.6 Elect Director Anthony Zingale --- For
2 Increase Authorized Common Stock For For Mgmt
We support this increase, as the company has indicated
specific plans to split the stock.
3 Ratify Auditors For For Mgmt
05/19/04 - A SOUTHWEST AIRLINES CO. *LUV* 844741108 03/23/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Herbert D. Kelleher ---
Withhold
We recommend a vote FOR the directors with the exceptions
of C. Webb Crockett, June M. Morris and Herbert D.
Kelleher. We recommend that shareholders WITHHOLD votes
from June M. Morris for standing as an affiliated outsider
on the Audit, Compensation and Nominating committees and
for failure to establish a majority independent board, C.
Webb Crockett for standing as affiliated outsider on the
Compensation and Nominating committees and for failure to
establish a majority independent board, and Herbert D.
Kelleher for failure to establish a majority independent
board.
1.2 Elect Director Rollin W. King --- For
1.3 Elect Director June M. Morris --- Withhold
1.4 Elect Director C. Webb Crockett --- Withhold
1.5 Elect Director William P. Hobby --- For
1.6 Elect Director Travis C. Johnson --- For
2 Ratify Auditors For For Mgmt
05/19/04 - A TARGET CORPORATION *TGT* 87612E106 03/22/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
3 Amend Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's
plans of 4.85 percent is within the allowable cap for this
company of 7.19 percent. Additionally, this plan expressly
forbids repricing.
05/20/04 - A CDW CORP. *CDWC* 12512N105 04/01/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Approve Non-Employee Director Omnibus Stock For Against Mgmt
Plan
Annual dilution and the total cost of the company's plans
exceeds RCM guidelines.
05/20/04 - A MEDIMMUNE, INC. *MEDI* 584699102 03/31/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Wayne T. Hockmeyer --- For
1.2 Elect Director David M. Mott --- For
1.3 Elect Director David Baltimore --- For
1.4 Elect Director M. James Barrett --- For
1.5 Elect Director Melvin D. Booth --- Withhold
RCM generally does not support the election of employee
directors who serve on the board along with the CEO, as
they may not be objective and independent representatives
of shareholder interests.
1.6 Elect Director James H. Cavanaugh --- For
1.7 Elect Director Barbara Hackman Franklin ---
For
1.8 Elect Director Gordon S. Macklin --- For
1.9 Elect Director Elizabeth H. S. Wyatt --- For
2 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation The total cost of the company's
plans of 9.92 percent is within the allowable cap for this
company of 10.39 percent. Additionally, this plan
expressly forbids repricing. Equity grants of stock
options to top five named executive officers is 27.41
percent of the total shares awarded in the current year.
More than one quarter of the total shares granted in the
current year were made to top five executives.
3 Ratify Auditors For For Mgmt
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
05/21/04 - A TIME WARNER INC *TWX* 887317105 03/23/04
1 Elect Directors For Split Mgmt
1.1 Elect Director James L. Barksdale ---
Withhold
Votes withheld from insiders and affiliated outsiders,
with the exception of the CEO and Chairman, as the board
is only 54% independent.
1.2 Elect Director Stephen F. Bollenbach --- For
1.3 Elect Director Stephen M. Case --- Withhold
Votes withheld from insiders and affiliated outsiders,
with the exception of the CEO and Chairman, as the board
is only 54% independent.
1.4 Elect Director Frank J. Caufield --- For
1.5 Elect Director Robert C. Clark --- For
1.6 Elect Director Miles R. Gilburne ---
Withhold
Votes withheld from insiders and affiliated outsiders,
with the exception of the CEO and Chairman, as the board
is only 54% independent.
1.7 Elect Director Carla A. Hills --- For
1.8 Elect Director Reuben Mark --- For
1.9 Elect Director Michael A. Miles --- For
1.10 Elect Director Kenneth J. Novack ---
Withhold
Votes withheld from insiders and affiliated outsiders,
with the exception of the CEO and Chairman, as the board
is only 54% independent.
1.11 Elect Director Richard D. Parsons --- For
1.12 Elect Director R. E. Turner --- Withhold
Votes withheld from insiders and affiliated outsiders,
with the exception of the CEO and Chairman, as the board
is only 54% independent.
1.13 Elect Director Francis T. Vincent, Jr. ---
For
2 Ratify Auditors For For Mgmt
3 Adopt China Principles Against Against ShrHoldr
In the case of Time Warner, we note that the company is
not involved in labor controversies with its workers in
China, but the Internet industry in general has faced
criticism from opponents over the issue of promoting
freedom of expression while operating under restrictive
Chinese laws. While it appears the company does not have a
publicly available code of conduct referencing certain
human and labor rights issues, we are concerned that some
of the aspects of the China Principles may be beyond the
company's control, such as prohibiting police or military
presence at the company's operations, or preventing the
government from using company technology to commit human
rights violations. Thus, adopting and fully implementing
the China Principles could prove both costly and
difficult. As such, while ISS strongly encourages Timer
Warner to evaluate its policies and compliance standards
for labor and human rights in China and around the world,
we do not believe that the implementation of the China
Principles would be in the best interests of the company.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
4 Report on Pay Disparity Against Against ShrHoldr
Based on our concerns regarding the scope of the proposal
and the independence of the company's compensation
committee, we do not believe that preparation of the
requested report would yield meaningful information to
shareholders regarding the efficacy of the company's
executive compensation policies and practices.
05/21/04 - A YAHOO!, INC. *YHOO* 984332106 03/25/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Terry S. Semel --- For
1.2 Elect Director Jerry Yang --- For
1.3 Elect Director Roy J. Bostock --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor and
auditors.
1.4 Elect Director Ronald W. Burkle --- For
1.5 Elect Director Eric Hippeau --- For
1.6 Elect Director Arthur H. Kern --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor and
auditors.
1.7 Elect Director Robert A. Kotick --- For
1.8 Elect Director Edward R. Kozel --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor and
auditors.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.9 Elect Director Gary L. Wilson --- Withhold
Votes withheld for serving on the audit committee and
approving excessive non-audit fees paid to the auditor and
auditors.
2 Amend Employee Stock Purchase Plan For For Mgmt
The plan complies with Section 423 of the Internal Revenue
Code, the number of shares being added is relatively
conservative, the offering period is reasonable, and there
are limitations on participation.
3 Ratify Auditors For Against Mgmt
Non-audit fees make up 29.23% of the total fees paid to
the auditor. RCM generally believes that auditor
independence is compromised when fees for non-audit
services exceed 20%.
4 Expense Stock Options Against For ShrHoldr
RCM supports shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company s earnings and
profitability to shareholders.
05/25/04 - A OMNICOM GROUP INC. *OMC* 681919106 04/09/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Approve Non-Employee Director Stock Option For For Mgmt
Plan
V. Vote Recommendation. The total cost of the company's
plans of 5.20 percent is within the allowable cap for this
company of 12.56 percent.
05/26/04 - A BANK OF AMERICA CORP. *BAC* 060505104 04/07/04
1 Elect Directors For For Mgmt
1.1 Elect Director William Barnet, III --- For
We recommend a vote FOR the directors.
1.2 Elect Director Charles W. Coker --- For
1.3 Elect Director John T. Collins --- For
1.4 Elect Director Gary L. Countryman --- For
1.5 Elect Director Paul Fulton --- For
1.6 Elect Director Charles K. Gifford --- For
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.7 Elect Director Donald E. Guinn --- For
1.8 Elect Director James H. Hance, Jr. --- For
1.9 Elect Director Kenneth D. Lewis --- For
1.10 Elect Director Walter E. Massey --- For
1.11 Elect Director Thomas J. May --- For
1.12 Elect Director C. Steven McMillan --- For
1.13 Elect Director Eugene M. McQuade --- For
1.14 Elect Director Patricia E. Mitchell --- For
1.15 Elect Director Edward L. Romero --- For
1.16 Elect Director Thomas M. Ryan --- For
1.17 Elect Director O. Temple Sloan, Jr. --- For
1.18 Elect Director Meredith R. Spangler --- For
1.19 Elect Director Jackie M. Ward --- For
2 Ratify Auditors For For Mgmt
3 Change Date of Annual Meeting Against Against ShrHoldr
Changing the date of the annual meeting could allow more
shareholders to attend, but there is no way to determine
for sure whether attendance would actually increase. There
is no compelling reason to change the date of the meeting.
4 Adopt Nomination Procedures for the Board Against Against ShrHoldr
5 Charitable Contributions Against Against ShrHoldr
ISS generally believes that charitable contributions are
beneficial to the company when they are donated in good
faith and in the absence of gross negligence or
self-dealing of management. These contributions assist in
worthwhile causes and can help generate goodwill within
the community. The Bank of America engages and donates to
causes that management believes strengthen the communities
in which the company operates and ultimately benefit the
company. Further, the corporate donations and voluntary
employee contributions through the Bank of America
Foundation help to improve the company's image as a good
social citizen and assist the company in maintaining a
strong CRA score. Therefore, lacking evidence to the
contrary, we believe that continuing these charitable
contributions is in the best interests of the shareholders.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
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6 Establish Independent Committee to Review Against Against ShrHoldr
Mutual Fund Policy
In its defense, the board points to its recent efforts to
ensure the integrity of its mutual fund operations, under
the board's oversight, and in particular that of its
independent audit committee. According to the board, the
provisions of the settlements with the New York Attorney
General and the SEC and the pledges that the corporation
has previously made go well beyond the scope of the
proposal. The company argues that it has retained
various outside experts to assist it in developing a plan
to improve mutual fund governance, organizational
structure and technology as follows: -The company
engaged Dale Frey, the retired president and chairman of
General Electric Investment Corp., as a special advisor to
lead an independent review of the company's mutual fund
policies and practices. -The company also retained
Maureen Scannell Bateman, the former general counsel of
State Street Corporation and U.S. Trust, to conduct a
complete legal and regulatory compliance review of the
company's mutual fund business. -The company
engaged Promontory Financial Group to coordinate a
detailed review of all technology, control, and compliance
systems related to the mutual fund business, including all
systems relating to sales, clearing, and derivative and
brokerage operations. The independent review is
expected to result in recommendations to ensure the mutual
fund business is conducted in the best interest of fund
shareholders. As part of the settlements, the company
indicates that it has committed to create best-in-class
governance policies for the Nations Funds board, including
such criteria as independence and tenure, and to hire a
full-time senior officer supporting and reporting
exclusively to the board to monitor compliance and to
oversee the reasonableness of the mutual fund advisory
fees. Furthermore, the settlements will contain additional
provisions regarding the implementation of enhanced
compliance measures for the company's mutual fund
practices. Background Since the
initiation of the mutual fund investigation by the NYAG in
Sept. 2003, the company has been cooperating with the
authorities and is expected to finalize its settlement
with the SEC and NYAG. On March 15, 2004, Bank of America
announced agreements in principle with both the NYAG and
the SEC over matters related to late-day trading and
market timing. According to a SEC press release, Bank of
America has agreed to pay a total of $375 million,
consisting of $250 million in disgorgement and $125
million in penalties. The money will be distributed to the
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Jul 01, 2003 - Jun 30, 2004
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mutual funds and their shareholders that were harmed as a
result of market timing in Nations Funds and other mutual
funds through Bank of America. The agreement with the
Attorney General also stipulated that eight members of the
board of directors of Nations Funds, Bank of America's
mutual fund complex, will resign or otherwise leave the
board in the course of the next year. Furthermore, Bank of
America has represented that it will exit the securities
clearing business by the end of the year. ISS
Analysis The shareholder proposal calls for direct
board involvement by establishing a special committee and
for enhanced disclosure on the company's efforts regarding
the mutual fund allegations. We have evaluated the board's
involvement in this process as well as the existing
disclosure. Since the shareholder proposal was
filed, the company has devoted significant resources to
address the allegations regarding its mutual fund
practices. Subsequent to the inquiry in September 2003,
Nations Funds' board hired an independent firm to evaluate
whether there was any monetary impact to any funds in
which the adviser to the fund permitted a discretionary
market-timing agreement and launched an evaluation of fund
management practices. Furthermore, in October 2003, the
company engaged Promontory Financial Group for a detailed
review of all systems related to sales, clearing,
derivative and brokerage operations, which will be
coordinated by Mr. Dale Frey, special advisor to Ken
Lewis. Also, the company retained Maureen Scannell
Bateman, the former general counsel of State Street
Corporation and of U.S Trust, to conduct a complete legal
and regulatory compliance review of the company's mutual
fund business. Bank of America has also taken the
following steps to deter future improper
practice: Worked with Nations Fund board
of trustees to set best-in-class standards for mutual
funds' fees, charges and related corporate governance
practices. Enhanced audit reviews, compliance
oversight and the overall risk management
framework. Enhanced technology and operations
process controls and increased monitoring for unusual
mutual funds trading activity Revised the Code of
Ethics to include guidelines for practices in the mutual
fund business and for share trading policy to prohibit
late trading and market timing In discussions held
with ISS, the company indicated that Mr. Frey (who
coordinates the independent review) receives weekly
updates from Promontory Financial Group and the
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- -------------------------------------------------------------------------------------------------------------------------------
independent consultant, and periodically updates the CEO.
Members of senior management regularly update the board's
Audit Committee, which deals primarily with control
issues. The independent consultants work closely with an
internal project team, which already implements certain
remediation actions. While the company has devoted
substantial resources to this process, it is not directly
conducted under the supervision of the board. With
respect to disclosure, the company is in the process of
finalizing the settlement agreement, therefore significant
disclosure is expected once the settlement is final. In
addition, in connection with the settlement, a formal
report of the outside consultant with findings and
remediation actions will be submitted to the SEC and
banking regulators. But while the settlements
represent a substantial step, it is of utmost importance
that structural changes are made to Bank of America to
ensure that such malfeasance doesn't reoccur. This is
particularly true in light of the merger with Fleet Boston
and a likely reorganization of the Nations and Columbia
fund complexes. Bank of America has therefore in
large part conformed with the AFL-CIO requests. With the
restructuring, Nations Fund Trustees should provide the
necessary oversight of mutual fund activities. That said,
additional and regular disclosure to shareholders would
provide some transparency that was sorely lacking prior to
the outbreak of the mutual fund scandal. In view
of the company's efforts and the disclosure expected with
the final settlement agreement, we do not support this
proposal at this time.
7 Adopt Standards Regarding Privacy and Against Against ShrHoldr
Information Security
In this case we note that Bank of America does outsource
certain positions to foreign markets where the company has
determined that service quality, timing, or cost savings
would ultimately benefit the company and increase
shareholder value. Further we note that many other large
companies have outsourced similar operations support and
customer service jobs. Additionally, detailed disclosure
on the company's policies regarding job outsourcing may
not provide benefits to shareholders commensurate with the
cost of preparing this report. As such, we do not
recommend support for the proposal at this time.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
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05/26/04 - A EXXON MOBIL CORP. *XOM* 30231G102 04/05/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Michael J. Boskin --- For
We recommend a vote FOR the directors.
1.2 Elect Director James R. Houghton --- For
1.3 Elect Director William R. Howell --- For
1.4 Elect Director Reatha Clark King --- For
1.5 Elect Director Philip E. Lippincott --- For
1.6 Elect Director Harry J. Longwell ---
Withhold
RCM generally does not support the election of employee
directors who serve on the board along with the CEO, as
they may not be objective and independent representatives
of shareholder interests.
1.7 Elect Director Henry A. McKinnell, Jr. ---
For
1.8 Elect Director Marilyn Carlson Nelson ---
For
1.9 Elect Director Lee R. Raymond --- For
1.10 Elect Director Walter V. Shipley --- For
1.11 Elect Director Rex W. Tillerson --- Withhold
RCM generally does not support the election of employee
directors who serve on the board along with the CEO, as
they may not be objective and independent representatives
of shareholder interests.
2 Ratify Auditors For For Mgmt
3 Approve Non-Employee Director Restricted For For Mgmt
Stock Plan
V. Vote Recommendation The total cost of the company's
plans of 3.64 percent is within the allowable cap for this
company of 5.32 percent.
4 Affirm Political Nonpartisanship Against Against ShrHoldr
Since it appears that the company has already addressed
this issue through its own internal policies and
observance of federal law, we do not believe that support
of this proposal is necessary.
5 Report on Political Contributions/Activities Against Against ShrHoldr
When reviewing requests for proposals on political
contributions, ISS takes into account the scope and nature
of the request, the company's adherence to laws and
regulations governing political contributions, and company
policies and additional disclosure on such contributions.
As previously noted, in the case of Exxon Mobil, the
company complies with federal, state and local laws
regarding contributions to political candidates or
organizations as well as those laws that apply to similar
contributions in Canada. Further, the scope of the reports
requested in this proposal may not be substantially
different from information currently available through
public sources. As such, it does not appear that preparing
and publicizing such reports in the manner requested by
the proponent would be the most effective use of
shareholder funds.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
6 Report on Equatorial Guinea Against Against ShrHoldr
In this case, the proposal asks for detailed disclosure on
Exxon Mobil's operations in Equatorial Guinea as well as a
public response to allegations made by a nationally aired
television program. While ISS advocates transparency into
company operations that increases shareholder
understanding of the risks and opportunities placed on the
company, the benefit of such disclosures must be
considered as a factor of cost and burden on the company
as well as the potential benefit that can be derived by
shareholders from the information. Exxon Mobil discusses
information in some detail in press releases, corporate
reports, and other sections of the company's website. The
discussion of this topic includes information explaining
the royalties and tax payments that are made to Equatorial
Guinea, financial support for social programs in that
company, and the general logic behind the structure of the
company's Production Sharing Contract with the government.
While these disclosures do not directly respond to each
aspect of the proposal, we do believe that they
substantially address the issue at hand, providing
shareholders with adequate information to assess the risks
related to the company's operations in Equatorial Guinea
and the company's policies and procedures in place to
mitigate such risks. As such we do not recommend
shareholder support for this resolution.
7 Separate Chairman and CEO Positions Against For ShrHoldr
RCM generally supports shareholder proposals requiring the
position of Chairman to be filled by an independent
director, because a combined title can make it difficult
for the board to remove a CEO that has underperformed, and
harder to challenge a CEO's decisions.
8 Prohibit Awards to Executives Against Against ShrHoldr
For its long term compensation, ExxonMobil switched from
options to restricted stock two years ago, as the board
believes restricted stock to be more effective in
retaining employees and in meeting shareholder
expectations. For senior executives, the restricted stock
carries rigorous vesting requirements: 50 percent vesting
over five years and the remaining over another five. In
this case, the proposal requests a total ban on rights,
options, SARs and severance payments and is therefore
unduly restrictive.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
9 Report on Stock Option Distribution by Race Against Against ShrHoldr
and Gender
Given the scope of the proposal, the company's current
compensation practices, and the company's apparent
commitment to and disclosure of racial and gender
diversity, we do not believe that shareholder support of
the requested report is warranted.
10 Amend EEO Statement to Include Reference to Against For ShrHoldr
Sexual Orientation
ISS generally believes that companies should have policies
in place to prevent workplace discrimination, as instances
of discrimination can be costly to companies in the form
of high turnover, fines, and litigation. Workplace
discrimination can result in real costs to corporations,
and therefore can impact shareholder value. Studies have
indicated that workforce diversity strategies can have a
positive impact on company performance through enhanced
corporate performance, reduced turnover, increased job
satisfaction and employee morale, decreased vulnerability
to legal challenges, and enhanced reputation. In light of
potential costs and legal implications arising from
discrimination, the high number of companies with policies
referencing sexual orientation, and the low costs involved
in amending EEO policies, ISS believes that requests to
amend EEO policies to specifically reference sexual
orientation are generally supportable, unless a company
can demonstrate that the change would result in
significant costs to the company. In this case, we note
that the company has had substantial controversy
surrounding its adoption of its current EEO policy over
the policies of its predecessor, Mobil. Exxon Mobil does
have existing programs and policies that demonstrate the
company's stance on discrimination on the basis of sexual
orientation, but those policies have failed to alleviate
the negative publicity and controversy surrounding this
issue. Furthermore, the company has not identified any
resulting costs to the company of including such a
reference in its EEO policy. A significant number of the
company's peers do include such language in their EEO
statements. By not referencing sexual orientation in the
post-merger company's EEO statement, it appears that the
company has created unnecessary controversy. While we
recognize that the company has gone to great lengths to
discuss its existing prohibition on discrimination on the
basis of sexual orientation in certain company
publications, it would appear that the enduring
controversy could be easily resolved by adding that
language back into its EEO statement. Given the fact that
company's competitors reference sexual orientation
discrimination in their EEO statements and the fact that
Mobil did explicitly bar this type of discrimination in
its EEO statement prior to the merger with Exxon, we
believe that the company should amend its EEO to
explicitly prohibit discrimination based on sexual
orientation.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
11 Report on Climate Change Research Against Against ShrHoldr
Therefore, based on the broad scope of the proposal and
the associated practical considerations of publishing this
information, recent improvements in disclosure made by the
company, and our concerns regarding the value that the
requested information would provide to shareholders, we do
not recommend support for this resolution.
05/26/04 - A SOURCECORP, INC. *SRCP* 836167106 04/13/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Thomas C. Walker --- Withhold
We recommend a vote FOR the directors with the exceptions
of affiliated outsiders G. Michael Bellenghi and David
Lowenstein, and insiders Ed H. Bowman, Jr. and Thomas C.
Walker. We recommend that shareholders WITHHOLD votes from
G. Michael Bellenghi for standing as an affiliated
outsider on the Audit and Nominating committees and for
failure to establish a majority independent board. We also
recommend that shareholders WITHHOLD votes from David
Lowenstein, Ed H. Bowman, Jr. and Thomas C. Walker for
failure to establish a majority independent board.
1.2 Elect Director Ed H. Bowman, Jr. ---
Withhold
1.3 Elect Director David Lowenstein --- Withhold
1.4 Elect Director G. Michael Bellenghi ---
Withhold
1.5 Elect Director Michael J. Bradley --- For
1.6 Elect Director Donald F. Moorehead, Jr. ---
For
1.7 Elect Director Edward M. Rowell --- For
05/27/04 - A HOME DEPOT, INC. (THE) *HD* 437076102 03/29/04
1 Elect Directors For For Mgmt
1.1 Elect Director Gregory D. Brenneman --- For
ISS Conclusion: We recommend a vote FOR the
directors with the exception of independent outsider
Claudio X. Gonzalez. We recommend that shareholders
WITHHOLD votes from Claudio X. Gonzalez for sitting on
more than six boards.
1.2 Elect Director Richard H. Brown --- For
1.3 Elect Director John L. Clendenin --- For
1.4 Elect Director Berry R. Cox --- For
1.5 Elect Director Claudio X. Gonzalez --- For
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.6 Elect Director Milledge A. Hart, III --- For
1.7 Elect Director Bonnie G. Hill --- For
1.8 Elect Director Kenneth G. Langone --- For
1.9 Elect Director Robert L. Nardelli --- For
1.10 Elect Director Roger S. Penske --- For
2 Ratify Auditors For For Mgmt
3 Establish Term Limits for Directors Against Against ShrHoldr
ISS Conclusion: Because a six-year term limit is
arbitrary, and because the company's shareholders can
express their dissatisfaction with directors on an annual
basis, we believe that the proposal does not warrant
shareholder support.
4 Submit Shareholder Rights Plan (Poison Against For ShrHoldr
Pill) to Shareholder Vote
ISS Conclusion: Because the company does not have a
policy that puts any future pill to a shareholder vote, we
recommend that shareholders support this proposal.
5 Performance- Based/Indexed Options Against For ShrHoldr
ISS Conclusion: Because ISS supports pay for
performance, and because the grants of restricted stock
(other than those granted under the LTIP) are not based on
specific performance hurdles, we believe the proposal
warrants shareholder support.
6 Adopt ILO Based Code of Conduct Against Against ShrHoldr
ISS Conclusion: Given that the company already has
a policy in place that addresses some of the principles
outlined in the ILO principles and uses independent firms
for monitoring factories, we do not believe that support
of this proposal is warranted at this time.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
7 Submit Severance Agreement Against For ShrHoldr
(Change-in-Control) to Shareholder Vote
ISS Conclusion: We support the shareholder proposal
as it relates to ex post facto ratification of golden
parachutes and severance plans, and therefore recommend
that shareholders vote to approve this proposal.
8 Require Affirmative Vote of the Majority of Against Against ShrHoldr
the Shares to Elect Directors
ISS Conclusion: Given that: (i) the plurality
voting threshold is the currently accepted standard for
the election of directors of publicly traded companies,
(ii) approval of this item could disrupt board operations
and the company's financial performance in the event some
or all of the director nominees do not receive majority
support and do not get elected, (iii) requiring a majority
vote of the outstanding shares in effect provides for a
supermajority of votes cast, which would adversely affect
shareholders' ability to elect directors in a contested
election, and (iv) the proposed provision may diminish the
likelihood of a successful open access campaign by
providing for an increased vote requirement in the
election of directors, we do not at this point in time
believe the proposed amendment warrants shareholder
support.
05/28/04 - A LOWE *LOW* 548661107 04/01/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Leonard L. Berry --- For
We recommend a vote FOR the directors with the exception
of Dawn E. Hudson. We recommend that shareholders WITHHOLD
votes from Dawn E. Hudson for poor attendance.
1.2 Elect Director Paul Fulton --- Withhold
1.3 Elect Director Dawn E. Hudson --- Withhold
1.4 Elect Director Marshall O. Larsen --- For
1.5 Elect Director Robert A. Niblock --- For
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.6 Elect Director Stephen F. Page --- For
1.7 Elect Director O. Temple Sloan, Jr. ---
Withhold
1.8 Elect Director Robert L. Tillman --- For
2 Ratify Auditors For For Mgmt
06/02/04 - A GENERAL MOTORS CORP. *GM* 370442105 04/05/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Prohibit Awards to Executives Against Against ShrHoldr
4 Prohibit Awards to Executives Against Against ShrHoldr
ISS Analysis ISS supports the use of
performance-based pay and believes there should be strong
linkage between compensation and performance at the senior
executive level. However, ISS believes that issuers should
have some flexibility in determining the mix of award
types that would best align executives incentives with
those of shareholders. Deleting all rights, options, SAR's
and severance payments to top management after expiration
of existing plans or commitments can unduly restrict the
flexibility of the Compensation Committee from designing
executive compensation. Therefore, ISS recommends a vote
AGAINST this proposal.
5 Separate Chairman and CEO Positions Against Against ShrHoldr
We believe that the company's governance structure
provides a satisfactory balance to a unified chairman and
CEO position and therefore recommend a vote against this
proposal.
6 Limit Composition of Committees to Against Against ShrHoldr
Independent Directors
7 Report on Greenhouse Gas Emissions Against Against ShrHoldr
As the company's current reporting addresses emissions
information, including company efforts to incorporate
advanced emissions reducing technology into the company's
fleet of vehicles in order to improve overall fuel
economy, we do not believe that the preparation of an
additional report is warranted at this time.
8 Submit Severance Agreement Against For ShrHoldr
(Change-in-Control) to Shareholder Vote
ISS Analysis ISS generally supports the submission
of parachute provisions for shareholder ratification as
long as there is no requirement for prior shareholder
approval which would limit a board's negotiating
flexibility. Seeking shareholder approval after the
material terms of the contract are agreed upon would give
the board a framework to work within and prevent the
excessive "pay for failure" packages that have been
witnessed at some companies. Furthermore, we believe that
a company's parachute provisions should be reasonable and
not excessive. To be effective without creating distorted
incentives with respect to management, severance
arrangements must be considerably less attractive than
continued employment with the company. We recommend a vote
in favor of this proposal.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
9 Establish Executive and Director Stock Against Against ShrHoldr
Ownership Guidelines
In this case, while the company has executive stock
ownership requirements of 1x to 5x salary, the actual
stock ownership of the CEO and some of the other executive
officers exceeds 7x salary. The company has also updated
its stock ownership guidelines for directors since the
filing of 2004 proxy statement from 3x to 5x annual
retainer for directors. Therefore, ISS belives that the
company substantially meets what would be considered
appropriate stock ownership requirements for aligning the
interests of executives and directors with those of
shareholders. We recommend a vote AGAINST this proposal.
06/02/04 - A/S INTERTAPE POLYMER GROUP INC. *ITP.* 460919103 04/26/04
1 Elect Directors For For Mgmt
2 Approve Auditors and Authorize Board to Fix For For Mgmt
Remuneration of Auditors
3 Amend Executive Stock Option Plan For For Mgmt
Vote Recommendation The total cost of the company's
plans of 3.48 percent is within the allowable cap for this
company of 12.9 percent. Additionally, this plan includes
a limit on non-employee director participation and
expressly forbids repricing.
06/04/04 - A WAL-MART STORES, INC. *WMT* 931142103 04/05/04
1 Elect Directors For Split Mgmt
1.1 Elect Director James W. Breyer --- For
We recommend a vote FOR the directors.
1.2 Elect Director M. Michele Burns --- Withhold
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
1.3 Elect Director Thomas M. Coughlin --- For
1.4 Elect Director David D. Glass --- Withhold
1.5 Elect Director Roland A. Hernandez ---
Withhold
1.6 Elect Director Dawn G. Lepore --- For
1.7 Elect Director John D. Opie --- For
1.8 Elect Director J. Paul Reason --- Withhold
1.9 Elect Director H. Lee Scott, Jr. --- For
1.10 Elect Director Jack C. Shewmaker ---
Withhold
1.11 Elect Director Jose H. Villarreal --- For
1.12 Elect Director John T. Walton --- Withhold
1.13 Elect Director S. Robson Walton --- For
1.14 Elect Director Christopher J. Williams ---
For
2 Approve Stock Option Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 2.98 percent is within the allowable cap for this
company of 5.69 percent.
3 Approve Stock Option Plan For For Mgmt
Sharesave plans enable employees to become shareholders,
which gives them a stake in the company's growth. However,
such plans are beneficial only when they are well balanced
and in the best interests of all shareholders. ISS
approves of this plan because the number of shares being
allowed under the plan is reasonable and the plan is broad
based.
4 Amend Employee Stock Purchase Plan For For Mgmt
ISS approves of this item because: (1) the number of
shares being added is relatively conservative, (2) the
company's matching contribution is reasonable, and (3)
there is no voting power dilution associated with the plan.
5 Ratify Auditors For Against Mgmt
6 Separate Chairman and CEO Positions Against For ShrHoldr
Absent an offsetting governance structure, we believe that
a company of this size should be able to find a qualified
independent director willing to serve as chairman.
7 Prepare Sustainability Report Against For ShrHoldr
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
8 Report on Stock Option Distribution by Race Against Against ShrHoldr
and Gender
9 Report on Genetically Modified Organisms Against Against ShrHoldr
(GMO)
10 Prepare Diversity Report Against For ShrHoldr
As employment diversity issues can impact corporate
reputation, we believe that such information should be
made available to shareholders of the company.
11 Submit Executive Compensation to Vote Against For ShrHoldr
We acknowledge the tax benefits arising from deferring
executive compensation. However, paying above-market
interest rates on deferred compensation is not "best
practice" and results in an additional expense to
shareholders. According to an Executive Benefits Survey
(2003 Results) published by Clark Consulting, only seven
percent of the 227 participating companies provided a
bonus rate above their base earnings rate. In addition,
the increment formula for long term participating in the
plan is unique and quite generous. We believe shareholders
may benefit from having the opportunity to make their own
evaluation of the deferred compensation packages,
especially when such plans contain unique features beyond
best practice.
06/08/04 - A DEVON ENERGY CORP. *DVN* 25179M103 04/09/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Require a Majority Vote for the Election of Against Against ShrHoldr
Directors
In the view of many shareholders, the current director
election system simply creates self-perpetuating boards.
Incumbent members select nominees to fill vacancies and
decide whether to renominate themselves. Thus,
shareholders effectively have no meaningful choice among
candidates, and the election process becomes a mere
ratification of the company's slate of nominees.
Withholding votes from a board member can serve as a
shareholder communication tool to express displeasure with
a given director. But because directors are typically
elected by a plurality (those nominees receiving the most
votes win board seats), company nominees running unopposed
are reelected. Under current proxy rules, only candidates
nominated by the board can appear in the company's proxy
statement. A shareholder could technically nominate a
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
candidate from the floor of the annual meeting, but, since
most investors vote by mail, floor nominations are
unlikely to succeed. Although some companies' bylaws
outline procedures for shareholders to suggest possible
candidates to board nominating panels, few of these
individuals actually make it to the ballots as nominees.
Instead, shareholders wishing to nominate an alternative
slate of candidates to run against management's must go
through an expensive and time-consuming proxy solicitation
process of their own (i.e., a proxy contest). In October
2003, the SEC proposed new proxy rules to give
significant, long-term shareholders greater ability to
include director nominees in management's proxy statement.
A final rule is expected in 2004. The proposal entails a
two-step, two-year process. In the first year, one of two
triggering events must occur, each of which demonstrates
shareholder dissatisfaction with a company's proxy
process: (i) one or more directors at a company must
receive withhold votes totaling 35 percent or more of the
votes cast, or (ii) a shareholder proposal asking for open
access, which is submitted by the holders of at least one
percent of the shares (and owned for at least one year),
must be approved by a majority of the votes cast. If one
of these two conditions is met, then for the following two
years, the company would be required to include in its
proxy materials one or more board nominees proposed by
holders of at least five percent of the company's shares
(and owned for at least two years). In addition, the
number of shareholder nominees permitted would be dictated
by the size of the board as follows: one nominee for
boards of eight or fewer directors, two nominees for
boards of nine to 19 directors, and three nominees for
boards having 20 or more directors. ISS supports the
general principle that shareholders should have choice in
director elections and input in the nomination process
greater than they currently have under the plurality
system. We believe that requiring directors to receive a
majority of votes cast in an uncontested election has some
merit as it promotes the accountability of directors and
makes a shareholder vote on director elections a more
powerful signal. However, this proposal lacks clarity on
the threshold requirement -- the resolution refers to
majority of shares "entitled to vote" while the supporting
statement refers both to "shares entitled to be voted" and
"majority of votes cast." Requiring nominees to obtain the
majority of outstanding votes is a much more difficult
hurdle, one which we are not at this time ready to
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
endorse. The main concern in implementing a majority
threshold requirement is that an annual board could be in
effect be "decapitated" by a failure to obtain majority
shareholder support. In the case of companies which have
classified boards, the concerns regarding a "decapitated"
board is mitigated. With staggered boards, only a minority
portion of the board is up for election each year, and
therefore only such minority portion may be adversely
affected by the failure of that year's nominees to obtain
majority shareholder support. Irrespective of the
structure of the company's board, this proposal fails to
address the implementation mechanism in the event that
directors fail to garner the required majority vote. In
such a case, actual removal of affected directors may not
be feasible or desirable, and alternative measures may be
available to indicate displeasure with the board (e.g.,
increased disclosure requirements for "unratified" board
members). Given that: (i) the plurality voting threshold
is the currently accepted standard for the election of
directors of publicly-traded companies, (ii) approval of
this item could disrupt board operations and the company's
financial performance in the event some or all of the
director nominees do not receive majority support and do
not get elected, (iii) requiring a majority vote of the
outstanding shares in effect provides for a supermajority
of votes cast, which would adversely affect shareholders'
ability to elect directors in a contested election, and
(iv) the proposed provision may diminish the likelihood of
a successful open access campaign by providing for an
increased vote requirement in the election of directors,
we do not at this point in time believe the proposed
amendment warrants shareholder support.
06/08/04 - A UNION PLANTERS CORP. 908068109 04/21/04
1 Approve Merger Agreement For For Mgmt
Conclusion: Based on the fair market value compared to
recent historic trading levels, the fairness opinion, and
the potential strategic synergies, we believe the merger
agreement warrants shareholder support.
2 Elect Directors For For Mgmt
3 Ratify Auditors For For Mgmt
4 Adjourn Meeting For Against Mgmt
Conclusion In this case, shareholders already have enough
information to make their vote decisions. Once their votes
have been cast, there is no justification for spending
more money to continue pressing shareholders for more
votes.
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* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
5 Limit Executive Compensation Against Against ShrHoldr
Conclusion ISS policy is to recommend voting against
proposals that seek to set absolute levels on compensation
or otherwise dictate the amount or form of compensation.
06/15/04 - A CIRCUIT CITY STORES, INC. *CC* 172737108 04/21/04
1 Elect Directors For For Mgmt
1.1 Elect Director E.V. Goings --- For
We recommend a vote FOR the directors.
1.2 Elect Director James F. Hardymon --- For
1.3 Elect Director Allen B. King --- For
1.4 Elect Director J. Patrick Spainhour --- For
1.5 Elect Director Carolyn Y. Woo --- For
2 Amend Employee Stock Purchase Plan For For Mgmt
ISS approves of this item because the number of shares
being added is relatively conservative, the offering
period is reasonable, and there are limitations on
participation.
3 Amend Non-Employee Director Omnibus Stock For For Mgmt
Plan
V. Vote Recommendation. The total cost of the company's plan
of 8.27 percent is within the allowable cap for this company
of 11.03 percent.
4 Ratify Auditors For For Mgmt
06/15/04 - A COMVERSE TECHNOLOGY, INC. *CMVT* 205862402 04/27/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Kobi Alexander --- For
1.2 Elect Director Raz Alon --- For
1.3 Elect Director Itsik Danziger --- Withhold
1.4 Elect Director John H. Friedman --- For
1.5 Elect Director Ron Hiram --- Withhold
1.6 Elect Director Sam Oolie --- For
1.7 Elect Director William F. Sorin --- For
2 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 8.09 percent is within the allowable cap for this
company of 10.60 percent. Additionally, this plan expressly
forbids repricing.
Page 83
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
3 Ratify Auditors For For Mgmt
06/16/04 - A AEROPOSTALE, INC *ARO* 007865108 04/29/04
1 Classify the Board of Directors For Against Mgmt
The ability to elect directors is the single most
important use of the shareholder franchise, and all
directors should be accountable on an annual basis. A
classified board can entrench management and effectively
preclude most takeover bids or proxy contests. Board
classification forces dissidents and would-be acquirers to
negotiate with the incumbent board, which has the
authority to decide on offers without a shareholder vote.
2 Elect Directors For For Mgmt
2.1 Elect Director Julian R. Geiger --- For
We recommend a vote FOR the directors.
2.2 Elect Director John S. Mills --- For
2.3 Elect Director Bodil Arlander --- For
2.4 Elect Director Ronald L. Beegle --- For
2.5 Elect Director Mary Elizabeth Burton --- For
2.6 Elect Director Robert B. Chavez --- For
2.7 Elect Director David Edwab --- For
2.8 Elect Director John D. Howard --- For
2.9 Elect Director David B. Vermylen --- For
3 Approve Executive Incentive Bonus Plan For For Mgmt
The performance measures included under the plan are
appropriate for the company given its line of business,
long-term strategic objectives, and industry-specific
measures for assessing market competitiveness.
Additionally, the plan is administered by a committee of
independent outsiders who must certify attainment of these
objective, measurable performance goals before bonus
awards are paid to participants. Moreover, preservation of
the full deductibility of all compensation paid reduces
the company's corporate tax obligation.
Page 84
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
06/16/04 - A MONSTER WORLDWIDE, INC. *MNST* 611742107 04/26/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Andrew J. Mckelvey --- For
1.2 Elect Director George R. Eisele --- Withhold
1.3 Elect Director John Gaulding --- For
1.4 Elect Director Ronald J. Kramer --- For
1.5 Elect Director Michael Kaufman --- For
1.6 Elect Director John Swann --- For
1.7 Elect Director David A. Stein --- For
2 Amend Omnibus Stock Plan For For Mgmt
This proposal does not seek to authorize an increase in
the number of shares available for issuance under the
plan. Instead it seeks shareholder reapproval for the
material terms of the performance goals of the company. We
recommend a vote FOR the proposal.
06/23/04 - A SIEBEL SYSTEMS, INC. *SEBL* 826170102 04/29/04
1 Elect Directors For For Mgmt
1.1 Elect Director C. Scott Hartz --- For
1.2 Elect Director Charles R. Schwab --- For
1.3 Elect Director George T. Shaheen --- For
1.4 Elect Director John W. White --- For
2 Ratify Auditors For For Mgmt
3 Expense Stock Options Abstain For ShrHoldr
RCM supports shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company s earnings and
profitability to shareholders.
06/24/04 - A BEST BUY CO., INC. *BBY* 086516101 04/26/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Approve Omnibus Stock Plan For For Mgmt
V. Vote Recommendation. The total cost of the company's
plans of 7.52 percent is within the allowable cap for this
company of 7.82 percent. Additionally, this plan expressly
forbids repricing.
Page 85
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUNDS' HIGHLANDS GROWTH FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- -------------------------------------------------------------------------------------------------------------------------------
06/24/04 - A EBAY INC. *EBAY* 278642103 04/26/04
1 Elect Directors For For Mgmt
1.1 Elect Director Philippe Bourguignon --- For
We recommend a vote FOR the directors.
1.2 Elect Director Thomas J. Tierney --- For
1.3 Elect Director Margaret C. Whitman --- For
2 Amend Omnibus Stock Plan For Against Mgmt
This proposal to satisfy requirements of 162(m) could not
be supported, as no awards are subject to performance
criteria, according to research provided by ISS.
3 Amend Stock Option Plan For Against Mgmt
The total cost of the company's plans exceeds RCM
guidelines.
4 Increase Authorized Common Stock For Against Mgmt
This share increase could not be supported, as the stated
purpose indicated that the additional shares may be used
to oppose a hostile takeover attempt or delay or prevent
changes in control or management.
5 Ratify Auditors For For Mgmt
6 Expense Stock Options Against For ShrHoldr
RCM favors shareholder proposals requesting companies to
disclose the cost of stock options as an expense on their
income statement, to clarify the company's earnings and
profitability to shareholders.
06/28/04 - A SINA CORP. (FORMERLY SINA.COM) *SINA* G81477104 05/21/04
MEETING FOR HOLDERS OF ADRS
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
Page 86
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Mgmt Rec - Company Management Recommended Vote
* - Exception Vote
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUND'S TOTAL RETURN UTILITIES FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- --------------------------------------------------------------------------------------------------------------------------------
02/19/04 - A NATIONAL FUEL GAS CO. *NFG* 636180101 12/22/03
1 Elect Directors For Withhold Mgmt
2 Ratify Auditors For Against Mgmt
SHAREHOLDER PROPOSAL
3 Limit Awards to Executives Against Against ShrHoldr
02/27/04 - A PEOPLES ENERGY CORP. *PGL* 711030106 12/31/03
1 Elect Directors For For Mgmt
2 Approve Omnibus Stock Plan For For Mgmt
04/14/04 - A EQUITABLE RESOURCES, INC. *EQT* 294549100 02/17/04
1 Elect Directors For For Mgmt
2 Amend Omnibus Stock Plan For For Mgmt
3 Ratify Auditors For For Mgmt
04/15/04 - A NICOR INC. *GAS* 654086107 02/17/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Robert M. Beavers, Jr. ---
For
1.2 Elect Director Bruce P. Bickner --- For
1.3 Elect Director John H. Birdsall, III ---
Withhold
1.4 Elect Director Thomas A. Donahoe --- For
1.5 Elect Director Thomas L. Fisher --- For
1.6 Elect Director John E. Jones --- For
1.7 Elect Director Dennis J. Keller --- For
1.8 Elect Director William A. Osborn --- For
1.9 Elect Director John Rau --- For
1.10 Elect Director John F. Riordan --- For
1.11 Elect Director Russ M. Strobel --- For
1.12 Elect Director Patricia A. Wier --- For
2 Ratify Auditors For For Mgmt
3 Submit Shareholder Rights Plan (Poison Against For ShrHoldr
Pill) to Shareholder Vote
04/16/04 - A UNION PACIFIC CORP. *UNP* 907818108 02/06/04
1 Elect Directors For For Mgmt
2 Approve Omnibus Stock Plan For For Mgmt
3 Ratify Auditors For For Mgmt
4 Limit Executive Compensation Against For ShrHoldr
5 Report on Political Contributions/Activities Against For ShrHoldr
Page 1
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Mgmt Rec - Company Management Recommended Vote
- --------------------------------------------------------------------------------
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUND'S TOTAL RETURN UTILITIES FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- --------------------------------------------------------------------------------------------------------------------------------
04/21/04 - A BURLINGTON RESOURCES INC. *BR* 122014103 02/23/04
1 Elect Directors For Withhold Mgmt
2 Approve Increase in Common Stock and a For For Mgmt
Stock Split
3 Ratify Auditors For For Mgmt
04/22/04 - A ALLTEL CORP. *AT* 020039103 02/24/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Ammend EEO - Sexual Orientation Against For ShrHoldr
04/27/04 - A MDU RESOURCES GROUP, INC. *MDU* 552690109 02/27/04
1 Elect Directors For For Mgmt
2 Amend Non-Employee Director Omnibus Stock For Against Mgmt
Plan
04/28/04 - A AGL RESOURCES INC. *ATG* 001204106 02/20/04
1 Elect Directors For For Mgmt
04/28/04 - A VECTREN CORP. *VVC* 92240G101 03/05/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Expense Stock Options Against For ShrHoldr
04/28/04 - A VERIZON COMMUNICATIONS *VZ* 92343V104 03/01/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Restore or Provide for Cumulative Voting Against For ShrHoldr
4 Require Majority of Independent Directors Against For ShrHoldr
on Board
5 Separate Chairman and CEO Positions Against For ShrHoldr
6 Submit Shareholder Rights Plan (Poison Against Against ShrHoldr
Pill) to Shareholder Vote
7 Submit Executive Compensation to Vote Against For ShrHoldr
8 Prohibit Awards to Executives Against Abstain ShrHoldr
9 Report on Stock Option Distribution by Race Against For ShrHoldr
and Gender
10 Report on Political Contributions/Activities Against For ShrHoldr
11 Cease Charitable Contributions Against Against ShrHoldr
Page 2
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Mgmt Rec - Company Management Recommended Vote
- --------------------------------------------------------------------------------
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUND'S TOTAL RETURN UTILITIES FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- --------------------------------------------------------------------------------------------------------------------------------
05/04/04 - A CINERGY CORP. *CIN* 172474108 03/05/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
05/04/04 - A EOG RESOURCES, INC. *EOG* 26875P101 03/08/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Amend Omnibus Stock Plan For For Mgmt
4 Other Business For Against Mgmt
05/06/04 - A ANADARKO PETROLEUM CORP. *APC* 032511107 03/08/04
1 Elect Directors For Withhold Mgmt
2 Approve Executive Incentive Bonus Plan For For Mgmt
3 Ratify Auditors For For Mgmt
4 Report on Greenhouse Gas Emissions Against For ShrHoldr
05/06/04 - A CENTURYTEL, INC. *CTL* 156700106 03/08/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
05/11/04 - A NISOURCE INC. *NI* 65473P105 03/16/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
05/17/04 - A CONSOLIDATED EDISON, INC. *ED* 209115104 03/29/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Approve Employee Stock Purchase Plan For For Mgmt
4 Increase Disclosure of Executive Against Against ShrHoldr
Compensation
05/18/04 - A QUESTAR CORP. *STR* 748356102 03/22/04
1 Elect Directors For Split Mgmt
1.1 Elect Director Teresa Beck --- For
1.2 Elect Director R.D. Cash --- For
1.3 Elect Director Robert E. McKee III ---
Withhold
1.4 Elect Director Gary G. Michael --- For
1.5 Elect Director Charles B. Stanley --- For
2 Approve Executive Incentive Bonus Plan For For Mgmt
Page 3
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Mgmt Rec - Company Management Recommended Vote
- --------------------------------------------------------------------------------
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUND'S TOTAL RETURN UTILITIES FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- --------------------------------------------------------------------------------------------------------------------------------
05/20/04 - A AQUA AMERICA, INC. *WTR* 03836W103 03/29/04
1 Elect Directors For For Mgmt
2 Increase Authorized Common Stock For Against Mgmt
3 Approve Omnibus Stock Plan For For Mgmt
05/20/04 - A IDACORP, INC. *IDA* 451107106 04/01/04
1 Elect Directors For Withhold Mgmt
2 Ratify Auditors For For Mgmt
3 Report on Charitable Contributions Against Against ShrHoldr
05/20/04 - A KEYSPAN CORPORATION *KSE* 49337W100 03/22/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Submit Shareholder Rights Plan (Poison Against For ShrHoldr
Pill) to Shareholder Vote
05/20/04 - A ONEOK, INC. *OKE* 682680103 03/25/04
1 Elect Directors For Split Mgmt
1.1 Elect Director William M. Bell --- For
1.2 Elect Director Julie H. Edwards --- For
1.3 Elect Director Pattye L. Moore --- For
1.4 Elect Director J.D. Scott --- Withhold
1.5 Elect Director James C. Day --- For
2 Ratify Auditors For For Mgmt
05/21/04 - A PEPCO HOLDINGS, INC. *POM* 713291102 03/22/04
1 Elect Directors For For Mgmt
2 Declassify the Board of Directors Against For ShrHoldr
06/04/04 - A CHESAPEAKE ENERGY CORP. *CHK* 165167107 04/08/04
1 Elect Directors For Withhold Mgmt
2 Increase Authorized Common Stock For For Mgmt
3 Increase Authorized Preferred Stock For For Mgmt
06/08/04 - A DEVON ENERGY CORP. *DVN* 25179M103 04/09/04
1 Elect Directors For For Mgmt
2 Ratify Auditors For For Mgmt
3 Require a Majority Vote for the Election of Against Against ShrHoldr
Directors
Page 4
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Mgmt Rec - Company Management Recommended Vote
- --------------------------------------------------------------------------------
VOTE SUMMARY REPORT
Jul 01, 2003 - Jun 30, 2004
THE FLEX-FUND'S TOTAL RETURN UTILITIES FUND
Mtg Company/ Mgmt Vote Record
Date/Type Ballot Issues Security Rec Cast Date Prpnent
- --------------------------------------------------------------------------------------------------------------------------------
06/18/04 - A ENERGY EAST CORPORATION *EAS* 29266M109 04/22/04
1 Elect Directors For For Mgmt
2 Declassify the Board of Directors For For Mgmt
3 Eliminate Cumulative Voting For For Mgmt
4 Approve Employee Stock Purchase Plan For For Mgmt
5 Ratify Auditors For For Mgmt
Page 5
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Mgmt Rec - Company Management Recommended Vote
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