Oppenheimer Capital LLC
Proxy Voting Policy and Procedures
General Policy
Rule 206(4)-6 under the Investment Advisers Act of 1940 requires an
investment adviser that exercises voting authority over client proxies to adopt
and implement policies and procedures that are reasonably designed to ensure
that the investment adviser votes client and fund securities in the best
interests of clients and fund investors and addresses how conflicts of interest
are handled. Oppenheimer Capital LLC (the "Company") typically votes proxies as
part of its discretionary authority to manage accounts, unless the client has
explicitly reserved the authority for itself. When voting proxies, the Company's
primary objective is to make voting decisions solely in the best economic
interests of its clients. The Company will act in a manner which is intended to
enhance the economic value of the underlying portfolio securities held in its
clients' accounts.
This policy sets forth the general standards for proxy voting whereby the
Company has authority to vote its clients' proxies with respect to portfolio
securities held in the accounts of its clients for whom it provides
discretionary investment management services. Under the rule, an investment
adviser can have implicit or explicit proxy voting authority, and an adviser
must vote proxies even if the advisory contract is silent on this question where
its authority is implied by the overall delegation of discretionary authority.
In some situations, the client may prefer to retain proxy voting authority or
direct proxy voting authority to a third party. The Company is only relieved of
the duty to vote proxies in such cases when the client investment advisory
agreement or another operative document clearly reserves or assigns proxy voting
authority to the client or to a third party.
I. Proxy Voting Guidelines
A. Proxy Guidelines. The Company has adopted written Proxy Voting
Guidelines (the "Proxy Guidelines") that are reasonably designed to ensure that
the firm is voting in the best interest of its clients and fund investors (See
Appendix No. 1). The Proxy Guidelines reflect the Company's general voting
positions on specific corporate governance issues and corporate actions. The
Proxy Guidelines address routine as well as significant matters commonly
encountered. However, because the Proxy Guidelines cannot anticipate all
situations and the surrounding facts of each proxy issue (including, without
limitation, foreign laws and practices that may apply to a proxy), some proxy
issues may require a case-by-case analysis (whether or not required by the Proxy
Guidelines) prior to voting and may result in a vote being cast that will
deviate from the Proxy Guidelines. In such cases, the proxy voting procedures
established by the Proxy Committee for such situations (and described below)
will be followed.
B. Client Instructions to Vote in a Particular Manner. Upon receipt of a
client's written request, the Company may also vote proxies for that client's
account in a particular manner that may differ from the Proxy Guidelines. The
Company shall not vote shares held in one client's account in a manner designed
to benefit or accommodate any other client.
C. Cost-Benefit Analysis Involving Voting Proxies. The Company may review
additional criteria associated with voting proxies and evaluate the expected
benefit to its clients when making an overall determination on how or whether to
vote a proxy. Given the outcome of the cost-benefit analysis, the Company may
refrain from voting a proxy on behalf of its clients' accounts.
In addition, the Company may refrain from voting a proxy on behalf of its
clients' accounts due to de-minimis holdings, immaterial impact on the
portfolio, items relating to foreign issues (such as those described below),
timing issues related to the opening/closing of accounts and contractual
arrangements with clients and/or their authorized delegate. For example, the
Company may refrain from voting a proxy of a foreign issue due to logistical
considerations that may have a detrimental effect on the Company's ability to
vote the proxy. These issues may include, but are not limited to: (i) proxy
statements and ballots being written in a foreign language, (ii) untimely notice
of a shareholder meeting, (iii) requirements to vote proxies in person, (iv)
restrictions on foreigner's ability to exercise votes, (v) restrictions on the
sale of securities for a period of time in proximity to the shareholder meeting,
or (vi) requirements to provide local agents with power of attorney to
facilitate the voting instructions. Such proxies are voted on a best-efforts
basis.
D. Share Blocking and Shares Out on Loan. The Company will generally
refrain from voting proxies on foreign securities that are subject to share
blocking restrictions. In addition, proxies will typically not be voted when
shares are out on loan through client securities lending programs with their
custodians.
E. Case-by-Case Proxy Determinations. With respect to a proxy ballot that
requires a case-by-case voting determination where the Company has not
instructed the Proxy Provider (as defined below) how to vote the proxy prior to
the proxy voting deadline, the Company has directed the Proxy Provider to vote
with management of the issuer.
II. Outsourcing the Proxy Voting Process
The Company has retained an independent third party service provider (the
"Proxy Provider") to assist in the proxy voting process by implementing the
votes in accordance with the Proxy Guidelines as well as assisting in the
administrative process. The services provided offer a variety of proxy-related
services to assist the Company's handling of proxy voting responsibilities.
2
III. Proxy Committee
The Company has also established a Proxy Committee that is responsible for
overseeing the proxy voting process and ensuring that the voting process is
implemented in accordance with these Proxy Voting Policy and Procedures. The
Proxy Committee meets at a minimum on a semi-annual basis and when necessary to
address potential conflicts of interest. The Company may have conflicts of
interest that could potentially affect how it votes its clients' proxies. For
example, the Company may manage a pension plan whose management is sponsoring a
proxy proposal relating to a security held in another client's account. In order
to ensure that all material conflicts of interest are addressed appropriately
while carrying out the Company's obligation to vote proxies, the Proxy Committee
is responsible for developing a process to identify proxy voting issues that may
raise conflicts of interest between the Company and its clients and to resolve
such issues.
The Proxy Committee will also perform the following duties:
1. Approve and monitor the outsourcing of voting obligations to the
Proxy Provider;
2. Develop a process for resolution of voting issues that require a
case-by-case analysis (either because the Proxy Guidelines require a
case-by-case analysis or the Proxy Guidelines do not specify a vote
for a particular proxy issue) or involve a potential conflict of
interest (in consultation with the relevant portfolio manager and/or
analyst when appropriate), monitor such process and ensure that the
resolutions of such issues are properly documented;
3. Monitor proxy voting (or the failure to vote) based on the Company's
instructions or recommendations to (i) abstain from a vote, (ii)
vote contrary to its Proxy Guidelines or (iii) take voting action
based on the Company's interpretation of a Proxy Guideline, and
ensure that the reasons for such actions are properly documented;
4. Oversee the maintenance of records regarding proxy voting decisions
in accordance with the standards set forth by this policy and
applicable law; and
5. Review, at least annually, all applicable processes and procedures,
voting practices, the adequacy of records and the use of third party
services and update or revise as necessary.
IV. Proxy Voting - Conflicts of Interest
The Proxy Committee has determined that if a particular proxy vote is
specified by the Proxy Guidelines and the Company, in fact, votes in accordance
with the Proxy Guidelines, a potential conflict of interest does not arise. In
all other cases, proxy proposals will be reviewed for potential conflicts of
interest and will be monitored to ensure the sufficiency of documentation
supporting the reasons for such proxy vote. If a potential conflict of interest
is identified, the Proxy Committee will review the voting decision to ensure
that the voting decision has not been affected by the potential conflict.
3
V. Investment Management Personnel Responsibilities
The Company has assigned responsibility to its Chief Investment Officers
for the review of the Proxy Guidelines on an annual basis to ensure that the
guidelines are consistent with the Company's position on various corporate
governance issues and corporate actions and to make any amendments as necessary.
All amendments to the Proxy Guidelines will be communicated promptly to the
Proxy Provider by the Company.
In addition, the following types of "case-by-case" proxy proposals are
required to be reviewed by the appropriate portfolio manager and/or analyst
(subject to the conflicts of interests procedures established by the Proxy
Committee):
1. Proxy proposals which are specified as case-by-case according to the
Proxy Guidelines;
2. Proxy proposals which are not currently covered by the Proxy
Guidelines and are referred back to the Company as case-by-case;
3. Bundled proxy proposals which require a single vote and are referred
back to the Company as case-by-case; and
4. Proxy proposals where the Proxy Provider does not have sufficient
information to evaluate the proposal and are referred back to the
Company as case-by-case.
VI. Disclosure of Proxy Voting Policies and Procedures
The Company shall provide clients with a copy of the Proxy Voting Policy
and Procedures upon request. In addition, a summary of this policy is disclosed
in Part II of the Company's Form ADV which is provided to clients at or prior to
entering into an investment advisory agreement with a client and is also offered
to existing clients on an annual basis.
VII. Providing Clients Access to Voting Records
Generally, clients of the Company have the right, and shall be afforded
the opportunity, to have access to records of voting actions taken with respect
to securities held in their respective accounts. Proxy voting reports for
clients who request such voting records are typically prepared by the Proxy
Provider on a quarterly basis and sent to the client by the Company's applicable
client service representative. Shareholders and unit-holders of commingled funds
managed by the Company shall have access to voting records pursuant to the
governing documents of the commingled fund.
Proxy voting actions are confidential and may not be disclosed to third
parties except as may be required by law, requested by regulators or authorized
by the applicable client.
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VIII. Maintenance of Proxy Voting Records
Rule 204-2 under the Investment Advisers Act of 1940 requires investment
advisers that vote client proxies to maintain specified records with respect to
those clients. The Company must maintain the following records relating to proxy
voting:
1. Copies of the Company's Proxy Voting Policies, Procedures and
Guidelines;
2. Copies or records of each proxy statement received with respect to
clients' securities for whom the Company exercises voting authority;
3. A record of each vote cast on behalf of a client;
4. A copy of any document created by the Company that was material to
making a decision how to vote proxies on behalf of a client or that
memorializes the basis for that decision; and
5. A copy of each written client request for information on how the
Company voted proxies on behalf of the client, and a copy of any
written response by the Company to any client request for
information (either written or oral) on how the Company voted
proxies on behalf of the requesting client.
Records are to be kept for a period of at least six years following the
date that the vote was cast. The Company may maintain the records
electronically. The Company may also satisfy the second and third requirement by
relying on the Proxy Provider to maintain the required records on the Company's
behalf. As such, the Proxy Provider must provide a copy of the records promptly
upon request.
5
05-31-07
Appendix No. 1
Oppenheimer Capital LLC
Proxy Voting Guidelines
Table of Contents
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Operational Items - U.S. Proposals............................................14
101. Adjourn Meeting
102. Approve Technical Amendments
103. Approve Name Change
104. Approve Other Business
Operational Items - Non-U.S. Proposals........................................14
101N. Amend Articles-Technical
102N. Amend Articles to Reflect Regulatory Changes
103N. Approve Amendments to Articles of Association
104N. Change Company Name
105N. Amend Meeting Procedures/Change Date
106N. Amend Company Purpose
107N. Change Fiscal Year
108N. Consider Other Business
109N. Receive Statutory Reports
110N. Authorize Legal Formalities
111N. Approve Meeting Formalities
112N. Questions
Board of Directors - U.S. Proposals...........................................15
201. Elect Directors
202. Elect Contested Nominee
203. Elect Subsidiary Director(s)
204. Election of Trustee - Fund/Trust/Debtholders
205. Approve Board Size
206. Give Board Authority to Set Board Size
207. Approve Classified Board
208. Amend Classified Board
209. Repeal Classified Board
210. Adopt Cumulative Voting
211. Eliminate Cumulative Voting
212. Adopt Director Liability Provision
213. Amend Director Liability Provision
214. Adopt Indemnification Provision
215. Amend Indemnification Provision
216. No Shareholder Approval to Fill Vacancy
217. Removal of Directors
1
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Board of Directors - Non-U.S. Proposals.......................................17
201N. Election of Directors by Slate
202N. Appoint Board Advisors/Deputy Directors/Alternate Directors
203N. Ratify Executive Board Appointments
204N. Elect Directors-Canada
205N. Elect Directors-UK and Ireland
206N. Elect Directors-Japan
207N. Elect Directors/Supplemental Board Members-Other Markets
208N. Election of Trustee - Fund/Trust/Debtholders
209N. Elect Shareholder Representatives
210N. Set Board/Supervisory Board Size Limits
211N. Amend Board/Supervisory Board Size
212N. Amend Board Structure
213N. Indemnify Directors/Officers
214N. Amend Terms of Indemnification
215N. Elect Board Committee
216N. Amend Board Election Rules
217N. Establish Board Committees
218N. Appoint Board Commission
219N. Appoint Officer(s) from Board
220N. Approve Minimum Stock Ownership by Directors
221N. End Minimum Stock Ownership by Directors
222N. Reduce Board Term to One Year
223N. Preserve/Restore Supermajority to Oust Directors
224N. Amend Board Powers/Procedures/Qualifications
225N. Ratify Board Acts-Symbolic
226N. Ratify Board Acts-Legal
Auditor/Financial Statement Related - U.S. Proposals..........................20
301. Ratify Selection of Auditors
302. Approve Financial Statements
Auditor/Financial Statement Related - Non-U.S. Proposals......................20
301N. Appoint Auditors and Set Their Fees
302N. Set Auditors' Fees
303N. Appoint Outside Auditors
304N. Appoint Secondary Outside Auditor
305N. Appoint Substitute/Back-up Auditor
306N. Elect Supervisory Board/Corporate Assembly
307N. Elect Statutory Auditors
308N. Elect Alternate Statutory Auditor
309N. Appoint Appraiser/Special Auditor/Liquidator
310N. Set Number of Auditors
311N. Set Number of Statutory Auditors
312N. Approve Maximum Statutory Auditors' Fee
313N. Approve Bonuses for Retiring Statutory Auditors
2
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Auditor/Financial Statement Related - Non-U.S. Proposals (Continued)..........22
314N. Bonus for Ending Statutory Auditor Retirement Bonuses
315N. Amend Statutory Auditor Term
316N. Ratify Acts of Auditors
317N. Ratify Statutory Auditor Acts-Symbolic
318N. Ratify Statutory Auditor Acts-Legal
319N. Approve Financial Statements
320N. Approve Book Entry System
321N. Extend Consolidated Taxation Status
322N. Approve Related Party Transactions
Executive and Director Compensation - U.S. Proposals..........................23
401. Adopt Stock Incentive Plan
402. Amend Stock Incentive Plan
403. Add Shares to Stock Incentive Plan
404. Extend Term of Stock Incentive Plan
405. Limit Per-Employee Awards
406. Adopt Director Stock Incentive Plan
407. Amend Director Stock Incentive Plan
408. Add Shares to Director Stock Incentive Plan
409. Adopt Employee Stock Purchase Plan
410. Amend Employee Stock Purchase Plan
411. Add Shares to Employee Stock Purchase Plan
412. Adopt Stock Award Plan
413. Amend Stock Award Plan
414. Add Shares to Stock Award Plan
415. Approve Option/Stock Awards
416. Adopt Director Stock Award Plan
417. Amend Director Stock Award Plan
418. Add Shares to Director Stock Award Plan
419. Exchange Underwater Options
420. Approve Annual Bonus Plan
421. Amend Annual Bonus Plan
422. Approve Long-Term Bonus Plan
423. Amend Long-Term Bonus Plan
424. Re-approve Option/Bonus Plan for OBRA
425. Approve Savings Plan
426. Adopt Deferred Compensation Plan
427. Amend Deferred Compensation Plan
428. Approve Employment Agreements
Executive and Director Compensation - Non-U.S. Proposals......................27
401N. Approve Stock Option Plan
402N. Amend Stock Option Plan
403N. Approve Stock Option Plan for Subsidiary
404N. Approve Director Participation in Stock Plan
3
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Executive and Director Compensation - Non-U.S. Proposals (Continued)..........28
405N. Approve Outside Directors Stock Option Plan
406N. Amend Outside Directors Stock Option Plan
407N. Approve Stock Purchase Plan/SAYE/AESOP
408N. Amend Stock Purchase Plan/SAYE/AESOP
409N. Approve Option/Purchase Plan-Overseas Employees
410N. Approve Stock Option Grant
411N. Approve Stock Award
412N. Approve Multiple Stock Option Grants
413N. Approve Restricted Stock Grants (Japan Only)
414N. Approve Executive Profit Sharing/Bonus Plan
415N. Amend Executive Profit Sharing/Bonus Plan
416N. Approve Bonus
417N. Approve Bonuses for Retiring Directors
418N. Bonus for Ending Director Retirement Bonuses
419N. Eliminate Board Retirement Bonus System
420N. Ratify Director Retirement
421N. Approve Remuneration Policy
422N. Approve Loans to Directors/Employees
423N. Establish Employee Share Trust
424N. Issue Bonds with Warrants to Employees
425N. Issue Warrants in Excess of Individual Limits
426N. Approve Directors' Fees
427N. Approve Supervisory Board/Corporate Assembly Fees
428N. Approve Board Commission Fees
429N. Approve Committee Fees
430N. Approve Committee Budget
431N. Approve Shareholder Representative Fees
432N. Approve Director Contract
Capital Structure - U.S. Proposals............................................31
501. Increase Authorized Common Stock
502. Decrease Authorized Common Stock
503. Amend Authorized Common Stock
504. Approve Common Stock Issuance
505. Approve Warrants Exercisable for Common Stock
506. Authorize Dual Class Common Stock
507. Increase Authorized Dual Class Common Stock
508. Eliminate Dual Class Common Stock
509. Amend Dual Class Common Stock
510. Eliminate Preemptive Rights
511. Restore Preemptive Rights
512. Authorize Preferred Stock
513. Increase Authorized Preferred Stock
514. Decrease Authorized Preferred Stock
515. Amend Authorized Preferred Stock
4
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Capital Structure - U.S. Proposals (Continued)................................32
516. Cancel Series of Preferred Stock
517. Approve Issuance/Conversion of Preferred Stock
518. Approve Recapitalization
519. Approve Stock Split
520. Approve Reverse Stock Split
521. Approve Share Repurchase
Capital Structure - Non-U.S. Proposals........................................33
501N. Amend/Remove Par Value
502N. Increase Authorized Capital
503N. Reduce Authorized Capital
504N. Limit Capital Increase
505N. Allow Subsidiaries to Issue Stock
506N. Cancel Authorized Stock Class
507N. Authorize New Stock Class
508N. Reauthorize Share Issue Limit
509N. Authorize Issuance of Differential Voting Stock
510N. Amend Share Class Rights
511N. Issue Stock with Preemptive Rights
512N. Issue Stock without Preemptive Rights
513N. Issue Stock with or without Preemptive Rights
514N. Issue Stock with Warrants
515N. Issue Bonds with Warrants
516N. Issue Warrants with Preemptive Rights
517N. Issue Warrants without Preemptive Rights
518N. Authorize Creation of Preferred Stock
519N. Approve Issue of Preferred Stock
520N. Increase Authorized Preferred Stock
521N. Amend Authorized Preferred Stock
522N. Issue Debt Instruments
523N. Issue Convertible Debt Instruments
524N. Amend Terms of Debt Instruments
525N. Approve Borrowing
526N. Approve Borrowing Powers
527N. Convert One Form of Stock to Another
528N. Approve Stock Split
529N. Approve Reverse Stock Split
530N. Reduce Authorized Capital when Shares Repurchased
531N. Authorize Share Repurchase
532N. Waive Approval of Share Repurchase
533N. Re-issuance of Shares/Treasury Stock
534N. Set Price of Reissued Treasury Stock
535N. Amend Articles to Reflect Capital Increase/Decrease
536N. Amend Articles Regarding Issuance of Capital
537N. Amend Articles to Authorize Share Repurchase
5
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Capital Structure - Non-U.S. Proposals (Continued)............................37
538N. Amend Articles Regarding Treasury Shares
539N. Approve Use/Transfer of Reserves
540N. Transfer Shareholder Equity Funds
541N. Authorize Trade in Company Stock
542N. Amend Tradable Lot Size
543N. Restate/Adjust Capital for Inflation
544N. Amend Reporting Currency
545N. Reduce Share Premium Account
546N. Allow Company to Give Guarantees
547N. Add/Remove Exchange Listing(s)
548N. Appoint Risk-Rating Agency
549N. Authorize Nominal Capital Repayment
550N. Set Dividend/Allocate Profits
551N. Allocate Dividend
552N. Waive Shareholder Approval for Profit Allocation
553N. Approve Scrip Dividend/Dividend Reinvestment Plan
554N. Approve Special Dividend/Bonus Share Issue
555N. Amend Dividend Distribution Rules
556N. Approve Interim Dividend
Mergers and Corporate Restructurings - U.S. Proposals.........................38
601. Approve Merger/Acquisition
602. Approve Restructuring
603. Approve Bankruptcy Restructuring
604. Approve Liquidation
605. Approve Leveraged Buyout
606. Approve Spin-Off
607. Approve Sale of Assets
Mergers and Corporate Restructurings - Non-U.S. Proposals.....................39
601N. Approve Merger/Acquisition
602N. Approve Joint Venture/Strategic Alliance
603N. Approve Restructuring/Recapitalization
604N. Dissolve Company/Approve Liquidation
605N. Ratify Liquidator's Fees
606N. Approve Divestiture/Spin-Off
607N. Approve Intra-Company Contracts
608N. Extend Investment Trust
609N. Dissolve Investment Trust
610N. Create Parent Holding Company
Anti-Takeover Defenses/Voting Related Issues - U.S. Proposals.................40
701. Adopt Advance Notice Requirement
702. Approve Non-Technical Charter Amendments
703. Approve Non-Technical Bylaw Amendments
6
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Anti-Takeover Defenses/Voting Related Issues - U.S. Proposals (Continued).....40
704. Adopt Poison Pill
705. Redeem Poison Pill
706. Eliminate Written Consent
707. Limit Written Consent
708. Restore Written Consent
709. Eliminate Special Meeting
710. Limit Special Meeting
711. Restore Special Meeting
712. Adopt Supermajority Requirement for Business Transactions
713. Amend Supermajority Requirement for Business Transactions
714. Eliminate Supermajority Requirement for Business
Transactions
715. Adopt Supermajority Lock-in
716. Amend Supermajority Lock-in
717. Eliminate Supermajority Lock-in
718. Consider Non-Financial Effects of Merger
Anti-Takeover Defenses/Voting Related Issues - Non-U.S. Proposals.............42
701N. Adopt Poison-Pill-Style Defense
702N. Amend Poison-Pill-Style Defense
703N. Limit Voting Rights
704N. Amend Voting Rights Limit
705N. End Voting Rights Limit
706N. Require Voting Supermajority
707N. Amend Supermajority Requirement
708N. End Voting Supermajority
709N. Approve Share Transfer/Registration
710N. End Share Transfer/Registration
711N. Registration of Shares
712N. End Foreign Investor Restrictions
713N. Amend Foreign Investor Restrictions
714N. Amend Shareholder Disclosure Rules
715N. Waive Mandatory Takeover Requirement
716N. Require Approval for Partial Takeover Bids
717N. Authorize Voting Record Date Changes (Japan Only)
State of Incorporation - U.S. Proposals.......................................43
801. Adopt Fair Price Provision
802. Amend Fair Price Provision
803. Repeal Fair Price Provision
804. Adopt Anti-Greenmail Provision
805. Approve Reincorporation
806. Opt Out of State Takeover Law
807. Opt Into State Takeover Law
7
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
State of Incorporation - Non-U.S. Proposals...................................44
801N. Approve Reincorporation
802N. Relocate Corporate Headquarters
Corporate Responsibility - Non-U.S. Proposals.................................44
901N. Authorize Charitable Donations
902N. Approve Political Donation
Other - U.S. Proposals........................................................45
1001. Miscellaneous Proposals
Other - Non-U.S. Proposals....................................................45
1001N. Approve Electronic Share Trading
1002N. Approve Property Purchase
1003N. Approve Property Sale
1004N. Ratify Management Acts-Symbolic
1005N. Ratify Management Acts-Legal
1006N. Adopt Corporate Governance Standards
1007N. Miscellaneous Proposals
Shares Out on Loan - U.S. Proposals...........................................45
1100. Shares Out on Loan
Share Blocking and Share Out on Loan - Non-U.S. Proposals.....................45
1100N. Share Blocking and Shares Out on Loan
8
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Operational Items - U.S. Proposals............................................46
SP-101. Change Annual Meeting Location
SP-102. Change Annual Meeting Date
SP-103. Improve Meeting Reports
Board of Directors - U.S. Proposals...........................................46
SP-201. Majority Vote to Elect Directors
SP-202. Director Tenure/Retirement Age
SP-203. Repeal Classified Board
SP-204. Double Board Nominees
SP-205. Adopt Cumulative Voting
SP-206. Director Liability
SP-207. Independent Board Chairman
SP-208. Lead Director
SP-209. Allow Union/Employee Representatives on Board
SP-210. Increase Board Independence
SP-211. Create Nominating Committee
SP-212. Increase Nominating Committee Independence
SP-213. Create Shareholder Committee
SP-214. Create Compensation Committee
SP-215. Hire Independent Compensation Consultant
SP-216. Increase Compensation Committee Independence
SP-217. Increase Key Committee Independence
SP-218. Minimum Stock Ownership by Directors
SP-219. Directors' Role in Corporate Strategy
SP-220. Require Nominee Statement in Proxy
Board of Directors - Non-U.S. Proposals.......................................48
SP-201N. Elect Dissident Directors
SP-202N. Elect Dissident Supervisory Board
SP-203N. Set Age Limit on Directors
SP-204N. Oust Director(s)
SP-205N. Establish Key Board Committees
SP-206N. Amend Board Procedures
SP-207N. Limit Number of Boards Directors Sit On
Auditor/Financial Statement Related - U.S. Proposals..........................49
SP-301. Shareholder Approval of Auditors
SP-302. Limit Non-Audit Fees
SP-303. Increase Audit Committee Independence
SP-304. Auditors Must Attend Annual Meeting
SP-305. Rotate Auditors
Executive and Director Compensation - U.S. Proposals..........................49
SP-401. Restrict/Reform Executive Compensation
SP-402. Approve Executive Compensation
9
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Executive and Director Compensation - U.S. Proposals (Continued)..............49
SP-403. Disclose Executive Compensation
SP-404. Cap Executive Pay
SP-405. Require Equity Awards to be Held
SP-406. Restrict Director Compensation
SP-407. Pay Directors in Stock
SP-408. Restrict Director Pensions
SP-409. No Re-pricing of Underwater Options
SP-410. Award Performance-Based Stock Options
SP-411. Golden Parachutes
SP-412. Add Performance Criteria to Equity-Based Awards
SP-413. Expense Stock Options
SP-414. Pension Fund Surplus
SP-415. Approve and/or Disclose SERPs
SP-416. Advisory Vote on Compensation
Executive and Director Compensation - Non-U.S. Proposals......................51
SP-401N. Oppose/Change Executive Pay
Capital Structure - U.S. Proposals............................................51
SP-501. Restore Preemptive Rights
Capital Structure - Non-U.S. Proposals........................................51
SP-501N. Restrict Capital Increases
SP-502N. Restore Preemptive Rights
SP-503N. Remove Multiple-Voting Rights
SP-504N. Increase Dividend
SP-505N. Redistribute Profits
Mergers and Corporate Restructurings - U.S. Proposals.........................51
SP-601. Study Sale or Spin-Off
Mergers and Corporate Restructurings - Non-U.S. Proposals.....................51
SP-601N. Oppose Merger/Acquisition
SP-602N. Restructure Investments
SP-603N. Liquidate Company
Anti-Takeover Defenses/Voting Related Issues - U.S. Proposals.................52
SP-701. Redeem or Vote on Poison Pill
SP-702. Right to Act by Written Consent
SP-703. Restore Right to Call Special Meeting
SP-704. Eliminate Supermajority Provision
SP-705. Reduce Supermajority Provision
SP-706. Prohibit Targeted Share Placement
10
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Anti-Takeover Defenses/Voting Related Issues - U.S. Proposals (Continued).....52
SP-707. Counting Shareholder Vote
SP-708. No Discretionary Voting
SP-709. Adopt Confidential Voting
SP-710. Equal Access to the Proxy
Anti-Takeover Defenses/Voting Related Issues - Non-U.S. Proposals.............53
SP-701N. End Bars on Foreign Investors
SP-702N. End Voting Rights Limitation
SP-703N. Facilitate Shareholder Proposals
SP-704N. Approve Confidential Voting
State of Incorporation - U.S. Proposals.......................................53
SP-801. Repeal Fair Price Provision
SP-802. Adopt Anti-Greenmail Provision
SP-803. Reincorporation
SP-804. Opt Out of State Takeover Statute
Corporate Responsibility - U.S. Proposals.....................................54
SP-901. Review or Promote Animal Welfare
SP-902. Review Drug Pricing or Distribution
SP-903. Review Response to or Impact of Pandemics
SP-904. Oppose Embryo/Fetal Destruction
SP-905. Review Tobacco Marketing
SP-906. Sever Links with Tobacco Industry
SP-907. Review or Reduce Tobacco Harm to Health
SP-908. Review Nuclear Facility/Waste
SP-909. Review Energy Efficiency & Renewables
SP-910. Endorse Ceres Principles
SP-911. Control Generation of Pollutants
SP-912. Report on Environmental Impact or Plans
SP-913. Review Social Impact of Financial Ventures
SP-914. Report or Take Action on Climate Change
SP-915. Review/Reduce Toxicity of Product Formulation
SP-916. Review or Curb Bioengineering
SP-917. Preserve/Report on Natural Habitat
SP-918. Report on Sustainability
SP-919. Review Charitable Giving Policy
SP-920. Limit or End Charitable Giving
SP-921. Review Political Spending or Lobbying
SP-922. Limit or End Political Spending
SP-923. Disclose Prior Government Service
SP-924. Affirm Political Nonpartisanship
SP-925. Link Executive Pay to Social Criteria
SP-926. Develop/Report on Human Rights Policy
SP-927. Review/Develop Ethics Policy
11
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Management Proposals
- --------------------------------------------------------------------------------
Corporate Responsibility - U.S. Proposals (Continued).........................56
SP-928. Review Operations' Impact on Local Groups
SP-929. Burma-Limit or End Operations
SP-930. Burma-Review Operations
SP-931. China-No Use of Forced Labor
SP-932. China-Adopt Code of Conduct
SP-933. Review Mexican Work Force Conditions
SP-934. Adopt Standards for Mexican Operation
SP-935. Review or Implement MacBride Principles
SP-936. Urge MacBride on Contractor/Franchisee
SP-937. Review Global Labor Practices
SP-938. Review Developing Country Debt
SP-939. Review Military Contracting Criteria
SP-940. Review Economic Conversion
SP-941. Review Space Weapons
SP-942. Review Foreign Military Sales
SP-943. Limit or End Nuclear Weapons Production
SP-944. Review Nuclear Weapons Production
SP-945. Review Fair Lending Policy
SP-946. Review Job Cuts or Relocations
SP-947. Report on EEO SP-948. Board Inclusiveness
SP-949. Drop Sexual Orientation from EEO Policy
SP-950. Adopt Sexual Orientation Anti-Bias Policy
SP-951. Monitor/Adopt ILO Provisions
SP-952. Miscellaneous Corporate Responsibility Proposals
Corporate Responsibility - Non-U.S. Proposals.................................59
SP-901N. Review Nuclear Facility/Waste
SP-902N. Review Energy Efficiency & Renewables
SP-903N. Control Generation of Pollutants
SP-904N. Report on Environmental Impact or Plans
SP-905N. Report or Take Action on Climate Change
SP-906N. Preserve/Report on Natural Habitat
SP-907N. Review Charitable Giving Policy
SP-908N. Review Political Spending or Lobbying
SP-909N. Limit or End Political Spending
SP-910N. Develop/Report on Human Rights Policy
SP-911N. Commit to Increase Representation of Women
SP-912N. Monitor/Adopt ILO Provisions
SP-913N. Miscellaneous Corporate Responsibility Proposals
Other - U.S. Proposals........................................................60
SP-1001. Miscellaneous Proposals
12
Proxy Voting Guidelines - Table of Contents (Continued)
Proposal
No. Description Page #
- --------------------------------------------------------------------------------
Shareholder Proposals
- --------------------------------------------------------------------------------
Other - Non-U.S. Proposals....................................................60
SP-1001N. Improve Disclosure
SP-1002N. Miscellaneous Proposals
Shares Out on Loan - U.S. Proposals...........................................61
SP-1100. Shares Out on Loan
Share Blocking and Shares Out on Loan - U.S. Proposals........................61
SP-1100N. Share Blocking and Shares out on Loan
13
GUIDELINES FOR VOTING ON MANAGEMENT PROPOSALS
The Company will generally vote on management proposals in accordance with the
following guidelines, however, because the Proxy Guidelines cannot anticipate
all situations and the surrounding facts of each proxy issue (including, without
limitation, foreign laws and practices that may apply to a proxy), some proxy
issues may require a case-by-case analysis (whether or not required by the Proxy
Guidelines) prior to voting and may result in a vote being cast that will
deviate from the Proxy Guidelines. In such cases, the proxy voting procedures
established by the Proxy Committee for such situations will be followed.
OPERATIONAL ITEMS - U.S. PROPOSALS
- --------------------------------------------------------------------------------
101. Adjourn Meeting: The Company will vote for management proposals to
adjourn meetings.
102. Approve Technical Amendments: The Company will vote for management
proposals to approve technical amendments. For this proposal,
amendments may include restatements to omit spelling or grammatical
errors, to change the company's business purpose, or other similar
technical changes. They do not include amendments that could affect
shareholder rights or claims on the company or that could be deemed to
be anti-takeover measures.
103. Approve Name Change: The Company will vote for management proposals
regarding corporate name changes.
104. Approve Other Business: The Company will vote against management
proposals to seek to approve other business.
OPERATIONAL ITEMS - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
101N. Amend Articles-Technical: The Company will vote for management
proposals to amend technical changes to the company's legal documents.
102N. Amend Articles to Reflect Regulatory Changes: The Company will vote for
management proposals to amend its articles to reflect regulatory
changes.
103N. Approve Amendments to Articles of Association: The Company will vote
for management proposals to approve amendments to the articles of
association unless amendments are not disclosed.
104N. Change Company Name: The Company will vote for management proposals to
change the company's name unless amendments are not disclosed.
14
OPERATIONAL ITEMS - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
105N. Amend Meeting Procedures/Change Date: The Company will vote for
management proposals to amend meeting procedures or change meeting
dates.
106N. Amend Company Purpose: The Company will vote for management proposals
to amend the description of what the company does.
107N. Change Fiscal Year: The Company will vote for management proposals to
change the company's fiscal year.
108N. Consider Other Business: The Company will vote against management
proposals to consider other business.
109N. Receive Statutory Reports: The Company will vote for management
proposals to receive statutory reports.
110N. Authorize Legal Formalities: The Company will vote for management
proposals to authorize legal formalities to ensure that the meeting is
properly summoned, conducted and concluded, and its decisions carried
out.
111N. Approve Meeting Formalities: The Company will vote for management
proposals to approve meeting formalities.
112N. Questions: The Company will evaluate management proposals that allow
for the use of Agenda items (may be labeled voting or nonvoting)
indicating questions will be taken from the floor on a case-by-case
basis.
BOARD OF DIRECTORS - U.S. PROPOSALS
- --------------------------------------------------------------------------------
201. Elect Directors: The Company will vote for management proposals in
connection with the routine election of directors unless certain
independence issues exist. The Company will withhold votes from a
nominee as follows:
1. Withhold votes from any non-independent nominee (excluding the
CEO) if employees or affiliated directors comprise more than
50% of the board;
2. Withhold votes from any non-independent nominee on the audit
committee if 1% or more of directors serving on that committee
are not independent;
3. Withhold votes from any non-independent nominee on the
compensation committee if 1% or more of directors serving on
that committee are not independent;
4. Withhold votes from any non-independent nominee on the
nominating committee if 1% or more of directors serving on
that committee are not independent; and
15
BOARD OF DIRECTORS - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
5. Withhold votes from any nominee who attended less than 75% of
the board and committee meetings that they were scheduled to
attend during the previous fiscal year.
202. Elect Contested Nominee: The Company will evaluate management proposals
to elect contested nominees on a case-by-case basis.
203. Elect Subsidiary Director(s): The Company will vote for management
proposals to elect directors to a subsidiary corporation.
204. Election of Trustee - Fund/Trust/Debtholders: The Company will vote for
management proposals relating to the election of trustees.
205. Approve Board Size: The Company will vote for management proposals that
seek to approve board size unless:
1. The proposed maximum board size is greater than 12 directors;
or
2. The board will consist of less than 3 directors.
206. Give Board Authority to Set Board Size: The Company will vote against
management proposals which would give the board authority to set the
size of the board without shareholder approval.
207. Approve Classified Board: The Company will vote against management
proposals to approve classified boards. Under a classified board
structure, directors are divided into separate classes (usually three)
with the directors in each class elected to overlapping multiyear
terms.
208. Amend Classified Board: The Company will evaluate management proposals
to amend classified boards on a case-by-case basis.
209. Repeal Classified Board: The Company will vote for management proposals
to repeal classified boards.
210. Adopt Cumulative Voting: The Company will vote against management
proposals to adopt cumulative voting. Cumulative voting permits
shareholders to apportion the total number of votes they are entitled
to cast for one director among the candidates. The total number of
votes is equal to the total number of directors to be elected at the
meeting multiplied by the number of shares eligible to be voted.
211. Eliminate Cumulative Voting: The Company will vote for management
proposals to eliminate cumulative voting.
16
BOARD OF DIRECTORS - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
212. Adopt Director Liability Provision: The Company will vote for
management proposals to adopt director liability provisions.
213. Amend Director Liability Provision: The Company will vote for
management proposals to amend director liability provisions.
214. Adopt Indemnification Provision: The Company will vote for management
proposals to adopt indemnification provisions.
215. Amend Indemnification Provision: The Company will vote for management
proposals to amend indemnification provisions.
216. No Shareholder Approval to Fill Vacancy: The Company will vote against
management proposals which allow the board to fill vacancies without
shareholder approval.
217. Removal of Directors: The Company will evaluate management proposals to
remove members from the board on a case-by-case basis.
BOARD OF DIRECTORS - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
201N. Election of Directors by Slate: The Company will vote for management
proposals to elect directors by slate
202N. Appoint Board Advisors/Deputy Directors/Alternate Directors: The
Company will vote for management proposals to select nominees to serve
as advisers, deputy directors or alternate directors to the board.
203N. Ratify Executive Board Appointments: The Company will vote for
management proposals to ratify executive board appointments.
204N. Elect Directors-Canada: The Company will vote for management proposals
in connection with the routine election of directors unless certain
independence issues exist. The Company will withhold votes from a
nominee as follows:
1. Withhold votes from all nominees if employees or affiliated
directors comprise more than 50% of the board;
2. Withhold votes from any non-independent nominee on the audit
committee if 1% or more of directors serving on that committee
are not independent;
3. Withhold votes from any non-independent nominee on the
compensation committee if 1% or more of directors serving on
that committee are not independent; and
17
BOARD OF DIRECTORS - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
4. Withhold votes from any non-independent nominee on the
nominating committee if 1% or more of directors serving on
that committee are not independent.
205N. Elect Directors-UK and Ireland: The Company will vote for management
proposals in connection with the routine election of directors unless
certain independence issues exist. The Company will vote against any
non-independent nominee as follows:
1. Vote against any non-independent nominee who serves on the
audit committee if 1% or more of the directors serving on the
audit committee are not independent;
2. Vote against any non-independent nominee who serves on the
remuneration committee if 1% or more of directors serving on
the remuneration committee are not independent;
3. Vote against any non-independent nominee who serves on the
nominating committee if 1% or more of directors serving on the
nominating committee are not independent;
4. Vote against any nominee who is a non-independent chair of the
board; and
5. Vote against any non-independent nominee if employees and
affiliated directors comprise more than 30% of the board.
206N. Elect Directors-Japan: The Company will vote for management proposals
to elect directors on Japanese company ballots unless executives or
affiliated directors comprise more than 95% of the board.
207N. Elect Directors/Supplemental Board Members-Other Markets: The Company
will vote for management proposals to elect directors in other markets
unless certain independence issues exist. The company will vote against
any non-independent nominee if executives and affiliated directors
comprise more than 50% of the board.
208N. Election of Trustee - Fund/Trust/Debtholders: The Company will evaluate
management proposals relating to the election of trustees on a
case-by-case basis.
209N. Elect Shareholder Representatives: The Company will vote for management
proposals to elect the nominees who are available and qualified to act
as shareholder representatives.
210N. Set Board/Supervisory Board Size Limits: The Company will vote for
management proposals to set size limits for the board or supervisory
board unless the maximum size exceeds 20 voting members (Japan only).
18
BOARD OF DIRECTORS - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
211N. Amend Board/Supervisory Board Size: The Company will vote for
management proposals to amend the size of the board or supervisory
board.
212N. Amend Board Structure: The Company will vote for management proposals
to amend the structure of the board unless the amendment would
institute a two-tier board system.
213N. Indemnify Directors/Officers: The Company will vote for management
proposals to indemnify directors and officers.
214N. Amend Terms of Indemnification: The Company will vote for management
proposals to amend the terms of indemnification.
215N. Elect Board Committee: The Company will vote for management proposals
to elect board committees unless the election is for an audit committee
and executives will serve on the committee.
216N. Amend Board Election Rules: The Company will vote for management
proposals to amend board election rules unless the amendment would
result in a classified board structure.
217N. Establish Board Committees: The Company will vote for management
proposals to establish board committees.
218N. Appoint Board Commission: The Company will vote for management
proposals to appoint board commissions.
219N. Appoint Officer(s) from Board: The Company will evaluate management
proposals to appoint officer(s) from the board on a case-by-case basis.
220N. Approve Minimum Stock Ownership by Directors: The Company will vote for
management proposals to approve a minimum stock ownership requirement
for directors.
221N. End Minimum Stock Ownership by Directors: The Company will evaluate
management proposals to end minimum stock ownership requirements for
directors on a case-by-case basis.
222N. Reduce Board Term to One Year: The Company will vote for management
proposals to reduce the board terms to one year.
223N. Preserve/Restore Supermajority to Oust Directors: The Company will vote
against management proposals to preserve or restore supermajority rule
to oust directors.
19
BOARD OF DIRECTORS - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
224N. Amend Board Powers/Procedures/Qualifications: The Company will evaluate
management proposals to amend board powers, board procedures and board
qualifications on a case-by-case basis.
225N. Ratify Board Acts-Symbolic: The Company will vote for management
proposals to ratify board acts (symbolic) in the previous year. This
traditional housekeeping measure is symbolic in nature and carries no
legal or financial consequences.
226N. Ratify Board Acts-Legal: The Company will evaluate management proposals
to ratify board acts (legal) in the previous year on a case-by-case
basis.
AUDITOR/FINANCIAL STATEMENT RELATED - U.S. PROPOSALS
- --------------------------------------------------------------------------------
301. Ratify Selection of Auditors: The Company will vote for management
proposals to ratify the selection of auditors unless the fees paid by
the company for non-audit services in the prior fiscal year exceed 75%
of the aggregate fees paid to the company's outside auditor.
302. Approve Financial Statements: The Company will vote for management
proposals to approve the company's financial statements.
AUDITOR/FINANCIAL STATEMENT RELATED - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
301N. Appoint Auditors and Set their Fees: The Company will vote for
management proposals to select auditors and set their fees unless:
1. Non-audit fees exceed 75% of total fees paid to auditors (UK
and Ireland only);
2. Non-audit fees exceed 75% of total fees paid to auditors
(Other);
3. Audit fees are not disclosed; or
4. Non-audit fees are not broken down by category.
302N. Set Auditors' Fees: The Company will vote for management proposals to
determine how much the auditors should be paid to perform the annual
audit unless:
1. Non-audit fees exceed 75% of total fees paid to auditors (UK
and Ireland only);
2. Non-audit fees exceed 75% of total fees paid to auditors
(Other);
3. Audit fees are not disclosed;
4. Executives sit on audit committee; or
20
AUDITOR/FINANCIAL STATEMENT RELATED - NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
5. The company does not have an audit committee.
303N. Appoint Outside Auditors: The Company will vote for management
proposals to appoint outside auditors unless:
1. Non-audit fees exceed 75% of total fees paid to auditors (UK
and Ireland only); or
2. Non-audit fees exceed 75% of total fees paid to auditors
(Other).
304N. Appoint Secondary Outside Auditor: The Company will vote for management
proposals to select secondary outside auditors.
305N. Appoint Substitute/Back-up Auditor: The Company will vote for
management proposals to select substitute back-up auditors.
306N. Elect Supervisory Board/Corporate Assembly: Markets with a two-tier
board structure typically have what's called a supervisory board
(termed "supervisory auditors" in Japan), comprised of non-executives
and a management board comprised of executives. The structure is
prevalent in Germany, Holland, other continental European markets,
Asian markets including Japan and Indonesia, and elsewhere. The Company
will vote for management proposals to elect a supervisory board unless:
1. The company does not have an audit committee or if the audit
committee is less than 100% independent;
2. The company does not have a remuneration committee or if the
remuneration committee is less than 100% independent; or
3. The company does not have a nominating committee or if the
nominating committee is less than 100% independent.
307N. Elect Statutory Auditors: The Company will vote for management
proposals to elect statutory auditor board members.
308N. Elect Alternate Statutory Auditor: The Company will vote for management
proposals to elect alternate statutory auditors.
309N. Appoint Appraiser/Special Auditor/Liquidator: The Company will vote for
management proposals to select an appraiser to estimate the value of a
proposed merger or an auditor to conduct a special audit.
310N. Set Number of Auditors: The Company will vote for management proposals
that determine the appropriate number of auditors.
21
AUDITOR/FINANCIAL STATEMENT RELATED - NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
311N. Set Number of Statutory Auditors: The Company will vote for management
proposals to set the number of statutory auditors.
312N. Approve Maximum Statutory Auditors' Fee: The Company will vote for
management proposals to approve the maximum statutory auditors' fee
unless the amount to be paid is not disclosed.
313N. Approve Bonuses for Retiring Statutory Auditors: The Company will vote
against management proposals to approve bonuses for retiring statutory
auditors.
314N. Bonus for Ending Statutory Auditor Retirement Bonuses: The Company will
vote against management proposals for ending statutory auditor
retirement bonuses.
315N. Amend Statutory Auditor Term: The Company will vote for management
proposals to amend the statutory auditors' term.
316N. Ratify Acts of Auditors: The Company will vote for management proposals
to ratify the acts of auditors for the previous financial year unless
executives sit on the audit committee or the company does not have an
audit committee.
317N. Ratify Statutory Auditor Acts-Symbolic: The Company will vote for
management proposals to ratify statutory auditors' acts (symbolic) in
the previous year. This traditional housekeeping measure is symbolic in
nature and carries no legal or financial consequences.
318N. Ratify Statutory Auditor Acts-Legal: The Company will evaluate
management proposals to ratify statutory auditors' acts (legal) in the
previous year on a case-by-case basis.
319N. Approve Financial Statements: The Company will vote for management
proposals to approve the company's financial statements unless the
auditors have qualified their opinion in their evaluation of accounts.
320N. Approve Book Entry System: The Company will vote for management
proposals to approve a book entry system to record stock transactions.
321N. Extend Consolidated Taxation Status: The Company will vote for
management proposals to extend an authorization that allows companies
to pay taxes as a consolidated group and earn a tax break.
322N. Approve Related Party Transactions: The Company will vote for
management proposals to approve related-party transactions.
22
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. PROPOSALS
- --------------------------------------------------------------------------------
401. Adopt Stock Incentive Plan: The Company will vote for management
proposals to adopt stock incentive plans unless:
1. The dilution represented by the proposed plan is more than 10%
of the outstanding common stock;
2. The proposed plan allows the company to re-price or replace
underwater options without shareholder approval;
3. The proposed plan allows nonqualified options to be priced at
less than 100% of the fair market value;
4. The proposed plan has an automatic share replenishment feature
(evergreen plan);
5. The plan administrator may provide loans to exercise awards;
6. The plan administrator may accelerate the vesting of
outstanding awards; or
7. The plan administrator may grant reload stock options.
402. Amend Stock Incentive Plan: The Company will vote for management
proposals to amend stock incentive plans unless:
1. The amendment would allow options to be priced at less than
100% of the fair market value;
2. The amendment allows the plan administrator to re-price or
replace underwater options; or
3. The amendment extends the post-retirement exercise period of
outstanding options.
403. Add Shares to Stock Incentive Plan: The Company will vote for
management proposals to add shares to stock incentive plans unless:
1. The dilution represented by the proposal is more than 10% of
the outstanding common stock;
2. The plan allows the company to re-price or replace underwater
options without shareholder approval;
3. The plan allows nonqualified options to be priced at less than
100% of the fair market value;
4. The plan has an automatic share replenishment feature
(evergreen plan);
5. The plan administrator may provide loans to exercise awards;
6. The plan administrator may accelerate the vesting of
outstanding awards; or
7. The plan administrator may grant reload stock options.
23
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. (CONTINUED)
- --------------------------------------------------------------------------------
404. Extend Term of Stock Incentive Plan: The Company will vote for
management proposals to extend the term of stock incentive plans
unless:
1. The plan allows the company to re-price or replace underwater
options without shareholder approval;
2. The plan allows nonqualified options to be priced at less than
100% of the fair market value;
3. The plan administrator may provide loans to exercise awards;
4. The plan administrator may accelerate the vesting of
outstanding awards; or
5. The plan administrator may grant reload stock options.
405. Limit Per-Employee Awards: Amendments to the U.S. Tax Code, which were
made in 1993, limit the deductibility of compensation paid to each of a
company's five highest-paid executives up to $1 million per year.
Compensation paid to an executive may be excluded from the $1 million
cap if it is paid pursuant to a plan that ties pay to the company's
performance. To qualify for the performance-related exemption, stock
options and stock appreciation rights (SARS) awards must be priced at
no less than fair market value on the grant date and shareholders must
approve the maximum potential award that may be granted to each plan
participant. The Company will vote for management proposals to limit
per-employee awards.
406. Adopt Director Stock Incentive Plan: The Company will vote for
management proposals to adopt director stock incentive plans unless:
1. The dilution represented by this proposal is more than 5% of
outstanding common stock;
2. The proposed plan allows nonqualified options to be priced at
less than 100% of the fair market value;
3. The plan authorizes five or more types of awards; or
4. The plan allows for non-formula, discretionary awards.
407. Amend Director Stock Incentive Plan: The Company will vote for
management proposals to amend director stock incentive plans unless:
1. The amendment would allow options to be priced at less than
100% of the fair market value;
2. The amendment increases the size of the option awards;
3. The amendment would authorize five or more types of awards;
4. The amendment would permit granting of non-formula,
discretionary awards;
5. The minimum equity overhang of all plans is more than 10% of
outstanding common stock and the company is a technology
company; or
24
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. (CONTINUED)
- --------------------------------------------------------------------------------
6. The minimum equity overhang of all plans is more than 5% of
outstanding common stock and the company is NOT a technology
company.
408. Add Shares to Director Stock Incentive Plan: The Company will vote for
management proposals to add shares to director stock incentive plans
unless:
1. The dilution represented by this proposal is more than 5% of
outstanding common stock;
2. The plan allows the company to re-price or replace underwater
options without shareholder approval;
3. The plan allows nonqualified options to be priced at less than
100% of the fair market value;
4. The plan authorizes five or more types of awards; or
5. The plan allows for non-formula, discretionary awards.
409. Adopt Employee Stock Purchase Plan: The Company will vote for
management proposals to adopt employee stock purchase plans unless the
proposed plan allows employees to purchase stock at less than 85% of
the fair market value.
410. Amend Employee Stock Purchase Plan: The Company will vote for
management proposals to amend employee stock purchase plans unless the
amendment allows employees to purchase stock at less than 85% of the
fair market value.
411. Add Shares to Employee Stock Purchase Plan: The Company will vote for
management proposals to add shares to employee stock purchase plans
unless the plan allows employees to purchase stock at less than 85% of
the fair market value.
412. Adopt Stock Award Plan: The Company will vote for management proposals
to adopt stock award plans unless the dilution represented by the
proposed plan is more than 10% of outstanding common stock or the
proposed plan permits unrestricted stock or time-lapsing restricted
stock awards that fully vest in less than 3 years.
413. Amend Stock Award Plan: The Company will vote for management proposals
to amend stock award plans unless the amendment shortens the vesting
requirement or lessens performance requirements.
414. Add Shares to Stock Award Plan: The Company will vote for management
proposals to add shares to stock award plans unless the dilution
represented by the proposal is more than 10% of outstanding common
stock or the plan permits unrestricted stock or time-lapsing restricted
stock awards that fully vest in less than 3 years.
25
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. (CONTINUED)
- --------------------------------------------------------------------------------
415. Approve Option/Stock Awards: The Company will vote for management
proposals to approve option/stock awards unless:
1. The dilution represented by the award is more than 5% of
outstanding common stock;
2. The option is priced at less than 85% of the fair market value
on the grant date; or
3. The award is time-lapsing restricted stock that fully vests in
less than 3 years.
416. Adopt Director Stock Award Plan: The Company will vote for management
proposals to adopt director stock award plans unless:
1. The dilution represented by the proposal is more than 5% of
outstanding common stock;
2. The plan permits unrestricted stock or time-lapsing restricted
stock awards that fully vest in less than 3 years; or
3. The plan allows for non-formula, discretionary awards.
417. Amend Director Stock Award Plan: The Company will vote for management
proposals to amend director stock award plans unless the amendment adds
unrestricted stock or time-lapsing restricted stock awards that fully
vest in less than 3 years or the amendment would permit granting of
non-formula, discretionary awards.
418. Add Shares to Director Stock Award Plan: The Company will vote for
management proposals to add shares to director stock award plans
unless:
1. The dilution represented by the proposal is more than 5% of
outstanding common stock;
2. The plan permits unrestricted stock or time-lapsing restricted
stock awards that fully vest in less than 3 years; or
3. The plan allows for non-formula, discretionary awards.
419. Exchange Underwater Options: Stock options whose exercise price is
higher than the current market price of the underlying stock are said
to be "underwater." One way to re-price such options is to exchange
them for new options with an exercise price set at fair market value on
the new grant date. The Company will vote against management proposals
to exchange underwater options.
420. Approve Annual Bonus Plan: The Company will vote for management
proposals to approve annual bonus plans.
26
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. (CONTINUED)
- --------------------------------------------------------------------------------
421. Amend Annual Bonus Plan: The Company will vote for management proposals
to amend annual bonus plans.
422. Approve Long-Term Bonus Plan: The Company will vote for management
proposals to approve long-term bonus plans.
423. Amend Long-Term Bonus Plan: The Company will vote for management
proposals to amend long-term bonus plans.
424. Re-approve Option/Bonus Plan for OBRA: The Company will vote for
management proposals to re-approve option or bonus plans for OBRA.
425. Approve Savings Plan: The Company will vote for management proposals to
approve savings plans.
426. Adopt Deferred Compensation Plan: The Company will vote for management
proposals to adopt deferred compensation plans.
427. Amend Deferred Compensation Plan: The Company will vote for management
proposals to amend deferred compensation plans.
428. Approve Employment Agreements: The Company will vote for management
proposals to approve employment agreements/contracts.
EXECUTIVE AND DIRECTOR COMPENSATION - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
401N. Approve Stock Option Plan: The Company will vote for
management proposals to approve stock option plans unless:
1. The potential dilution from the proposed plan exceeds 5% of
the current outstanding ordinary shares;
2. The options may be granted at a discount to the fair market
value; or
3. The plan allows for the repricing of underwater options.
402N. Amend Stock Option Plan: The Company will vote for management proposals
to amend stock option plans unless:
1. The amendment would add shares to the plan and the potential
dilution from the new shares exceeds 5% of the current
outstanding ordinary shares;
2. The amendment would allow for the grant of options at a
discount to the fair market value; or
3. The amendment would allow for the repricing of underwater
options.
27
EXECUTIVE AND DIRECTOR COMPENSATION - NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
403N. Approve Stock Option Plan for Subsidiary: The Company will vote for
management proposals to approve stock option plans for subsidiaries
unless:
1. The plan issues stock in the parent company and the potential
dilution from the plan exceeds 5% of the current outstanding
ordinary shares;
2. The options may be granted at a discount to the fair market
value; or
3. The plan allows for the repricing of underwater options.
404N. Approve Director Participation in Stock Plan: The Company will vote for
management proposals to approve director participation in stock plans
unless:
1. The potential dilution from the proposed awards exceeds 5% of
the current outstanding ordinary shares;
2. The proposed awards may be granted at a discount to their fair
market value; or
3. The terms of the proposed awards allow for the repricing of
underwater options.
405N. Approve Outside Directors Stock Option Plan: The Company will vote for
management proposals to approve outside directors stock option plans
unless the potential dilution from the plan exceeds 5% of the current
outstanding ordinary shares or the options may be granted at a discount
to the fair market value.
406N. Amend Outside Directors Stock Option Plan: The Company will vote for
management proposals to amend outside director's stock option plans
unless:
1. The amendment would add shares to the plan and the potential
dilution from the new shares exceeds 5% of the current
outstanding ordinary shares;
2. The amendment would allow for the grant of options at a
discount to the fair market value; or
3. The amendment would allow for the repricing of underwater
options.
407N. Approve Stock Purchase Plan/SAYE/AESOP: The Company will vote for
management proposals to approve stock purchase plans/SAYE/AESOP unless
the potential dilution from the plan exceeds 10% of the current
outstanding ordinary shares or the plan allows for discounts of more
than 15% on stock purchases.
408N. Amend Stock Purchase Plan/SAYE/AESOP: The Company will vote for
management proposals to amend stock purchase plans/SAYE/AESOP unless
the amendment would add shares to the plan and the potential dilution
from the new shares exceeds 10% of the current outstanding ordinary
shares or the amendment would allow for discounted stock purchases of
more than 15%.
28
EXECUTIVE AND DIRECTOR COMPENSATION - NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
409N. Approve Option/Purchase Plan-Overseas Employees: The Company will vote
for management proposals to approve stock option or stock purchase
plans for overseas employees unless:
1. The plan issues stock in the parent company and the potential
dilution from this plan exceeds 5% of the current outstanding
ordinary shares;
2. The plan allows for the repricing of underwater options; or
3. The plan allows for discounts of more than 15% on stock
purchases.
410N. Approve Stock Option Grant: The Company will vote for management
proposals to approve stock option grants unless:
1. The potential dilution from the grant exceeds 5% of the
current outstanding ordinary shares;
2. The potential dilution from all plans exceeds 10% of the
current outstanding ordinary shares (if available) (Japan
only);
3. The options may be granted at a discount to the fair market
value;
4. The terms of the grant allow for the repricing of underwater
options;
5. The exercise price does not adjust to avoid issuing discount
options (Japan only); or
6. The issuance or exercise is conditioned on a hostile bid
(Japan only).
411N. Approve Stock Award: The Company will vote for management proposals to
approve stock awards unless the potential dilution from the stock award
exceeds 5% of the current outstanding ordinary shares or the potential
dilution from all plans exceeds 10% of the current outstanding ordinary
shares (if available).
412N. Approve Multiple Stock Option Grants: Multiple stock option grants are
stock grants proposed for multiple recipients, which may have varied
terms that are bundled into a single proposal. The Company will vote
for management proposals to approve multiple stock option grants.
413N. Approve Restricted Stock Grants (Japan Only): The Company will vote for
management proposals to approve restricted stock grants on Japanese
company ballots.
414N. Approve Executive Profit Sharing/Bonus Plan: The Company will vote for
management proposals to approve executive profit sharing/bonus plans.
415N. Amend Executive Profit Sharing/Bonus Plan: The Company will vote for
management proposals to amend executive profit sharing/bonus plans.
29
EXECUTIVE AND DIRECTOR COMPENSATION - NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
416N. Approve Bonus: The Company will vote for management proposals to
approve bonuses unless the company does not disclose the recipient(s)
and/or the amount of the bonus.
417N. Approve Bonuses for Retiring Directors: The Company will vote for
management proposals to approve bonuses for retiring directors unless
the bonus amounts are not disclosed or information on insider-outsider
status is not provided.
418N. Bonus for Ending Director Retirement Bonuses: The Company will vote for
management proposals to approve ending director retirement bonuses
unless information on insider-outsider status does not establish that
recipients are insiders.
419N. Eliminate Board Retirement Bonus System: The Company will vote for
management proposals to eliminate board retirement bonus systems.
420N. Ratify Director Retirement: The Company will vote for management
proposals to ratify director retirement.
421N. Approve Remuneration Policy: The Company will vote for management
proposals to approve the company's remuneration policy.
422N. Approve Loans to Directors/Employees: The Company will evaluate
management proposals to approve loans to board members or employees on
a case-by-case basis.
423N. Establish Employee Share Trust: The Company will vote for management
proposals to establish share trusts to administer and deliver shares to
employees participating in incentive share plans.
424N. Issue Bonds with Warrants to Employees: The Company will evaluate
management proposals to issue bonds with warrants over company shares
to employees on a case-by-case basis.
425N. Issue Warrants in Excess of Individual Limits: The Company will
evaluate management proposals to issue warrants in excess of individual
limits on a case-by-case basis.
426N. Approve Directors' Fees: The Company will vote for management proposals
to approve directors' fees unless the company does not disclose the
fees that will be paid to directors.
427N. Approve Supervisory Board/Corporate Assembly Fees: The Company will
vote for management proposals to approve fees of the supervisory board
of corporate assembly members unless the company does not disclose the
amount to be paid.
30
EXECUTIVE AND DIRECTOR COMPENSATION - NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
428N. Approve Board Commission Fees: The Company will vote for management
proposals to approve board commission fees.
429N. Approve Committee Fees: The Company will vote for management proposals
to approve committee fees unless the fees are not disclosed.
430N. Approve Committee Budget: The Company will vote for management
proposals to approve the committee's budget unless the amount is not
disclosed.
431N. Approve Shareholder Representative Fees: The Company will vote for
management proposals to approve shareholder representative fees unless
the company does not disclose the amount to be paid.
432N. Approve Director Contract: The Company will vote for management
proposals to approve directors' contracts.
CAPITAL STRUCTURE - U.S. PROPOSALS
- --------------------------------------------------------------------------------
501. Increase Authorized Common Stock: The Company will vote for management
proposals to increase authorized common stock unless the increase is
not intended to effect a merger, stock split, or recapitalization or
the dilution represents more than 100% of the currently authorized
shares of stock class.
502. Decrease Authorized Common Stock: The Company will vote for management
proposals to decrease authorized common stock.
503. Amend Authorized Common Stock: The Company will vote for management
proposals to amend authorized common stock.
504. Approve Common Stock Issuance: The Company will evaluate management
proposals to issue shares of common stock on a case-by-case basis.
505. Approve Warrants Exercisable for Common Stock: The Company will
evaluate management proposals to approve the issuance of warrants
exercisable for common stock on a case-by-case basis.
506. Authorize Dual Class Common Stock: The Company will vote against
management proposals to authorize dual class common stock.
31
CAPITAL STRUCTURE - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
507. Increase Authorized Dual Class Common Stock: The Company will vote for
management proposals to increase authorized dual class common stock
unless it will allow the company to issue additional shares with
superior voting rights.
508. Eliminate Dual Class Common Stock: The Company will vote for management
proposals to eliminate dual class common stock.
509. Amend Dual Class Common Stock: The Company will evaluate management
proposals to amend dual class common stock on a case-by-case basis.
510. Eliminate Preemptive Rights: The Company will vote for management
proposals to eliminate preemptive rights. Preemptive rights give
existing shareholders a "right of first refusal" to purchase new issues
of shares to maintain their proportional ownership in the company.
511. Restore Preemptive Rights: The Company will vote against management
proposals to restore preemptive rights.
512. Authorize Preferred Stock: The Company will vote for management
proposals to issue authorized preferred stock unless the board has
unlimited rights to set the terms and conditions of the shares (known
as "blank check" preferred stock).
513. Increase Authorized Preferred Stock: The Company will vote for
management proposals to increase authorized preferred stock unless the
proposed increase creates potential dilution of more than 50% or the
board has unlimited rights to set the terms and conditions of the
shares.
514. Decrease Authorized Preferred Stock: The Company will vote for
management proposals to decrease authorized preferred stock.
515. Amend Authorized Preferred Stock: The Company will evaluate management
proposals to amend authorized preferred stock on a case-by-case basis.
516. Cancel Series of Preferred Stock: The Company will vote for management
proposals to cancel a series of preferred stock.
517. Approve Issuance/Conversion of Preferred Stock: The Company will vote
for management proposals to approve the issuance or conversion of
preferred stock unless the shares have voting rights superior to those
of other shares.
518. Approve Recapitalization: The Company will evaluate management
proposals to approve recapitalizations on a case-by-case basis.
32
CAPITAL STRUCTURE - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
519. Approve Stock Split: The Company will vote for management proposals seeking
approval for a stock split.
520. Approve Reverse Stock Split: The Company will vote for management proposals
seeking approval for a reverse stock split.
521. Approve Share Repurchase: The Company will vote for management proposals
that seek approval for a stock repurchase plan.
CAPITAL STRUCTURE - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
501N. Amend/Remove Par Value: The Company will vote for management proposals
to amend or remove the stock's par value.
502N. Increase Authorized Capital: The Company will vote for management
proposals to increase authorized capital unless:
1. The increase is greater than 50%;
2. The explicit purpose of the increase is to strengthen takeover
defenses; or
3. The board can set the rights/terms of the shares at issuance.
503N. Reduce Authorized Capital: The Company will vote for management
proposals to reduce authorized capital.
504N. Limit Capital Increase: The Company will vote for management proposals
to limit capital increase.
505N. Allow Subsidiaries to Issue Stock: The Company will vote for management
proposals to allow subsidiaries to issue stock unless the potential
dilution in the parent company would exceed 20% of the current
outstanding ordinary shares.
506N. Cancel Authorized Stock Class: The Company will vote for management
proposals to cancel a particular class of stock.
507N. Authorize New Stock Class: The Company will vote for management
proposals to authorize a new stock class unless the new class carries
differential (inferior or superior) voting rights.
508N. Reauthorize Share Issue Limit: The Company will vote for management
proposals to reauthorize share issue limits.
33
CAPITAL STRUCTURE - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
509N. Authorize Issuance of Differential Voting Stock: The Company will vote
against management proposals to authorize the issuance of differential
voting stock.
510N. Amend Share Class Rights: The Company will vote for management
proposals to amend share class rights unless:
1. The amendment results in a loss of voting rights;
2. The amendment results in a loss of dividend rights; or
3. The amendment results in a dual class share structure with
unequal voting rights.
511N. Issue Stock with Preemptive Rights: The Company will vote for
management proposals to issue stock with preemptive rights unless:
1. The potential dilution exceeds 100% of the current outstanding
ordinary shares;
2. The explicit purpose of the stock issuance is to strengthen
takeover defenses; or
3. The maximum number of shares to be issued is not disclosed.
512N. Issue Stock without Preemptive Rights: The Company will vote for
management proposals to issue stock without preemptive rights unless:
1. The potential dilution exceeds 50% of the current outstanding
ordinary shares;
2. The explicit purpose of the stock issuance is to strengthen
takeover defenses;
3. The board can set the rights/terms of the shares at issuance;
or
4. The maximum number of shares to be issued is not disclosed.
513N. Issue Stock with or without Warrants: The Company will vote for
management proposals to issue stock with or without warrants unless:
1. The potential dilution exceeds 50% of the current outstanding
ordinary shares.
2. The explicit purpose of the stock issuance is to strengthen
takeover defenses.
3. The board can set the rights/terms of the shares at issuance.
4. The maximum number of shares to be issued is not disclosed.
514N. Issue Stock with Warrants: The Company will vote for management
proposals to issue stock with warrants unless:
34
CAPITAL STRUCTURE - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
1. The potential dilution exceeds 50% of the current outstanding
ordinary shares;
2. The explicit purpose of the stock issuance is to strengthen
takeover defenses;
3. The board can set the rights/terms of the shares at issuance;
or
4. The maximum number of shares to be issued is not disclosed.
515N. Issue Bonds with Warrants: The Company will vote for management
proposals to issue bonds with warrants unless the potential dilution
exceeds 10% of the current outstanding ordinary shares.
516N. Issue Warrants with Preemptive Rights: The Company will vote for
management proposals to issue warrants with preemptive rights unless
the potential dilution exceeds 100% of the current outstanding ordinary
shares or the explicit purpose of the stock issuance is to strengthen
takeover defenses.
517N. Issue Warrants without Preemptive Rights: The Company will vote for
management proposals to issue warrants without preemptive rights
unless:
1. The potential dilution exceeds 50% of the current outstanding
ordinary shares;
2. The explicit purpose of the stock issuance is to strengthen
takeover defenses;
3. The board can set the rights/terms of the shares at issuance;
or
4. The maximum number of shares to be issued is not disclosed.
518N. Authorize Creation of Preferred Stock: If the board has an unlimited
right to set the terms for the class and may issue the preferred stock
for anti-takeover purposes without shareholder approval, the stock is
considered blank check. The Company will vote for management proposals
to authorize the creation of preferred stock unless the authorization
is for blank check preferred stock.
519N. Approve Issue of Preferred Stock: The Company will vote for management
proposals to approve the issuance of preferred stock unless the board
can set the rights/terms of the shares at issuance.
520N. Increase Authorized Preferred Stock: The Company will vote for
management proposals to increase authorized preferred stock unless the
board can set the rights/terms of the additional shares at the time of
issuance.
521N. Amend Authorized Preferred Stock: The Company will vote for management
proposals to amend authorized preferred stock unless the amendment
would result in board authority to issue blank check preferred stock.
35
CAPITAL STRUCTURE - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
522N. Issue Debt Instruments: The Company will vote for management proposals
to issue debt instruments.
523N. Issue Convertible Debt Instruments: The Company will vote for
management proposals to issue convertible debt instruments unless the
potential dilution exceeds 50% of the current outstanding ordinary
shares.
524N. Amend Terms of Debt Instruments: The Company will vote for management
proposals to amend the terms of issued convertible debt instruments
unless the amendment would increase potential dilution by 50%.
525N. Approve Borrowing: The Company will vote for management proposals to
approve borrowing.
526N. Amend Borrowing Powers: The Company will vote for management proposals
to amend the company's articles regarding the limit on borrowing
powers.
527N. Convert One Form of Stock to Another: The Company will vote for
management proposals to convert one form of stock to another unless the
amendment results in a loss or reduction of voting rights.
528N. Approve Stock Split: The Company will vote for management proposals to
approve stock splits.
529N. Approve Reverse Stock Split: The Company will vote for management
proposals to approve reverse stock splits.
530N. Reduce Authorized Capital when Shares Repurchased: The Company will
vote for management proposals to reduce its authorized capital when
shares are repurchased.
531N. Authorize Share Repurchase: The Company will vote for management
proposals to authorize share repurchases.
532N. Waive Approval of Share Repurchase: The Company will vote for
management proposals to waive approval for share repurchases.
533N. Re-issuance of Shares/Treasury Stock: The Company will vote for
management proposals to sell shares it has previously repurchased and
held in reserve as treasury stock.
534N. Set Price of Reissued Treasury Stock: The Company will vote for
management proposals to set the price range at which treasury stock can
be sold privately or not on stock market.
36
CAPITAL STRUCTURE - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
535N. Amend Articles to Reflect Capital Increase/Decrease: The Company will
vote for management proposals to amend its bylaws to reflect increases
or decreases in share capital.
536N. Amend Articles Regarding Issuance of Capital: The Company will evaluate
management proposals to amend the company's articles regarding issuance
of capital on a case-by-case basis.
537N. Amend Articles to Authorize Share Repurchase: The Company will vote for
management proposals to amend the company's articles to authorize share
repurchases.
538N. Amend Articles Regarding Treasury Shares: The Company will vote for
management proposals to amend its articles regarding treasury shares.
539N. Approve Use/Transfer of Reserves: The Company will vote for management
proposals to approve the use or transfer of reserves.
540N. Transfer Shareholder Equity Funds: The Company will vote for management
proposals to approve transfers between shareholder equity accounts.
541N. Authorize Trade in Company Stock: The Company will vote for management
proposals to authorize the company to trade in its own stock.
542N. Amend Tradable Lot Size: The Company will vote for management proposals
to change the size of tradable units.
543N. Restate/Adjust Capital for Inflation: The Company will evaluate
management proposals to restate or adjust capital for inflation on a
case-by-case basis.
544N. Amend Reporting Currency: The Company will vote for management
proposals to amend the company's reporting currency.
545N. Reduce Share Premium Account: The Company will vote for management
proposals to reduce the share premium account to clear deficits on
profit and loss accounts or to return cash to stakeholders.
546N. Allow Company to Give Guarantees: The Company will vote for management
proposals that allow companies to give guarantees.
547N. Add/Remove Exchange Listing(s): The Company will evaluate management
proposals to add or remove stock exchange listings on a case-by-case
basis.
37
CAPITAL STRUCTURE - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
548N. Appoint Risk-Rating Agency: The Company will vote for management
proposals to appoint a risk-rating agency.
549N. Authorize Nominal Capital Repayment: The Company will vote for
management proposals to authorize nominal capital repayment.
550N. Set Dividend/Allocate Profits: The Company will vote for management
proposals to determine how to apportion the company's profits for the
year and set the dividend.
551N. Allocate Dividend: The Company will vote for management proposals
relating to allocation of dividends.
552N. Waive Shareholder Approval for Profit Allocation: The Company will vote
for management proposals that waive shareholder approval for profit
allocation proposals.
553N. Approve Scrip Dividend/Dividend Reinvestment Plan: Stock dividend
programs allow investors to obtain additional shares on attractive
terms while enabling the company to conserve cash. The Company will
vote for management proposals to approve scrip dividends or dividend
reinvestment plans.
554N. Approve Special Dividend/Bonus Share Issue: The Company will vote for
management proposals that permit management to determine whether it is
in the company's interest to offer shareholders a special bonus
dividend.
555N. Amend Dividend Distribution Rules: The Company will vote for management
proposals to amend its dividend distribution rules.
556N. Approve Interim Dividend: The Company will vote for management
proposals to approve an interim dividend.
MERGERS AND CORPORATE RESTRUCTURINGS - U.S. PROPOSALS
- --------------------------------------------------------------------------------
601. Approve Merger/Acquisition: The Company will evaluate merger and
acquisition management proposals on a case-by-case basis. The Company
will consider the following factors:
1. Anticipated financial and operating benefits;
2. Offer price (cost vs. premium);
3. Prospects of the combined companies;
4. How the deal was negotiated;
5. Changes in corporate governance and their impact on
shareholder rights;
38
MERGERS AND CORPORATE RESTRUCTURINGS - U.S. (CONTINUED)
- --------------------------------------------------------------------------------
6. Corporate restructuring;
7. Spin-offs;
8. Asset sales;
9. Liquidations; and
10. Rights of appraisal.
602. Approve Restructuring: The Company will evaluate corporate
restructuring management proposals on case-by-case basis.
603. Approve Bankruptcy Restructuring: The Company will evaluate bankruptcy
restructuring management proposals on case-by-case basis.
604. Approve Liquidation: The Company will evaluate liquidation proposals by
management on a case-by-case basis and will review management's efforts
to pursue other alternatives, appraisal value of assets, and the
compensation plan for executives managing the liquidation.
605. Approve Leveraged Buyout: The Company will evaluate management
proposals to approve a leveraged buyout on a case-by-case basis.
606. Approve Spin-Off: The Company will evaluate spin-off proposals on a
case-by-case basis depending on the tax and regulatory advantages,
planned use of sale proceeds, market focus and managerial incentives.
607. Approve Sale of Assets: The Company will evaluate asset sale management
proposals on a case-by-case basis by assessing the impact on the
balance sheet/working capital and the value received for the asset.
MERGERS AND CORPORATE RESTRUCTURINGS - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
601N. Approve Merger/Acquisition: The Company will evaluate management
proposals to approve mergers and acquisitions on a case-by-case basis.
602N. Approve Joint Venture/Strategic Alliance: The Company will evaluate
management proposals to approve joint ventures or strategic
partnerships on a case-by-case basis.
603N. Approve Restructuring/Recapitalization: The Company will evaluate
management proposals to approve restructuring or recapitalization of
companies on a case-by-case basis.
39
MERGERS AND CORPORATE RESTRUCTURINGS - NON-U.S. (CONT.)
- --------------------------------------------------------------------------------
604N. Dissolve Company/Approve Liquidation: The Company will evaluate
management proposals to dissolve companies or approve liquidations on a
case-by-case basis.
605N. Ratify Liquidator's Fees: The Company will evaluate management
proposals to ratify liquidator's fees on a case-by-case basis.
606N. Approve Divestiture/Spin-Off: The Company will evaluate management
proposals to approve company divestitures or spin-offs on a
case-by-case basis.
607N. Approve Intra-Company Contracts: The Company will vote for management
proposals to approve intra-company contracts.
608N. Extend Investment Trust: The Company will vote for management proposals
to extend investment trusts.
609N. Dissolve Investment Trust: The Company will evaluate management
proposals to dissolve investment trusts on a case-by-case basis.
610N. Create Parent Holding Company: The Company will evaluate management
proposals to create a parent holding company on a case-by-case basis.
ANTI-TAKEOVER DEFENSES/VOTING RELATED ISSUES - U.S.
- --------------------------------------------------------------------------------
701. Adopt Advance Notice Requirement: The Company will vote for management
proposals to adopt advance notice requirements for shareholder
proposals. By requiring advance notice, the board can review and
consider shareholder presentations for their content and value as a
shareholder issue.
702. Approve Non-Technical Charter Amendments: The Company will vote for
management proposals to approve non-technical charter amendments unless
the amendments reduce shareholders' rights.
703. Approve Non-Technical Bylaw Amendments: The Company will vote for
management proposals to approve non-technical bylaw amendments unless
the amendments reduce shareholders' rights.
704. Adopt Poison Pill: A poison pill is a strategic move by a
takeover-target to make its stock less attractive. A target company
with a "pill" (also known as a shareholder rights plan) usually
distributes warrants or purchase rights that become exercisable when a
triggering event occurs. The Company will vote against management
proposals to adopt poison pills.
40
ANTI-TAKEOVER DEFENSES/VOTING RELATED ISSUES - U.S. (CONT.)
- --------------------------------------------------------------------------------
705. Redeem Poison Pill: The Company will vote for management proposals to
redeem poison pills.
706. Eliminate Written Consent: The Company will vote against management
proposals which eliminate written consent. Written consent allows
shareholders to initiate actions without calling a special meeting or
waiting until the annual meeting.
707. Limit Written Consent: The Company will vote against management
proposals which limit written consent.
708. Restore Written Consent: The Company will vote for management proposals
which restore written consent.
709. Eliminate Special Meeting: The Company will vote against management
proposals which eliminate the ability of shareholders to call special
meetings.
710. Limit Special Meeting: The Company will vote against management
proposals which limit shareholders' ability to call a special meeting.
711. Restore Special Meeting: The Company will vote for management proposals
which restore the ability of shareholders to call a special meeting.
712. Adopt Supermajority Requirement for Business Transactions: The Company
will vote against management proposals to adopt supermajority vote
requirements to approve mergers or other business combinations.
713. Amend Supermajority Requirement for Business Transactions: The Company
will vote for management proposals to amend supermajority requirements
for business transactions unless the amendment would increase the vote
required to approve a business transaction.
714. Eliminate Supermajority Requirement for Business Transactions: The
Company will vote for management proposals to eliminate supermajority
requirements for business transactions.
715. Adopt Supermajority Lock-in: The Company will vote against management
proposals to adopt supermajority lock-in vote requirements. In many
cases, supermajority lock-in vote requirements apply to anti-takeover
provisions.
716. Amend Supermajority Lock-in: The Company will evaluate management
proposals to amend supermajority lock-in vote requirements on a
case-by-case basis.
41
ANTI-TAKEOVER DEFENSES/VOTING RELATED ISSUES - U.S. (CONT.)
- --------------------------------------------------------------------------------
717. Eliminate Supermajority Lock-in: The Company will vote for management
proposals to eliminate supermajority lock-in vote requirements.
718. Consider Non-Financial Effects of Merger: Also called "directors'
duties," these anti-takeover provisions allow directors to consider the
non-financial interests of employees, suppliers, customers and the
communities in which the company operates, in addition to the financial
interests of shareholders, when assessing a merger proposal. The
Company will vote against management proposals to consider the
non-financial effects of a merger proposal.
ANTI-TAKOVER DEFENSES/VOTING RELATED ISSUES - NON-U.S.
- --------------------------------------------------------------------------------
701N. Adopt Poison-Pill-Style Defense: The Company will vote against
management proposals seeking to adopt poison-pill-style plans (known as
shareholder rights plans).
702N. Amend Poison-Pill-Style Defense: The Company will vote against
management proposals seeking to amend poison-pill-style plans.
703N. Limit Voting Rights: The Company will vote against management proposals
that seek to limit voting rights.
704N. Amend Voting Rights Limit: The Company will vote for management
proposals to amend voting rights unless the amendment would strengthen
the voting rights limit.
705N. End Voting Rights Limit: The Company will vote for management proposals
to remove a company's voting rights limitation.
706N. Require Voting Supermajority: The Company will vote against management
proposals that require voting supermajority.
707N. Amend Supermajority Requirement: The Company will vote for management
proposals to amend supermajority provisions unless the amendment would
increase the supermajority vote requirement.
708N. End Voting Supermajority: The Company will vote for management
proposals to end voting supermajority.
709N. Approve Share Transfer/Registration: Share transfer/registration is a
practice that serves as a defense in takeover attempts and allows
management to refuse to register shares acquired by an investor. The
shares in question then lose voting
42
ANTI-TAKOVER DEFENSES/VOTING RELATED ISSUES - NON-U.S. (CONT.)
- --------------------------------------------------------------------------------
rights but retain all other rights. The Company will evaluate
management proposals to approve share transfer/registration on a
case-by-case basis.
710N. End Share Transfer/Registration: The Company will evaluate management
proposals to end share transfer/registration on case-by-case basis.
711N. Registration of Shares: The Company will evaluate management proposals
relating to registration of shares on a case-by-case basis.
712N. End Foreign Investor Restrictions: The Company will vote for management
proposals to end foreign investor restrictions pertaining to
shareholders' rights to buy, hold, vote, sell and collect dividends on
the company's stock.
713N. Amend Foreign Investor Restrictions: The Company will evaluate
management proposals to amend foreign investor restrictions on a
case-by-case basis.
714N. Amend Shareholder Disclosure Rules: The Company will vote for
management proposals to amend shareholder disclosure rules.
715N. Waive Mandatory Takeover Requirement: The Company will evaluate
management proposals that seek to grant a waiver from the statutory
mandatory takeover requirement on a case-by-case basis.
716N. Require Approval for Partial Takeover Bids: The Company will evaluate
management proposals that require approval for partial takeover bids on
a case-by-case basis.
717N. Authorize Voting Record Date Changes (Japan Only): The traditional
record date in Japan is the fiscal year closing date, typically about
three months prior to the annual shareholder meeting. The Company will
vote for management proposals to authorize voting record date changes.
STATE OF INCORPORATION - U.S. PROPOSALS
- --------------------------------------------------------------------------------
801. Adopt Fair Price Provision: Fair price provisions require a
supermajority vote of the outstanding shares to approve a merger or
business combination unless the acquirer meets certain price
requirements or the merger is approved by the company's board. The
Company will vote for management proposals to adopt fair price
provisions.
802. Amend Fair Price Provision: The Company will vote for management
proposals to amend fair price provisions.
43
STATE OF INCORPORATION - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
803. Repeal Fair Price Provision: The Company will evaluate management
proposals to repeal fair price provisions on a case-by-case basis.
804. Adopt Anti-Greenmail Provision: Greenmail is the name given to certain
discriminatory share repurchases. Typically, it refers to payments that
a company makes to a raider in exchange for the raider's shares and a
guarantee the raider will terminate a takeover bid. This payment is
usually a premium above market price, so while greenmail can ensure the
continued independence of a company, it discriminates against the other
stockholders. The Company will vote for management proposals to adopt
anti-greenmail provisions.
805. Approve Reincorporation: The Company will vote for management proposals
to change a company's state of incorporation unless the proposal would
reduce shareholder rights (if the changes are not subject to a separate
shareholder vote).
806. Opt Out of State Takeover Law: Anti-takeover laws may include: (1)
control share acquisition, (2) fair price, (3) business combination
(also known as freeze-out or business moratorium), (4) directors'
duties, (5) poison pill endorsement and (6) profit recapture. The
Company will evaluate whether to opt out of state takeover laws on a
case-by-case basis.
807. Opt Into State Takeover Law: The Company will evaluate whether to opt
into state takeover laws on a case-by-case basis.
STATE OF INCORPORATION - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
801N. Approve Reincorporation: The Company will evaluate management proposals
to reincorporate on a case-by-case basis.
802N. Relocate Corporate Headquarters: The Company will vote for management
proposals to relocate the company's official headquarters.
CORPORATE RESPONSIBILITY - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
901N. Authorize Charitable Donations: The Company will vote for management
proposals to authorize charitable donations.
902N. Approve Political Donation: The Company will vote against management
proposals to approve political donations.
44
OTHER - U.S. PROPOSALS
- --------------------------------------------------------------------------------
1001. Miscellaneous Proposals: The Company will evaluate all management
proposals described as "miscellaneous" on a case-by-case basis.
OTHER - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
1001N. Approve Electronic Share Trading: The Company will vote for
management proposals to approve electronic share trading systems.
1002N. Approve Property Purchase: The Company will vote for management
proposals to approve a property purchase.
1003N. Approve Property Sale: The Company will vote for management proposals
to approve a property sale.
1004N. Ratify Management Acts-Symbolic: The Company will vote for management
proposals to ratify management acts (symbolic) in the previous year.
This traditional housekeeping measure is symbolic in nature and
carries no legal or financial consequences.
1005N. Ratify Management Acts-Legal: The Company will evaluate management
proposals to ratify management acts (legal) in the previous year on a
case-by-case basis.
1006N. Adopt Corporate Governance Standards: The Company will evaluate
management proposals to adopt corporate governance standards on a
case-by-case basis.
1007N. Miscellaneous Proposals: The Company will evaluate all management
proposals described as "miscellaneous" on a case-by-case basis.
SHARES OUT ON LOAN - U.S. PROPOSALS
- --------------------------------------------------------------------------------
1100. Shares Out on Loan: Proxies will typically not be voted when shares
are out on loan through client securities lending programs with their
custodians.
SHARE BLOCKING AND SHARES OUT ON LOAN - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
1100N. Share Blocking and Shares Out on Loan: The Company will generally
refrain from voting proxies on foreign securities that are subject to
share blocking restrictions. In addition, proxies will typically not
be voted when shares are out on loan through client securities
lending programs with their custodians.
45
GUIDELINES FOR VOTING SHAREHOLDER PROPOSALS
The Company will generally vote on shareholder proposals in accordance with the
following guidelines, however, because the Proxy Guidelines cannot anticipate
all situations and the surrounding facts of each proxy issue (including, without
limitation, foreign laws and practices that may apply to a proxy), some proxy
issues may require a case-by-case analysis (whether or not required by the Proxy
Guidelines) prior to voting and may result in a vote being cast that will
deviate from the Proxy Guidelines. In such cases, the proxy voting procedures
established by the Proxy Committee for such situations will be followed.
OPERATIONAL ITEMS - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-101. Change Annual Meeting Location: The Company will vote against
shareholder proposals to change the annual meeting location.
SP-102. Change Annual Meeting Date: The Company will vote against shareholder
proposals to change the annual meeting date.
SP-103. Improve Meeting Reports: The Company will vote against shareholder
proposals to improve meeting reports. Pertinent information on what
transpired at the meeting is usually available in the quarterly report
following the meeting, in letters to shareholders or from the corporate
secretary or the company's investor relations department.
BOARD OF DIRECTORS - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-201. Majority Vote to Elect Directors: The Company will vote for shareholder
proposals which require majority votes in director elections.
SP-202. Director Tenure/Retirement Age: The Company will vote against
shareholder proposals that seek to limit the period of time a director
can serve on the board or mandate a particular retirement age for
members of the board.
SP-203. Repeal Classified Board: The Company will vote for shareholder
proposals to repeal classified boards. Under a classified board
structure, directors are divided into separate classes (usually three)
with the directors in each class elected to overlapping multiyear
terms.
SP-204. Double Board Nominees: The Company will vote against double board
nominee shareholder proposals.
SP-205. Adopt Cumulative Voting: The Company will vote for shareholder
proposals to adopt cumulative voting.
46
BOARD OF DIRECTORS - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-206. Director Liability: The Company will vote against shareholder proposals
aimed at determining the appropriate level of personal liability of
board members.
SP-207. Independent Board Chairman: The Company will vote against shareholder
proposals that require an independent board chairman.
SP-208. Lead Director: The Company will vote against shareholder proposals that
require a lead director. A lead/presiding director must hold the
position for at least one year.
SP-209. Allow Union/Employee Representatives on the Board: The Company will
vote against shareholder proposals for union/employee representatives
to serve on the board.
SP-210. Increase Board Independence: The Company will vote for shareholder
proposals that seek to increase the independence of the board.
SP-211. Create Nominating Committee: The Company will vote against shareholder
proposals to create nominating committees.
SP-212. Increase Nominating Committee Independence: The Company will vote
against shareholder proposals to increase nominating committee
independence.
SP-213. Create Shareholder Committee: The Company will vote against shareholder
proposals to create shareholder committees.
SP-214. Create Compensation Committee: The Company will vote against
shareholder proposals to create compensation committees.
SP-215. Hire Independent Compensation Consultant: The Company will vote against
shareholder proposals to hire independent compensation consultants.
SP-216. Increase Compensation Committee Independence: The Company will vote
against shareholder proposals to increase compensation committee
independence.
SP-217. Increase Key Committee Independence: The Company will vote against
shareholder proposals to limit membership on the board's key committees
to directors who have no ties to the company other than those
relationships created as a result of their service on the board.
47
BOARD OF DIRECTORS - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-218. Minimum Stock Ownership by Directors: The Company will vote against
shareholder proposals that mandate a minimum amount of stock that
directors must own in order to qualify as a director or to remain on
the board.
SP-219. Directors' Role in Corporate Strategy: The Company will vote against
shareholder proposals relating to disclosure of directors' role in
corporate strategy. Strategy planning tasks are within the normal
definition of the directors' role and do not need to be specifically
disclosed, and/or are adequately defined in most companies' existing
documents. Too much disclosure regarding strategy formation could put a
company at a competitive disadvantage.
SP-220. Require Nominee Statement in Proxy: The Company will vote against
shareholder proposals requiring nominee statements in proxies.
BOARD OF DIRECTORS - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-201N. Elect Dissident Director(s): The Company will evaluate shareholder
proposals to elect dissident directors on a case-by-case basis.
SP-202N. Elect Dissident Supervisory Board: The Company will evaluate
shareholder proposals to elect dissident supervisory boards on a
case-by-case basis.
SP-203N. Set Age Limit on Directors: The Company will vote against shareholder
proposals that seek to set a retirement age for board members.
SP-204N. Oust Director(s): The Company will evaluate shareholder proposals to
oust members of the board on a case-by-case basis.
SP-205N. Establish Key Board Committees: The Company will evaluate shareholder
proposals to establish key board committees on a case-by-case basis.
SP-206N. Amend Board Procedures: The Company will evaluate shareholder proposals
to amend board procedures on a case-by-case basis.
SP-207N. Limit Number of Boards Directors Sit On: The Company will vote against
shareholder proposals that seek to limit the number of boards on which
a director may serve.
48
AUDITOR/FINANCIAL STATEMENT RELATED - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-301. Shareholder Approval of Auditors: The Company will vote for shareholder
proposals which allow shareholders to ratify the company's independent
auditor selection.
SP-302. Limit Non-Audit Fees: The Company will vote against shareholder
proposals that limit non-audit fees. The Sarbanes-Oxley Act of 2002
("the Act") contains provisions that establish safeguards that promote
auditor independence. Since certain non-audit services are now
prohibited, and the Act requires audit committees to pre-approve
non-audit services, there is no need to set arbitrary limitations on
the provision of these services.
SP-303. Increase Audit Committee Independence: The Company will vote for
shareholder proposals to increase audit committee independence.
SP-304. Auditors Must Attend Annual Meeting: The Company will vote against
shareholder proposals which require attendance by the auditors at the
annual meeting.
SP-305. Rotate Auditors: The Company will vote against shareholder proposals
that require mandatory auditor rotation.
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-401. Restrict/Reform Executive Compensation: The Company will vote against
shareholder proposals that restrict or seek to reform executive
compensation.
SP-402. Approve Executive Compensation: The Company will vote against
shareholder proposals that permit shareholders to approve executive pay
packages.
SP-403. Disclose Executive Compensation: The Company will vote against
shareholder proposals that require additional disclosure for executive
compensation above and beyond the disclosure required by the Securities
and Exchange Commission ("SEC") regulations.
SP-404. Cap Executive Pay: The Company will vote against shareholder proposals
to cap executive pay. Caps may put a company at a competitive
disadvantage by negatively affecting its ability to attract, motivate
and retain highly qualified executives.
SP-405. Require Equity Awards to be Held: The Company will vote against
shareholder proposals which require stock holding requirements for
executives.
49
EXECUTIVE AND DIRECTOR COMPENSATION - U.S. (CONTINUED)
- --------------------------------------------------------------------------------
SP-406. Restrict Director Compensation: The Company will vote against
shareholder proposals that seek to restrict director compensation.
SP-407. Pay Directors in Stock: The Company will vote against shareholder
proposals that require directors to be paid in stock.
SP-408. Restrict Director Pensions: The Company will vote against shareholder
proposals which restrict director pensions.
SP-409. No Re-pricing of Underwater Options: The Company will vote for
shareholder proposals requesting companies not re-price underwater
options (i.e. turn in options with exercise prices above the current
market value of the stock for new options at or below the market
value).
SP-410. Award Performance-Based Stock Options: The Company will vote against
shareholder proposals to award performance-based options.
SP-411. Golden Parachutes: The Company will vote for shareholder proposals
which require shareholder approval of golden parachutes or shareholder
proposals which limit golden parachutes. Golden parachutes are
severance packages contingent upon a change in control (i.e. benefits
given to top executives in the event that a company is taken over by
another firm, resulting in the loss of their job).
SP-412. Add Performance Criteria to Equity-Based Awards: The Company will vote
against shareholder proposals to add performance criteria to
equity-based awards.
SP-413. Expense Stock Options: The Company will vote for shareholder proposals
requesting that stock options be expensed.
SP-414. Pension Fund Surplus: The Company will vote against shareholder
proposals which seek to exclude pension fund figures when calculating
performance-based compensation payouts or awards.
SP-415. Approve and/or Disclose SERPs: A supplemental executive retirement
plan, or SERP, is a plan that supplements management's pension plan
benefits above the limit established by the Internal Revenue Service.
The Company will vote against shareholder approval of benefits under
these plans.
SP-416. Advisory Vote on Compensation: The Company will vote against
shareholder proposals for an advisory vote on compensation.
50
EXECUTIVE AND DIRECTOR COMPENSATION - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-401N. Oppose/Change Executive Pay: The Company will evaluate shareholder
proposals which oppose or seek to change executive pay on a
case-by-case basis.
CAPITAL STRUCTURE - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-501. Restore Preemptive Rights: Preemptive rights give existing shareholders
a "right of first refusal" to purchase new issues of shares to maintain
their proportional ownership in the company. The Company will vote
against shareholder proposals to restore preemptive rights.
CAPITAL SRUCTURE - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-501N. Restrict Capital Increases: The Company will evaluate shareholder
proposals to restrict capital increases on a case-by-case basis.
SP-502N. Restore Preemptive Rights: The Company will evaluate shareholder
proposals that seek to restore preemptive rights on a case-by-case
basis.
SP-503N. Remove Multiple-Voting Rights: The Company will vote for shareholder
proposals that would abolish multiple-voting rights.
SP-504N. Increase Dividend: The Company will evaluate shareholder proposals to
increase the dividend on a case-by-case basis.
SP-505N. Redistribute Profits: The Company will evaluate shareholder proposals
to redistribute profits on a case-by-case basis.
MERGERS AND CORPORATE RESTRUCTURINGS - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-601. Study Sale or Spin-Off: The Company will vote against shareholder
proposals that seek to study sales, spin-offs or other strategic
alternatives.
MERGERS AND CORPORATE RESTRUCTURINGS - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-601N. Oppose Merger/Acquisition: The Company will evaluate shareholder
proposals that oppose mergers and acquisitions on a case-by-case basis.
SP-602N. Restructure Investments: The Company will vote against shareholder
proposals to restructure investments.
51
MERGERS AND CORPORATE RESTRUCTURINGS-NON-U.S. (CONTINUED)
- --------------------------------------------------------------------------------
SP-603N. Liquidate Company: The Company will evaluate shareholder proposals to
liquidate companies on a case-by-case basis.
ANTI-TAKEOVER DEFENSES/VOTING RELATED ISSUES - U.S.
- --------------------------------------------------------------------------------
SP-701. Redeem or Vote on Poison Pill: The Company will vote for shareholder
proposals that request the board of directors to redeem poison pill
provisions or call for poison pills to be put to a vote.
SP-702. Right to Act by Written Consent: The Company will vote against
shareholder proposals to permit shareholders to take action by written
consent. Written consent allows shareholders to initiate actions
without calling a special meeting or waiting until the annual meeting.
SP-703. Restore Right to Call Special Meeting: The Company will vote against
shareholder proposals to grant shareholders the ability to call special
meetings.
SP-704. Eliminate Supermajority Provision: The Company will vote for
shareholder proposals to eliminate existing supermajority vote
requirements to amend the charters or bylaws as well as approve
mergers, acquisitions and other business combinations.
SP-705. Reduce Supermajority Provision: The Company will vote for shareholder
proposals to reduce existing supermajority vote provisions.
SP-706. Prohibit Targeted Share Placement: The Company will vote for
shareholder proposals to prohibit targeted share placement. Targeted
share placements are issuances of blocks of company securities, usually
preferred stock, to a friendly shareholder. Often such placements are
made to defend against takeovers or to obtain favorable financing.
SP-707. Counting Shareholder Votes: The Company will vote against shareholder
proposals pertaining to the methods of counting shareholders' votes.
SP-708. No Discretionary Voting: The Company will vote against shareholder
proposals relating to discretionary voting. Company proxy cards have
historically given shareholders the opportunity to grant a
discretionary proxy in matters consistent with federal and state laws.
Shareholders should not be required to mark their proxies in order to
have their proxies counted in the vote. Proxy cards clearly indicate
how unmarked but signed proxies will be voted.
52
ANTI-TAKEOVER DEFENSES/VOTING RELATED ISSUES - U.S. (CONT.)
- --------------------------------------------------------------------------------
SP-709. Adopt Confidential Voting: The Company will vote against shareholder
proposals requesting that corporations adopt confidential voting.
SP-710. Equal Access to the Proxy: The Company will vote for shareholder
proposals to allow shareholders equal access to management's proxy
material so they can evaluate and propose voting recommendations on
proxy proposals and director nominees.
ANTI-TAKEOVER DEFENSES AND VOTING RELATED ISSUES - NON-U.S.
- --------------------------------------------------------------------------------
SP-701N. End Bars on Foreign Investors: The Company will vote for shareholder
proposals to end restrictions on foreign investors.
SP-702N. End Voting Rights Limitation: The Company will vote for shareholder
proposals to end voting rights limitations.
SP-703N. Facilitate Shareholder Proposals: The Company will vote against
shareholder proposals relating to the introduction of shareholder
proposals.
SP-704N. Approve Confidential Voting: The Company will vote for shareholder
proposals to approve confidential voting.
STATE OF INCORPORATION - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-801. Repeal Fair Price Provision: Fair price provisions require a
supermajority vote of the outstanding shares to approve a merger or
business combination unless the acquirer meets certain price
requirements or the merger is approved by the company's board. The
Company will vote against shareholder proposals to repeal fair price
provisions.
SP-802. Adopt Anti-Greenmail Provision: Greenmail is the name given to certain
discriminatory share repurchases. Typically, it refers to payments that
a company makes to a raider in exchange for the raider's shares and a
guarantee the raider will terminate a takeover bid. This payment is
usually a premium above market price, so while greenmail can ensure the
continued independence of a company, it discriminates against the other
stockholders. The Company will vote for shareholder proposals to adopt
anti-greenmail provisions.
SP-803. Reincorporation: The Company will vote for shareholder proposals
requesting the company change its state of incorporation unless the new
state has stronger anti-takeover provisions.
53
STATE OF INCORPORATION - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-804. Opt Out of State Takeover Statute: Anti-takeover laws may include: (1)
control share acquisition, (2) fair price, (3) business combination
(also known as freeze-out or business moratorium), (4) directors'
duties, (5) poison pill endorsement and (6) profit recapture. The
Company will vote against shareholder proposals to opt out of
state/country takeover laws.
CORPORATE RESPONSIBILITY - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-901. Review or Promote Animal Welfare: The Company will vote against
shareholder proposals that ask companies to review, report on or
improve the welfare of animals in their care, and of animals that
provide food for company products.
SP-902. Review Drug Pricing or Distribution: The Company will vote against
shareholder proposals asking for drug price restraint or disclosure.
SP-903. Review Response to or Impact of Pandemics: The Company will vote
against shareholder proposals asking companies to review their response
to pandemics (i.e. HIV/AIDS, TB, malaria, etc.), or to review the
impact of pandemics on their business.
SP-904. Oppose Embryo/Fetal Destruction: The Company will vote against
shareholder proposals aimed to halt companies' practices of abortion or
research or contraceptive methods that cause the destruction of embryos
or fetuses.
SP-905. Review Tobacco Marketing: The Company will vote against shareholder
proposals asking management to report on or change tobacco product
marketing practices.
SP-906. Sever Links with Tobacco Industry: The Company will vote against
shareholder proposals that ask a company to report on or approve the
dissolution of links with the tobacco industry.
SP-907. Review or Reduce Tobacco Harm to Health: The Company will vote against
shareholder proposals that ask a company to review or reduce tobacco
harm to health.
SP-908. Review Nuclear Facility/Waste: The Company will vote against
shareholder proposals asking companies that operate nuclear power
plants or handle radioactive waste to review the safety and
competitiveness of these operations; to revise operating procedures, if
necessary, to reduce safety risks; and to report to shareholders on
these efforts.
54
CORPORATE RESPONSIBILITY - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-909. Review Energy Efficiency & Renewables: The Company will vote against
shareholder proposals that ask companies to reduce their reliance on
nuclear and fossil fuels, to develop or use solar and wind power, or to
promote energy efficiency.
SP-910. Endorse Ceres Principles: The Ceres Principles are a broad statement of
environmental policy. The Company will vote against shareholder
proposals requesting the company endorse the Ceres Principles.
SP-911. Control Generation of Pollutants: The Company will vote against
shareholder proposals asking management to control emissions and solid
waste generation and consider pollution prevention programs and product
recycling initiatives.
SP-912. Report on Environmental Impact or Plans: The Company will vote against
shareholder requests for additional information on corporate
environmental impact or plans.
SP-913. Review Social Impact of Financial Ventures: The Company will vote
against shareholder proposals that ask companies to conduct reviews of
the social and environmental consequences of their lending activities.
SP-914. Report or Take Action on Climate Change: The Company will vote against
shareholder proposals that ask management to report or take action on
climate change.
SP-915. Review/Reduce Toxicity of Product Formulation: The Company will vote
against shareholder proposals requesting that companies reduce the
toxicity of their products beyond legal requirements.
SP-916. Review or Curb Bioengineering: The Company will vote against
shareholder proposals that ask the company to review or curb its
bioengineering.
SP-917. Preserve/Report on Natural Habitat: The Company will vote against
shareholder proposals that ask management to take action or institute
policy changes concerning the development of wilderness, open areas or
cultural sites.
SP-918. Report on Sustainability: The Company will vote against shareholder
proposals that ask companies to report on corporate economic,
environmental and social performance.
55
CORPORATE RESPONSIBILITY - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-919. Review Charitable Giving Policy: The Company will vote against
shareholder proposals asking management to review or report on its
charitable giving program.
SP-920. Limit or End Charitable Giving: The Company will vote against
shareholder proposals that ask companies to limit or end their
charitable giving.
SP-921. Review Political Spending or Lobbying: "Political spending" includes
both "political contributions," such as money given to political party
committees (including local committees) and spent on political action
committees and money spent on lobbying. The Company will vote against
shareholder proposals to review corporate political activities.
SP-922. Limit or End Political Spending: The Company will vote against
shareholder proposals asking the company to end or restrict its
political payments.
SP-923. Disclose Prior Government Service: The Company will vote against
shareholder proposals requesting information on the background of
company executives, including prior government service.
SP-924. Affirm Political Nonpartisanship: The Company will vote against
shareholder proposals asking the company to affirm political
nonpartisanship.
SP-925. Link Executive Pay to Social Criteria: The Company will vote against
shareholder proposals which seek to link executive pay to
non-financial/social criteria.
SP-926. Develop/Report on Human Rights Policy: The Company will vote against
shareholder proposals asking management to develop or report on their
human rights policies.
SP-927. Review/Develop Ethics Policy: The Company will vote against shareholder
proposals asking management to develop an ethics policy and report to
shareholders on such policy.
SP-928. Review Operations' Impact on Local Groups: The Company will vote
against shareholder proposals that ask a company to conduct a review of
its operations' impact on local communities.
SP-929. Burma-Limit or End Operations: The Company will vote against
shareholder proposals to limit or end operations in Burma.
56
CORPORATE RESPONSIBILITY - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-930. Burma-Review Operations: The Company will vote against shareholder
proposals requesting companies to report on the cost of doing business
in Burma, including the risk of consumer boycotts and divestment
campaigns.
SP-931. China-No Use of Forced Labor: The Company will evaluate shareholder
proposals requesting companies to have a certification process to
ensure that it does not contract with organizations that use forced
labor in China on a case-by-case basis.
SP-932. China-Adopt Code of Conduct: The Company will vote against shareholder
proposals to require companies to adopt principles aimed at correcting
working conditions in China that fall below basic standards of fair and
humane treatment.
SP-933. Review Mexican Work Force Conditions: The Company will vote against
shareholder proposals asking companies to review or report on Mexican
operations.
SP-934. Adopt Standards for Mexican Operation: The Company will vote against
shareholder proposals asking management to adopt standards for Mexican
operations.
SP-935. Review or Implement MacBride Principles: The Company will vote against
shareholder proposals that are aimed at anti-Catholic discrimination
within Northern Ireland as outlined in the MacBride Principles.
SP-936. Urge MacBride on Contractor/Franchisee: The Company will vote against
shareholder proposals that ask companies whose presence in Northern
Ireland is through franchises or subcontractors to urge them to
implement the MacBride Principles.
SP-937. Review Global Labor Practices: The Company will vote against
shareholder proposals asking companies to review or report on company
and contractor labor practices.
SP-938. Review Developing Country Debt: The Company will vote against
shareholder proposals which request that management report on its
criteria for lending to developing and/or emerging market economies.
SP-939. Review Military Contracting Criteria: The Company will oppose
shareholder proposals that ask management to explain how it determines
whether to accept a defense contract, and what consideration, if any,
it gives to the social, economic and ethical dimensions therein.
57
CORPORATE RESPONSIBILITY - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-940. Review Economic Conversion: The Company will vote against shareholder
proposals which ask the management of a company heavily dependent on
defense contracting for details on how it plans to provide for the
continued economic and financial viability of the company.
SP-941. Review Space Weapons: The Company will vote against shareholder
proposals requesting management to report on the company's
participation in the development of ballistic missile defense
technologies and related space systems.
SP-942. Review Foreign Military Sales: The Company will vote against
shareholder proposals to review the company's foreign military sales.
SP-943. Limit or End Nuclear Weapons Productions: The Company will vote against
shareholder proposals requesting that the company reduce or end its
involvement in nuclear weapons productions.
SP-944. Review Nuclear Weapons Production: The Company will vote against
shareholder proposals which ask the company to report on various
aspects of its nuclear weapons production program.
SP-945. Review Fair Lending Policy: The Company will vote against shareholder
proposals that ask banks and other financial institutions to conduct
reviews and issue reports pertaining to their fair lending policies.
SP-946. Review Job Cuts or Relocations: The Company will vote against
shareholder proposals that ask a company to report on its rationale for
job cuts or relocation and the impact these past or planned actions
will have on the company's stakeholders.
SP-947. Report on EEO: The Company will vote against shareholder proposals that
ask a company to report on its equal employment opportunity (EEO)
practices.
SP-948: Board Inclusiveness: The Company will vote against shareholder
proposals to include more women and members of racial minorities among
director candidates.
SP-949. Drop Sexual Orientation from EEO Policy: The Company will vote against
shareholder proposals that ask management to drop the reference to
sexual orientation in corporate-wide non-discrimination policies.
SP-950. Adopt Sexual Orientation Anti-Bias Policy: The Company will vote
against shareholder proposals that ask companies to adopt sexual
orientation anti-bias policies.
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CORPORATE RESPONSIBILITY - U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-951. Monitor/Adopt ILO Provisions: The Company will vote against shareholder
proposals asking companies to enforce core International Labor
Organization (ILO) conventions.
SP-952. Miscellaneous Corporate Responsibility Proposals: The Company will vote
against shareholder proposals relating to corporate responsibility
issues that are described as "miscellaneous."
CORPORATE RESPONSIBILITY - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-901N. Review Nuclear Facility/Waste: The Company will vote against
shareholder proposals asking companies that operate nuclear power
plants or handle radioactive waste to review the safety and
competitiveness of these operations; to revise operating procedures, if
necessary, to reduce safety risks; and to report to shareholders on
these efforts.
SP-902N. Review Energy Efficiency & Renewables: The Company will vote against
shareholder proposals that ask companies to reduce their reliance on
nuclear and fossil fuels, to develop or use solar and wind power, or to
promote energy efficiency.
SP-903N. Control Generation of Pollutants: The Company will vote against
shareholder proposals asking management to control emissions and solid
waste generation and consider pollution prevention programs and product
recycling initiatives.
SP-904N. Report on Environmental Impact or Plans: The Company will vote against
shareholder requests for additional information on corporate
environmental impact or plans.
SP-905N. Report or Take Action on Climate Change: The Company will vote against
shareholder proposals that ask management to report or take action on
climate change.
SP-906N. Preserve/Report on Natural Habitat: The Company will vote against
shareholder proposals that ask management to take action or institute
policy changes concerning the development of wilderness, open areas or
cultural sites.
SP-907N. Review Charitable Giving Policy: The Company will evaluate shareholder
proposals asking management to report to shareholders on the rationales
for and recipients of their charitable giving programs on a
case-by-case basis.
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CORPORATE RESPONSIBILITY - NON-U.S. PROPOSALS (CONTINUED)
- --------------------------------------------------------------------------------
SP-908N. Review Political Spending or Lobbying: The Company will evaluate
shareholder proposals asking management to report on corporate
political activities on a case-by-case basis.
SP-909N. Limit or End Political Spending: The Company will vote against
shareholder proposals to limit or end political spending.
SP-910N. Develop/Report on Human Rights Policy: The Company will evaluate
shareholder proposals asking management to develop or report on the
company's human rights policy on a case-by-case basis.
SP-911N. Commit to Increase Representation of Women: The Company will vote
against shareholder proposals that ask companies to increase the
representation of women on their boards or in senior managerial or
professional professions.
SP-912N. Monitor/Adopt ILO Conventions: The Company will vote against
shareholder proposals asking companies to enforce core International
Labor Organization (ILO) conventions.
SP-913N. Miscellaneous Corporate Responsibility Proposals: The Company will
vote against shareholder proposals relating to corporate
responsibility issues that are described as "miscellaneous."
OTHER - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-1001. Miscellaneous Proposals: The Company will evaluate all shareholder
proposals, except those relating to corporate responsibility issues,
described as "miscellaneous" on a case-by-case basis.
OTHER - NON-U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-1001N. Improve Disclosure: The Company will vote against shareholder
proposals to improve company disclosure.
SP-1002N. Miscellaneous Proposals: The Company will evaluate all shareholder
proposals, except those relating to corporate responsibility issues,
described as "miscellaneous" on a case-by-case basis.
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SHARES OUT ON LOAN - U.S. PROPOSALS
- --------------------------------------------------------------------------------
SP-1100. Shares Out on Loan: Proxies will typically not be voted when shares are
out on loan through client securities lending programs with their
custodians.
- --------------------------------------------------------------------------------
SHARE BLOCKING AND SHARES OUT ON LOAN - NON-U.S. PROPOSALS
SP-1100N. Share Blocking and Shares Out on Loan: The Company will generally
refrain from voting proxies on foreign securities that are subject to
share blocking restrictions. In addition, proxies will typically not be
voted when shares are out on loan through client securities lending
programs with their custodians.
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