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29 |
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(i) |
State
Street, in connection with the provision of services as the Funds’
custodian, administrator, transfer agent, securities lending agent and
short sales lending agent; |
(ii) |
Third-party
providers of proxy voting services, such as Institutional Shareholder
Services Inc. (“ISS”) and mailing services such as Broadridge Financial
Solutions, Inc. (“Broadridge”); |
(iii) |
Cohen
& Company, Ltd., the Funds’ independent registered public accountant,
in connection with the provision of services related to the audit of the
Funds’ financial statements and certain non-audit
services; |
(iv) |
Third-party
providers of pricing/analytical/reconciliation services, such as FT
Interactive Data Corporation, FactSet, Bloomberg Valuation Service (BVAL)
and Electra Information Systems; |
(v) |
Ratings
and ranking organizations, such as Morningstar, Inc. and Lipper/Thomson
Reuters; |
(vi) |
Faegre
Drinker Biddle & Reath LLP, in connection with the provision of
services as legal counsel to the Funds; |
(vii) |
Foreside
Financial Group, LLC in connection with the provision of services related
to the Funds’ compliance program; |
(viii) |
Barclays
Capital Inc., BTIG LLC, J.P. Morgan Securities LLC and its affiliates,
Goldman Sachs Execution and Clearing LP and Goldman, Sachs & Co., in
connection with the performance of brokerage and options trading and
related functions; and |
(ix) |
Third-party
financial printers, such as Broadridge Financial
Solutions. |
|
30 |
|
(1) |
invest
in commodities or commodity contracts, except that each Portfolio may
invest in futures contracts and options; |
(2) |
purchase
or sell real estate, although it may purchase and sell securities of
companies which deal in real estate and may purchase and sell securities
which are secured by interests in real estate; |
(3) |
make
loans, except (i) by purchasing bonds, debentures or similar obligations
(including repurchase agreements, subject to the limitation described in
investment limitation (9) below, and money market instruments, including
bankers’ acceptances and commercial paper, and selling securities on a
when issued, delayed settlement or forward delivery basis) which are
publicly or privately distributed, and (ii) by lending its portfolio
securities to banks, brokers, dealers and other financial institutions so
long as such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the SEC thereunder;
|
(4) |
purchase
on margin or sell short, except as specified above in investment
limitation (1); |
(5) |
purchase
more than 10% of any class of the outstanding voting securities of any
issuer; |
(6) |
issue
senior securities, except that a Portfolio may borrow money in accordance
with investment limitation (7) below, purchase securities on a when
issued, delayed settlement or forward delivery basis and enter into
reverse repurchase agreements; |
(7) |
borrow
money, except as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 10% of its total assets at the time of
the borrowing (entering into reverse repurchase agreements and purchasing
securities on a when issued, delayed settlement or forward delivery basis
are not subject to this investment limitation); |
(8) |
pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10%
of its total assets at fair market value, except as described in the
Prospectus and this SAI and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in connection
with the writing of covered put and call options and the purchase of
securities on a when issued, delayed settlement or forward delivery basis
and collateral arrangements with respect to initial or variation margin
for futures contracts will not be deemed to be pledges of a Portfolio’s
assets or the purchase of any securities on margin for purposes of this
investment limitation; |
(9) |
underwrite
the securities of other issuers or invest more than an aggregate of 10% of
the total assets of the Portfolio, at the time of purchase, in securities
for which there are no readily available markets, including repurchase
agreements which have maturities of more than seven days or, in the case
of each Portfolio, securities subject to legal or contractual restrictions
on resale; |
(10) |
invest
for the purpose of exercising control over management of any company;
|
(11) |
invest
its assets in securities of any investment company, except in connection
with mergers, acquisitions of assets or consolidations and except as may
otherwise be permitted by the 1940 Act;
|
|
31 |
|
(12) |
acquire
any securities of companies within one industry if, as a result of such
acquisition, more than 25% of the value of the Portfolio’s total assets
would be invested in securities of companies within such industry;
provided, however, that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies,
enterprises or instrumentalities; and |
(13) |
write
or acquire options or interests in oil, gas or other mineral exploration
or development programs. Each Portfolio also will not:
|
(14) |
with
respect to 75% of its total assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed by the U.S. Government, its
agencies, enterprises or instrumentalities). |
(1) |
invest
in commodities or commodity contracts, except that each Portfolio may
invest in futures contracts and options; |
(2) |
purchase
or sell real estate, although it may purchase and sell securities of
companies which deal in real estate and may purchase and sell securities
which are secured by interests in real estate; |
(3) |
make
loans, except (i) by purchasing bonds, debentures or similar obligations
(including repurchase agreements, subject to the limitation described in
investment limitation (9) below, and money market instruments, including
bankers’ acceptances and commercial paper, and selling securities on a
when issued, |
|
32 |
|
(4) |
purchase
on margin or sell short, except as specified above in investment
limitation (1); |
(5) |
purchase
more than 10% of any class of the outstanding voting securities of any
issuer; |
(6) |
issue
senior securities, except that a Portfolio may borrow money in accordance
with investment limitation (7) below, purchase securities on a when
issued, delayed settlement or forward delivery basis and enter into
reverse repurchase agreements; |
(7) |
borrow
money, except as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 10% of its total assets at the time of
the borrowing (entering into reverse repurchase agreements and purchasing
securities on a when issued, delayed settlement or forward delivery basis
are not subject to this investment limitation); |
(8) |
pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10%
of its total assets at fair market value, except as described in the
Prospectuses and this SAI and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in connection
with the writing of covered put and call options and the purchase of
securities on a when issued, delayed settlement or forward delivery basis
and collateral arrangements with respect to initial or variation margin
for futures contracts will not be deemed to be pledges of a Portfolio’s
assets or the purchase of any securities on margin for purposes of this
investment limitation; |
(9) |
underwrite
the securities of other issuers or invest more than an aggregate of 15% of
the total assets of the Portfolio, at the time of purchase, in securities
for which there are no readily available markets, including repurchase
agreements which have maturities of more than seven days or, in the case
of each Portfolio, securities subject to legal or contractual restrictions
on resale; |
(10) |
invest
for the purpose of exercising control over management of any company;
|
(11) |
invest
its assets in securities of any investment company, except in connection
with mergers, acquisitions of assets or consolidations and except as may
otherwise be permitted by the 1940 Act; |
(12) |
acquire
any securities of companies within one industry if, as a result of such
acquisition, more than 25% of the value of the Portfolio’s net assets
would be invested in securities of companies within such industry;
provided, however, that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies,
enterprises or instrumentalities; and |
(13) |
write
or acquire options or interests in oil, gas or other mineral exploration
or development programs. |
(14) |
with
respect to 75% of its total assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed by the U.S. Government, its
agencies, enterprises or instrumentalities). |
|
33 |
|
(1) |
invest
in commodities or commodity contracts, except that the Portfolio may
invest in futures contracts, options, swaps and other derivative
instruments; |
(2) |
purchase
or sell real estate, although it may purchase and sell securities of
companies which deal in real estate and may purchase and sell securities
which are secured by interests in real estate; |
(3) |
make
loans, except (1) by purchasing bonds, debentures or similar obligations
(including repurchase agreements and money market instruments, including
bankers’ acceptances and commercial paper, and selling securities on a
when issued, delayed settlement or forward delivery basis) which are
publicly or privately distributed, and (2) by lending its portfolio
securities to banks, brokers, dealers and other financial institutions so
long as such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the SEC thereunder;
|
(4) |
purchase
more than 10% of any class of the outstanding voting securities of any
issuer; |
(5) |
issue
senior securities to the extent such issuance would violate applicable
law; |
(6) |
borrow
money, except (1) as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 10% of its total assets at the time of
the borrowing (entering into reverse repurchase agreements, and purchasing
securities on a when issued, delayed settlement or forward delivery basis
are not subject to this investment limitation), (2) the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities, and (3) the Portfolio may
purchase securities on margin to the extent permitted by applicable law.
Derivative transactions such as options, futures contracts and swaps are
not considered to involve borrowings of money and are not subject to these
restrictions; |
(7) |
pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10%
of its total assets at fair market value, except as described in the
Prospectus and this SAI and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in connection
with futures, swaps, put and call options and the purchase of securities
on a when issued, delayed settlement or forward delivery basis or other
permitted investment techniques and collateral arrangements with respect
to initial or variation margin for such transactions will not be deemed to
be pledges or other encumbrance of the Portfolio’s assets or the purchase
of any securities on margin for purposes of this investment limitation;
|
(8) |
invest
for the purpose of exercising control over management of any company;
|
(9) |
invest
its assets in securities of any investment company, except in connection
with mergers, acquisitions of assets or consolidations and except as may
otherwise be permitted by the 1940 Act; |
(10) |
acquire
any securities of companies within one industry if, as a result of such
acquisition, more than 25% of the value of the Portfolio’s total assets
would be invested in securities of companies within such industry;
provided, however, that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies,
enterprises or instrumentalities; |
(11) |
invest
in interests in oil, gas or other mineral exploration or development
programs; |
(12) |
with
respect to 75% of its total assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed by the U.S. Government, its
agencies, enterprises or instrumentalities); and
|
|
34 |
|
(13) |
underwrite
the securities of other issuers, except to the extent that the sale of
portfolio securities by the Portfolio may be deemed to be an underwriting.
|
(a) |
invest
in commodities or commodity contracts, except that each Portfolio may
invest in futures contracts, options, swaps and other derivative
instruments; |
(b) |
purchase
or sell real estate, although it may purchase and sell securities of
companies which deal in real estate and may purchase and sell securities
which are secured by interests in real estate; |
(c) |
make
loans, except (1) by purchasing bonds, debentures or similar obligations
(including repurchase agreements, subject to the limitation described in
investment limitation (h) below, and money market instruments, including
bankers’ acceptances and commercial paper, and selling securities on a
when issued, delayed settlement or forward delivery basis) which are
publicly or privately distributed, and (2) by lending its portfolio
securities to banks, brokers, dealers and other financial institutions so
long as such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the SEC thereunder;
|
(d) |
purchase
more than 10% of any class of the outstanding voting securities of any
issuer; |
(e) |
issue
senior securities to the extent such issuance would violate applicable
law; |
(f) |
borrow
money, except (1) each Portfolio, to the extent permitted by applicable
law, may borrow from banks (as defined in the 1940 Act), other affiliated
investment companies and other persons, enter into reverse repurchase
agreements, and purchase securities on a when issued, delayed settlement
or forward delivery basis in amounts up to 33⅓% of its total assets
(including the amount borrowed), (2) each Portfolio may, to the extent
permitted by applicable law, borrow up to an additional 5% of its total
assets for temporary purposes, (3) each Portfolio may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities, and (4) each Portfolio may purchase
securities on margin to the extent permitted by applicable law. Short
sales of securities as well as other derivative transactions such as
futures contracts and swaps are not considered to involve borrowings of
money and are not subject to these restrictions;
|
(g) |
pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10%
of its total assets at fair market value, except as described in the
Prospectus and this SAI and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in connection
with short sales, swaps, borrowings, the writing of covered put and call
options and the purchase of securities on a when issued, delayed
settlement or forward delivery basis or other permitted investment
techniques and collateral arrangements with respect to initial or
variation margin for such transactions will not be deemed to be pledges or
other encumbrance of a Portfolio’s assets or the purchase of any
securities on margin for purposes of this investment limitation;
|
(h) |
invest
for the purpose of exercising control over management of any company;
|
|
35 |
|
(i) |
invest
its assets in securities of any investment company, except in connection
with mergers, acquisitions of assets or consolidations and except as may
otherwise be permitted by the 1940 Act; |
(j) |
acquire
any securities of companies within one industry if, as a result of such
acquisition, more than 25% of the value of the Portfolio’s total assets
would be invested in securities of companies within such industry;
provided, however, that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies,
enterprises or instrumentalities; |
(k) |
write
or acquire options or interests in oil, gas or other mineral exploration
or development programs; |
(l) |
with
respect to 75% of its total assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed by the U.S. Government, its
agencies, enterprises or instrumentalities); and
|
(m) |
underwrite
the securities of other issuers, except to the extent that the sale of
portfolio securities by the Portfolio may be deemed to be an underwriting.
|
(1) |
with
respect to limitation (j), invest more than 25% of the value of its total
assets in instruments issued by U.S. banks; or |
(2) |
invest
more than an aggregate of 15% of the net assets of the Portfolio, at the
time of purchase, in illiquid securities. |
(1) |
invest
in commodities or commodity contracts, except that the Portfolio may
invest in futures contracts, options, swaps and other derivative
instruments; |
(2) |
purchase
or sell real estate, although it may purchase and sell securities of
companies which deal in real estate and may purchase and sell securities
which are secured by interests in real estate; |
(3) |
make
loans, except (1) by purchasing bonds, debentures or similar obligations
(including repurchase agreements and money market instruments, including
bankers’ acceptances and commercial paper, and selling securities on a
when issued, delayed settlement or forward delivery basis) which are
publicly or privately distributed, and (2) by lending its portfolio
securities to banks, brokers, dealers and other financial institutions so
long as such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the SEC thereunder;
|
(4) |
purchase
more than 10% of any class of the outstanding voting securities of any
issuer; |
(5) |
issue
senior securities to the extent such issuance would violate applicable
law; |
|
36 |
|
(6) |
borrow
money, except (1) as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 10% of its total assets at the time of
the borrowing (entering into reverse repurchase agreements, and purchasing
securities on a when issued, delayed settlement or forward delivery basis
are not subject to this investment limitation), (2) the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities, and (3) the Portfolio may
purchase securities on margin to the extent permitted by applicable law.
Derivative transactions such as options, futures contracts and swaps are
not considered to involve borrowings of money and are not subject to these
restrictions; |
(7) |
pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10%
of its total assets at fair market value, except as described in the
Prospectus and this SAI and in connection with entering into futures
contracts, but the deposit of assets in a segregated account in connection
with futures, swaps, put and call options and the purchase of securities
on a when issued, delayed settlement or forward delivery basis or other
permitted investment techniques and collateral arrangements with respect
to initial or variation margin for such transactions will not be deemed to
be pledges or other encumbrance of the Portfolio’s assets or the purchase
of any securities on margin for purposes of this investment limitation;
|
(8) |
invest
for the purpose of exercising control over management of any company;
|
(9) |
invest
its assets in securities of any investment company, except in connection
with mergers, acquisitions of assets or consolidations and except as may
otherwise be permitted by the 1940 Act; |
(10) |
acquire
any securities of companies within one industry if, as a result of such
acquisition, more than 25% of the value of the Portfolio’s total assets
would be invested in securities of companies within such industry;
provided, however, that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies,
enterprises or instrumentalities; |
(11) |
invest
in interests in oil, gas or other mineral exploration or development
programs; |
(12) |
with
respect to 75% of its total assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed by the U.S. Government, its
agencies, enterprises or instrumentalities); and
|
(13) |
underwrite
the securities of other issuers, except to the extent that the sale of
portfolio securities by the Portfolio may be deemed to be an underwriting.
|
(a) |
with
respect to limitation (10), invest more than 25% of the value of its total
assets in instruments issued by U.S. banks; or |
(b) |
invest
more than an aggregate of 15% of the net assets of the Portfolio, at the
time of purchase, in illiquid securities. |
|
37 |
|
|
38 |
|
Name and
Year of Birth |
Positions
with the
Funds
and Time
Served |
Principal
Occupations(s)
During
Past 5 Years |
Number
of
Portfolios
in
Fund
Complex
Overseen |
Other
Director-
ships
Held
During
Past
5 Years | ||||||||
Interested
Directors/Trustees (2) | ||||||||||||
Susan
W. Catherwood (2) Year of Birth: 1943 |
Director
of Glenmede Fund and Trustee of Glenmede Portfolios (since
February 2007) |
Director
(since 1988) and Member of the Investment Review/
Relationship
Oversight Committee (since 2001), Compensation Committee (since 1993) and
Nominating Committee (since 2018), Glenmede Trust; Director, The Glenmede
Corporation (since 1988); Board Member, The Pew Charitable Trusts; Charter
Trustee, The University of Pennsylvania; Chairman Emeritus, The University
Museum of The University of Pennsylvania; Chairman of the Board of
Managers, The Christopher Ludwick Foundation; Board Member, Monell
Chemical Senses Center; Director: Thomas Skelton Harrison Foundation and
The Catherwood Foundation; Fellow and serves on Finance and Investment
Committees, and former Board member, College of Physicians of
Philadelphia; Former Member and Chair, The Women’s Committee and Penn
Museum Board of Overseers of the University of Pennsylvania; Former Board
Chair, University of Pennsylvania Health System
(1991-1999). |
18 |
None | ||||||||
Mary
Ann B. Wirts (2)
Year
of Birth: 1951 |
Director
of Glenmede Fund (since June 2020) and Trustee of Glenmede Portfolios
(since June 2020) |
Managing
Director and Chief Administrative Officer of Glenmede Trust (until 2020);
Managing Director and Chief Administrative Officer of Glenmede Investment
Management LP (2006-2020); First Vice President and Managing Director of
Fixed Income of Glenmede Advisers (2000-2006). |
18 |
None | ||||||||
(2) |
Interested
Directors/Trustees are those Directors/Trustees who are “interested
persons” of the Funds as defined in the 1940 Act. Susan W. Catherwood and
Mary Ann B. Wirts are considered to be “interested” Director/Trustees of
the Funds because of their current or prior affiliations with Glenmede
Trust, the parent company of the Funds’ investment advisor, GIM, and/or
their stock ownership in The Glenmede Corporation, of which GIM is an
affiliate. |
|
39 |
|
Name and
Year of Birth |
Positions
with the
Funds
and Time
Served |
Principal
Occupations(s)
During
Past 5 Years |
Number
of
Portfolios
in
Fund
Complex
Overseen |
Other
Director-
ships
Held
During
Past
5 Years | ||||||||
Independent
Directors/Trustees (1) | ||||||||||||
Andrew
Phillips
Year
of Birth: 1962 |
Director
of Glenmede Fund and Trustee of Glenmede Portfolios (since
September 2022) |
Adjunct
Professor - College of Management (since 2021), Long Island University;
Senior Performance Officer (2013 - 2015), Global Head of Institutional and
Alternatives Product Strategy
(2012
- 2013), Global Chief Performance Officer (2010 - 2012), Global Chief
Operating Officer (2007 - 2010) and Managing Director - Americas Fixed
Income Executive Team, BlackRock, Inc. |
18 |
None | ||||||||
H.
Franklin Allen, Ph.D.
Year
of Birth: 1956 |
Director
of Glenmede Fund (since March 1991) and Trustee of Glenmede
Portfolios (since May 1992) |
Vice
Dean Research and Faculty of the Imperial College Business School (since
2019), Professor of Finance and Economics and Executive Director of the
Brevan Howard Centre for Financial Analysis at the Imperial College London
(since 2014); Professor Emeritus of Finance, The Wharton School of The
University of Pennsylvania since June 2016; Professor of Finance and
Economics (1990-1994); Vice Dean and Director of Wharton Doctoral Programs
(1990-1993); Employed by The University of Pennsylvania (from
1980-2016). |
18 |
None | ||||||||
William
L. Cobb, Jr.
Year
of Birth: 1947 |
Director
of Glenmede Fund and Trustee of Glenmede Portfolios (since February 2007)
Chairman of the Funds (since December 2021) |
Former
Executive Vice President and Former Chief Investment Officer, The Church
Pension Fund (defined benefit plan for retired clergy of the Episcopal
Church) (1999-2014); Chair and Member, Investment Committee, The Minister
and Missionaries Benefit Board of the American Baptist Church (until
2013); Vice Chairman, J.P. Morgan Investment Management (1994 -
1999). |
18 |
Director,
TCW Direct Lending LLC None | ||||||||
|
40 |
|
Name and
Year of Birth |
Positions
with the
Funds
and Time
Served |
Principal
Occupations(s)
During
Past 5 Years |
Number
of
Portfolios
in
Fund
Complex
Overseen |
Other
Director-
ships
Held
During
Past
5 Years | ||||||||
Rebecca
E. Duseau
Year
of Birth: 1963 |
Director
of Glenmede Fund and Trustee of Glenmede Portfolios (since
December 2023) |
Cofounder
and Chief Compliance Officer (since 2000), Adamas Partners, LLC
(investment firm); Chair of Investment Advisory Board (since 2020) for
Boston Family Advisors (multi-family office); Member of Investment
Committees of Mass General Brigham (hospital) (since 2019) and Berklee
School of Music (since 2019); Chair of the Investment Committee and Member
of the Finance Committee, Museum of Science (since 2023). |
18 |
None | ||||||||
Harry
Wong
Year
of Birth: 1948 |
Director
of Glenmede Fund and Trustee of Glenmede Portfolios (since
February 2007) |
Former
Managing Director, Knight Capital Americas, L.P., an operating subsidiary
of Knight Capital Group Inc. (investment banking) (2009 - 2011); Managing
Director, Long Point Advisors, LLC (business consulting) (2003 - 2012);
Managing Director, BIO-IB LLC (healthcare investment banking) (2004-2009)
Senior Managing Director, ABN AMRO (investment banking)
(1990-2002);
Adjunct Faculty Member, Sacred Heart University (2003- 2007). |
18 |
None | ||||||||
(1) |
Independent
Directors/Trustees are those Directors/Trustees who are not “interested
persons” of the Funds as defined in the 1940 Act.
|
|
41 |
|
Name,
Address and
Year
of Birth |
Positions
Held with
the
Funds/Time Served |
Principal
Occupation(s) During Past 5 Years | ||||
Kent
E. Weaver, Jr.
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103
Year
of Birth: 1967 |
President
of the Funds since November 2019. |
President
of Glenmede Investment Management LP (since 2021); Director of Client
Service of Glenmede Investment Management LP (July 2015-2021); Former
Director of Client Service and Sales, Chief Compliance Officer of
Philadelphia International Advisors, LP (2002-June 2015). | ||||
Kimberly
C. Osborne
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103
Year
of Birth: 1966 |
Executive
Vice President of the Funds since December 1997; Assistant Treasurer
of the Funds since December 2020. |
Client
Service Manager of Glenmede Investment Management LP (since 2006). Vice
President of Glenmede Trust and Glenmede Advisers until 2008. Employed by
Glenmede Trust 1993-2008 and Glenmede Advisers 2000-2008. | ||||
Christopher
E. McGuire
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103
Year
of Birth: 1973 |
Treasurer
of the Funds since December 2019. |
Director
of Administration of Glenmede Investment Management LP (since
October 2019); Managing Director, State Street Bank and Trust Company
(from 2007-October 2019). | ||||
Michael
P. Malloy
One
Logan Square, Suite 2000
Philadelphia,
PA 19103-6996
Year
of Birth: 1959 |
Secretary
of the Funds since January 1995. |
Partner
in the law firm of Faegre Drinker Biddle & Reath LLP. | ||||
Eimile
J. Moore
3
Canal Plaza, Suite
100,
3rd Floor Portland, ME 04101
Year
of Birth: 1969 |
Chief
Compliance Officer of the Funds since December 2017. |
Senior
Principal Consultant (Since 2011). | ||||
Daniel
P. Bulger
1650
Market Street,
Suite,
1200
Philadelphia,
PA 19103
Year
of Birth: 1966 |
Assistant
Secretary of the Funds since December 2022. |
Vice
President and Counsel, State Street Bank and Trust Company
(2016-present). | ||||
Rebecca
Tran Savage
1650
Market Street,
Suite,
1200
Philadelphia,
PA 19103
Year
of Birth: 1981 |
Assistant
Secretary of the Funds since December 2022. |
Assistant
Vice President and Associate Counsel, State Street Bank and Trust Company
(May 2022-present). | ||||
|
42 |
|
|
|
|
|
H.
Franklin Allen, Ph.D.: |
|
|
Dr. Allen
has substantial experience in the areas of finance and economics through
his educational background and position for many years as a professor of
finance and economics at The Wharton School of The University of
Pennsylvania and most recently as Vice Dean of Research and Faculty of the
Imperial College London Business School and Professor of Finance and
Economics and Director of the Brevan Howard Centre for Financial Analysis
at the Imperial College London. |
Susan
W. Catherwood: |
|
|
Ms.
Catherwood has substantial business, finance and investment management
experience through her board and committee positions with the parent
companies of the Advisor and her board and/or executive positions with
academic entities, charitable foundations and companies. |
William
L. Cobb, Jr.: |
|
|
Mr. Cobb
has substantial investment management and business experience through his
senior executive, chief investment officer and/or investment committee
positions with private and non-profit entities, as a senior executive
officer of a global investment management firm and most recently as a
board member of a business development company. |
Rebecca
E. Duseau |
|
|
Ms. Duseau
has substantial investment management, compliance, risk management and
business experience as a co-founder and executive of an investment
management firm. |
Andrew
Phillips: |
|
|
Mr. Phillips
has substantial investment management and business experience through his
executive positions with a major investment management firm. |
Mary
Ann B. Wirts: |
|
|
Ms. Wirts
has substantial business, financial services and investment management
experience through her senior executive positions with the Advisor and its
parent companies. |
Harry
Wong: |
|
|
Mr. Wong
has substantial finance, investment banking and capital markets experience
through his positions as an executive in investment banking
businesses. |
|
|
|
|
|
43 |
|
|
44 |
|
Name of
Director/Trustee |
Dollar
Range of Equity Securities in
each
Portfolio of each Fund |
Aggregate
Dollar Range of Equity
Securities
in All Portfolios in the
Fund
Complex | |||||||
Interested
Directors/Trustees | |||||||||
Susan
W. Catherwood |
None |
None | |||||||
Mary
Ann B. Wirts |
Core
Fixed Income Portfolio
Quantitative
U.S. Large Cap
Core
Equity Portfolio |
Over
$100,000
Over
$100,000 |
Over
$100,000 | ||||||
Independent
Directors/Trustees | |||||||||
H.
Franklin Allen, Ph.D. |
None |
None | |||||||
William
L. Cobb, Jr. |
None |
None | |||||||
Rebecca
E. Duseau |
None |
None | |||||||
Andrew
Phillips |
None |
None | |||||||
Harry
Wong |
None |
None | |||||||
|
45 |
|
Name of
Person Position* |
Aggregate
Compensation*
from
Glenmede
Fund |
Aggregate
Compensation*
from
Glenmede
Portfolios |
Pension
or
Retirement
Benefits
Accrued
as
Part of
Funds’
Expenses |
Estimated
Annual
Benefits
Upon
Retirement |
Total
Compensation*
from
the Fund
Complex** | ||||||||||
Interested
Directors/Trustees | |||||||||||||||
Susan
W. Catherwood, Director |
$ 124,000 |
$ 6,000 |
None |
None |
$ 130,000 | ||||||||||
Mary
Ann B. Wirts, Director |
$124,705 |
$6,000 |
None |
None |
$130,705 | ||||||||||
Independent
Directors/Trustees | |||||||||||||||
H.
Franklin Allen, Ph.D., Director |
$131,461 |
$6,000 |
None |
None |
$137,461 | ||||||||||
William
L. Cobb, Jr., Director |
$139,752 |
$6,000 |
None |
None |
$145,752 | ||||||||||
Harry
Wong, Director |
$136,321 |
$6,000 |
None |
None |
$142,321 | ||||||||||
Andrew
Phillips, Director |
$124,390 |
$6,000 |
None |
None |
$130,390 | ||||||||||
Rebecca
E Duseau** |
$0 |
$0 |
None |
None |
$0 |
* |
Compensation
includes reimbursement of out-of-pocket expenses incurred in attending
Board meetings, where applicable. |
** |
Ms. Duseau
became a Director/Trustee of the Funds in December 2023, was not a
member of the Boards during the fiscal year ended October 31, 2023,
and did not receive any compensation from the
Funds. |
|
46 |
|
|
|
|
|
Name |
|
|
Position
with GIM |
Peter
J. Zuleba |
|
|
Managing
Director and Chief Executive Officer |
Raj
Tewari |
|
|
Managing
Director and Chief Operating Officer |
Kent
E. Weaver |
|
|
Managing
Director and President |
John
F. McCabe |
|
|
Managing
Director and General Counsel |
|
|
|
|
|
47 |
|
Name |
Position
with AllianceBernstein | ||
Seth
P. Bernstein |
Director,
President and Chief Executive Officer | ||
Karl
Sprules |
Chief
Operating Officer | ||
Mark
Manley |
General
Counsel | ||
Bill
Siemers |
Interim
Chief Financial Officer and Controller | ||
Onur
Erzan |
Head
of Global Client Group and Head of Private | ||
Joan
Lamm-Tennant |
Chair
of the Board | ||
Nella
Domenici |
Director | ||
Jeffrey
Hurd |
Director | ||
Daniel
G. Kaye |
Director | ||
Nick
Lane |
Director | ||
Das
Narayandas |
Director | ||
Mark
Pearson |
Director | ||
Charles
Stonehill |
Director | ||
Todd
Walthall |
Director | ||
Portfolio |
Percentage
of Average
Daily
Net Assets | ||
Quantitative
U.S. Large Cap Core Equity Portfolio |
0.55% | ||
Quantitative
U.S. Large Cap Growth Equity Portfolio |
0.55% | ||
Quantitative
U.S. Large Cap Value Equity Portfolio |
0.55%1 | ||
Quantitative
U.S. Small Cap Equity Portfolio |
0.55%1 | ||
Quantitative
International Equity Portfolio |
0.75%2 | ||
Responsible
ESG U.S. Equity Portfolio |
0.55%1 | ||
Women
in Leadership U.S. Equity Portfolio |
0.55%1 | ||
Quantitative
U.S. Long/Short Equity Portfolio |
1.20%3 | ||
Quantitative
U.S. Total Market Equity Portfolio |
1.20%3 | ||
Strategic
Equity Portfolio |
0.55% | ||
Equity
Income Portfolio |
0.55%1 | ||
Small
Cap Equity Portfolio |
0.55% | ||
Secured
Options Portfolio |
0.55% | ||
Global
Secured Options Portfolio |
0.55%2 | ||
Core
Fixed Income Portfolio |
0.35% | ||
Muni
Intermediate Portfolio |
N/A4 | ||
Short
Term Tax Aware Fixed Income Portfolio |
0.35%5 | ||
High
Yield Municipal Portfolio |
0.57% |
1 |
The Advisor has contractually agreed, until at
least February 28, 2025, to waive all or a portion of its investment
advisory fees and/or reimburse expenses (excluding Acquired Fund fees and
expenses, brokerage commissions, extraordinary items, interest and taxes)
to the extent that the Quantitative U.S. Large Cap Value Equity,
Quantitative U.S. Small Cap Equity, Responsible ESG U.S. Equity, Women in
Leadership U.S. Equity, and Equity Income Portfolios’ total annual
operating expenses, as a percentage of such Portfolio’s average daily net
assets, exceed 0.85% of such Portfolio’s average daily net assets. The
Advisor is not entitled to collect or make a claim for waived fees or
reimbursed expenses at any time in the future. You will be notified if the
waivers are discontinued after that date.
|
|
48 |
|
2 |
The Advisor has contractually agreed, until at
least February 28, 2025, to waive all or a portion of its investment
advisory fees and/or reimburse expenses (excluding Acquired Fund fees and
expenses, brokerage commissions, extraordinary items, interest and taxes)
to the extent that the Quantitative International Equity and Global
Secured Options Portfolios’ total annual operating expenses, as a
percentage of such Portfolio’s average daily net assets, exceed 1.00% of
such Portfolio’s average daily net assets. The Advisor is not entitled to
collect or make a claim for waived fees or reimbursed expenses at any time
in the future. You will be notified if the waivers are discontinued after
that date. |
3 |
The Advisor has contractually agreed, until at
least February 28, 2025, to waive a portion of its advisory fees so
that the management fees for the Quantitative U.S. Long/Short Equity and
Quantitative U.S. Total Market Equity Portfolios are 0.85% of each such
Portfolio’s average daily net assets. GIM has also contractually agreed to
waive an additional portion of its advisory fees and/or reimburse the
Portfolios to the extent that total annual Portfolio operating expenses,
as a percentage of the Portfolio’s average daily net assets, exceed 1.25%
of the average daily net assets of the Quantitative U.S. Long/Short Equity
Portfolio’s Advisor Shares, 1.05% of the average daily net assets of the
Quantitative U.S. Long/Short Equity Portfolio’s Institutional Shares and
1.25% of the average daily net assets of the Quantitative U.S. Total
Market Equity Portfolio (excluding Acquired Fund fees and expenses, short-
sale dividends, prime broker interest, brokerage commissions, taxes,
interest, and extraordinary expenses). The Advisor has contractually
agreed to these waivers and/or reimbursements until at least
February 28, 2025. You will be notified if the waivers are
discontinued after that date. The Advisor is not entitled to collect or
make a claim for waived fees or reimbursed expenses at any time in the
future. |
4 |
As noted in the Prospectus, the Advisor does not
receive any fee from the Muni Intermediate Portfolio for its investment
services. |
5 |
The Advisor has contractually agreed, until at
least February 28, 2025, to waive all or a portion of its investment
advisory fees and/or reimburse expenses (excluding Acquired Fund fees and
expenses, brokerage commissions, extraordinary items, interest and taxes)
to the extent that the Short Term Tax Aware Fixed Income Portfolio’s total
annual operating expenses, as a percentage of the Portfolio’s average
daily net assets, exceed 0.55% of the Portfolio’s average daily net assets
(excluding Acquired Fund fees and expenses, brokerage commissions,
extraordinary items, interest and taxes). The Advisor is not entitled to
collect or make a claim for waived fees or reimbursed expenses at any time
in the future. You will be notified if the waivers are discontinued after
that date. |
|
49 |
|
Portfolio |
Total
Management
Fees
for
Fiscal
Year
ended
October 31,
2023 |
Total
Waived/
Reimbursed
for
Fiscal
Year
ended
October
31,
2023 |
Total
Management
Fees
for Fiscal
Year
ended
October 31,
2022 |
Total
Waived/
Reimbursed
for
Fiscal
Year
ended
October
31,
2022 |
Total
Management
Fees
for Fiscal
Year
ended
October 31,
2021 |
Total
Waived/
Reimbursed
for
Fiscal
Year
ended
October 31,
2021 | ||||||||||||
Quantitative
U.S. Large Cap Core Equity Portfolio |
$4,721,318 |
$0 |
$6,615,381 |
$0 |
$7,588,526 |
$0 | ||||||||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio |
$11,511,367 |
$0 |
$12,995,994 |
$0 |
$12,444,966 |
$0 | ||||||||||||
Quantitative
U.S. Large Cap Value Equity Portfolio |
$9,363 |
$(33,996) |
$13,106 |
$(33,711) |
$12,153 |
$(35,371) | ||||||||||||
Quantitative
U.S. Small Cap Equity Portfolio |
$8,457 |
$(33,923) |
$8,238 |
$(39,523) |
$7,827 |
$(37,040) | ||||||||||||
Quantitative
International Equity Portfolio |
$178,220 |
$(75,745) |
$227,352 |
$(81,426) |
$376,729 |
$(92,575) | ||||||||||||
Responsible
ESG U.S. Equity Portfolio |
$128,163 |
$(45,202) |
$158,653 |
$(47,697) |
$162,791 |
$(58,167) | ||||||||||||
Women
in Leadership U.S. Equity Portfolio |
$119,341 |
$(46,554) |
$135,183 |
$(49,722) |
$151,033 |
$(51,809) | ||||||||||||
Quantitative
U.S. Long/Short Equity Portfolio |
$630,180 |
$(229,377) |
$742,885 |
$
(246,812) |
$929,454 |
$(282,785) | ||||||||||||
Quantitative
U.S. Total Market Equity Portfolio |
$499,659 |
$(170,925) |
$534,025 |
$
(165,351) |
$410,408 |
$(136,648) | ||||||||||||
Strategic
Equity Portfolio |
$1,003,906 |
$0 |
$1,250,486 |
$0 |
$1,414,612 |
$0 | ||||||||||||
Equity
Income Portfolio |
$114,562 |
$(30,450) |
$121,580 |
$(27,068) |
$117,153 |
$(53,569) | ||||||||||||
Small
Cap Equity Portfolio |
$5,784,976 |
$0 |
$7,387,860 |
$0 |
$7,816,936 |
$0 | ||||||||||||
Secured
Options Portfolio |
$2,809,043 |
$0 |
$2,601,151 |
$0 |
$2,302,449 |
$0 | ||||||||||||
Global
Secured Options Portfolio |
$122,156 |
$(33,774) |
$102,596 |
$(40,826) |
$73,346 |
$(39,838) | ||||||||||||
Core
Fixed Income Portfolio |
$1,176,817 |
$0 |
$1,315,910 |
$0 |
$1,503,289 |
$0 | ||||||||||||
Muni
Intermediate Portfolio* |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A | ||||||||||||
Short
Term Tax Aware Fixed Income Portfolio |
$154,906 |
$(60,649) |
$198,122 |
$(37,879) |
$186,994 |
$(48,494) | ||||||||||||
High
Yield Municipal Portfolio |
$1,029,422 |
$0 |
$1,511,778 |
$(63,806) |
$1,750,547 |
$(23,408) |
* |
As
noted in the Prospectus, the Advisor does not receive any fee from the
Muni Intermediate Portfolio for its investment services.
|
|
50 |
|
Glenmede
Investment
Management
LP |
Type
of Accounts |
Number
of
Accounts
Managed |
Total
Assets
Managed |
Number
of
Accounts
Managed
with
Performance-
Based
Advisory
Fees |
Total
Assets
Managed
with
Performance-
Based
Advisory
Fees | ||||||||||
Stephen
J. Mahoney |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
156 |
$720,432,733 |
None |
0 | |||||||||||
Vladimir
de Vassal |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
1 |
$7,849,604 |
None |
0 | |||||||||||
Other
Accounts |
312 |
$1,104,858,527 |
None |
0 | |||||||||||
Paul
T. Sullivan |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
1 |
$7,849,604 |
None |
0 | |||||||||||
Other
Accounts |
312 |
$1,104,858,527 |
None |
0 | |||||||||||
Alexander
R. Atanasiu |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
1 |
$7,849,604 |
None |
0 | |||||||||||
Other
Accounts |
312 |
$1,104,858,527 |
None |
0 | |||||||||||
Amy
T. Wilson |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
14 |
$106,216,234 |
None |
0 | |||||||||||
John
R. Kichula |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
883 |
$920,134,970 |
None |
0 | |||||||||||
Sean
Heron |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
85 |
$250,955,758 |
None |
0 | |||||||||||
Stacey
Gilbert |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
85 |
$250,955,758 |
None |
0 | |||||||||||
Mark
Livingston |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
883 |
$920,134,970 |
None |
0 | |||||||||||
Jordan
L. Irving |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
1 |
$6,830,996 |
None |
0 | |||||||||||
Other
Accounts |
27 |
$348,551,886 |
None |
0 | |||||||||||
Robert
M. Daly |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
1,572 |
$3,032,547,957 |
None |
0 | |||||||||||
|
51 |
|
Glenmede
Investment
Management
LP |
Type
of Accounts |
Number
of
Accounts
Managed |
Total
Assets
Managed |
Number
of
Accounts
Managed
with
Performance-
Based
Advisory
Fees |
Total
Assets
Managed
with
Performance-
Based
Advisory
Fees | ||||||||||
J.
Douglas Wilson |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
1,416 |
$2,312,115,225 |
None |
0 | |||||||||||
David
M. Joyce |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
None |
0 |
None |
0 | |||||||||||
Other
Accounts |
1,416 |
$2,312,115,225 |
None |
0 | |||||||||||
Matthew
F. Shannon |
Registered
Investment Companies |
None |
0 |
None |
0 | ||||||||||
Other
Pooled Investment Vehicles |
1 |
$6,803,996 |
None |
0 | |||||||||||
Other
Accounts |
27 |
$348,551,886 |
None |
0 | |||||||||||
Matthew
J. Norton |
Registered
Investment Companies |
32 |
$22,021 |
0 |
0 | ||||||||||
Other
Pooled Investment Vehicles |
14 |
$7,969 |
0 |
0 | |||||||||||
Other
Accounts |
11,058 |
$31,141 |
3 |
$128 | |||||||||||
Andrew
D. Potter |
Registered
Investment Companies |
32 |
$22,021 |
0 |
0 | ||||||||||
Other
Pooled Investment Vehicles |
14 |
$7,969 |
0 |
0 | |||||||||||
Other
Accounts |
11,058 |
$31,141 |
3 |
$128 | |||||||||||
Portfolio/Portfolio
Manager |
Dollar
Range of Shares Beneficially Owned | ||
Quantitative
U.S. Large Cap CoreEquity Portfolio |
|||
Vladimir
de Vassal, CFA |
$500,001-$1,000,000 | ||
Paul
T. Sullivan, CFA |
$100,001-$500,000 | ||
Alexander
R. Atanasiu, CFA |
$500,001-$1,000,000 | ||
Quantitative
U.S. Large CapGrowth Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$10,001-$50,000 | ||
Paul
T. Sullivan, CFA |
None | ||
Alexander
R. Atanasiu, CFA |
None | ||
Quantitative
U.S. Large Cap Value Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$10,001-$50,000 | ||
Paul
T. Sullivan, CFA |
None | ||
Alexander
R. Atanasiu, CFA |
None | ||
Quantitative
U.S. Small Cap Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$10,001-$50,000 | ||
Paul
T. Sullivan, CFA |
None | ||
Alexander
R. Atanasiu, CFA |
None | ||
Quantitative
International Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$10,001-$50,000 | ||
Paul
T. Sullivan, CFA |
None | ||
Alexander
R. Atanasiu, CFA |
None | ||
Responsible
ESG U.S. Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$10,001-$50,000 | ||
Paul
T. Sullivan, CFA |
None | ||
Alexander
R. Atanasiu, CFA |
None | ||
Amy
T. Wilson, CFA |
None | ||
|
52 |
|
Portfolio/Portfolio
Manager |
Dollar
Range of Shares Beneficially Owned | ||
Women
in Leadership U.S. Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$10,001-$50,000 | ||
Paul
T. Sullivan, CFA |
None | ||
Alexander
R. Atanasiu, CFA |
None | ||
Amy
T. Wilson, CFA |
None | ||
Quantitative
U.S. Long/Short Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$50,001-$100,000 | ||
Paul
T. Sullivan, CFA |
$50,001-$100,000 | ||
Alexander
R. Atanasiu, CFA |
None | ||
Quantitative
U.S. Total Market Equity Portfolio |
|||
Vladimir
de Vassal, CFA |
$50,001-$100,000 | ||
Paul
T. Sullivan, CFA |
$50,001-$100,000 | ||
Alexander
R. Atanasiu, CFA |
None | ||
Strategic
Equity Portfolio |
|||
John
R. Kichula, CFA |
None | ||
Mark
Livingston, CFA |
None | ||
Equity
Income Portfolio |
|||
John
R. Kichula, CFA |
None | ||
Mark
Livingston, CFA |
None | ||
Small
Cap Equity Portfolio |
|||
Matthew
F. Shannon, CFA |
$100,001-$500,000 | ||
Jordan
L. Irving |
$100,001-$500,000 | ||
Global
Secured Options Portfolio |
|||
Sean
Heron, CFA |
None | ||
Stacey
Gilbert |
None | ||
Secured
Options Portfolio |
|||
Sean
Heron, CFA |
$500,001-$1,000,000 | ||
Stacey
Gilbert |
None | ||
Core
Fixed Income Portfolio |
|||
Stephen
J. Mahoney |
None | ||
Robert
M. Daly |
None | ||
Muni
Intermediate Portfolio |
|||
Robert
M. Daly |
None | ||
J.
Douglas Wilson |
None | ||
David
M. Joyce |
None | ||
Short
Term Tax Aware Fixed Income Portfolio |
|||
Robert
M. Daly |
None | ||
J.
Douglas Wilson |
None | ||
David
M. Joyce |
None | ||
High
Yield Municipal Portfolio |
|||
Matthew
J. Norton |
None | ||
Andrew
D. Potter |
None | ||
|
53 |
|
|
54 |
|
Portfolio |
October 31,
2023 |
October 31,
2022 |
October 31,
2021 | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio |
$ 322,535 |
$ 425,285 |
$ 591,619 | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio |
$730,926 |
$795,157 |
$960,431 | ||||||
Quantitative
U.S. Large Cap Value Equity Portfolio |
$26,973 |
$27,367 |
$28,572 | ||||||
Quantitative
U.S. Small Cap Equity Portfolio |
$26,855 |
$32,723 |
$29,744 | ||||||
Quantitative
International Equity Portfolio |
$38,764 |
$39,778 |
$42,993 | ||||||
Responsible
ESG U.S. Equity Portfolio |
$33,019 |
$39,972 |
$50,814 | ||||||
Women
in Leadership U.S. Equity Portfolio |
$32,379 |
$39,017 |
$42,178 | ||||||
Quantitative
U.S. Long/Short Equity Portfolio |
$71,598 |
$63,627 |
$77,759 | ||||||
Quantitative
U.S. Total Market Equity Portfolio |
$54,959 |
$51,675 |
$50,488 | ||||||
Strategic
Equity Portfolio |
$86,900 |
$102,465 |
$122,097 | ||||||
Equity
Income Portfolio |
$31,926 |
$31,875 |
$56,706 | ||||||
Small
Cap Equity Portfolio |
$640,588 |
$770,852 |
$753,447 | ||||||
Secured
Options Portfolio |
$211,558 |
$193,071 |
$199,327 | ||||||
Global
Secured Options Portfolio |
$47,499 |
$48,043 |
$40,692 | ||||||
Core
Fixed Income Portfolio |
$166.570 |
$163,537 |
$185,936 | ||||||
Muni
Intermediate Portfolio |
$162,936 |
$138,644 |
$147,568 | ||||||
Short
Term Tax Aware Fixed Income Portfolio |
$70,200 |
$62,678 |
$71,005 | ||||||
High
Yield Municipal Portfolio |
$149,336 |
$182,315 |
$165,225 |
|
55 |
|
Glenmede
Trust |
October 31,
2023 |
October 31,
2022 |
October 31,
2021 | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio |
$ 1,590,423 |
$ 2,184,121 |
$ 2,442,956 | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio |
$2,339,983 |
$2,892,471 |
$3,438,919 | ||||||
Quantitative
U.S. Large Cap Value Equity Portfolio |
$3,405 |
$4,766 |
$4,419 | ||||||
Quantitative
U.S. Small Cap Equity Portfolio |
$3,075 |
$2,996 |
$2,846 | ||||||
Quantitative
International Equity Portfolio |
$59,407 |
$75,784 |
$125,576 | ||||||
Responsible
ESG U.S. Equity Portfolio |
$46,605 |
$57,692 |
$59,197 | ||||||
Women
in Leadership U.S. Equity Portfolio |
$43,397 |
$49,158 |
$54,921 | ||||||
Quantitative
U.S. Long/Short Equity Portfolio |
$88,028 |
$108,324 |
$151,428 | ||||||
Quantitative
U.S. Total Market Equity Portfolio |
$83,277 |
$89,004 |
$68,401 | ||||||
Strategic
Equity Portfolio |
$365,057 |
$454,722 |
$514,404 | ||||||
Equity
Income Portfolio |
$41,659 |
$44,211 |
$42,601 | ||||||
Small
Cap Equity Portfolio |
$1,445,568 |
$1,670,870 |
$1,746,407 | ||||||
Secured
Options Portfolio |
$119,676 |
$167,261 |
$186,347 | ||||||
Global
Secured Options Portfolio |
$44,421 |
$37,308 |
$26,671 | ||||||
Core
Fixed Income Portfolio |
$336,233 |
$375,974 |
$429,511 | ||||||
Muni
Intermediate Portfolio |
$485,731 |
$439,473 |
$496,011 | ||||||
Short
Term Tax Aware Fixed Income Portfolio |
$44,259 |
$56,606 |
$53,427 | ||||||
High
Yield Municipal Portfolio |
$270,900 |
$510,432 |
$673,287 |
|
56 |
|
|
Fees
and/or compensation paid for securities lending activities and related
services | ||||||||||||||||||||||||||
|
Gross
income
from
securities
lending
activities1 |
Fees
paid to
securities
lending
agent
from a
revenue
split |
Fees
paid for
any
cash
collateral
management
service
(including
fees
deducted
from
a
pooled cash
collateral
reinvestment
vehicle)
that
are
not
included
in
the
revenue
split |
Administrative
fees
not
included
in
revenue
split |
Indemnification
fee
not
included
in
revenue split |
Rebate
(paid
to
borrower) |
Other
fees
not
included
in
revenue
split |
Aggregate
fees/
compensation
for
securities
lending
activities |
Net
income
from
securities
lending
activities | ||||||||||||||||||
Quantitative
U.S. Large Cap Core Equity Portfolio |
$112,974.27 |
$1,679.22 |
$804.30 |
$0.00 |
$0.00 |
$103,773.60 |
$0.00 |
$106,257.12 |
$6,717.15 | ||||||||||||||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio |
$212,386.91 |
$959.90 |
$1,570.55 |
$0.00 |
$0.00 |
$206,016.97 |
$0.00 |
$208,547.42 |
$3,843.30 | ||||||||||||||||||
Quantitative
U.S. Large Cap Value Equity Portfolio |
$91.99 |
$1.10 |
$0.69 |
$0.00 |
$0.00 |
$85.92 |
$0.00 |
$87.71 |
$4.28 | ||||||||||||||||||
Quantitative
U.S. Small Cap Equity Portfolio |
$1,486.99 |
$32.47 |
$9.92 |
$0.00 |
$0.00 |
$1,315.59 |
$0.00 |
$1,357.98 |
$129.01 | ||||||||||||||||||
Quantitative
International Equity Portfolio |
$30,381.78 |
$1,100.13 |
$195.70 |
$0.00 |
$0.00 |
$24,685.74 |
$0.00 |
$25,981.57 |
$4,400.21 | ||||||||||||||||||
Responsible
ESG U.S. Equity Portfolio |
$906.87 |
$5.07 |
$7.71 |
$0.00 |
$0.00 |
$874.30 |
$0.00 |
$887.08 |
$19.79
|
|
57 |
|
|
Fees
and/or compensation paid for securities lending activities and related
services | ||||||||||||||||||||||||||
|
Gross
income
from
securities
lending
activities1 |
Fees
paid to
securities
lending
agent
from a
revenue
split |
Fees
paid for
any
cash
collateral
management
service
(including
fees
deducted
from
a
pooled cash
collateral
reinvestment
vehicle)
that
are
not
included
in
the
revenue
split |
Administrative
fees
not
included
in
revenue
split |
Indemnification
fee
not
included
in
revenue split |
Rebate
(paid
to
borrower) |
Other
fees
not
included
in
revenue
split |
Aggregate
fees/
compensation
for
securities
lending
activities |
Net
income
from
securities
lending
activities | ||||||||||||||||||
Women
in Leadership U.S. Equity Portfolio |
$16.68 |
$0.05 |
$0.13 |
$0.00 |
$0.00 |
$16.28 |
$0.00 |
$16.46 |
$0.22 | ||||||||||||||||||
Quantitative
U.S. Long/Short Equity Portfolio |
$27,950.31 |
$167.59 |
$198.31 |
$0.00 |
$0.00 |
$26,915.16 |
$0.00 |
$27,281.06 |
$671.00 | ||||||||||||||||||
Quantitative
U.S. Total Market Equity Portfolio |
$40,513.78 |
$18.00 |
$0.00 |
$0.00 |
$0.00 |
$40,424.48 |
$0.00 |
$40,442.48 |
$71.30 | ||||||||||||||||||
Strategic
Equity Portfolio |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 | ||||||||||||||||||
Equity
Income Portfolio |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 | ||||||||||||||||||
Small
Cap Equity Portfolio |
$2,073,322.47 |
$11,295.15 |
$14,026.07 |
$0.00 |
$0.00 |
$2,002,816.25 |
$0.00 |
$2,028,137.47 |
$45,276.00 | ||||||||||||||||||
Secured
Options Portfolio* |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A | ||||||||||||||||||
Global
Secured Options Portfolio* |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A | ||||||||||||||||||
Core
Fixed Income Portfolio |
$642,396.27 |
$7,035.71 |
$4,279.64 |
$0.00 |
$0.00 |
$602,942.19 |
$0.00 |
$614,257.54 |
$28,172.00 | ||||||||||||||||||
Short
Term Tax Aware Fixed Income Portfolio |
$29,399.03 |
$1,495.44 |
$203.23 |
$0.00 |
$0.00 |
$21,717.98 |
$0.00 |
$23,416.65 |
$5,982.38 | ||||||||||||||||||
High
Yield Municipal Portfolio* |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A | ||||||||||||||||||
1 |
Includes income from cash collateral reinvestment.
|
* |
The
Secured Options Portfolio, Global Secured Options Portfolio, Muni
Intermediate Portfolio and High Yield Municipal Portfolio did not
participate in the securities lending program during the fiscal year ended
October 31, 2023. |
|
58 |
|
Portfolio |
Broker
Security |
Market
Value | ||||
Quantitative
U.S. Large Cap Core Equity Portfolio |
WELLS
FARGO & CO. |
$4,164,317 | ||||
Strategic
Equity Portfolio |
JP
MORGAN CHASE & CO. |
$3,702,333 | ||||
Equity
Income Portfolio |
JP
MORGAN CHASE & CO. |
$521,753 | ||||
Core
Fixed Income Portfolio |
JP
MORGAN CHASE & CO. |
$5,383,397 |
Portfolio |
October
31, 2023 |
October
31, 2022 |
October
31, 2021 | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio |
$ 747,917 |
$ 856,921 |
$ 709,455 | ||||||
Quantitative
U.S. Large Cap Growth EquityPortfolio |
$1,417,416 |
$1,295,016 |
$743,651 | ||||||
Quantitative
U.S. Large Cap Value Equity Portfolio |
$1,165 |
$1,928 |
$1,561 | ||||||
Quantitative
U.S. Small Cap Equity Portfolio |
$5,728 |
$4,629 |
$3,953 | ||||||
Quantitative
International Equity Portfolio |
$12,864 |
$21,523 |
$50,247 | ||||||
Responsible
ESG U.S. Equity Portfolio |
$25,264 |
$37,042 |
$23,130 | ||||||
Women
in Leadership U.S. Equity Portfolio |
$22,638 |
$28,806 |
$24,063 | ||||||
Quantitative
U.S. Long/Short Equity Portfolio |
$120,997 |
$173,560 |
$173,609 | ||||||
Quantitative
U.S. Total Market Equity Portfolio |
$97,927 |
$106,849 |
$53,701 | ||||||
Strategic
Equity Portfolio |
$21,745 |
$25,261 |
$23,350 | ||||||
Small
Cap Equity Portfolio |
$553,905 |
$828,803 |
$1,114,579 | ||||||
Equity
Income Portfolio |
$4,521 |
$2,436 |
$5,300 | ||||||
Secured
Options Portfolio |
$85,667 |
$81,512 |
$58,890 | ||||||
Global
Secured Options Portfolio |
$10,348 |
$12,816 |
$6,808 | ||||||
Short
Term Tax Aware Fixed Income Portfolio |
$0 |
$201 |
$44 | ||||||
|
59 |
|
|
60 |
|
Portfolio |
Unlimited
(Short Term) |
Unlimited
(Long Term) | ||||
Muni
Intermediate Portfolio |
$ 4,121,267 |
$ 8,091,795 | ||||
Quantitative
U.S. Small Cap Equity Portfolio |
$7,517 |
— | ||||
Quantitative
International Equity Portfolio |
$1,068,400 |
$55,853 | ||||
Secured
Options Portfolio |
$699,238 |
$856,319 | ||||
Global
Secured Options Portfolio* |
$4,883,418 |
$1,510,931 | ||||
Core
Fixed Income Portfolio |
$3,091,409 |
$9,186,597 | ||||
Short
Term Tax Aware Fixed Income Portfolio |
$201,485 |
$657,180 | ||||
High
Yield Municipal Portfolio |
$5,574,808 |
$5,925,806 |
* |
Utilization
of the capital loss carryforwards of the Global Secured Options Portfolio
is severely limited currently and in future years pursuant to Internal
Revenue Code Section 382. |
|
61 |
|
|
62 |
|
|
63 |
|
|
64 |
|
Portfolio |
Name
and Address of Owner |
Ownership
Type |
Percentage
of Outstanding Shares | ||||||
Core
Fixed Income Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place1650 Market
Street,
Suite 1200
Philadelphia,
PA 19103 |
Record |
91.64% | ||||||
Core
Fixed Income Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place1650 Market
Street,
Suite 1200
Philadelphia,
PA 19103 |
Record |
6.87% | ||||||
Equity
Income Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place1650 Market
Street,
Suite 1200
Philadelphia,
PA 19103 |
Record |
87.31% | ||||||
Equity
Income Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place1650 Market
Street,
Suite 1200
Philadelphia,
PA 19103 |
Record |
9.66% | ||||||
Quantitative
International Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
67.24% | ||||||
Quantitative
International Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
31.26% | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Advisor Shares |
Charles
Schwab & Co. Inc.
Attn:
Jill Khashayar
Glenmede
Funds
88
Kearny St.
San
Francisco, CA 94108 |
Record |
51.66% | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Advisor Shares |
National
Financial Services LLC
Attn:
Mutual Funds Department
4th
Floor, 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
21.23% |
|
65 |
|
Portfolio |
Name
and Address of Owner |
Ownership
Type |
Percentage
of Outstanding Shares | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Advisor Shares |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
12.94% | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Advisor Shares |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
52.98% | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Advisor Shares |
National
Financial Services LLC Attn: Mutual Funds Department
4th
Floor, 499 Washington Blvd. |
Record |
21.60% | ||||||
|
Jersey
City, NJ 07310 |
|
| ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Advisor Shares |
Charles
Schwab & Co. Inc.
Attn:
Jill Khashayar
Glenmede
Funds
88
Kearny St.
San
Francisco, CA 94108 |
Record |
14.34% | ||||||
Quantitative
U.S. Long/Short Equity Portfolio - Advisor Shares |
Lauer
& Co.
c/o
The Glenmede Trust CompanyOne Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
92.83% | ||||||
Quantitative
U.S. Long/Short Equity Portfolio - Institutional Shares |
Pershing
LLC
P.O.
Box 2052
Jersey
City, NJ 07303 |
Record |
57.25% | ||||||
Quantitative
U.S. Long/Short Equity Portfolio - Institutional Shares |
National
Financial Services LLC Attn: Mutual Funds Department
499
Washington Blvd.
Jersey
City, NJ 07310 |
Record |
17.63% | ||||||
Quantitative
U.S. Long/Short Equity Portfolio - Institutional Shares |
Charles
Schwab & Co. Inc.
Attn:
Mutual Funds Department 211 Main Street
San
Francisco, CA 94105 |
Record |
17.04% | ||||||
Women
in Leadership U.S. Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
53.71% |
|
66 |
|
Portfolio |
Name
and Address of Owner |
Ownership
Type |
Percentage
of Outstanding Shares | ||||||
Women
in Leadership U.S. Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
29.98% | ||||||
Women
in Leadership U.S. Equity Portfolio |
Charles
Schwab & Co. Inc.
211
Main St.
San
Francisco, CA 94105 |
Record |
10.51% | ||||||
Responsible
ESG U.S. Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
50.30% | ||||||
Responsible
ESG U.S. Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
45.54% | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Institutional Shares |
Charles
Schwab & Co. Inc.
Attn:
Mutual Funds Department
211
Main St.
San
Francisco, CA 94105 |
Record |
38.56% | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Institutional Shares |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
25.69% | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Institutional Shares |
Pershing
LLC
P.O
Box 2052
Jersey
City, NJ 07303 |
Record |
9.76% | ||||||
Quantitative
U.S. Large Cap Growth Equity Portfolio - Institutional Shares |
Merrill
Lynch, Pierce, Fenner & Smith, Inc. For the Sole Benefit of its
Customers
4800
Deer Lake Drive East
Jacksonville,
FL 32246 |
Record |
6.79% | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Institutional Shares |
SEI
Private Trust Company
c/o
First Horizon ID 683
1
Freedom Valley Drive,
Oaks,
PA 19456 |
Record |
15.48% | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Institutional Shares |
Vanguard
Fiduciary Trust
c/o
FBO 401K Clients,
Attn:
Investment Services,
P.O.
Box 2600 VM L
23
Valley Forge, PA 19482 |
Record |
13.82% |
|
67 |
|
Portfolio |
Name
and Address of Owner |
Ownership
Type |
Percentage
of Outstanding Shares | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Institutional Shares |
Merrill
Lynch, Pierce, Fenner & Smith, Inc. For the Sole Benefit of its
Customers
4800
Deer Lake Drive East
Jacksonville,
FL 32246 |
Record |
11.98% | ||||||
Quantitative
U.S. Large Cap Core Equity Portfolio - Institutional Shares |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
38.49% | ||||||
High
Yield Municipal Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
95.40% | ||||||
International
Secured Options Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
5.83% | ||||||
Secured
Options Portfolio - Advisor Shares |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
36.19% | ||||||
Secured
Options Portfolio - Advisor Shares |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
28.96% | ||||||
Secured
Options Portfolio - Advisor Shares |
Charles
Schwab & Co. Inc.
Attn:
Jill Khashayar
Glenmede
Funds
88
Kearny St.
San
Francisco, CA 94108 |
Record |
25.80% | ||||||
Secured
Options Portfolio - Institutional Shares |
Nevada
Office of Treasurer Nevada Higher Education Tuition Trust Fund
101
N. Carson Street, Suite 4 Carson City, NV 89701 |
Record |
16.69% | ||||||
Secured
Options Portfolio - Institutional Shares |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
65.61% | ||||||
Secured
Options Portfolio - Institutional Shares |
Charles
Schwab & Co. Inc.
Attn:
Mutual Funds
211
Main Street
San
Francisco, CA 94105 |
Record |
6.14% | ||||||
|
68 |
|
Portfolio |
Name
and Address of Owner |
Ownership
Type |
Percentage
of Outstanding Shares | ||||||
Small
Cap Equity Portfolio - Advisor Shares |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
33.89% | ||||||
Small
Cap Equity Portfolio - Advisor Shares |
Charles
Schwab & Co. Inc.
Attn:
Jill Khashayar
Glenmede
Funds
88
Kearny St.
San
Francisco, CA 94108 |
Record |
26.38% | ||||||
Small
Cap Equity Portfolio - Advisor Shares |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
22.47% | ||||||
Small
Cap Equity Portfolio - Advisor Shares |
Merrill
Lynch, Pierce, Fenner & Smith, Inc. For the Sole Benefit of its
Customers
4800
Deer Lake Drive East Jacksonville, FL 32246 |
Record |
5.91% | ||||||
Small
Cap Equity Portfolio - Institutional Shares |
Merrill
Lynch, Pierce, Fenner & Smith, Inc. For the Sole Benefit of its
Customers
4800
Deer Lake Drive East Jacksonville, FL 32246 |
Record |
55.07% | ||||||
Small
Cap Equity Portfolio - Institutional Shares |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
34.23% | ||||||
Strategic
Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
88.27% | ||||||
Muni
Intermediate Portfolio |
The
Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
99.54% | ||||||
Short
Term Tax Aware Fixed Income Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
80.06% | ||||||
|
69 |
|
Portfolio |
Name
and Address of Owner |
Ownership
Type |
Percentage
of Outstanding Shares | ||||||
Short
Term Tax Aware Fixed Income Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
19.94% | ||||||
Quantitative
U.S. Total Market Equity Portfolio |
Charles
Schwab & Co. Inc.
Attn:
Jill Khashayar
Glenmede
Funds
88
Kearny St.
San
Francisco, CA 94108 |
Record |
38.58% | ||||||
Quantitative
U.S. Total Market Equity Portfolio |
National
Financial Services LLC 499 Washington Blvd.
Jersey
City, NJ 07310 |
Record |
31.83% | ||||||
Quantitative
U.S. Total Market Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
22.74% | ||||||
Quantitative
U.S. Large Cap Value Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
97.40% | ||||||
Quantitative
U.S. Small Cap Equity Portfolio |
Lauer
& Co.
c/o
The Glenmede Trust Company One Liberty Place
1650
Market Street,
Suite
1200
Philadelphia,
PA 19103 |
Record |
98.45% |
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schedule - the larger the final maturity relative to other maturities, the
more likely it will be treated as a note; and |
• |
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of payment - the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.
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GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-5 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-7 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-8 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-9 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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1. |
Routine/Miscellaneous
|
• |
Vote
for proposals that relate specifically to soliciting votes for a merger or
transaction if supporting that merger or transaction.
|
• |
Vote
against proposals if the wording is too vague or if the proposal includes
“other business.” |
• |
The
new quorum threshold requested; |
• |
The
rationale presented for the reduction; |
• |
The
market capitalization of the company (size, inclusion in indices);
|
• |
The
company’s ownership structure; |
• |
Previous
voter turnout or attempts to achieve quorum; |
• |
Any
provisions or commitments to restore quorum to a majority of shares
outstanding, should voter turnout improve sufficiently; and
|
• |
Other
factors as appropriate. |
|
B-10 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
The
terms of the auditor agreement--the degree to which these agreements
impact shareholders’ rights; |
• |
The
motivation and rationale for establishing the agreements;
|
• |
The
quality of the company’s disclosure; and |
• |
The
company’s historical practices in the audit area.
|
• |
An
auditor has a financial interest in or association with the company, and
is therefore not independent; |
• |
There
is reason to believe that the independent auditor has rendered an opinion
that is neither accurate nor indicative of the company’s financial
position; |
• |
Poor
accounting practices are identified that rise to a serious level of
concern, such as: fraud; misapplication of GAAP; and material weaknesses
identified in Section 404 disclosures; or |
• |
Fees
for non-audit services (“Other” fees) are excessive.
|
• |
Non-audit
(“other”) fees > audit fees + audit-related fees + tax
compliance/preparation fees |
|
B-11 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
The
tenure of the audit firm; |
• |
The
length of rotation specified in the proposal; |
• |
Any
significant audit-related issues at the company;
|
• |
The
number of audit committee meetings held each year;
|
• |
The
number of financial experts serving on the committee; and
|
• |
Whether
the company has a periodic renewal process where the auditor is evaluated
for both audit quality and competitive price. |
2. |
Board
of Directors |
• |
Accountability: Boards
should be sufficiently accountable to shareholders, including through
transparency of the company’s governance practices and regular board
elections, by the provision of sufficient information for shareholders to
be able to assess directors and board composition, and through the ability
of shareholders to remove directors. |
• |
Responsiveness: Directors
should respond to investor input, such as that expressed through
significant opposition to management proposals, significant support for
shareholder proposals (whether binding or non- binding), and tender offers
where a majority of shares are tendered. |
• |
Composition: Companies
should seek directors who can add value to the board through specific
skills or expertise and who can devote sufficient time and commitment to
serve effectively. Boards should be of a size appropriate to accommodate
diversity, expertise, and independence, while ensuring active and
collaborative participation by all members. Boards should be sufficiently
diverse to ensure consideration of a wide range of perspectives.
|
• |
Independence: Boards
should be sufficiently independent from management (and significant
shareholders) so as to ensure that they are able and motivated to
effectively supervise management’s performance for the benefit of all
shareholders, including in setting and monitoring the execution of
corporate strategy, with appropriate use of shareholder capital, and in
setting and monitoring executive compensation programs that support that
strategy. The chair of the board should ideally be an independent
director, and all boards should have an independent leadership position or
a similar role in order to help provide appropriate counterbalance to
executive management, as well as having sufficiently independent
committees that focus on key governance concerns such as audit,
compensation, and nomination of directors.
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B-12 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
A
classified board structure; |
• |
A
supermajority vote requirement; |
• |
Either
a plurality vote standard in uncontested director elections or a majority
vote standard with no plurality carve-out for contested elections;
|
• |
The
inability of shareholders to call special meetings;
|
• |
The
inability of shareholders to act by written consent;
|
• |
A
multi-class capital structure; and/or |
• |
A
non–shareholder-approved poison pill. |
• |
The
company has a poison pill with a deadhand or slowhand feature2; |
• |
The
board makes a material adverse modification to an existing pill,
including, but not limited to, extension, renewal, or lowering the
trigger, without shareholder approval; or |
• |
The
company has a long-term poison pill (with a term of over one year) that
was not approved by the public shareholders3. |
• |
The
disclosed rationale for the adoption; |
• |
The
trigger; |
1 |
A “new nominee” is a director
who is being presented for election by shareholders for the first time.
Recommendations on new nominees who have served for less than one year are
made on a case-by-case basis depending on the timing of their appointment
and the problematic governance issue in
question. |
2 |
If the short-term pill with a
deadhand or slowhand feature is enacted but expires before the next
shareholder vote, Glenmede Policy will generally still recommend
withhold/against nominees at the next shareholder meeting following its
adoption. |
3 |
Approval prior to, or in
connection, with a company’s becoming publicly-traded, or in connection
with a de-SPAC transaction, is
insufficient. |
|
B-13 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
The
company’s market capitalization (including absolute level and sudden
changes); |
• |
A
commitment to put any renewal to a shareholder vote; and
|
• |
Other
factors as relevant. |
• |
The
board’s rationale for adopting the bylaw/charter amendment without
shareholder ratification; |
• |
Disclosure
by the company of any significant engagement with shareholders regarding
the amendment; |
• |
The
level of impairment of shareholders’ rights caused by the board’s
unilateral amendment to the bylaws/charter; |
• |
The
board’s track record with regard to unilateral board action on
bylaw/charter amendments or other entrenchment
provisions; |
• |
The
company’s ownership structure; |
• |
The
company’s existing governance provisions; |
• |
The
timing of the board’s amendment to the bylaws/charter in connection with a
significant business development; and, |
• |
Other
factors, as deemed appropriate, that may be relevant to determine the
impact of the amendment on shareholders. |
• |
Classified
the board; |
• |
Adopted
supermajority vote requirements to amend the bylaws or
charter; |
• |
Eliminated
shareholders’ ability to amend bylaws; |
• |
Adopted
a fee-shifting provision; or |
• |
Adopted
another provision deemed egregious. |
• |
Supermajority
vote requirements to amend the bylaws or
charter; |
• |
A
classified board structure; or |
• |
Other
egregious provisions. |
4 |
Includes companies that emerge
from bankruptcy, SPAC transactions, spin-offs, direct listings, and those
who complete a traditional initial public
offering. |
|
B-14 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Newly-public
companies6 with a sunset provision of no more than seven
years from the date of going public; |
• |
Limited
Partnerships and the Operating Partnership (OP) unit structure of
REITs; |
• |
Situations
where the unequal voting rights are considered de minimis;
or |
• |
The
company provides sufficient protections for minority shareholders, such as
allowing minority shareholders a regular binding vote on whether the
capital structure should be maintained. |
• |
The
presence of a shareholder proposal addressing the same issue on the same
ballot; |
• |
The
board’s rationale for seeking ratification; |
• |
Disclosure
of actions to be taken by the board should the ratification proposal
fail; |
• |
Disclosure
of shareholder engagement regarding the board’s ratification
request; |
• |
The
level of impairment to shareholders’ rights caused by the existing
provision; |
• |
The
history of management and shareholder proposals on the provision at the
company’s past meetings; |
• |
Whether
the current provision was adopted in response to the shareholder
proposal; |
• |
The
company’s ownership structure; and |
• |
Previous
use of ratification proposals to exclude shareholder
proposals. |
• |
The
company’s governing documents impose undue restrictions on shareholders’
ability to amend the bylaws. Such restrictions include but are not limited
to: outright prohibition on the submission of binding shareholder
proposals, or share ownership requirements, subject matter restrictions,
or time holding requirement in excess of SEC Rule 14a-8. Vote against
or withhold on an ongoing basis. |
5 |
This generally includes
classes of common stock that have additional votes per share than other
shares; classes of shares that are not entitled to vote on all the same
ballot items or nominees; or stock with time-phased voting rights
(“loyalty shares”). |
6 |
Newly-public companies
generally include companies that emerge from bankruptcy, SPAC
transactions, spin-offs, direct listings, and those who complete a
traditional initial public
offering. |
|
B-15 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
non-audit fees paid to the auditor are excessive (see discussion under
“Auditor Ratification”); |
• |
The
company receives an adverse opinion on the company’s financial statements
from its auditor; or |
• |
There
is persuasive evidence that the audit committee entered into an
inappropriate indemnification agreement with its auditor that limits the
ability of the company, or its shareholders, to pursue legitimate legal
recourse against the audit firm. |
• |
Poor
accounting practices are identified that rise to a level of serious
concern, such as: fraud; misapplication of GAAP; and material weaknesses
identified in Section 404 disclosures. Examine the severity, breadth,
chronological sequence, and duration, as well as the company’s efforts at
remediation or corrective actions, in determining whether withhold/against
votes are warranted. |
• |
There
is a significant misalignment between CEO pay and company performance
(pay for performance);
|
• |
The
company maintains significant problematic pay practices;
|
• |
The
board exhibits a significant level of poor communication and
responsiveness to shareholders; |
• |
The
company fails to include a Say on Pay ballot item when required under SEC
provisions, or under the company’s declared frequency of say on pay; or
|
• |
The
company fails to include a Frequency of Say on Pay ballot item when
required under SEC provisions. |
• |
The
presence of an anti-pledging policy, disclosed in the proxy statement,
that prohibits future pledging activity; |
• |
The
magnitude of aggregate pledged shares in terms of total common shares
outstanding, market value, and trading volume; |
• |
Disclosure
of progress or lack thereof in reducing the magnitude of aggregate pledged
shares over time; |
• |
Disclosure
in the proxy statement that shares subject to stock ownership and holding
requirements do not include pledged company stock; and
|
• |
Any
other relevant factors. |
|
B-16 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Material
failures of governance, stewardship, risk oversight7, or fiduciary
responsibilities at the company, including failure to adequately guard
against or manage ESG risks; |
• |
A
lack of sustainability reporting in the company’s public documents and/or
website in conjunction with a failure to adequately manage or mitigate ESG
risks; |
• |
Failure
to replace management as appropriate; or |
• |
Egregious
actions related to a director’s service on other boards that raise
substantial doubt about his or her ability to effectively oversee
management and serve the best interests of shareholders at any company.
|
• |
The
company has detailed disclosure of climate-related risks, such as
according to the framework established by the Task Force on
Climate-related Financial Disclosures (TCFD), including:
|
• |
Board
governance measures; |
• |
Corporate
strategy; |
• |
Risk
management analyses; and |
• |
Metrics
and targets |
• |
The
company has declared a Net Zero target by 2050 or sooner and the target
includes scope 1, 2, and relevant scope 3 emissions.
|
• |
The
company has set a medium-term target for reducing its GHG emissions.
|
7 |
Examples of failure of risk
oversight include, but are not limited to: bribery; large or serial fines
or sanctions from regulatory bodies; demonstrably poor risk oversight of
environmental and social issues, including climate change; significant
environmental incidents including spills and pollution; large scale or
repeat workplace fatalities or injuries; significant adverse legal
judgments or settlements; or hedging of company stock.
|
8 |
For 2024, companies defined as
“significant GHG emitters” will be those on the current Climate Action
100+ Focus Group list. |
|
B-17 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
board failed to act on a shareholder proposal that received the support of
a majority of the shares cast in the previous year or failed to act on a
management proposal seeking to ratify an existing charter/bylaw provision
that received opposition of a majority of the shares cast in the previous
year. Factors that will be considered are: |
• |
Disclosed
outreach efforts by the board to shareholders in the wake of the vote;
|
• |
Rationale
provided in the proxy statement for the level of implementation;
|
• |
The
subject matter of the proposal; |
• |
The
level of support for and opposition to the resolution in past meetings;
|
• |
Actions
taken by the board in response to the majority vote and its engagement
with shareholders; |
• |
The
continuation of the underlying issue as a voting item on the ballot (as
either shareholder or management proposals); and
|
• |
Other
factors as appropriate. |
• |
The
board failed to act on takeover offers where the majority of shares are
tendered; |
• |
At
the previous board election, any director received more than 50 percent
withhold/against votes of the shares cast and the company has failed to
address the issue(s) that caused the high withhold/against vote.
|
• |
The
company’s previous say-on-pay received the support of less than 70 percent
of votes cast. Factors that will be considered are:
|
• |
The
company’s response, including: |
• |
Disclosure
of engagement efforts with major institutional investors regarding the
issues that contributed to the low level of support (including the timing
and frequency of engagements and whether independent directors
participated); |
• |
Disclosure
of the specific concerns voiced by dissenting shareholders that led to the
say-on-pay opposition; |
• |
Disclosure
of specific and meaningful actions taken to address shareholders’
concerns; |
• |
Other
recent compensation actions taken by the company;
|
• |
Whether
the issues raised are recurring or isolated; |
• |
The
company’s ownership structure; and |
• |
Whether
the support level was less than 50 percent, which would warrant the
highest degree of responsiveness. |
• |
The
board implements an advisory vote on executive compensation on a less
frequent basis than the frequency that received the plurality of votes
cast. |
|
B-18 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Medical
issues/illness; |
• |
Family
emergencies; and |
• |
Missing
only one meeting (when the total of all meetings is three or fewer).
|
• |
In
cases of chronic poor attendance without reasonable justification, in
addition to voting against the director(s) with poor attendance, generally
vote against or withhold from appropriate members of the
nominating/governance committees or the full board.
|
• |
Sit
on more than five public company boards; or |
• |
Are
CEOs of public companies who sit on the boards of more than two public
companies besides their own—withhold only at their outside boards10. |
• |
Independent
directors comprise 50 percent or less of the board;
|
• |
The
non-independent director serves on the audit, compensation, or nominating
committee; |
• |
The
company lacks an audit, compensation, or nominating committee so that the
full board functions as that committee; or
|
9 |
Nominees who served for only
part of the fiscal year are generally exempted from the attendance
policy. |
10 |
Although all of a CEO’s
subsidiary boards will be counted as separate boards, Sustainability
Advisory Services will not recommend a withhold vote for the CEO of a
parent company board or any of the controlled (>50 percent ownership)
subsidiaries of that parent, but may do so at subsidiaries that are less
than 50 percent controlled and boards outside the parent/subsidiary
relationships. |
11 |
Underrepresented gender
identity includes directors who identify as women or as non-binary.
|
12 |
Aggregate diversity statistics
provided by the board will only be considered if specific to racial and/or
ethnic diversity. |
|
B-19 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
company lacks a formal nominating committee, even if the board attests
that the independent directors fulfill the functions of such a committee.
|
1. |
Executive
Director
|
1.1. |
Current
officer[1] of the
company or one of its affiliates[2]. |
2. |
Non-Independent
Non-Executive Director |
2.1. |
Director
identified as not independent by the board. |
2.2. |
Beneficial
owner of more than 50 percent of the company’s voting power (this may be
aggregated if voting power is distributed among more than one member of a
group). |
2.3. |
Non-officer
employee of the firm (including employee representatives).
|
2.4. |
Officer[1], former officer, or
general or limited partner of a joint venture or partnership with the
company. |
2.5. |
Former
CEO of the company.[3],[4] |
2.6. |
Former
non-CEO officer[1] of
the company or an affiliate[2] within the past five
years. |
2.7. |
Former
officer[1] of an
acquired company within the past five years[4]. |
2.8. |
Officer[1]of a former parent or
predecessor firm at the time the company was sold or split off within the
past five years. |
2.9. |
Former
interim officer if the service was longer than 18 months. If the service
was between 12 and 18 months an assessment of the interim officer’s
employment agreement will be made.[5]
|
2.10. |
Immediate
family member[6] of a
current or former officer[1] of the company or its
affiliates[2] within
the last five years. |
2.11. |
Immediate
family member[6] of a
current employee of company or its affiliates[2] where additional factors
raise concern (which may include, but are not limited to, the following: a
director related to numerous employees; the company or its affiliates
employ relatives of numerous board members; or a non-Section 16
officer in a key strategic role). |
2.12. |
Director
who (or whose immediate family member[6]) currently provides
professional services[7]
in excess of $10,000 per
year to: the company, an
affiliate[2], or an
individual officer of the company or an affiliate; either directly or is
(or whose family member is) a partner, employee, or controlling
shareholder of an organization which provides the
services. |
|
B-20 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
2.13. |
Director
who (or whose immediate family member[6]) currently has any
material transactional relationship[8]with the company or its
affiliates[2]; or who
is (or whose immediately family member[6] is) a partner in, or a
controlling shareholder or an executive officer of, an organization which
has the material transactional relationship[8] (excluding investments in
the company through a private placement). |
2.14. |
Director
who (or whose immediate family member[6]) is a trustee, director, or employee of a
charitable or non-profit organization that receives material grants or
endowments[8] from the
company or its affiliates[2]. |
2.15. |
Party
to a voting agreement[9]
to vote in line with management on proposals being brought to
shareholder vote. |
2.16. |
Has
(or an immediate family member[6] has) an interlocking
relationship as defined by the SEC involving members of the board of
directors or its Compensation Committee[10]. |
2.17. |
Founder[11] of the company but not
currently an employee. |
2.18. |
Director
with pay comparable to Named Executive
Officers. |
2.19. |
Any
material[12]relationship with the
company. |
3. |
Independent
Director |
3.1. |
No
material[12] connection
to the company other than a board seat. |
[1] |
The definition of officer will
generally follow that of a “Section 16 officer” (officers subject to
Section 16 of the Securities and Exchange Act of 1934) and includes
the chief executive, operating, financial, legal, technology, and
accounting officers of a company (including the president, treasurer,
secretary, controller, or any vice president in charge of a principal
business unit, division, or policy function). Current interim officers are
included in this category. For private companies, the equivalent positions
are applicable. A non-employee director serving as an officer due to
statutory requirements (e.g. corporate secretary) will be classified as an
Affiliated Outsider under “Any material relationship with the company.”
However, if the company provides explicit disclosure that the director is
not receiving additional compensation in excess of $10,000 per year for
serving in that capacity, then the director will be classified as an
Independent Outsider. |
[2] |
“Affiliate” includes a
subsidiary, sibling company, or parent company. Glenmede Policy uses 50
percent control ownership by the parent company as the standard for
applying its affiliate designation. The manager/advisor of an externally
managed issuer (EMI) is considered an affiliate.
|
[3] |
Includes any former CEO of the
company prior to the company’s initial public offering (IPO).
|
[4] |
When there is a former CEO of a
special purpose acquisition company (SPAC) serving on the board of an
acquired company, Glenmede Policy will generally classify such directors
as independent unless determined otherwise taking into account the
following factors: the applicable listing standards determination of such
director’s independence; any operating ties to the firm; and the existence
of any other conflicting relationships or related party
transactions. |
[5] |
Glenmede Policy will look at
the terms of the interim officer’s employment contract to determine if it
contains severance pay, long-term health and pension benefits, or other
such standard provisions typically contained in contracts of permanent,
non-temporary CEOs. Glenmede Policy will also consider if a formal search
process was under way for a full-time officer at the time.
|
[6] |
“Immediate family member”
follows the SEC’s definition of such and covers spouses, parents,
children, step-parents, step-children, siblings, in-laws, and any person
(other than a tenant or employee) sharing the household of any director,
nominee for director, executive officer, or significant shareholder of the
company. |
[7] |
Professional services can be
characterized as advisory in nature, generally involve access to sensitive
company information or to strategic decision-making, and typically have a
commission- or fee-based payment structure. Professional services
generally include, but are not limited to the following: investment
banking/financial advisory services; commercial banking (beyond deposit
services); investment services; insurance services; accounting/audit
services; consulting services; marketing services; legal services;
property management services; realtor services; lobbying services;
executive search services; and IT consulting services. The following would
generally be considered transactional relationships and not professional
services: deposit services; IT tech support services; educational
services; and construction services. The case of participation in a
banking |
|
B-21 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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[8] |
A material transactional
relationship, including grants to non-profit organizations, exists if the
company makes annual payments to, or receives annual payments from,
another entity exceeding the greater of $200,000 or 5 percent of the
recipient’s gross revenues, in the case of a company which follows NASDAQ
listing standards; or the greater of $1,000,000 or 2 percent of the
recipient’s gross revenues, in the case of a company which follows NYSE
listing standards. In the case of a company which follows neither of the
preceding standards, Glenmede Policy will apply the NASDAQ-based
materiality test. (The recipient is the party receiving the financial
proceeds from the transaction). |
[9] |
Dissident directors who are
parties to a voting agreement pursuant to a settlement or similar
arrangement may be classified as independent outsiders if an analysis of
the following factors indicates that the voting agreement does not
compromise their alignment with all shareholders’ interests: the terms of
the agreement; the duration of the standstill provision in the agreement;
the limitations and requirements of actions that are agreed upon; if the
dissident director nominee(s) is subject to the standstill; and if there
any conflicting relationships or related party
transactions. |
[10] |
Interlocks include: executive
officers serving as directors on each other’s compensation or similar
committees (or, in the absence of such a committee, on the board); or
executive officers sitting on each other’s boards and at least one serves
on the other’s compensation or similar committees (or, in the absence of
such a committee, on the board). |
[11] |
The operating involvement of
the founder with the company will be considered; if the founder was never
employed by the company, Glenmede Policy may deem him or her an
independent outsider. |
[12] |
For purposes of Glenmede
Policy’s director independence classification, “material” will be defined
as a standard of relationship (financial, personal or otherwise) that a
reasonable person might conclude could potentially influence one’s
objectivity in the boardroom in a manner that would have a meaningful
impact on an individual’s ability to satisfy requisite fiduciary standards
on behalf of shareholders. |
|
B-22 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
rationale provided for adoption of the term/tenure limit;
|
• |
The
robustness of the company’s board evaluation process;
|
• |
Whether
the limit is of sufficient length to allow for a broad range of director
tenures; |
• |
Whether
the limit would disadvantage independent directors compared to
non-independent directors; and |
• |
Whether
the board will impose the limit evenly, and not have the ability to waive
it in a discriminatory manner. |
• |
The
scope of the shareholder proposal; and |
• |
Evidence
of problematic issues at the company combined with, or exacerbated by, a
lack of board refreshment. |
• |
The
reasonableness/scope of the request; and |
• |
The
company’s existing disclosure on its current CEO succession planning
process. |
|
B-23 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
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|
• |
The
company has proxy access, thereby allowing shareholders to nominate
directors to the company’s ballot; and |
• |
The
company has adopted a majority vote standard, with a carve-out for
plurality voting in situations where there are more nominees than seats,
and a director resignation policy to address failed elections.
|
• |
Eliminate
entirely directors’ and officers’ liability for monetary damages for
violating the duty of care. |
• |
Eliminate
directors’ and officers’ liability for monetary damages for violating the
duty of loyalty. |
• |
Expand
coverage beyond just legal expenses to liability for acts that are more
serious violations of fiduciary obligation than mere carelessness.
|
• |
Expand
the scope of indemnification to provide for mandatory indemnification of
company officials in connection with acts that previously the company was
permitted to provide indemnification for, at the discretion of the
company’s board (i.e., “permissive indemnification”), but that previously
the company was not required to indemnify. |
• |
If
the individual was found to have acted in good faith and in a manner that
the individual reasonably believed was in the best interests of the
company; and |
• |
If
only the director’s legal expenses would be covered.
|
• |
The
company’s board committee structure, existing subject matter expertise,
and board nomination provisions relative to that of its
peers; |
13 |
Indemnification: the condition of being
secured against loss or damage. |
|
B-24 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
company’s existing board and management oversight mechanisms regarding the
issue for which board oversight is sought; |
• |
The
company’s disclosure and performance relating to the issue for which board
oversight is sought and any significant related controversies; and
|
• |
The
scope and structure of the proposal. |
• |
Existing
oversight mechanisms (including current committee structure) regarding the
issue for which board oversight is sought; |
• |
Level of
disclosure regarding the issue for which board oversight is sought;
|
• |
Company
performance related to the issue for which board oversight is sought;
|
• |
Board
committee structure compared to that of other companies in its industry
sector; and |
• |
The
scope and structure of the proposal. |
• |
Vote
for proposals to restore shareholders’ ability to remove directors with or
without cause. |
• |
Vote
against proposals that provide that only continuing directors may elect
replacements to fill board vacancies. |
• |
Vote
for proposals that permit shareholders to elect directors to fill board
vacancies. |
|
B-25 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Ownership threshold: maximum requirement
not more than three percent (3%) of the voting power;
|
• |
Ownership duration: maximum requirement
not longer than three (3) years of continuous ownership for each member of
the nominating group; |
• |
Aggregation: minimal or no limits on the
number of shareholders permitted to form a nominating group;
|
• |
Cap: cap on nominees of generally
twenty-five percent (25%) of the board. |
• |
Established
a communication structure that goes beyond the exchange requirements to
facilitate the exchange of information between shareholders and members of
the board; |
• |
Effectively
disclosed information with respect to this structure to its shareholders;
|
• |
Company
has not ignored majority-supported shareholder proposals or a majority
withhold vote on a director nominee; and |
• |
The
company has an independent chair or a lead director, according to Glenmede
Policy’s definition. This individual must be made available for periodic
consultation and direct communication with major shareholders.
|
|
B-26 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Long-term
financial performance of the company relative to its industry;
|
• |
Management’s
track record; |
• |
Background
to the contested election; |
• |
Nominee
qualifications and any compensatory arrangements;
|
• |
Strategic
plan of dissident slate and quality of the critique against management;
|
• |
Likelihood
that the proposed goals and objectives can be achieved (both slates); and
|
• |
Stock
ownership positions. |
3. |
Shareholder
Rights & Defenses |
|
B-27 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
B-28 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
company’s stated rationale for adopting such a provision;
|
• |
Disclosure
of past harm from duplicative shareholder lawsuits in more than one forum;
|
• |
The
breadth of application of the charter or bylaw provision, including the
types of lawsuits to which it would apply and the definition of key terms;
and |
• |
Governance
features such as shareholders’ ability to repeal the provision at a later
date (including the vote standard applied when shareholders attempt to
amend the charter or bylaws) and their ability to hold directors
accountable through annual director elections and a majority vote standard
in uncontested elections. |
|
B-29 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
ownership threshold (NOL protective amendments generally prohibit stock
ownership transfers that would result in a new 5-percent holder or
increase the stock ownership percentage of an existing 5-percent holder);
|
• |
The
value of the NOLs; |
• |
Shareholder
protection mechanisms (sunset provision or commitment to cause expiration
of the protective amendment upon exhaustion or expiration of the NOL);
|
• |
The
company’s existing governance structure including: board independence,
existing takeover defenses, track record of responsiveness to
shareholders, and any other problematic governance concerns; and
|
• |
Any
other factors that may be applicable. |
• |
Shareholders
have approved the adoption of the plan; or |
• |
The
board, in its exercise of its fiduciary responsibilities, determines that
it is in the best interest of shareholders under the circumstances to
adopt a pill without the delay in adoption that would result from seeking
stockholder approval (i.e., the
“fiduciary out” provision). A poison pill adopted under this fiduciary out
will be put to a shareholder ratification vote within 12 months of
adoption or expire. If the pill is not approved by a majority of the votes
cast on this issue, the plan will immediately terminate.
|
• |
No
lower than a 20% trigger, flip-in or flip-over; |
• |
A
term of no more than three years; |
• |
No
dead-hand, slow-hand, no-hand or similar feature that limits the ability
of a future board to redeem the pill; |
• |
Shareholder
redemption feature (qualifying offer clause); if the board refuses to
redeem the pill 90 days after a qualifying offer is announced, 10 percent
of the shares may call a special meeting or seek a written consent to vote
on rescinding the pill. |
|
B-30 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
• |
The
ownership threshold to transfer (NOL pills generally have a trigger
slightly below 5 percent); |
• |
The
value of the NOLs; |
• |
Shareholder
protection mechanisms (sunset provision, or commitment to cause expiration
of the pill upon exhaustion or expiration of NOLs);
|
• |
The
company’s existing governance structure including: board independence,
existing takeover defenses, track record of responsiveness to
shareholders, and any other problematic governance concerns; and
|
• |
Any
other factors that may be applicable. |
• |
The
scope and structure of the proposal; |
• |
The
company’s stated confidential voting policy (or other relevant policies)
and whether it ensures a “level playing field” by providing
shareholder proponents with equal access to vote information prior to the
annual meeting; |
• |
The
company’s vote standard for management and shareholder proposals and
whether it ensures consistency and fairness in the proxy voting
process and maintains the integrity of vote results;
|
• |
Whether
the company’s disclosure regarding its vote counting method and other
relevant voting policies with respect to management and shareholder
proposals are consistent and clear; |
• |
Any
recent controversies or concerns related to the company’s proxy voting
mechanics; |
• |
Any
unintended consequences resulting from implementation of the proposal; and
|
• |
Any
other factors that may be relevant. |
|
B-31 |
|
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
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|
|
|
• |
The
presence of a shareholder proposal addressing the same issue on the same
ballot; |
• |
The
board’s rationale for seeking ratification; |
• |
Disclosure
of actions to be taken by the board should the ratification proposal fail;
|
• |
Disclosure
of shareholder engagement regarding the board’s ratification request;
|
• |
The
level of impairment to shareholders’ rights caused by the existing
provision; |
• |
The
history of management and shareholder proposals on the provision at the
company’s past meetings; |
• |
Whether
the current provision was adopted in response to the shareholder proposal;
|
• |
The
company’s ownership structure; and |
• |
Previous
use of ratification proposals to exclude shareholder proposals.
|
• |
The
election of fewer than 50% of the directors to be elected is contested in
the election; |
• |
One
or more of the dissident’s candidates is elected;
|
• |
Shareholders
are not permitted to cumulate their votes for directors; and
|
• |
The
election occurred, and the expenses were incurred, after the adoption of
this bylaw. |
• |
Reasons
for reincorporation; |
• |
Comparison
of company’s governance practices and provisions prior to and following
the reincorporation; and |
• |
Comparison
of corporation laws of original state and destination state.
|
• |
Vote
for reincorporation when the economic factors outweigh any neutral or
negative governance changes. |
|
B-32 |
|
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
• |
Shareholders’
current right to act by written consent; |
• |
The
consent threshold; |
• |
The
inclusion of exclusionary or prohibitive language;
|
• |
Investor
ownership structure; and |
• |
Shareholder
support of, and management’s response to, previous shareholder proposals.
|
• |
An
unfettered14 right for shareholders to call special
meetings at a 10 percent threshold; |
• |
A
majority vote standard in uncontested director elections;
|
• |
No
non-shareholder-approved pill; and |
• |
An
annually elected board. |
• |
Shareholders’
current right to call special meetings; |
• |
Minimum
ownership threshold necessary to call special meetings (10% preferred);
|
• |
The
inclusion of exclusionary or prohibitive language;
|
• |
Investor
ownership structure; and |
• |
Shareholder
support of, and management’s response to, previous shareholder proposals.
|
14 |
“Unfettered” means no
restrictions on agenda items, no restrictions on the number of
shareholders who can group together to reach the 10 percent threshold, and
only reasonable limits on when a meeting can be called: no greater than 30
days after the last annual meeting and no greater than 90 prior to the
next annual meeting. |
|
B-33 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
• |
Ownership
structure; |
• |
Quorum
requirements; and |
• |
Vote
requirements. |
• |
Scope
and rationale of the proposal; and |
• |
Concerns
identified with the company’s prior meeting practices.
|
4. |
Capital/Restructuring
|
• |
If
share usage (outstanding plus reserved) is less than 50% of the current
authorized shares, vote for an increase of up to 50% of current authorized shares.
|
• |
If
share usage is 50% to 100% of the current authorized, vote for an increase
of up to 100% of current authorized
shares. |
• |
If
share usage is greater than current authorized shares, vote for an
increase of up to the current share usage. |
• |
In
the case of a stock split, the allowable increase is calculated (per
above) based on the post-split adjusted
authorization. |
15 |
Virtual-only shareholder
meeting” refers to a meeting of shareholders that is held exclusively
using technology without a corresponding in-person
meeting. |
|
B-34 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
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|
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|
|
• |
The
proposal seeks to increase the number of authorized shares of the class of
common stock that has superior voting rights to other share classes;
|
• |
On
the same ballot is a proposal for a reverse split for which support is
warranted despite the fact that it would result in an excessive increase
in the share authorization; |
• |
The
company has a non-shareholder approved poison pill (including an NOL
pill); or |
• |
The
company has previous sizeable placements (within the past 3 years) of
stock with insiders at prices substantially below market value, or with
problematic voting rights, without shareholder approval.
|
• |
In,
or subsequent to, the company’s most recent 10-K filing, the company
discloses that there is substantial doubt about its ability to continue as
a going concern; |
• |
The
company states that there is a risk of imminent bankruptcy or imminent
liquidation if shareholders do not approve the increase in authorized
capital; or |
• |
A
government body has in the past year required the company to increase its
capital ratios. |
• |
twice
the amount needed to support the transactions on the ballot, and
|
• |
the
allowable increase as calculated for general issuances above.
|
• |
The
company discloses a compelling rationale for the dual-class capital
structure, such as: |
• |
The
company’s auditor has concluded that there is substantial doubt about the
company’s ability to continue as a going concern; or
|
• |
The
new class of shares will be transitory; |
• |
The
new class is intended for financing purposes with minimal or no dilution
to current shareholders in both the short term and long term; and
|
• |
The
new class is not designed to preserve or increase the voting power of an
insider or significant shareholder. |
|
B-35 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
size of the company; |
• |
The
shareholder base; and |
• |
The
liquidity of the stock. |
• |
If
share usage (outstanding plus reserved) is less than 50% of the current
authorized shares, vote for an increase of up to 50% of current authorized shares.
|
• |
If
share usage is 50% to 100% of the current authorized, vote for an increase
of up to 100% of current authorized
shares. |
• |
If
share usage is greater than current authorized shares, vote for an
increase of up to the current share usage. |
• |
In
the case of a stock split, the allowable increase is calculated (per
above) based on the post-split adjusted authorization.
|
• |
If
no preferred shares are currently issued and outstanding, vote against the
request, unless the company discloses a specific use for the shares.
|
• |
If
the shares requested are blank check preferred shares that can be used for
antitakeover purposes16 |
• |
The
company seeks to increase a class of non-convertible preferred shares
entitled to more than one vote per share on matters that do not solely
affect the rights of preferred stockholders “supervoting shares”);
|
• |
The
company seeks to increase a class of convertible preferred shares entitled
to a number of votes greater than the number of common shares into which
they’re convertible (“supervoting shares”) on matters that do not solely
affect the rights of preferred stockholders; |
• |
The
stated intent of the increase in the general authorization is to allow the
company to increase an existing designated class of supervoting preferred
shares; |
• |
On
the same ballot is a proposal for a reverse split for which support is
warranted despite the fact that it would result in an excessive increase
in the share authorization; |
• |
The
company has a non-shareholder approved poison pill (including an NOL
pill); or |
• |
The
company has previous sizeable placements (within the past 3 years) of
stock with insiders at prices substantially below market value, or with
problematic voting rights, without shareholder
approval. |
16 |
To be acceptable, appropriate
disclosure would be needed that the shares are “declawed”: i.e.,
representation by the board that it will not, without prior stockholder
approval, issue or use the preferred stock for any defensive or
anti-takeover purpose or for the purpose of implementing any stockholder
rights plan. |
|
B-36 |
|
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|
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
The
stated intent of the increase in the general authorization is to allow the
company to increase an existing designated class of supervoting preferred
shares; |
• |
In,
or subsequent to, the company’s most recent 10-K filing, the company
discloses that there is substantial doubt about its ability to continue as
a going concern; |
• |
The
company states that there is a risk of imminent bankruptcy or imminent
liquidation if shareholders do not approve the increase in authorized
capital; or |
• |
A
government body has in the past year required the company to increase its
capital ratios. |
• |
twice
the amount needed to support the transactions on the ballot, and
|
• |
the
allowable increase as calculated for general issuances
above. |
• |
More
simplified capital structure; |
• |
Enhanced
liquidity; |
• |
Fairness
of conversion terms; |
• |
Impact
on voting power and dividends; |
• |
Reasons
for the reclassification; |
• |
Conflicts
of interest; and |
• |
Other
alternatives considered. |
• |
The
number of authorized shares will be proportionately reduced; or
|
• |
The
effective increase in authorized shares is equal to or less than the
allowable increase calculated in accordance with Glenmede’s Common Stock
Authorization policy. |
|
B-37 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
Stock
exchange notification to the company of a potential delisting;
|
• |
Disclosure
of substantial doubt about the company’s ability to continue as a going
concern without additional financing; |
• |
The
company’s rationale; or |
• |
Other
factors as applicable. |
• |
Greenmail,
|
• |
The
use of buybacks to inappropriately manipulate incentive compensation
metrics, |
• |
Threats
to the company’s long-term viability, or |
• |
Other
company-specific factors as warranted. |
• |
Adverse
governance changes; |
• |
Excessive
increases in authorized capital stock; |
• |
Unfair
method of distribution; |
• |
Diminution
of voting rights; |
• |
Adverse
conversion features; |
• |
Negative
impact on stock option plans; and |
• |
Alternatives
such as spin-off. |
|
B-38 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Purchase
price; |
• |
Fairness
opinion; |
• |
Financial
and strategic benefits; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest; |
• |
Other
alternatives for the business; |
• |
Non-completion
risk. |
• |
Impact
on the balance sheet/working capital; |
• |
Potential
elimination of diseconomies; |
• |
Anticipated
financial and operating benefits; |
• |
Anticipated
use of funds; |
• |
Value
received for the asset; |
• |
Fairness
opinion; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest. |
|
B-39 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
Dilution
to existing shareholders’ positions; |
• |
Terms
of the offer - discount/premium in purchase price to investor, including
any fairness opinion; termination penalties; exit strategy;
|
• |
Financial
issues - company’s financial situation; degree of need for capital; use of
proceeds; effect of the financing on the company’s cost of capital;
|
• |
Management’s
efforts to pursue other alternatives; |
• |
Control
issues - change in management; change in control, guaranteed board and
committee seats; standstill provisions; voting agreements; veto power over
certain corporate actions; and |
• |
Conflict
of interest - arm’s length transaction, managerial incentives.
|
• |
The
reasons for the change; |
• |
Any
financial or tax benefits; |
• |
Regulatory
benefits; |
• |
Increases
in capital structure; and |
• |
Changes
to the articles of incorporation or bylaws of the company.
|
• |
Increases
in common or preferred stock in excess of the allowable maximum (see
discussion under “Capital”); or |
• |
Adverse
changes in shareholder rights. |
|
B-40 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Offer
price/premium; |
• |
Fairness
opinion; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest; |
• |
Other
alternatives/offers considered; and |
• |
Non-completion
risk. |
• |
Whether
the company has attained benefits from being publicly-traded (examination
of trading volume, liquidity, and market research of the stock);
|
• |
Balanced
interests of continuing vs. cashed-out shareholders, taking into account
the following: |
• |
Are
all shareholders able to participate in the transaction?
|
• |
Will
there be a liquid market for remaining shareholders following the
transaction? |
• |
Does
the company have strong corporate governance? |
• |
Will
insiders reap the gains of control following the proposed transaction?
|
• |
Does
the state of incorporation have laws requiring continued reporting that
may benefit shareholders? |
• |
Percentage
of assets/business contributed; |
• |
Percentage
ownership; |
• |
Financial
and strategic benefits; |
• |
Governance
structure; |
• |
Conflicts
of interest; |
• |
Other
alternatives; and |
• |
Non-completion
risk. |
• |
Management’s
efforts to pursue other alternatives; |
• |
Appraisal
value of assets; and |
• |
The
compensation plan for executives managing the liquidation.
|
|
B-41 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Valuation - Is the value
to be received by the target shareholders (or paid by the acquirer)
reasonable? While the fairness opinion may provide an initial starting
point for assessing valuation reasonableness, emphasis is placed on the
offer premium, market reaction and strategic rationale.
|
• |
Market
reaction - How has the market responded to the proposed
deal? A negative market reaction should cause closer scrutiny of a deal.
|
• |
Strategic rationale -
Does the deal make sense strategically? From where is the value derived?
Cost and revenue synergies should not be overly aggressive or optimistic,
but reasonably achievable. Management should also have a favorable track
record of successful integration of historical acquisitions.
|
• |
Negotiations and process
- Were the terms of the transaction negotiated at arm’s-length? Was the
process fair and equitable? A fair process helps to ensure the best price
for shareholders. Significant negotiation “wins” can also signify the deal
makers’ competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no
auction) can also affect shareholder value. |
• |
Conflicts of interest -
Are insiders benefiting from the transaction disproportionately and
inappropriately as compared to non-insider shareholders? As the result of
potential conflicts, the directors and officers of the company may be more
likely to vote to approve a merger than if they did not hold these
interests. Consider whether these interests may have influenced these
directors and officers to support or recommend the merger.
|
• |
Governance - Will the
combined company have a better or worse governance profile than the
current governance profiles of the respective parties to the transaction?
If the governance profile is to change for the worse, the burden is on the
company to prove that other issues (such as valuation) outweigh any
deterioration in governance. |
• |
Dilution
to existing shareholders’ position: The amount and timing of shareholder
ownership dilution should be weighed against the needs and proposed
shareholder benefits of the capital infusion. Although newly issued common
stock, absent preemptive rights, is typically dilutive to existing
shareholders, share price appreciation is often the necessary event to
trigger the exercise of “out of the money” warrants and convertible debt.
In these instances from a value standpoint, the negative impact of
dilution is mitigated by the increase in the company’s stock price that
must occur to trigger the dilutive event. |
• |
Terms
of the offer (discount/premium in purchase price to investor, including
any fairness opinion, conversion features, termination penalties, exit
strategy): |
• |
The
terms of the offer should be weighed against the alternatives of the
company and in light of company’s financial condition. Ideally, the
conversion price for convertible debt and the exercise price for warrants
should be at a premium to the then prevailing stock price at the time of
private placement. |
• |
When
evaluating the magnitude of a private placement discount or premium,
consider factors that influence the discount or premium, such as,
liquidity, due diligence costs, control and monitoring costs, capital
scarcity, information asymmetry and anticipation of future performance.
|
|
B-42 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Financial
issues: |
• |
The
company’s financial condition; |
• |
Degree
of need for capital; |
• |
Use
of proceeds; |
• |
Effect
of the financing on the company’s cost of capital;
|
• |
Current
and proposed cash burn rate; |
• |
Going
concern viability and the state of the capital and credit markets.
|
• |
Management’s
efforts to pursue alternatives and whether the company engaged in a
process to evaluate alternatives: A fair, unconstrained process helps to
ensure the best price for shareholders. Financing alternatives can include
joint ventures, partnership, merger or sale of part or all of the company.
|
• |
Control
issues: |
• |
Change
in management; |
• |
Change
in control; |
• |
Guaranteed
board and committee seats; |
• |
Standstill
provisions; |
• |
Voting
agreements; |
• |
Veto
power over certain corporate actions; and |
• |
Minority
versus majority ownership and corresponding minority discount or majority
control premium |
• |
Conflicts
of interest: |
• |
Conflicts
of interest should be viewed from the perspective of the company and the
investor. |
• |
Were
the terms of the transaction negotiated at arm’s length? Are managerial
incentives aligned with shareholder interests? |
• |
Market
reaction: |
• |
The
market’s response to the proposed deal. A negative market reaction is a
cause for concern. Market reaction may be addressed by analyzing the
one day impact on the unaffected stock price. |
• |
Estimated
value and financial prospects of the reorganized company;
|
• |
Percentage
ownership of current shareholders in the reorganized company;
|
• |
Whether
shareholders are adequately represented in the reorganization process
(particularly through the existence of an official equity committee);
|
• |
The
cause(s) of the bankruptcy filing, and the extent to which the plan of
reorganization addresses the cause(s);
|
|
B-43 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
Existence
of a superior alternative to the plan of reorganization; and
|
• |
Governance
of the reorganized company. |
• |
Valuation—Is the value
being paid by the SPAC reasonable? SPACs generally lack an independent
fairness opinion and the financials on the target may be limited. Compare
the conversion price with the intrinsic value of the target company
provided in the fairness opinion. Also, evaluate the proportionate value
of the combined entity attributable to the SPAC IPO shareholders versus
the pre-merger value of SPAC. Additionally, a private company
discount may be applied to the target, if it is a private
entity. |
• |
Market
reaction—How has the market responded to the proposed deal?
A negative market reaction may be a cause for concern. Market
reaction may be addressed by analyzing the one-day impact on the
unaffected stock price. |
• |
Deal
timing—A main driver for most transactions is that the SPAC
charter typically requires the deal to be complete within 18 to 24
months, or the SPAC is to be liquidated. Evaluate the valuation, market
reaction, and potential conflicts of interest for deals that are announced
close to the liquidation date. |
• |
Negotiations and
process—What was the process undertaken to identify
potential target companies within specified industry or location specified
in charter? Consider the background of the sponsors.
|
• |
Conflicts of interest—How
are sponsors benefiting from the transaction compared to IPO shareholders?
Potential conflicts could arise if a fairness opinion is issued by the
insiders to qualify the deal rather than a third party or if management is
encouraged to pay a higher price for the target because of an 80% rule
(the charter requires that the fair market value of the target is at
least equal to 80% of net assets of the SPAC). Also, there may be sense of
urgency by the management team of the SPAC to close the deal since its
charter typically requires a transaction to be completed within the 18-24
month timeframe. |
• |
Voting
agreements—Are the sponsors entering into enter into any
voting agreements/ tender offers with shareholders who are likely to vote
against the proposed merger or exercise conversion rights?
|
• |
Governance—What is the
impact of having the SPAC CEO or founder on key committees following the
proposed merger? |
• |
Length
of request: Typically, extension requests range from two to
six months, depending on the progression of the SPAC’s acquistion process.
|
• |
Pending
transaction(s) or
progression of the acquisition
process: Sometimes an intial business combination was
already put to a shareholder vote, but, for varying reasons, the
transaction could not be consummated by the termination date and the SPAC
is requesting an extension. Other times, the SPAC has entered into a
definitive transaction agreement, but needs additional time to consummate
or hold the shareholder meeting. |
|
B-44 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
Added
incentive for non-redeeming shareholders: Sometimes the SPAC
sponsor (or other insiders) will contribute, typically as a loan to the
company, additional funds that will be added to the redemption value of
each public share as long as such shares are not redeemed in connection
with the extension request. The purpose of the “equity kicker” is to
incentivize shareholders to hold their shares through the end of the
requested extension or until the time the transaction is put to a
shareholder vote, rather than electing redeemption at the extension
proposal meeting. |
• |
Prior
extension requests: Some SPACs request additional time
beyond the extension period sought in prior extension requests.
|
• |
Tax
and regulatory advantages; |
• |
Planned
use of the sale proceeds; |
• |
Valuation
of spinoff; |
• |
Fairness
opinion; |
• |
Benefits
to the parent company; |
• |
Conflicts
of interest; |
• |
Managerial
incentives; |
• |
Corporate
governance changes; |
• |
Changes
in the capital structure. |
• |
Hiring
a financial advisor to explore strategic alternatives;
|
• |
Selling
the company; or |
• |
Liquidating
the company and distributing the proceeds to shareholders.
|
• |
Prolonged
poor performance with no turnaround in sight; |
• |
Signs
of entrenched board and management (such as the adoption of takeover
defenses); |
• |
Strategic
plan in place for improving value; |
• |
Likelihood
of receiving reasonable value in a sale or dissolution; and
|
• |
The
company actively exploring its strategic options, including retaining a
financial advisor. |
|
B-45 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
5. |
Compensation
|
1. |
Maintain
appropriate pay-for-performance alignment, with emphasis on long-term
shareholder value: This principle encompasses overall executive pay
practices, which must be designed to attract, retain, and appropriately
motivate the key employees who drive shareholder value creation over the
long term. It will take into consideration, among other factors, the link
between pay and performance; the mix between fixed and variable pay;
performance goals; and equity-based plan costs; |
2. |
Avoid
arrangements that risk “pay for failure”: This principle addresses the
appropriateness of long or indefinite contracts, excessive severance
packages, and guaranteed compensation; |
3. |
Maintain
an independent and effective compensation committee: This principle
promotes oversight of executive pay programs by directors with appropriate
skills, knowledge, experience, and a sound process for compensation
decision-making (e.g., including
access to independent expertise and advice when needed);
|
4. |
Provide
shareholders with clear, comprehensive compensation disclosures: This
principle underscores the importance of informative and timely disclosures
that enable shareholders to evaluate executive pay practices fully and
fairly; |
5. |
Avoid
inappropriate pay to non-executive directors: This principle recognizes
the interests of shareholders in ensuring that compensation to outside
directors does not compromise their independence and ability to make
appropriate judgments in overseeing managers’ pay and performance. At the
market level, it may incorporate a variety of generally accepted best
practices. |
• |
There
is an unmitigated misalignment between CEO pay and company performance
(pay for performance);
|
• |
The
company maintains significant problematic pay practices;
|
• |
The
board exhibits a significant level of poor communication and
responsiveness to shareholders. |
• |
There
is no SOP on the ballot, and an against vote on an SOP is warranted due to
pay for performance misalignment, problematic pay practices, or the lack
of adequate responsiveness on compensation issues raised previously, or a
combination thereof; |
• |
The
board fails to respond adequately to a previous SOP proposal that received
less than 70 percent support of votes cast; |
• |
The
company has recently practiced or approved problematic pay practices, such
as option repricing or option backdating; or |
• |
The
situation is egregious. |
|
B-46 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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1. |
Peer
Group18 Alignment: |
• |
The
degree of alignment between the company’s annualized TSR rank and the
CEO’s annualized total pay rank within a peer group, each measured over a
three-year period. |
• |
The
rankings of CEO total pay and company financial performance within a peer
group, each measured over a three-year period. |
• |
The
multiple of the CEO’s total pay relative to the peer group median in the
most recent fiscal year. |
2. |
Absolute
Alignment19 – the absolute alignment between the trend
in CEO pay and company TSR over the prior five fiscal years – i.e., the
difference between the trend in annual pay changes and the trend in
annualized TSR during the period. |
• |
The
ratio of performance- to time-based incentive awards;
|
• |
The
overall ratio of performance-based compensation;
|
• |
The
rigor of performance goals; |
• |
The
complexity and risks around pay program design; |
• |
The
transparency and clarity of disclosure; |
• |
The
company’s peer group benchmarking practices; |
• |
Financial/operational
results, both absolute and relative to peers; |
• |
Special
circumstances related to, for example, a new CEO in the prior FY or
anomalous equity grant practices (e.g., bi-annual awards);
|
• |
Realizable
pay20 compared to grant pay;
and |
• |
Any
other factors deemed relevant. |
17 |
The Russell 3000E Index includes
approximately 4,000 of the largest U.S. equity securities.
|
18 |
The revised peer group is
generally comprised of 14-24 companies that are selected using market cap,
revenue (or assets for certain financial firms), GICS industry group, and
company’s selected peers’ GICS industry group, with size constraints, via
a process designed to select peers that are comparable to the subject
company in terms of revenue/assets and industry, and also within a market
cap bucket that is reflective of the company’s. For Oil, Gas &
Consumable Fuels companies, market cap is the only size determinant.
|
19 |
Only Russell 3000 Index
companies are subject to the Absolute Alignment analysis.
|
20 |
Glenmede Policy research
reports include realizable pay for S&P1500
companies. |
|
B-47 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Problematic
practices related to non-performance-based compensation elements;
|
• |
Incentives
that may motivate excessive risk-taking or present a windfall risk; and
|
• |
Pay
decisions that circumvent pay-for-performance, such as options backdating
or waiving performance requirements. |
• |
Repricing
or replacing of underwater stock options/SARs without prior shareholder
approval (including cash buyouts and voluntary surrender of underwater
options); |
• |
Extraordinary
perquisites or tax gross-ups; |
• |
New
or materially amended agreements that provide for:
|
• |
Excessive
termination or CIC severance payments (generally exceeding 3 times base
salary and average/target/most recent bonus); |
• |
CIC
severance payments without involuntary job loss or substantial diminution
of duties (“single” or “modified single” triggers) or in connection with a
problematic Good Reason definition; |
• |
CIC
excise tax gross-up entitlements (including “modified” gross-ups);
|
• |
Multi-year
guaranteed awards that are not at risk due to rigorous performance
conditions; |
• |
Liberal
CIC definition combined with any single-trigger CIC benefits;
|
• |
Insufficient
executive compensation disclosure by externally-managed issuers (EMIs)
such that a reasonable assessment of pay programs and practices applicable
to the EMI’s executives is not possible; |
• |
Severance
payments made when the termination is not clearly disclosed as involuntary
(for example, a termination without cause or resignation for good reason);
|
• |
Any
other provision or practice deemed to be egregious and present a
significant risk to investors. |
• |
Reason
and motive for the options backdating issue, such as inadvertent vs.
deliberate grant date changes; |
• |
Duration
of options backdating; |
• |
Size
of restatement due to options backdating; |
• |
Corrective
actions taken by the board or compensation committee, such as canceling or
re-pricing backdated options, the recouping of option gains on backdated
grants; and |
|
B-48 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Adoption
of a grant policy that prohibits backdating, and creates a fixed grant
schedule or window period for equity grants in the future.
|
• |
Failure
to respond to majority-supported shareholder proposals on executive pay
topics; or |
• |
Failure
to adequately respond to the company’s previous say-on-pay proposal that
received the support of less than 70 percent of votes cast, taking into
account: |
• |
The
company’s response, including: |
• |
Disclosure
of engagement efforts with major institutional investors regarding the
issues that contributed to the low level of support (including the timing
and frequency of engagements and whether independent directors
participated); |
• |
Disclosure
of the specific concerns voiced by dissenting shareholders that led to the
say-on-pay opposition; |
• |
Disclosure
of specific and meaningful actions taken to address shareholders’
concerns; |
• |
Other
recent compensation actions taken by the company;
|
• |
Whether
the issues raised are recurring or isolated; |
• |
The
company’s ownership structure; and |
• |
Whether
the support level was less than 50 percent, which would warrant the
highest degree of responsiveness. |
• |
Single-
or modified-single-trigger cash severance; |
• |
Single-trigger
acceleration of unvested equity awards; |
• |
Full
acceleration of equity awards granted shortly before the change in
control; |
• |
Acceleration
of performance awards above the target level of performance without
compelling rationale; |
• |
Excessive
cash severance (>3x base salary and bonus); |
• |
Excise
tax gross-ups triggered and payable; |
• |
Excessive
golden parachute payments (on an absolute basis or as a percentage of
transaction equity value); or |
|
B-49 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Recent
amendments that incorporate any problematic features (such as those above)
or recent actions (such as extraordinary equity grants) that may make
packages so attractive as to influence merger agreements that may not be
in the best interests of shareholders; or |
• |
The
company’s assertion that a proposed transaction is conditioned on
shareholder approval of the golden parachute advisory vote.
|
• |
Plan Cost: The total estimated cost of
the company’s equity plans relative to industry/market cap peers, measured
by the company’s estimated Shareholder Value Transfer (SVT) in relation to
peers and considering both: |
• |
SVT
based on new shares requested plus shares remaining for future grants,
plus outstanding unvested/unexercised grants; and
|
• |
SVT
based only on new shares requested plus shares remaining for future
grants. |
• |
Plan Features: |
• |
Quality
of disclosure around vesting upon a change in control (CIC);
|
• |
Discretionary
vesting authority; |
• |
Liberal
share recycling on various award types; |
• |
Lack
of minimum vesting period for grants made under the plan;
|
• |
Dividends
payable prior to award vesting. |
• |
Grant Practices:
|
• |
The
company’s three year burn rate relative to its industry/market cap peers;
|
• |
Vesting
requirements in CEO’S recent equity grants (3-year look-back);
|
• |
The
estimated duration of the plan (based on the sum of shares remaining
available and the new shares requested, divided by the average annual
shares granted in the prior three years); |
• |
The
proportion of the CEO’s most recent equity grants/awards subject to
performance conditions; |
21 |
Proposals evaluated under the
EPSC policy generally include those to approve or amend (1) stock option
plans for employees and/or employees and directors, (2) restricted stock
plans for employees and/or employees and directors, and (3) omnibus stock
incentive plans for employees and/or employees and directors; amended
plans will be further evaluated
case-by-case. |
|
B-50 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Whether
the company maintains a sufficient claw-back policy;
|
• |
Whether
the company maintains sufficient post exercise/vesting share-holding
requirements. |
• |
Awards
may vest in connection with a liberal change-of-control definition;
|
• |
The
plan would permit repricing or cash buyout of underwater options without
shareholder approval (either by expressly permitting it – for NYSE and
Nasdaq listed companies -- or by not prohibiting it when the company has a
history of repricing – for non-listed companies);
|
• |
The
plan is a vehicle for problematic pay practices or a significant
pay-for-performance disconnect under certain circumstances;
|
• |
The
plan is excessively dilutive to shareholders’ holdings;
|
• |
The
plan contains an evergreen (automatic share replenishment) feature; or
|
• |
Any
other plan features are determined to have a significant negative impact
on shareholder interests. |
22 |
For plans evaluated under the
Equity Plan Scorecard policy, the company’s SVT benchmark is considered
along with other factors. |
|
B-51 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Amend
the terms of outstanding options or SARs to reduce the exercise price of
such outstanding options or SARs; |
• |
Cancel
outstanding options or SARs in exchange for options or SARs with an
exercise price that is less than the exercise price of the original
options or SARs; |
• |
Cancel
underwater options in exchange for stock awards; or
|
• |
Provide
cash buyouts of underwater options. |
• |
Magnitude
of pay misalignment; |
• |
Contribution
of non–performance-based equity grants to overall pay; and
|
• |
The
proportion of equity awards granted in the last three fiscal years
concentrated at the named executive officer level.
|
|
B-52 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Purchase
price is at least 85 percent of fair market value;
|
• |
Offering
period is 27 months or less; and |
• |
The
number of shares allocated to the plan is 10 percent or less of the
outstanding shares. |
• |
Purchase
price is less than 85 percent of fair market value; or
|
• |
Offering
period is greater than 27 months; or |
• |
The
number of shares allocated to the plan is more than ten percent of the
outstanding shares. |
• |
Broad-based
participation (i.e., all employees
of the company with the exclusion of individuals with 5 percent or more of
beneficial ownership of the company); |
• |
Limits
on employee contribution, which may be a fixed dollar amount or expressed
as a percent of base salary; |
|
B-53 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Company
matching contribution up to 25 percent of employee’s contribution, which
is effectively a discount of 20 percent from market value;
|
• |
No
discount on the stock price on the date of purchase when there is a
company matching contribution. |
• |
Addresses
administrative features only; or |
• |
Seeks
approval for Section 162(m) purposes only, and the plan administering
committee consists entirely of independent outsiders, per Glenmede
Policy’s Classification of Directors. Note that if the company is
presenting the plan to shareholders for the first time after the company’s
initial public offering (IPO), or if the proposal is bundled with other
material plan amendments, then the recommendation will be case-by-case
(see below). |
• |
Seeks
approval for Section 162(m) purposes only, and the plan administering
committee does not consist entirely of independent outsiders, per Glenmede Policy’s Classification of
Directors. |
• |
If
the proposal requests additional shares and/or the amendments may
potentially increase the transfer of shareholder value to employees, the
recommendation will be based on the Equity Plan Scorecard evaluation as
well as an analysis of the overall impact of the amendments.
|
• |
If
the plan is being presented to shareholders for the first time after the
company’s IPO, whether or not additional shares are being requested, the
recommendation will be based on the Equity Plan Scorecard evaluation as
well as an analysis of the overall impact of any amendments.
|
• |
If
there is no request for additional shares and the amendments are not
deemed to potentially increase the transfer of shareholder value to
employees, then the recommendation will be based entirely on an analysis
of the overall impact of the amendments, and the EPSC evaluation will be
shown for informational purposes. |
• |
Historic
trading patterns--the stock price should not be so volatile that the
options are likely to be back “in-the-money” over the near term;
|
• |
Rationale
for the re-pricing--was the stock price decline beyond management’s
control? |
• |
Is
this a value-for-value exchange? |
• |
Are
surrendered stock options added back to the plan reserve?
|
|
B-54 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Timing--repricing
should occur at least one year out from any precipitous drop in company’s
stock price; |
• |
Option
vesting--does the new option vest immediately or is there a black-out
period? |
• |
Term
of the option--the term should remain the same as that of the replaced
option; |
• |
Exercise
price--should be set at fair market or a premium to market;
|
• |
Participants--executive
officers and directors must be excluded. |
• |
Executive
officers and non-employee directors are excluded from participating;
|
• |
Stock
options are purchased by third-party financial institutions at a discount
to their fair value using option pricing models such as Black-Scholes or a
Binomial Option Valuation or other appropriate financial models;
|
• |
There
is a two-year minimum holding period for sale proceeds (cash or stock) for
all participants. |
|
B-55 |
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Eligibility;
|
• |
Vesting;
|
• |
Bid-price;
|
• |
Term
of options; |
• |
Cost
of the program and impact of the TSOs on company’s total option expense
|
• |
Option
repricing policy. |
• |
If
the equity plan under which non-employee director grants are made is on
the ballot, whether or not it warrants support; and
|
• |
An
assessment of the following qualitative factors:
|
• |
The
relative magnitude of director compensation as compared to companies of a
similar profile; |
• |
The
presence of problematic pay practices relating to director compensation;
|
• |
Director
stock ownership guidelines and holding requirements;
|
• |
Equity
award vesting schedules; |
• |
The
mix of cash and equity-based compensation; |
• |
Meaningful
limits on director compensation; |
• |
The
availability of retirement benefits or perquisites; and
|
• |
The
quality of disclosure surrounding director compensation.
|
• |
The
total estimated cost of the company’s equity plans relative to
industry/market cap peers, measured by the company’s estimated Shareholder
Value Transfer (SVT) based on new shares requested plus shares remaining
for future grants, plus outstanding unvested/unexercised grants;
|
• |
The
company’s three-year burn rate relative to its industry/market cap peers;
and |
• |
The
presence of any egregious plan features (such as an option repricing
provision or liberal CIC vesting risk).
|
|
B-56 |
|
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|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
The
relative magnitude of director compensation as compared to companies of a
similar profile; |
• |
The
presence of problematic pay practices relating to director compensation;
|
• |
Director
stock ownership guidelines and holding requirements;
|
• |
Equity
award vesting schedules; |
• |
The
mix of cash and equity-based compensation; |
• |
Meaningful
limits on director compensation; |
• |
The
availability of retirement benefits or perquisites; and
|
• |
The
quality of disclosure surrounding director compensation.
|
• |
The
company’s past practices regarding equity and cash compensation;
|
• |
Whether
the company has a holding period or stock ownership requirements in place,
such as a meaningful retention ratio (at least 50 percent for full
tenure); and |
• |
Whether
the company has a rigorous claw-back policy in place.
|
|
B-57 |
|
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|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
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|
|
|
|
• |
The
percentage/ratio of net shares required to be retained;
|
• |
The
time period required to retain the shares; |
• |
Whether
the company has equity retention, holding period, and/or stock ownership
requirements in place and the robustness of such requirements;
|
• |
Whether
the company has any other policies aimed at mitigating risk taking by
executives; |
• |
Executives’
actual stock ownership and the degree to which it meets or exceeds the
proponent’s suggested holding period/retention ratio or the company’s
existing requirements; and |
• |
First,
vote for shareholder proposals advocating the use of performance-based
equity awards, such as performance contingent options or restricted stock,
indexed options or premium-priced options, unless the proposal is overly
restrictive or if the company has demonstrated that it is using a
“substantial” portion of |
|
B-58 |
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|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Second,
assess the rigor of the company’s performance-based equity program. If the
bar set for the performance-based program is too low based on the
company’s historical or peer group comparison, generally vote for the
proposal. Furthermore, if target performance results in an above target
payout, vote for the shareholder proposal due to program’s poor design. If
the company does not disclose the performance metric of the
performance-based equity program, vote for the shareholder proposal
regardless of the outcome of the first step to the test.
|
• |
Set
compensation targets for the plan’s annual and long-term incentive pay
components at or below the peer group median; |
• |
Deliver
a majority of the plan’s target long-term compensation through
performance-vested, not simply time-vested, equity awards;
|
• |
Provide
the strategic rationale and relative weightings of the financial and
non-financial performance metrics or criteria used in the annual and
performance-vested long-term incentive components of the plan;
|
• |
Establish
performance targets for each plan financial metric relative to the
performance of the company’s peer companies; |
• |
Limit
payment under the annual and performance-vested long-term incentive
components of the plan to when the company’s performance on its selected
financial performance metrics exceeds peer group median performance.
|
• |
What
aspects of the company’s annual and long-term equity incentive programs
are performance driven? |
• |
If
the annual and long-term equity incentive programs are performance driven,
are the performance criteria and hurdle rates disclosed to shareholders or
are they benchmarked against a disclosed peer group?
|
• |
Can
shareholders assess the correlation between pay and performance based on
the current disclosure? |
• |
What
type of industry and stage of business cycle does the company belong to?
|
• |
Adoption,
amendment, or termination of a 10b5-1 Plan must be disclosed within two
business days in a Form 8-K; |
• |
Amendment
or early termination of a 10b5-1 Plan is allowed only under extraordinary
circumstances, as determined by the board; |
• |
Ninety
days must elapse between adoption or amendment of a 10b5-1 Plan and
initial trading under the plan; |
|
B-59 |
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|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Reports
on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;
|
• |
An
executive may not trade in company stock outside the 10b5-1 Plan.
|
• |
Trades
under a 10b5-1 Plan must be handled by a broker who does not handle other
securities transactions for the executive. |
• |
If
the company has adopted a formal recoupment policy;
|
• |
The
rigor of the recoupment policy focusing on how and under what
circumstances the company may recoup incentive or stock compensation;
|
• |
Whether
the company has chronic restatement history or material financial
problems; |
• |
Whether
the company’s policy substantially addresses the concerns raised by the
proponent; |
• |
Disclosure
of recoupment of incentive or stock compensation from senior executives or
lack thereof; or |
• |
Any
other relevant factors. |
• |
The
company’s severance or change-in-control agreements in place, and the
presence of problematic features (such as excessive severance
entitlements, single triggers, excise tax gross-ups,
etc.); |
• |
Any
existing limits on cash severance payouts or policies which require
shareholder ratification of severance payments exceeding a certain
level; |
• |
Any
recent severance-related controversies; and |
• |
Whether
the proposal is overly prescriptive, such as requiring shareholder
approval of severance that does not exceed market
norms. |
|
B-60 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
The
frequency and timing of the company’s share buybacks;
|
• |
The
use of per-share metrics in incentive plans; |
• |
The
effect of recent buybacks on incentive metric results and payouts; and
|
• |
Whether
there is any indication of metric result manipulation.
|
• |
The
company’s current treatment of equity in change-of-control situations
(i.e. is it double triggered, does it allow for the assumption of equity
by acquiring company, the treatment of performance shares, etc.);
|
• |
Current
employment agreements, including potential poor pay practices such as
gross-ups embedded in those agreements. |
|
B-61 |
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|
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2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
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|
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|
|
6. |
Social
and Environmental Issues |
• |
Whether
the proposal itself is well framed and reasonable;
|
• |
Whether
adoption of the proposal would have either a positive or negative impact
on the company’s short-term or long-term share value;
|
• |
The
percentage of sales, assets and earnings affected;
|
• |
Whether
the company has already responded in some appropriate manner to the
request embodied in a proposal; |
• |
Whether
the company’s analysis and voting recommendation to shareholders is
persuasive; |
• |
Whether
there are significant controversies, fines, penalties, or litigation
associated with the company’s environmental or social practices;
|
• |
What
other companies have done in response to the issue addressed in the
proposal; |
• |
Whether
implementation of the proposal would achieve the objectives sought in the
proposal; and |
• |
The
degree to which the company’s stated position on the issues raised in the
proposal could affect its reputation or sales, or leave it vulnerable to a
boycott or selective purchasing. |
• |
The
company has already published a set of animal welfare standards and
monitors compliance; |
• |
The
company’s standards are comparable to industry peers; and
|
• |
There
are no recent significant fines, litigation, or controversies related to
the company’s and/or its suppliers’ treatment of animals.
|
|
B-62 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
The
company is conducting animal testing programs that are unnecessary or not
required by regulation; |
• |
The
company is conducting animal testing when suitable alternatives are
commonly accepted and used by industry peers; or
|
• |
There
are recent, significant fines or litigation related to the company’s
treatment of animals. |
• |
The
potential impact of such labeling on the company’s business;
|
• |
The
quality of the company’s disclosure on GE product labeling, related
voluntary initiatives, and how this disclosure compares with industry peer
disclosure; and |
• |
Company’s
current disclosure on the feasibility of GE product labeling.
|
• |
Whether
the company has adequately disclosed mechanisms in place to prevent
abuses; |
• |
Whether
the company has adequately disclosed the financial risks of the
products/practices in question; |
• |
Whether
the company has been subject to violations of related laws or serious
controversies; and |
• |
Peer
companies’ policies/practices in this area.
|
|
B-63 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Whether
the company has adequately disclosed mechanisms in place to prevent
abusive lending practices; |
• |
Whether
the company has adequately disclosed the financial risks of the lending
products in question; |
• |
Whether
the company has been subject to violations of lending laws or serious
lending controversies; and |
• |
Peer
companies’ policies to prevent abusive lending practices.
|
• |
The
potential for reputational, market, and regulatory risk exposure;
|
• |
Existing
disclosure of relevant policies; |
• |
Deviation
from established industry norms; |
• |
Relevant
company initiatives to provide research and/or products to disadvantaged
consumers; |
• |
Whether
the proposal focuses on specific products or geographic regions;
|
• |
The
potential burden and scope of the requested report; and
|
• |
Recent
significant controversies, litigation, or fines at the company.
|
• |
The
scope of the company’s operations in the affected/relevant area(s);
|
• |
The
company’s existing healthcare policies, including benefits and healthcare
access; and |
• |
Company
donations to relevant healthcare providers. |
|
B-64 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Recent
related fines, controversies, or significant litigation;
|
• |
Whether
the company complies with relevant laws and regulations on the marketing
of tobacco; |
• |
Whether
the company’s advertising restrictions deviate from those of industry
peers; |
• |
Whether
the company entered into the Master Settlement Agreement, which restricts
marketing of tobacco to youth; and |
• |
Whether
restrictions on marketing to youth extend to foreign countries.
|
• |
Whether
the company complies with all laws and regulations;
|
• |
The
degree that voluntary restrictions beyond those mandated by law might hurt
the company’s competitiveness; and |
• |
The
risk of any health-related liabilities. |
|
B-65 |
|
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|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Vote
for shareholder proposals seeking information on the financial, physical,
or regulatory risks it faces related to climate change- on its operations
and investments, or on how the company identifies, measures, and manage
such risks. |
• |
Vote
for shareholder proposals calling for the reduction of GHG emissions.
|
• |
Vote
for shareholder proposals seeking reports on responses to regulatory and
public pressures surrounding climate change, and for disclosure of
research that aided in setting company policies around climate change.
|
• |
Vote
for shareholder proposals requesting a report/disclosure of goals on GHG
emissions from company operations and/or products.
|
• |
The
extent to which the company’s climate related disclosures are in line with
TCFD recommendations and meet other market standards;
|
• |
Disclosure
of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);
|
• |
The
completeness and rigor of company’s short-, medium-, and long-term targets
for reducing operational and supply chain GHG emissions (Scopes 1, 2, and
3 if relevant); |
• |
Whether
the company has sought and approved third-party approval that its targets
are science-based; |
• |
Whether
the company has made a commitment to be “net zero” for operational and
supply chain emissions (Scopes 1, 2, and 3) by 2050;
|
• |
Whether
the company discloses a commitment to report on the implementation of its
plan in subsequent years; |
• |
Whether
the company’s climate data has received third-party assurance;
|
• |
Disclosure
of how the company’s lobbying activities and its capital expenditures
align with company strategy; |
• |
Whether
there are specific industry decarbonization challenges; and
|
• |
The
company’s related commitment, disclosure, and performance compared to its
industry peers. |
23 |
Variations of this request
also include climate transition related ambitions, or commitment to
reporting on the implementation of a climate
plan. |
|
B-66 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
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|
|
|
|
• |
The
completeness and rigor of the company’s climate-related disclosure;
|
• |
The
company’s actual GHG emissions performance; |
• |
Whether
the company has been the subject of recent, significant violations, fines,
litigation, or controversy related to its GHG emissions; and
|
• |
Whether
the proposal’s request is unduly burdensome (scope or timeframe) or overly
prescriptive. |
• |
The
gender and racial minority representation of the company’s board is
reasonably inclusive in relation to companies of similar size and
business; and |
• |
The
board already reports on its nominating procedures and gender and racial
minority initiatives on the board and within the company.
|
|
B-67 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
company’s current policies and disclosure related to both its diversity
and inclusion policies and practices and its compensation philosophy and
fair and equitable compensation practices; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to gender, race, or ethnicity pay gap
issues; |
• |
The
company’s disclosure regarding gender, race, or ethnicity pay gap policies
or initiatives compared to its industry peers; and
|
• |
Local
laws regarding categorization of race and/or ethnicity and definitions of
ethnic and/or racial minorities. |
• |
The
company’s compliance with applicable regulations and guidelines;
|
• |
The
company’s current level of disclosure regarding its security and safety
policies, procedures, and compliance monitoring; and
|
• |
The
existence of recent, significant violations, fines, or controversy
regarding the safety and security of the company’s operations and/or
facilities. |
• |
Operations
in the specified regions are not permitted by current laws or regulations;
|
• |
The
company does not currently have operations or plans to develop operations
in these protected regions; or |
• |
The
company’s disclosure of its operations and environmental policies in these
regions is comparable to industry peers.
|
|
B-68 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
nature of the company’s business; |
• |
The
current level of disclosure of the company’s existing related programs;
|
• |
The
timetable and methods of program implementation prescribed by the
proposal; |
• |
The
company’s ability to address the issues raised in the proposal; and
|
• |
How
the company’s recycling programs compare to similar programs of its
industry peers. |
• |
Vote
for shareholder proposals seeking greater disclosure on the company’s
environmental and social practices, and/or associated risks and
liabilities. |
• |
Vote
for shareholder proposals asking companies to report in accordance with
the Global Reporting Initiative (GRI). |
• |
Vote
for shareholder proposals seeking the preparation of sustainability
reports. |
• |
Vote
for shareholder proposals to study or implement the CERES Roadmap
2030. |
• |
Vote
for shareholder proposals to study or implement the Equator
Principles. |
|
B-69 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
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|
|
|
|
• |
The
company’s current disclosure of relevant policies, initiatives, oversight
mechanisms, and water usage metrics; |
• |
Whether
or not the company’s existing water-related policies and practices are
consistent with relevant internationally recognized standards and
national/local regulations; |
• |
The
potential financial impact or risk to the company associated with
water-related concerns or issues; and |
• |
Recent,
significant company controversies, fines, or litigation regarding water
use by the company and its suppliers. |
• |
The
level of disclosure of company policies and procedures relating to data
security, privacy, freedom of speech, information access and management,
and Internet censorship; |
• |
Engagement
in dialogue with governments or relevant groups with respect to data
security, privacy, or the free flow of information on the Internet;
|
• |
The
scope of business involvement and of investment in countries whose
governments censor or monitor the Internet and other telecommunications;
|
• |
Applicable
market-specific laws or regulations that may be imposed on the company;
and |
• |
Controversies,
fines, or litigation related to data security, privacy, freedom of speech,
or Internet censorship. |
|
B-70 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Generally
vote for proposals requesting a report on company or company supplier
labor and/or human rights standards and policies.
|
• |
Vote
for shareholder proposals to implement human rights standards and
workplace codes of conduct. |
• |
Vote
for shareholder proposals calling for the implementation and reporting on
ILO codes of conduct, SA 8000 Standards, or the Global Sullivan
Principles. |
• |
Vote
for shareholder proposals that call for the adoption and/or enforcement of
principles or codes relating to countries in which there are systematic
violations of human rights. |
• |
Vote
for shareholder proposals that call for independent monitoring programs in
conjunction with local and respected religious and human rights groups to
monitor supplier and licensee compliance with codes.
|
• |
Vote
for shareholder proposals that seek publication of a “Code of Conduct” to
the company’s foreign suppliers and licensees, requiring they satisfy all
applicable standards and laws protecting employees’ wages, benefits,
working conditions, freedom of association, and other rights.
|
• |
Vote
for shareholder proposals seeking reports on, or the adoption of, vendor
standards including: reporting on incentives to encourage suppliers to
raise standards rather than terminate contracts and providing public
disclosure of contract supplier reviews on a regular basis.
|
|
B-71 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Vote
for shareholder proposals to adopt labor standards for foreign and
domestic suppliers to ensure that the company will not do business with
foreign suppliers that manufacture products for sale using forced labor,
child labor, or that fail to comply with applicable laws protecting
employee’s wages and working conditions. |
• |
Vote
for proposals requesting that a company conduct an assessment of the human
rights risks in its operations or in its supply chain, or report on its
human rights risk assessment process. |
• |
The
company’s current policies and practices related to the use of mandatory
arbitration agreements on workplace claims; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to the use of mandatory arbitration agreements
on workplace claims; and |
• |
The
company’s disclosure of its policies and practices related to the use of
mandatory arbitration agreements compared to its peers.
|
• |
Current
disclosure of applicable policies and risk assessment report(s) and risk
management procedures; |
• |
The
impact of regulatory non-compliance, litigation, remediation, or
reputational loss that may be associated with failure to manage the
company’s operations in question, including the management of relevant
community and stakeholder relations; |
• |
The
nature, purpose, and scope of the company’s operations in the specific
region(s); |
• |
The
degree to which company policies and procedures are consistent with
industry norms; and |
• |
Scope
of the resolution. |
|
B-72 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
nature, purpose, and scope of the operations and business involved that
could be affected by social or political disruption;
|
• |
Current
disclosure of applicable risk assessment(s) and risk management
procedures; |
• |
Compliance
with U.S. sanctions and laws; |
• |
Consideration
of other international policies, standards, and laws; and
|
• |
Whether
the company has been recently involved in recent, significant
controversies, fines or litigation related to its operations in
“high-risk” markets. |
• |
Controversies
surrounding operations in the relevant market(s);
|
• |
The
value of the requested report to shareholders; |
• |
The
company’s current level of disclosure of relevant information on
outsourcing and plant closure procedures; and |
• |
The
company’s existing human rights standards relative to industry peers.
|
• |
The
company’s current policies, practices, oversight mechanisms related to
preventing workplace sexual harassment; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to workplace sexual harassment issues; and
|
• |
The
company’s disclosure regarding workplace sexual harassment policies or
initiatives compared to its industry peers. |
|
B-73 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
company’s current disclosure of relevant lobbying policies, and management
and board oversight; |
• |
The
company’s disclosure regarding trade associations or other groups that it
supports, or is a member of, that engage in lobbying activities; and
|
• |
Recent
significant controversies, fines, or litigation regarding the company’s
lobbying-related activities. |
• |
The
company’s policies, and management and board oversight related to its
direct political contributions and payments to trade associations or other
groups that may be used for political purposes; |
• |
The
company’s disclosure regarding its support of, and participation in, trade
associations or other groups that may make political contributions; and
|
• |
Recent
significant controversies, fines, or litigation related to the company’s
political contributions or political activities.
|
• |
There
are no recent, significant controversies, fines, or litigation regarding
the company’s political contributions or trade association spending;
and |
• |
The
company has procedures in place to ensure that employee contributions to
company-sponsored political action committees (PACs) are strictly
voluntary and prohibit coercion. |
• |
The
company’s policies, management, board oversight, governance processes, and
level of disclosure related to direct political contributions, lobbying
activities, and payments to trade associations, political action
committees, or other groups that may be used for political
purposes; |
|
B-74 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
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|
|
|
• |
The
company’s disclosure regarding: the reasons for its support of candidates
for public offices; the reasons for support of and participation in trade
associations or other groups that may make political contributions; and
other political activities; |
• |
Any
incongruencies identified between a company’s direct and indirect
political expenditures and its publicly stated values and
priorities; |
• |
Recent
significant controversies related to the company’s direct and indirect
lobbying, political contributions, or political
activities. |
7. |
Mutual
Fund Proxies |
• |
Past
performance as a closed-end fund; |
• |
Market
in which the fund invests; |
• |
Measures
taken by the board to address the discount; and |
• |
Past
shareholder activism, board activity, and votes on related proposals.
|
• |
Past
performance relative to its peers; |
• |
Market
in which fund invests; |
• |
Measures
taken by the board to address the issues; |
• |
Past
shareholder activism, board activity, and votes on related proposals;
|
• |
Strategy
of the incumbents versus the dissidents; |
• |
Independence
of directors; |
• |
Experience
and skills of director candidates; |
• |
Governance
profile of the company; |
• |
Evidence
of management entrenchment. |
|
B-75 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Proposed
and current fee schedules; |
• |
Fund
category/investment objective; |
• |
Performance
benchmarks; |
• |
Share
price performance as compared with peers; |
• |
Resulting
fees relative to peers; |
• |
Assignments
(where the advisor undergoes a change of control).
|
• |
Stated
specific financing purpose; |
• |
Possible
dilution for common shares; |
• |
Whether
the shares can be used for antitakeover purposes.
|
• |
Potential
competitiveness; |
• |
Regulatory
developments; |
• |
Current
and potential returns; and |
• |
Current
and potential risk. |
• |
The
fund’s target investments; |
• |
The
reasons given by the fund for the change; and |
• |
The
projected impact of the change on the portfolio.
|
|
B-76 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Political/economic
changes in the target market; |
• |
Consolidation
in the target market; and |
• |
Current
asset composition. |
• |
Potential
competitiveness; |
• |
Current
and potential returns; |
• |
Risk
of concentration; |
• |
Consolidation
in target industry. |
• |
The
proposal to allow share issuances below NAV has an expiration date no more
than one year from the date shareholders approve the underlying proposal,
as required under the Investment Company Act of 1940;
|
• |
The
sale is deemed to be in the best interests of shareholders by (1) a
majority of the company’s independent directors and (2) a majority of the
company’s directors who have no financial interest in the issuance; and
|
• |
The
company has demonstrated responsible past use of share issuances by
either: |
• |
Outperforming
peers in its 8-digit GICS group as measured by one- and three-year median
TSRs; or |
• |
Providing
disclosure that its past share issuances were priced at levels that
resulted in only small or moderate discounts to NAV and economic dilution
to existing non-participating shareholders. |
• |
Strategies
employed to salvage the company; |
• |
The
fund’s past performance; |
• |
The
terms of the liquidation. |
|
B-77 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
degree of change implied by the proposal; |
• |
The
efficiencies that could result; |
• |
The
state of incorporation; |
• |
Regulatory
standards and implications. |
• |
Removal
of shareholder approval requirement to reorganize or terminate the trust
or any of its series; |
• |
Removal
of shareholder approval requirement for amendments to the new declaration
of trust; |
• |
Removal
of shareholder approval requirement to amend the fund’s management
contract, allowing the contract to be modified by the investment manager
and the trust management, as permitted by the 1940 Act;
|
• |
Allow
the trustees to impose other fees in addition to sales charges on
investment in a fund, such as deferred sales charges and redemption fees
that may be imposed upon redemption of a fund’s shares;
|
• |
Removal
of shareholder approval requirement to engage in and terminate subadvisory
arrangements; |
• |
Removal
of shareholder approval requirement to change the domicile of the fund.
|
• |
Regulations
of both states; |
• |
Required
fundamental policies of both states; |
• |
The
increased flexibility available. |
• |
Fees
charged to comparably sized funds with similar objectives;
|
• |
The
proposed distributor’s reputation and past performance;
|
• |
The
competitiveness of the fund in the industry; |
• |
The
terms of the agreement. |
|
B-78 |
|
|
|
|
|
2024
GLENMEDE – SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Resulting
fee structure; |
• |
Performance
of both funds; |
• |
Continuity
of management personnel; |
• |
Changes
in corporate governance and their impact on shareholder rights.
|
• |
Performance
of the fund’s Net Asset Value (NAV); |
• |
The
fund’s history of shareholder relations; |
• |
The
performance of other funds under the advisor’s management.
|
8. |
Foreign
Private Issuers Listed on U.S. Exchanges |
|
B-79 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-81 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-82 |
|
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|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-83 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-84 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-85 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-86 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-87 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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1. |
Routine/Miscellaneous
|
• |
Vote
for proposals that relate specifically to soliciting votes for a merger or
transaction if supporting that merger or transaction.
|
• |
Vote
against proposals if the wording is too vague or if the proposal includes
“other business.” |
• |
The
new quorum threshold requested; |
• |
The
rationale presented for the reduction; |
• |
The
market capitalization of the company (size, inclusion in indices);
|
• |
The
company’s ownership structure; |
• |
Previous
voter turnout or attempts to achieve quorum; |
• |
Any
provisions or commitments to restore quorum to a majority of shares
outstanding, should voter turnout improve sufficiently; and
|
• |
Other
factors as appropriate. |
|
B-88 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
The
terms of the auditor agreement--the degree to which these agreements
impact shareholders’ rights; |
• |
The
motivation and rationale for establishing the agreements;
|
• |
The
quality of the company’s disclosure; and |
• |
The
company’s historical practices in the audit area.
|
• |
An
auditor has a financial interest in or association with the company, and
is therefore not independent; |
• |
There
is reason to believe that the independent auditor has rendered an opinion
that is neither accurate nor indicative of the company’s financial
position; |
• |
Poor
accounting practices are identified that rise to a serious level of
concern, such as: fraud; misapplication of GAAP; and material weaknesses
identified in Section 404 disclosures; or |
• |
Fees
for non-audit services (“Other” fees) are excessive.
|
• |
Non-audit
(“other”) fees > audit fees + audit-related fees + tax
compliance/preparation fees |
|
B-89 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
The
tenure of the audit firm; |
• |
The
length of rotation specified in the proposal; |
• |
Any
significant audit-related issues at the company;
|
• |
The
number of audit committee meetings held each year;
|
• |
The
number of financial experts serving on the committee; and
|
• |
Whether
the company has a periodic renewal process where the auditor is evaluated
for both audit quality and competitive price. |
2. |
Board of Directors |
• |
Accountability: Boards
should be sufficiently accountable to shareholders, including through
transparency of the company’s governance practices and regular board
elections, by the provision of sufficient information for shareholders to
be able to assess directors and board composition, and through the ability
of shareholders to remove directors. |
• |
Responsiveness: Directors
should respond to investor input, such as that expressed through
significant opposition to management proposals, significant support for
shareholder proposals (whether binding or non- binding), and tender offers
where a majority of shares are tendered. |
• |
Composition: Companies
should seek directors who can add value to the board through specific
skills or expertise and who can devote sufficient time and commitment to
serve effectively. Boards should be of a size appropriate to accommodate
diversity, expertise, and independence, while ensuring active and
collaborative participation by all members. Boards should be sufficiently
diverse to ensure consideration of a wide range of perspectives.
|
• |
Independence: Boards
should be sufficiently independent from management (and significant
shareholders) so as to ensure that they are able and motivated to
effectively supervise management’s performance for the benefit of all
shareholders, including in setting and monitoring the execution of
corporate strategy, with appropriate use of shareholder capital, and in
setting and monitoring executive compensation programs that support that
strategy. The chair of the board should ideally be an independent
director, and all boards should have an independent leadership position or
a similar role in order to help provide appropriate counterbalance to
executive management, as well as having sufficiently independent
committees that focus on key governance concerns such as audit,
compensation, and nomination of directors. |
1 |
A “new nominee” is a director
who is being presented for election by shareholders for the first time.
Recommendations on new nominees who have served for less than one year are
made on a case-by-case basis depending on the timing of their appointment
and the problematic governance issue in question.
|
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B-90 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
A
classified board structure; |
• |
A
supermajority vote requirement; |
• |
Either
a plurality vote standard in uncontested director elections or a majority
vote standard with no plurality carve-out for contested elections;
|
• |
The
inability of shareholders to call special meetings;
|
• |
The
inability of shareholders to act by written consent;
|
• |
A
multi-class capital structure; and/or |
• |
A
non–shareholder-approved poison pill. |
• |
The
company has a poison pill with a deadhand or slowhand
feature2; |
• |
The
board makes a material adverse modification to an existing pill,
including, but not limited to, extension, renewal, or lowering the
trigger, without shareholder approval; or |
• |
The
company has a long-term poison pill (with a term of over one year) that
was not approved by the public shareholders3. |
• |
The
disclosed rationale for the adoption; |
• |
The
trigger; |
• |
The
company’s market capitalization (including absolute level and sudden
changes); |
• |
A
commitment to put any renewal to a shareholder vote; and
|
• |
Other
factors as relevant. |
2 |
If the short-term pill with a
deadhand or slowhand feature is enacted but expires before the next
shareholder vote, Glenmede Policy will generally still recommend
withhold/against nominees at the next shareholder meeting following its
adoption |
3 |
Approval prior to, or in
connection, with a company’s becoming publicly-traded, or in connection
with a de-SPAC transaction, is insufficient.
|
|
B-91 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
The
board’s rationale for adopting the bylaw/charter amendment without
shareholder ratification; |
• |
Disclosure
by the company of any significant engagement with shareholders regarding
the amendment; |
• |
The
level of impairment of shareholders’ rights caused by the board’s
unilateral amendment to the bylaws/charter; |
• |
The
board’s track record with regard to unilateral board action on
bylaw/charter amendments or other entrenchment
provisions; |
• |
The
company’s ownership structure; |
• |
The
company’s existing governance provisions; |
• |
The
timing of the board’s amendment to the bylaws/charter in connection with a
significant business development; and, |
• |
Other
factors, as deemed appropriate, that may be relevant to determine the
impact of the amendment on shareholders. |
• |
Classified
the board; |
• |
Adopted
supermajority vote requirements to amend the bylaws or
charter; |
• |
Eliminated
shareholders’ ability to amend bylaws; |
• |
Adopted
a fee-shifting provision; or |
• |
Adopted
another provision deemed egregious. |
• |
Supermajority
vote requirements to amend the bylaws or
charter; |
• |
A
classified board structure; or |
• |
Other
egregious provisions. |
4 |
Includes companies that emerge
from bankruptcy, SPAC transactions, spin-offs, direct listings, and those
who complete a traditional initial public offering.
|
|
B-92 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
Newly-public
companies6 with a sunset provision of no more than seven
years from the date of going public; |
• |
Limited
Partnerships and the Operating Partnership (OP) unit structure of
REITs; |
• |
Situations
where the unequal voting rights are considered de minimis;
or |
• |
The
company provides sufficient protections for minority shareholders, such as
allowing minority shareholders a regular binding vote on whether the
capital structure should be maintained. |
• |
The
presence of a shareholder proposal addressing the same issue on the same
ballot; |
• |
The
board’s rationale for seeking ratification; |
• |
Disclosure
of actions to be taken by the board should the ratification proposal
fail; |
• |
Disclosure
of shareholder engagement regarding the board’s ratification
request; |
• |
The
level of impairment to shareholders’ rights caused by the existing
provision; |
• |
The
history of management and shareholder proposals on the provision at the
company’s past meetings; |
• |
Whether
the current provision was adopted in response to the shareholder
proposal; |
• |
The
company’s ownership structure; and |
• |
Previous
use of ratification proposals to exclude shareholder
proposals. |
• |
The
company’s governing documents impose undue restrictions on shareholders’
ability to amend the bylaws. Such restrictions include but are not limited
to: outright prohibition on the submission of binding shareholder
proposals, or share ownership requirements, subject matter restrictions,
or time holding requirement in excess of SEC Rule 14a-8. Vote against
or withhold on an ongoing basis. |
5 |
This generally includes
classes of common stock that have additional votes per share than other
shares; classes of shares that are not entitled to vote on all the same
ballot items or nominees; or stock with time-phased voting rights
(“loyalty shares”) . |
6 |
Newly-public companies
generally include companies that emerge from bankruptcy, SPAC
transactions, spin-offs, direct listings, and those who complete a
traditional initial public
offering. |
|
B-93 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
non-audit fees paid to the auditor are excessive (see discussion under
“Auditor Ratification”); |
• |
The
company receives an adverse opinion on the company’s financial statements
from its auditor; or |
• |
There
is persuasive evidence that the audit committee entered into an
inappropriate indemnification agreement with its auditor that limits the
ability of the company, or its shareholders, to pursue legitimate legal
recourse against the audit firm. |
• |
Poor
accounting practices are identified that rise to a level of serious
concern, such as: fraud; misapplication of GAAP; and material weaknesses
identified in Section 404 disclosures. Examine the severity, breadth,
chronological sequence, and duration, as well as the company’s efforts at
remediation or corrective actions, in determining whether withhold/against
votes are warranted. |
• |
There
is a significant misalignment between CEO pay and company performance
(pay for performance);
|
• |
The
company maintains significant problematic pay practices;
|
• |
The
board exhibits a significant level of poor communication and
responsiveness to shareholders; |
• |
The
company fails to include a Say on Pay ballot item when required under SEC
provisions, or under the company’s declared frequency of say on pay; or
|
• |
The
company fails to include a Frequency of Say on Pay ballot item when
required under SEC provisions. |
• |
The
presence of an anti-pledging policy, disclosed in the proxy statement,
that prohibits future pledging activity; |
• |
The
magnitude of aggregate pledged shares in terms of total common shares
outstanding, market value, and trading volume; |
• |
Disclosure
of progress or lack thereof in reducing the magnitude of aggregate pledged
shares over time; |
• |
Disclosure
in the proxy statement that shares subject to stock ownership and holding
requirements do not include pledged company stock; and
|
• |
Any
other relevant factors. |
|
B-94 |
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|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Material
failures of governance, stewardship, risk oversight7, or fiduciary
responsibilities at the company, including failure to adequately guard
against or manage ESG risks; |
• |
A
lack of sustainability reporting in the company’s public documents and/or
website in conjunction with a failure to adequately manage or mitigate ESG
risks; |
• |
Failure
to replace management as appropriate; or |
• |
Egregious
actions related to a director’s service on other boards that raise
substantial doubt about his or her ability to effectively oversee
management and serve the best interests of shareholders at any company.
|
• |
The
company has detailed disclosure of climate-related risks, such as
according to the framework established by the Task Force on
Climate-related Financial Disclosures (TCFD), including:
|
• |
Board
governance measures; |
• |
Corporate
strategy; |
• |
Risk
management analyses; and |
• |
Metrics
and targets |
• |
The
company has declared a Net Zero target by 2050 or sooner and the target
includes scope 1, 2, and relevant scope 3 emissions.
|
• |
The
company has set a medium-term target for reducing its GHG emissions.
|
7 |
Examples of failure of risk
oversight include, but are not limited to: bribery; large or serial fines
or sanctions from regulatory bodies; demonstrably poor risk oversight of
environmental and social issues, including climate change; significant
environmental incidents including spills and pollution; large scale or
repeat workplace fatalities or injuries; significant adverse legal
judgments or settlements; or hedging of company stock.
|
8 |
For 2024, companies defined as
“significant GHG emitters” will be those on the current Climate Action
100+ Focus Group list. |
|
B-95 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
board failed to act on a shareholder proposal that received the support of
a majority of the shares cast in the previous year or failed to act on a
management proposal seeking to ratify an existing charter/bylaw provision
that received opposition of a majority of the shares cast in the previous
year. Factors that will be considered are: |
• |
Disclosed
outreach efforts by the board to shareholders in the wake of the vote;
|
• |
Rationale
provided in the proxy statement for the level of implementation;
|
• |
The
subject matter of the proposal; |
• |
The
level of support for and opposition to the resolution in past meetings;
|
• |
Actions
taken by the board in response to the majority vote and its engagement
with shareholders; |
• |
The
continuation of the underlying issue as a voting item on the ballot (as
either shareholder or management proposals); and
|
• |
Other
factors as appropriate. |
• |
The
board failed to act on takeover offers where the majority of shares are
tendered; |
• |
At
the previous board election, any director received more than 50 percent
withhold/against votes of the shares cast and the company has failed to
address the issue(s) that caused the high withhold/against vote.
|
• |
The
company’s previous say-on-pay received the support of less than 70 percent
of votes cast. Factors that will be considered are:
|
• |
The
company’s response, including: |
• |
Disclosure
of engagement efforts with major institutional investors regarding the
issues that contributed to the low level of support (including the timing
and frequency of engagements and whether independent directors
participated); |
• |
Disclosure
of the specific concerns voiced by dissenting shareholders that led to the
say-on-pay opposition; |
• |
Disclosure
of specific and meaningful actions taken to address shareholders’
concerns; |
• |
Other
recent compensation actions taken by the company;
|
• |
Whether
the issues raised are recurring or isolated; |
• |
The
company’s ownership structure; and |
• |
Whether
the support level was less than 50 percent, which would warrant the
highest degree of responsiveness. |
• |
The
board implements an advisory vote on executive compensation on a less
frequent basis than the frequency that received the plurality of votes
cast. |
|
B-96 |
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|
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
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|
|
|
|
• |
Medical
issues/illness; |
• |
Family
emergencies; and |
• |
Missing
only one meeting (when the total of all meetings is three or fewer).
|
• |
In
cases of chronic poor attendance without reasonable justification, in
addition to voting against the director(s) with poor attendance, generally
vote against or withhold from appropriate members of the
nominating/governance committees or the full board.
|
• |
Sit
on more than five public company boards; or |
• |
Are
CEOs of public companies who sit on the boards of more than two public
companies besides their own—withhold only at their outside boards10. |
• |
Independent
directors comprise 50 percent or less of the board;
|
• |
The
non-independent director serves on the audit, compensation, or nominating
committee; |
9 |
Nominees who served for only
part of the fiscal year are generally exempted from the attendance policy.
|
10 |
Although all of a CEO’s
subsidiary boards will be counted as separate boards, Sustainability
Advisory Services will not recommend a withhold vote for the CEO of a
parent company board or any of the controlled (>50 percent ownership)
subsidiaries of that parent, but may do so at subsidiaries that are less
than 50 percent controlled and boards outside the parent/subsidiary
relationships. |
11 |
Aggregate diversity statistics
provided by the board will only be considered if specific to racial and/or
ethnic diversity. |
|
B-97 |
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|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
The
company lacks an audit, compensation, or nominating committee so that the
full board functions as that committee; or |
• |
The
company lacks a formal nominating committee, even if the board attests
that the independent directors fulfill the functions of such a committee.
|
1. |
Executive
Director |
1.1. |
Current
officer[1] of the
company or one of its affiliates[2]. |
2. |
Non-Independent
Non-Executive Director |
2.1. |
Director
identified as not independent by the board. |
2.2. |
Beneficial
owner of more than 50 percent of the company’s voting power (this may be
aggregated if voting power is distributed among more than one member of a
group). |
2.3. |
Non-officer
employee of the firm (including employee representatives).
|
2.4. |
Officer[1], former officer, or
general or limited partner of a joint venture or partnership with the
company. |
2.5. |
Former
CEO of the company.[3],[4] |
2.6. |
Former
non-CEO officer[1] of the company or an affiliate[2] within the past five
years. |
2.7. |
Former
officer[1] of an
acquired company within the past five years[4]. |
2.8. |
Officer[1] of a former parent or
predecessor firm at the time the company was sold or split off within the
past five years. |
2.9. |
Former
interim officer if the service was longer than 18 months. If the service
was between 12 and 18 months an assessment of the interim officer’s
employment agreement will be made.[5] |
2.10. |
Immediate
family member[6] of a
current or former officer[1] of the company or its
affiliates[2] within
the last five years. |
2.11. |
Immediate
family member[6] of a
current employee of company or its affiliates[2] where additional factors
raise concern (which may include, but are not limited to, the following: a
director related to numerous employees; the company or its affiliates
employ relatives of numerous board members; or a non-Section 16
officer in a key strategic role). |
2.12. |
Director
who (or whose immediate family member[6]) currently provides
professional services[7] in excess of $10,000 per
year to: the company, an
affiliate[2], or an
individual officer of the company or an affiliate; either directly or is
(or whose family member is) a partner, employee, or controlling
shareholder of an organization which provides the services.
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B-98 |
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2.13. |
Director
who (or whose immediate family member[6]) currently has any
material transactional relationship[8] with the company or its
affiliates[2]; or who
is (or whose immediately family member[6] is) a partner in, or a
controlling shareholder or an executive officer of, an organization which
has the material transactional relationship[8] (excluding investments in
the company through a private placement). |
2.14. |
Director
who (or whose immediate family member[6]) is a trustee, director,
or employee of a charitable or non-profit organization that receives
material grants or endowments[8] from the company or its
affiliates[2].
|
2.15. |
Party
to a voting agreement[9] to vote in line with
management on proposals being brought to shareholder
vote. |
2.16. |
Has
(or an immediate family member[6] has) an interlocking
relationship as defined by the SEC involving members of the board of
directors or its Compensation Committee[10]. |
2.17. |
Founder[11] of the company but not
currently an employee. |
2.18. |
Director
with pay comparable to Named Executive Officers. |
2.19. |
Any
material[12]
relationship with the company. |
3. |
Independent
Director |
3.1. |
No
material[12] connection
to the company other than a board seat. |
[1] |
The definition of officer will generally follow
that of a “Section 16 officer” (officers subject to Section 16
of the Securities and Exchange Act of 1934) and includes the chief
executive, operating, financial, legal, technology, and accounting
officers of a company (including the president, treasurer, secretary,
controller, or any vice president in charge of a principal business unit,
division, or policy function). Current interim officers are included in
this category. For private companies, the equivalent positions are
applicable. A non-employee director serving as an officer due to statutory
requirements (e.g. corporate secretary) will be classified as an
Affiliated Outsider under “Any material relationship with the company.”
However, if the company provides explicit disclosure that the director is
not receiving additional compensation in excess of $10,000 per year for
serving in that capacity, then the director will be classified as an
Independent Outsider. |
[2] |
“Affiliate” includes a subsidiary, sibling
company, or parent company. Glenmede Policy uses 50 percent control
ownership by the parent company as the standard for applying its affiliate
designation. The manager/advisor of an externally managed issuer (EMI) is
considered an affiliate. |
[3] |
Includes any former CEO of the company prior to
the company’s initial public offering (IPO).
|
[4] |
When there is a former CEO of a special purpose
acquisition company (SPAC) serving on the board of an acquired company,
Glenmede Policy will generally classify such directors as independent
unless determined otherwise taking into account the following factors: the
applicable listing standards determination of such director’s
independence; any operating ties to the firm; and the existence of any
other conflicting relationships or related party
transactions. |
[5] |
Glenmede Policy will look at the terms of the
interim officer’s employment contract to determine if it contains
severance pay, long-term health and pension benefits, or other such
standard provisions typically contained in contracts of permanent,
non-temporary CEOs. Glenmede Policy will also consider if a formal search
process was under way for a full-time officer at the time.
|
[6] |
“Immediate family member” follows the SEC’s
definition of such and covers spouses, parents, children, step-parents,
step-children, siblings, in-laws, and any person (other than a tenant or
employee) sharing the household of any director, nominee for director,
executive officer, or significant shareholder of the company.
|
[7] |
Professional services can be characterized as
advisory in nature, generally involve access to sensitive company
information or to strategic decision-making, and typically have a
commission- or fee-based payment structure. Professional services
generally include, but are not limited to the following: investment
banking/financial advisory services; commercial banking (beyond deposit
services); investment services; insurance services; accounting/audit
services; consulting services; marketing services;legal services; property
management services; realtor services; lobbying services; executive search
services; and IT consulting services. The following would generally be
considered transactional relationships and not professional services:
deposit services; IT tech support services; educational services; and
construction services. The case of participation in a banking syndicate by
a non-lead bank should be considered a transactional (and hence subject to
the associated materiality test)
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B-99 |
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[8] |
A material transactional relationship,
including grants to non-profit organizations, exists if the company makes
annual payments to, or receives annual payments from, another entity
exceeding the greater of $200,000 or 5 percent of the recipient’s gross
revenues, in the case of a company which follows NASDAQ listing standards;
or the greater of $1,000,000 or 2 percent of the recipient’s gross
revenues, in the case of a company which follows NYSE listing standards.
In the case of a company which follows neither of the preceding standards,
Glenmede Policy will apply the NASDAQ-based materiality test. (The
recipient is the party receiving the financial proceeds from the
transaction). |
[9] |
Dissident directors who are parties to a voting
agreement pursuant to a settlement or similar arrangement may be
classified as independent outsiders if an analysis of the following
factors indicates that the voting agreement does not compromise their
alignment with all shareholders’ interests: the terms of the agreement;
the duration of the standstill provision in the agreement; the limitations
and requirements of actions that are agreed upon; if the dissident
director nominee(s) is subject to the standstill; and if there any
conflicting relationships or related party
transactions. |
[10] |
Interlocks include: executive officers serving
as directors on each other’s compensation or similar committees (or, in
the absence of such a committee, on the board); or executive officers
sitting on each other’s boards and at least one serves on the other’s
compensation or similar committees (or, in the absence of such a
committee, on the board). |
[11] |
The operating involvement of the founder with
the company will be considered; if the founder was never employed by the
company, Glenmede Policy may deem him or her an independent
outsider. |
[12] |
For purposes of Glenmede Policy’s director
independence classification, “material” will be defined as a standard of
relationship (financial, personal or otherwise) that a reasonable person
might conclude could potentially influence one’s objectivity in the
boardroom in a manner that would have a meaningful impact on an
individual’s ability to satisfy requisite fiduciary standards on behalf of
shareholders. |
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B-100 |
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• |
The
rationale provided for adoption of the term/tenure limit;
|
• |
The
robustness of the company’s board evaluation process;
|
• |
Whether
the limit is of sufficient length to allow for a broad range of director
tenures; |
• |
Whether
the limit would disadvantage independent directors compared to
non-independent directors; and |
• |
Whether
the board will impose the limit evenly, and not have the ability to waive
it in a discriminatory manner. |
• |
The
scope of the shareholder proposal; and |
• |
Evidence
of problematic issues at the company combined with, or exacerbated by, a
lack of board refreshment. |
• |
The
reasonableness/scope of the request; and |
• |
The
company’s existing disclosure on its current CEO succession planning
process. |
|
B-101 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
company has proxy access, thereby allowing shareholders to nominate
directors to the company’s ballot; and |
• |
The
company has adopted a majority vote standard, with a carve-out for
plurality voting in situations where there are more nominees than seats,
and a director resignation policy to address failed elections.
|
• |
Eliminate
entirely directors’ and officers’ liability for monetary damages for
violating the duty of care. |
• |
Eliminate
directors’ and officers’ liability for monetary damages for violating the
duty of loyalty. |
• |
Expand
coverage beyond just legal expenses to liability for acts that are more
serious violations of fiduciary obligation than mere carelessness.
|
• |
Expand
the scope of indemnification to provide for mandatory indemnification of
company officials in connection with acts that previously the company was
permitted to provide indemnification for, at the discretion of the
company’s board (i.e., “permissive indemnification”), but that previously
the company was not required to indemnify. |
• |
If
the individual was found to have acted in good faith and in a manner that
the individual reasonably believed was in the best interests of the
company; and |
• |
If
only the director’s legal expenses would be covered.
|
13 |
Indemnification: the condition of being
secured against loss or damage. |
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B-102 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
company’s board committee structure, existing subject matter expertise,
and board nomination provisions relative to that of its
peers; |
• |
The
company’s existing board and management oversight mechanisms regarding the
issue for which board oversight is sought; |
• |
The
company’s disclosure and performance relating to the issue for which board
oversight is sought and any significant related controversies; and
|
• |
The
scope and structure of the proposal. |
• |
Existing
oversight mechanisms (including current committee structure) regarding the
issue for which board oversight is sought; |
• |
Level of
disclosure regarding the issue for which board oversight is sought;
|
• |
Company
performance related to the issue for which board oversight is sought;
|
• |
Board
committee structure compared to that of other companies in its industry
sector; and |
• |
The
scope and structure of the proposal. |
• |
Vote
for proposals to restore shareholders’ ability to remove directors with or
without cause. |
• |
Vote
against proposals that provide that only continuing directors may elect
replacements to fill board vacancies. |
• |
Vote
for proposals that permit shareholders to elect directors to fill board
vacancies. |
|
B-103 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
Ownership threshold: maximum requirement
not more than three percent (3%) of the voting power;
|
• |
Ownership duration: maximum requirement
not longer than three (3) years of continuous ownership for each member of
the nominating group; |
• |
Aggregation: minimal or no limits on the
number of shareholders permitted to form a nominating group;
|
• |
Cap: cap on nominees of generally
twenty-five percent (25%) of the board. |
• |
Established
a communication structure that goes beyond the exchange requirements to
facilitate the exchange of information between shareholders and members of
the board; |
• |
Effectively
disclosed information with respect to this structure to its shareholders;
|
• |
Company
has not ignored majority-supported shareholder proposals or a majority
withhold vote on a director nominee; and |
• |
The
company has an independent chair or a lead director, according to Glenmede
Policy’s definition. This individual must be made available for periodic
consultation and direct communication with major shareholders.
|
|
B-104 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Long-term
financial performance of the company relative to its industry;
|
• |
Management’s
track record; |
• |
Background
to the contested election; |
• |
Nominee
qualifications and any compensatory arrangements;
|
• |
Strategic
plan of dissident slate and quality of the critique against management;
|
• |
Likelihood
that the proposed goals and objectives can be achieved (both slates); and
|
• |
Stock
ownership positions. |
3. |
Shareholder Rights &
Defenses |
|
B-105 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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B-106 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
company’s stated rationale for adopting such a provision;
|
• |
Disclosure
of past harm from duplicative shareholder lawsuits in more than one forum;
|
• |
The
breadth of application of the charter or bylaw provision, including the
types of lawsuits to which it would apply and the definition of key terms;
and |
• |
Governance
features such as shareholders’ ability to repeal the provision at a later
date (including the vote standard applied when shareholders attempt to
amend the charter or bylaws) and their ability to hold directors
accountable through annual director elections and a majority vote standard
in uncontested elections. |
|
B-107 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
ownership threshold (NOL protective amendments generally prohibit stock
ownership transfers that would result in a new 5-percent holder or
increase the stock ownership percentage of an existing 5-percent holder);
|
• |
The
value of the NOLs; |
• |
Shareholder
protection mechanisms (sunset provision or commitment to cause expiration
of the protective amendment upon exhaustion or expiration of the NOL);
|
• |
The
company’s existing governance structure including: board independence,
existing takeover defenses, track record of responsiveness to
shareholders, and any other problematic governance concerns; and
|
• |
Any
other factors that may be applicable. |
• |
Shareholders
have approved the adoption of the plan; or |
• |
The
board, in its exercise of its fiduciary responsibilities, determines that
it is in the best interest of shareholders under the circumstances to
adopt a pill without the delay in adoption that would result from seeking
stockholder approval (i.e., the
“fiduciary out” provision). A poison pill adopted under this fiduciary out
will be put to a shareholder ratification vote within 12 months of
adoption or expire. If the pill is not approved by a majority of the votes
cast on this issue, the plan will immediately terminate.
|
• |
No
lower than a 20% trigger, flip-in or flip-over; |
• |
A
term of no more than three years; |
• |
No
dead-hand, slow-hand, no-hand or similar feature that limits the ability
of a future board to redeem the pill; |
• |
Shareholder
redemption feature (qualifying offer clause); if the board refuses to
redeem the pill 90 days after a qualifying offer is announced, 10 percent
of the shares may call a special meeting or seek a written consent to vote
on rescinding the pill. |
|
B-108 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
ownership threshold to transfer (NOL pills generally have a trigger
slightly below 5 percent); |
• |
The
value of the NOLs; |
• |
Shareholder
protection mechanisms (sunset provision, or commitment to cause expiration
of the pill upon exhaustion or expiration of NOLs);
|
• |
The
company’s existing governance structure including: board independence,
existing takeover defenses, track record of responsiveness to
shareholders, and any other problematic governance concerns; and
|
• |
Any
other factors that may be applicable. |
• |
The
scope and structure of the proposal; |
• |
The
company’s stated confidential voting policy (or other relevant policies)
and whether it ensures a “level playing field” by providing
shareholder proponents with equal access to vote information prior to the
annual meeting; |
• |
The
company’s vote standard for management and shareholder proposals and
whether it ensures consistency and fairness in the proxy voting
process and maintains the integrity of vote results;
|
• |
Whether
the company’s disclosure regarding its vote counting method and other
relevant voting policies with respect to management and shareholder
proposals are consistent and clear; |
• |
Any
recent controversies or concerns related to the company’s proxy voting
mechanics; |
• |
Any
unintended consequences resulting from implementation of the proposal; and
|
• |
Any
other factors that may be relevant. |
|
B-109 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
presence of a shareholder proposal addressing the same issue on the same
ballot; |
• |
The
board’s rationale for seeking ratification; |
• |
Disclosure
of actions to be taken by the board should the ratification proposal fail;
|
• |
Disclosure
of shareholder engagement regarding the board’s ratification request;
|
• |
The
level of impairment to shareholders’ rights caused by the existing
provision; |
• |
The
history of management and shareholder proposals on the provision at the
company’s past meetings; |
• |
Whether
the current provision was adopted in response to the shareholder proposal;
|
• |
The
company’s ownership structure; and |
• |
Previous
use of ratification proposals to exclude shareholder proposals.
|
• |
The
election of fewer than 50% of the directors to be elected is contested in
the election; |
• |
One
or more of the dissident’s candidates is elected;
|
• |
Shareholders
are not permitted to cumulate their votes for directors; and
|
• |
The
election occurred, and the expenses were incurred, after the adoption of
this bylaw. |
• |
Reasons
for reincorporation; |
• |
Comparison
of company’s governance practices and provisions prior to and following
the reincorporation; and |
• |
Comparison
of corporation laws of original state and destination state.
|
• |
Vote
for reincorporation when the economic factors outweigh any neutral or
negative governance changes. |
|
B-110 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Shareholders’
current right to act by written consent; |
• |
The
consent threshold; |
• |
The
inclusion of exclusionary or prohibitive language;
|
• |
Investor
ownership structure; and |
• |
Shareholder
support of, and management’s response to, previous shareholder proposals.
|
• |
An
unfettered14 right for
shareholders to call special meetings at a 10 percent threshold;
|
• |
A
majority vote standard in uncontested director elections;
|
• |
No
non-shareholder-approved pill; and |
• |
An
annually elected board. |
• |
Shareholders’
current right to call special meetings; |
• |
Minimum
ownership threshold necessary to call special meetings (10% preferred);
|
• |
The
inclusion of exclusionary or prohibitive language;
|
• |
Investor
ownership structure; and |
• |
Shareholder
support of, and management’s response to, previous shareholder proposals.
|
14 |
“Unfettered” means no
restrictions on agenda items, no restrictions on the number of
shareholders who can group together to reach the 10 percent threshold, and
only reasonable limits on when a meeting can be called: no greater than 30
days after the last annual meeting and no greater than 90 prior to the
next annual meeting. |
|
B-111 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Ownership
structure; |
• |
Quorum
requirements; and |
• |
Vote
requirements. |
• |
Scope
and rationale of the proposal; and |
• |
Concerns
identified with the company’s prior meeting practices.
|
4. |
Capital/Restructuring
|
• |
If
share usage (outstanding plus reserved) is less than 50% of the current
authorized shares, vote for an increase of up to 50% of current authorized shares.
|
• |
If
share usage is 50% to 100% of the current authorized, vote for an increase
of up to 100% of current authorized
shares. |
• |
If
share usage is greater than current authorized shares, vote for an
increase of up to the current share usage. |
• |
In
the case of a stock split, the allowable increase is calculated (per
above) based on the post-split adjusted authorization.
|
15 |
Virtual-only shareholder
meeting” refers to a meeting of shareholders that is held exclusively
using technology without a corresponding in-person meeting.
|
|
B-112 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
proposal seeks to increase the number of authorized shares of the class of
common stock that has superior voting rights to other share classes;
|
• |
On
the same ballot is a proposal for a reverse split for which support is
warranted despite the fact that it would result in an excessive increase
in the share authorization; |
• |
The
company has a non-shareholder approved poison pill (including an NOL
pill); or |
• |
The
company has previous sizeable placements (within the past 3 years) of
stock with insiders at prices substantially below market value, or with
problematic voting rights, without shareholder approval.
|
• |
In,
or subsequent to, the company’s most recent 10-K filing, the company
discloses that there is substantial doubt about its ability to continue as
a going concern; |
• |
The
company states that there is a risk of imminent bankruptcy or imminent
liquidation if shareholders do not approve the increase in authorized
capital; or |
• |
A
government body has in the past year required the company to increase its
capital ratios. |
• |
twice
the amount needed to support the transactions on the ballot, and
|
• |
the
allowable increase as calculated for general issuances above.
|
• |
The
company discloses a compelling rationale for the dual-class capital
structure, such as: |
• |
The
company’s auditor has concluded that there is substantial doubt about the
company’s ability to continue as a going concern; or
|
• |
The
new class of shares will be transitory; |
• |
The
new class is intended for financing purposes with minimal or no dilution
to current shareholders in both the short term and long term; and
|
• |
The
new class is not designed to preserve or increase the voting power of an
insider or significant shareholder. |
|
B-113 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
|
|
|
|
|
• |
The
size of the company; |
• |
The
shareholder base; and |
• |
The
liquidity of the stock. |
• |
If
share usage (outstanding plus reserved) is less than 50% of the current
authorized shares, vote for an increase of up to 50% of current authorized shares.
|
• |
If
share usage is 50% to 100% of the current authorized, vote for an increase
of up to 100% of current authorized
shares. |
• |
If
share usage is greater than current authorized shares, vote for an
increase of up to the current share usage. |
• |
In
the case of a stock split, the allowable increase is calculated (per
above) based on the post-split adjusted authorization.
|
• |
If
no preferred shares are currently issued and outstanding, vote against the
request, unless the company discloses a specific use for the shares.
|
• |
If
the shares requested are blank check preferred shares that can be used for
antitakeover purposes;16
|
• |
The
company seeks to increase a class of non-convertible preferred shares
entitled to more than one vote per share on matters that do not solely
affect the rights of preferred stockholders “supervoting shares”);
|
• |
The
company seeks to increase a class of convertible preferred shares entitled
to a number of votes greater than the number of common shares into which
they’re convertible (“supervoting shares”) on matters that do not solely
affect the rights of preferred stockholders; |
• |
The
stated intent of the increase in the general authorization is to allow the
company to increase an existing designated class of supervoting preferred
shares; |
• |
On
the same ballot is a proposal for a reverse split for which support is
warranted despite the fact that it would result in an excessive increase
in the share authorization; |
• |
The
company has a non-shareholder approved poison pill (including an NOL
pill); or |
• |
The
company has previous sizeable placements (within the past 3 years) of
stock with insiders at prices substantially below market value, or with
problematic voting rights, without shareholder
approval. |
16 |
To be acceptable, appropriate
disclosure would be needed that the shares are “declawed”: i.e.,
representation by the board that it will not, without prior stockholder
approval, issue or use the preferred stock for any defensive or
anti-takeover purpose or for the purpose of implementing any stockholder
rights plan. |
|
B-114 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
stated intent of the increase in the general authorization is to allow the
company to increase an existing designated class of supervoting preferred
shares; |
• |
In,
or subsequent to, the company’s most recent 10-K filing, the company
discloses that there is substantial doubt about its ability to continue as
a going concern; |
• |
The
company states that there is a risk of imminent bankruptcy or imminent
liquidation if shareholders do not approve the increase in authorized
capital; or |
• |
A
government body has in the past year required the company to increase its
capital ratios. |
• |
twice
the amount needed to support the transactions on the ballot, and
|
• |
the
allowable increase as calculated for general issuances above.
|
• |
More
simplified capital structure; |
• |
Enhanced
liquidity; |
• |
Fairness
of conversion terms; |
• |
Impact
on voting power and dividends; |
• |
Reasons
for the reclassification; |
• |
Conflicts
of interest; and |
• |
Other
alternatives considered. |
• |
The
number of authorized shares will be proportionately reduced; or
|
• |
The
effective increase in authorized shares is equal to or less than the
allowable increase calculated in accordance with Glenmede’s Common Stock
Authorization policy. |
|
B-115 |
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• |
Stock
exchange notification to the company of a potential delisting;
|
• |
Disclosure
of substantial doubt about the company’s ability to continue as a going
concern without additional financing; |
• |
The
company’s rationale; or |
• |
Other
factors as applicable. |
• |
Greenmail,
|
• |
The
use of buybacks to inappropriately manipulate incentive compensation
metrics, |
• |
Threats
to the company’s long-term viability, or |
• |
Other
company-specific factors as warranted. |
• |
Adverse
governance changes; |
• |
Excessive
increases in authorized capital stock; |
• |
Unfair
method of distribution; |
• |
Diminution
of voting rights; |
• |
Adverse
conversion features; |
• |
Negative
impact on stock option plans; and |
• |
Alternatives
such as spin-off. |
|
B-116 |
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• |
Purchase
price; |
• |
Fairness
opinion; |
• |
Financial
and strategic benefits; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest; |
• |
Other
alternatives for the business; |
• |
Non-completion
risk. |
• |
Impact
on the balance sheet/working capital; |
• |
Potential
elimination of diseconomies; |
• |
Anticipated
financial and operating benefits; |
• |
Anticipated
use of funds; |
• |
Value
received for the asset; |
• |
Fairness
opinion; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest. |
|
B-117 |
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• |
Dilution
to existing shareholders’ positions; |
• |
Terms
of the offer - discount/premium in purchase price to investor, including
any fairness opinion; termination penalties; exit strategy;
|
• |
Financial
issues - company’s financial situation; degree of need for capital; use of
proceeds; effect of the financing on the company’s cost of capital;
|
• |
Management’s
efforts to pursue other alternatives; |
• |
Control
issues - change in management; change in control, guaranteed board and
committee seats; standstill provisions; voting agreements; veto power over
certain corporate actions; and |
• |
Conflict
of interest - arm’s length transaction, managerial incentives.
|
• |
The
reasons for the change; |
• |
Any
financial or tax benefits; |
• |
Regulatory
benefits; |
• |
Increases
in capital structure; and |
• |
Changes
to the articles of incorporation or bylaws of the company.
|
|
B-118 |
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• |
Increases
in common or preferred stock in excess of the allowable maximum (see
discussion under “Capital”); or |
• |
Adverse
changes in shareholder rights. |
• |
Offer
price/premium; |
• |
Fairness
opinion; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest; |
• |
Other
alternatives/offers considered; and |
• |
Non-completion
risk. |
• |
Whether
the company has attained benefits from being publicly-traded (examination
of trading volume, liquidity, and market research of the stock);
|
• |
Balanced
interests of continuing vs. cashed-out shareholders, taking into account
the following: |
• |
Are
all shareholders able to participate in the transaction?
|
• |
Will
there be a liquid market for remaining shareholders following the
transaction? |
• |
Does
the company have strong corporate governance? |
• |
Will
insiders reap the gains of control following the proposed transaction?
|
• |
Does
the state of incorporation have laws requiring continued reporting that
may benefit shareholders? |
• |
Percentage
of assets/business contributed; |
• |
Percentage
ownership; |
• |
Financial
and strategic benefits; |
• |
Governance
structure; |
• |
Conflicts
of interest; |
• |
Other
alternatives; and |
• |
Non-completion
risk. |
|
B-119 |
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• |
Management’s
efforts to pursue other alternatives; |
• |
Appraisal
value of assets; and |
• |
The
compensation plan for executives managing the liquidation.
|
• |
Valuation - Is the value
to be received by the target shareholders (or paid by the acquirer)
reasonable? While the fairness opinion may provide an initial starting
point for assessing valuation reasonableness, emphasis is placed on the
offer premium, market reaction and strategic rationale.
|
• |
Market
reaction - How has the market responded to the proposed
deal? A negative market reaction should cause closer scrutiny of a deal.
|
• |
Strategic rationale -
Does the deal make sense strategically? From where is the value derived?
Cost and revenue synergies should not be overly aggressive or optimistic,
but reasonably achievable. Management should also have a favorable track
record of successful integration of historical acquisitions.
|
• |
Negotiations and process
- Were the terms of the transaction negotiated at arm’s-length? Was the
process fair and equitable? A fair process helps to ensure the best price
for shareholders. Significant negotiation “wins” can also signify the deal
makers’ competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no
auction) can also affect shareholder value. |
• |
Conflicts of interest -
Are insiders benefiting from the transaction disproportionately and
inappropriately as compared to non-insider shareholders? As the result of
potential conflicts, the directors and officers of the company may be more
likely to vote to approve a merger than if they did not hold these
interests. Consider whether these interests may have influenced these
directors and officers to support or recommend the merger.
|
• |
Governance - Will the
combined company have a better or worse governance profile than the
current governance profiles of the respective parties to the transaction?
If the governance profile is to change for the worse, the burden is on the
company to prove that other issues (such as valuation) outweigh any
deterioration in governance. |
• |
Dilution
to existing shareholders’ position: The amount and timing of shareholder
ownership dilution should be weighed against the needs and proposed
shareholder benefits of the capital infusion. Although newly issued common
stock, absent preemptive rights, is typically dilutive to existing
shareholders, share price appreciation is often the necessary event to
trigger the exercise of “out of the money” warrants and convertible debt.
In these instances from a value standpoint, the negative impact of
dilution is mitigated by the increase in the company’s stock price that
must occur to trigger the dilutive event.
|
|
B-120 |
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|
• |
Terms
of the offer (discount/premium in purchase price to investor, including
any fairness opinion, conversion features, termination penalties, exit
strategy): |
• |
The
terms of the offer should be weighed against the alternatives of the
company and in light of company’s financial condition. Ideally, the
conversion price for convertible debt and the exercise price for warrants
should be at a premium to the then prevailing stock price at the time of
private placement. |
• |
When
evaluating the magnitude of a private placement discount or premium,
consider factors that influence the discount or premium, such as,
liquidity, due diligence costs, control and monitoring costs, capital
scarcity, information asymmetry and anticipation of future performance.
|
• |
Financial
issues: |
• |
The
company’s financial condition; |
• |
Degree
of need for capital; |
• |
Use
of proceeds; |
• |
Effect
of the financing on the company’s cost of capital;
|
• |
Current
and proposed cash burn rate; |
• |
Going
concern viability and the state of the capital and credit markets.
|
• |
Management’s
efforts to pursue alternatives and whether the company engaged in a
process to evaluate alternatives: A fair, unconstrained process helps to
ensure the best price for shareholders. Financing alternatives can include
joint ventures, partnership, merger or sale of part or all of the company.
|
• |
Control
issues: |
• |
Change
in management; |
• |
Change
in control; |
• |
Guaranteed
board and committee seats; |
• |
Standstill
provisions; |
• |
Voting
agreements; |
• |
Veto
power over certain corporate actions; and |
• |
Minority
versus majority ownership and corresponding minority discount or majority
control premium |
• |
Conflicts
of interest: |
• |
Conflicts
of interest should be viewed from the perspective of the company and the
investor. |
• |
Were
the terms of the transaction negotiated at arm’s length? Are managerial
incentives aligned with shareholder interests? |
• |
Market
reaction: |
• |
The
market’s response to the proposed deal. A negative market reaction is a
cause for concern. Market reaction may be addressed by analyzing the
one day impact on the unaffected stock price. |
|
B-121 |
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|
• |
Estimated
value and financial prospects of the reorganized company;
|
• |
Percentage
ownership of current shareholders in the reorganized company;
|
• |
Whether
shareholders are adequately represented in the reorganization process
(particularly through the existence of an official equity committee);
|
• |
The
cause(s) of the bankruptcy filing, and the extent to which the plan of
reorganization addresses the cause(s); |
• |
Existence
of a superior alternative to the plan of reorganization; and
|
• |
Governance
of the reorganized company. |
• |
Valuation—Is the value
being paid by the SPAC reasonable? SPACs generally lack an independent
fairness opinion and the financials on the target may be limited. Compare
the conversion price with the intrinsic value of the target company
provided in the fairness opinion. Also, evaluate the proportionate value
of the combined entity attributable to the SPAC IPO shareholders versus
the pre-merger value of SPAC. Additionally, a private company
discount may be applied to the target, if it is a private
entity. |
• |
Market
reaction—How has the market responded to the proposed deal?
A negative market reaction may be a cause for concern. Market
reaction may be addressed by analyzing the one-day impact on the
unaffected stock price. |
• |
Deal
timing—A main driver for most transactions is that the SPAC
charter typically requires the deal to be complete within 18 to 24
months, or the SPAC is to be liquidated. Evaluate the valuation, market
reaction, and potential conflicts of interest for deals that are announced
close to the liquidation date. |
• |
Negotiations and
process—What was the process undertaken to identify
potential target companies within specified industry or location specified
in charter? Consider the background of the sponsors.
|
• |
Conflicts of interest—How
are sponsors benefiting from the transaction compared to IPO shareholders?
Potential conflicts could arise if a fairness opinion is issued by the
insiders to qualify the deal rather than a third party or if management is
encouraged to pay a higher price for the target because of an 80% rule
(the charter requires that the fair market value of the target is at
least equal to 80% of net assets of the SPAC). Also, there may be sense of
urgency by the management team of the SPAC to close the deal since its
charter typically requires a transaction to be completed within the 18-24
month timeframe. |
• |
Voting
agreements—Are the sponsors entering into enter into any
voting agreements/ tender offers with shareholders who are likely to vote
against the proposed merger or exercise conversion rights?
|
• |
Governance—What is the
impact of having the SPAC CEO or founder on key committees following the
proposed merger? |
|
B-122 |
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|
• |
Length
of request: Typically, extension requests range from two to
six months, depending on the progression of the SPAC’s acquistion process.
|
• |
Pending
transaction(s) or
progression of the acquisition
process: Sometimes an intial business combination was
already put to a shareholder vote, but, for varying reasons, the
transaction could not be consummated by the termination date and the SPAC
is requesting an extension. Other times, the SPAC has entered into a
definitive transaction agreement, but needs additional time to consummate
or hold the shareholder meeting. |
• |
Added
incentive for non-redeeming shareholders: Sometimes the SPAC
sponsor (or other insiders) will contribute, typically as a loan to the
company, additional funds that will be added to the redemption value of
each public share as long as such shares are not redeemed in connection
with the extension request. The purpose of the “equity kicker” is to
incentivize shareholders to hold their shares through the end of the
requested extension or until the time the transaction is put to a
shareholder vote, rather than electing redeemption at the extension
proposal meeting. |
• |
Prior
extension requests: Some SPACs request additional time
beyond the extension period sought in prior extension requests.
|
• |
Tax
and regulatory advantages; |
• |
Planned
use of the sale proceeds; |
• |
Valuation
of spinoff; |
• |
Fairness
opinion; |
• |
Benefits
to the parent company; |
• |
Conflicts
of interest; |
• |
Managerial
incentives; |
• |
Corporate
governance changes; |
• |
Changes
in the capital structure. |
• |
Hiring
a financial advisor to explore strategic alternatives;
|
• |
Selling
the company; or |
• |
Liquidating
the company and distributing the proceeds to shareholders.
|
|
B-123 |
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• |
Prolonged
poor performance with no turnaround in sight; |
• |
Signs
of entrenched board and management (such as the adoption of takeover
defenses); |
• |
Strategic
plan in place for improving value; |
• |
Likelihood
of receiving reasonable value in a sale or dissolution; and
|
• |
The
company actively exploring its strategic options, including retaining a
financial advisor. |
5. |
Compensation |
1. |
Maintain
appropriate pay-for-performance alignment, with emphasis on long-term
shareholder value: This principle encompasses overall executive pay
practices, which must be designed to attract, retain, and appropriately
motivate the key employees who drive shareholder value creation over the
long term. It will take into consideration, among other factors, the link
between pay and performance; the mix between fixed and variable pay;
performance goals; and equity-based plan costs; |
2. |
Avoid
arrangements that risk “pay for failure”: This principle addresses the
appropriateness of long or indefinite contracts, excessive severance
packages, and guaranteed compensation; |
3. |
Maintain
an independent and effective compensation committee: This principle
promotes oversight of executive pay programs by directors with appropriate
skills, knowledge, experience, and a sound process for compensation
decision-making (e.g., including
access to independent expertise and advice when needed);
|
4. |
Provide
shareholders with clear, comprehensive compensation disclosures: This
principle underscores the importance of informative and timely disclosures
that enable shareholders to evaluate executive pay practices fully and
fairly; |
5. |
Avoid
inappropriate pay to non-executive directors: This principle recognizes
the interests of shareholders in ensuring that compensation to outside
directors does not compromise their independence and ability to make
appropriate judgments in overseeing managers’ pay and performance. At the
market level, it may incorporate a variety of generally accepted best
practices. |
• |
There
is an unmitigated misalignment between CEO pay and company performance
(pay for performance);
|
• |
The
company maintains significant problematic pay practices;
|
• |
The
board exhibits a significant level of poor communication and
responsiveness to shareholders.
|
|
B-124 |
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|
• |
There
is no SOP on the ballot, and an against vote on an SOP is warranted due to
pay for performance misalignment, problematic pay practices, or the lack
of adequate responsiveness on compensation issues raised previously, or a
combination thereof; |
• |
The
board fails to respond adequately to a previous SOP proposal that received
less than 70 percent support of votes cast; |
• |
The
company has recently practiced or approved problematic pay practices, such
as option repricing or option backdating; or |
• |
The
situation is egregious. |
1. |
Peer
Group18 Alignment:
|
• |
The
degree of alignment between the company’s annualized TSR rank and the
CEO’s annualized total pay rank within a peer group, each measured over a
three-year period. |
• |
The
rankings of CEO total pay and company financial performance within a peer
group, each measured over a three-year period. |
• |
The
multiple of the CEO’s total pay relative to the peer group median in the
most recent fiscal year. |
2. |
Absolute
Alignment19 – the
absolute alignment between the trend in CEO pay and company TSR over the
prior five fiscal years – i.e., the difference between the trend in annual
pay changes and the trend in annualized TSR during the period.
|
• |
The
ratio of performance- to time-based incentive awards;
|
• |
The
overall ratio of performance-based compensation;
|
• |
The
rigor of performance goals; |
• |
The
complexity and risks around pay program design;
|
17 |
The Russell 3000E Index includes
approximately 4,000 of the largest U.S. equity securities.
|
18 |
The revised peer group is
generally comprised of 14-24 companies that are selected using market cap,
revenue (or assets for certain financial firms), GICS industry group, and
company’s selected peers’ GICS industry group, with size constraints, via
a process designed to select peers that are comparable to the subject
company in terms of revenue/assets and industry, and also within a market
cap bucket that is reflective of the company’s. For Oil, Gas &
Consumable Fuels companies, market cap is the only size determinant.
|
19 |
Only Russell 3000 Index
companies are subject to the Absolute Alignment analysis.
|
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B-125 |
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|
• |
The
transparency and clarity of disclosure; |
• |
The
company’s peer group benchmarking practices; |
• |
Financial/operational
results, both absolute and relative to peers; |
• |
Special
circumstances related to, for example, a new CEO in the prior FY or
anomalous equity grant practices (e.g., bi-annual awards);
|
• |
Realizable
pay20 compared to grant
pay; and |
• |
Any
other factors deemed relevant. |
• |
Problematic
practices related to non-performance-based compensation elements;
|
• |
Incentives
that may motivate excessive risk-taking or present a windfall risk; and
|
• |
Pay
decisions that circumvent pay-for-performance, such as options backdating
or waiving performance requirements. |
• |
Repricing
or replacing of underwater stock options/SARs without prior shareholder
approval (including cash buyouts and voluntary surrender of underwater
options); |
• |
Extraordinary
perquisites or tax gross-ups; |
• |
New
or materially amended agreements that provide for:
|
• |
Excessive
termination or CIC severance payments (generally exceeding 3 times base
salary and average/target/most recent bonus); |
• |
CIC
severance payments without involuntary job loss or substantial diminution
of duties (“single” or “modified single” triggers) or in connection with a
problematic Good Reason definition; |
• |
CIC
excise tax gross-up entitlements (including “modified” gross-ups);
|
• |
Multi-year
guaranteed awards that are not at risk due to rigorous performance
conditions; |
• |
Liberal
CIC definition combined with any single-trigger CIC benefits;
|
• |
Insufficient
executive compensation disclosure by externally-managed issuers (EMIs)
such that a reasonable assessment of pay programs and practices applicable
to the EMI’s executives is not possible; |
• |
Severance
payments made when the termination is not clearly disclosed as involuntary
(for example, a termination without cause or resignation for good reason);
|
• |
Any
other provision or practice deemed to be egregious and present a
significant risk to investors. |
20 |
Glenmede Policy research
reports include realizable pay for S&P1500 companies.
|
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B-126 |
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|
• |
Reason
and motive for the options backdating issue, such as inadvertent vs.
deliberate grant date changes; |
• |
Duration
of options backdating; |
• |
Size
of restatement due to options backdating; |
• |
Corrective
actions taken by the board or compensation committee, such as canceling or
re-pricing backdated options, the recouping of option gains on backdated
grants; and |
• |
Adoption
of a grant policy that prohibits backdating, and creates a fixed grant
schedule or window period for equity grants in the future.
|
• |
Failure
to respond to majority-supported shareholder proposals on executive pay
topics; or |
• |
Failure
to adequately respond to the company’s previous say-on-pay proposal that
received the support of less than 70 percent of votes cast, taking into
account: |
• |
The
company’s response, including: |
• |
Disclosure
of engagement efforts with major institutional investors regarding the
issues that contributed to the low level of support (including the timing
and frequency of engagements and whether independent directors
participated); |
• |
Disclosure
of the specific concerns voiced by dissenting shareholders that led to the
say-on-pay opposition; |
• |
Disclosure
of specific and meaningful actions taken to address shareholders’
concerns; |
• |
Other
recent compensation actions taken by the company;
|
• |
Whether
the issues raised are recurring or isolated; |
• |
The
company’s ownership structure; and |
• |
Whether
the support level was less than 50 percent, which would warrant the
highest degree of responsiveness. |
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B-127 |
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• |
Single-
or modified-single-trigger cash severance; |
• |
Single-trigger
acceleration of unvested equity awards; |
• |
Full
acceleration of equity awards granted shortly before the change in
control; |
• |
Acceleration
of performance awards above the target level of performance without
compelling rationale; |
• |
Excessive
cash severance (>3x base salary and bonus); |
• |
Excise
tax gross-ups triggered and payable; |
• |
Excessive
golden parachute payments (on an absolute basis or as a percentage of
transaction equity value); or |
• |
Recent
amendments that incorporate any problematic features (such as those above)
or recent actions (such as extraordinary equity grants) that may make
packages so attractive as to influence merger agreements that may not be
in the best interests of shareholders; or |
• |
The
company’s assertion that a proposed transaction is conditioned on
shareholder approval of the golden parachute advisory vote.
|
• |
Plan Cost: The total estimated cost of
the company’s equity plans relative to industry/market cap peers, measured
by the company’s estimated Shareholder Value Transfer (SVT) in relation to
peers and considering both: |
• |
SVT
based on new shares requested plus shares remaining for future grants,
plus outstanding unvested/unexercised grants; and
|
• |
SVT
based only on new shares requested plus shares remaining for future
grants. |
• |
Plan Features: |
• |
Quality
of disclosure around vesting upon a change in control (CIC);
|
• |
Discretionary
vesting authority; |
21 |
Proposals evaluated under the
EPSC policy generally include those to approve or amend (1) stock option
plans for employees and/or employees and directors, (2) restricted stock
plans for employees and/or employees and directors, and (3) omnibus stock
incentive plans for employees and/or employees and directors; amended
plans will be further evaluated case-by-case.
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|
B-128 |
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|
• |
Liberal
share recycling on various award types; |
• |
Lack
of minimum vesting period for grants made under the plan;
|
• |
Dividends
payable prior to award vesting. |
• |
Grant Practices:
|
• |
The
company’s three year burn rate relative to its industry/market cap peers;
|
• |
Vesting
requirements in CEO’S recent equity grants (3-year look-back);
|
• |
The
estimated duration of the plan (based on the sum of shares remaining
available and the new shares requested, divided by the average annual
shares granted in the prior three years); |
• |
The
proportion of the CEO’s most recent equity grants/awards subject to
performance conditions; |
• |
Whether
the company maintains a sufficient claw-back policy;
|
• |
Whether
the company maintains sufficient post exercise/vesting share-holding
requirements. |
• |
Awards
may vest in connection with a liberal change-of-control definition;
|
• |
The
plan would permit repricing or cash buyout of underwater options without
shareholder approval (either by expressly permitting it – for NYSE and
Nasdaq listed companies -- or by not prohibiting it when the company has a
history of repricing – for non-listed companies);
|
• |
The
plan is a vehicle for problematic pay practices or a significant
pay-for-performance disconnect under certain circumstances;
|
• |
The
plan is excessively dilutive to shareholders’ holdings;
|
• |
The
plan contains an evergreen (automatic share replenishment) feature; or
|
• |
Any
other plan features are determined to have a significant negative impact
on shareholder interests. |
|
B-129 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Amend
the terms of outstanding options or SARs to reduce the exercise price of
such outstanding options or SARs; |
• |
Cancel
outstanding options or SARs in exchange for options or SARs with an
exercise price that is less than the exercise price of the original
options or SARs; |
• |
Cancel
underwater options in exchange for stock awards; or
|
• |
Provide
cash buyouts of underwater options. |
22 |
For plans evaluated under the
Equity Plan Scorecard policy, the company’s SVT benchmark is considered
along with other factors. |
|
B-130 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Magnitude
of pay misalignment; |
• |
Contribution
of non–performance-based equity grants to overall pay; and
|
• |
The
proportion of equity awards granted in the last three fiscal years
concentrated at the named executive officer level.
|
|
B-131 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Purchase
price is at least 85 percent of fair market value;
|
• |
Offering
period is 27 months or less; and |
• |
The
number of shares allocated to the plan is 10 percent or less of the
outstanding shares. |
• |
Purchase
price is less than 85 percent of fair market value; or
|
• |
Offering
period is greater than 27 months; or |
• |
The
number of shares allocated to the plan is more than ten percent of the
outstanding shares. |
• |
Broad-based
participation (i.e., all employees
of the company with the exclusion of individuals with 5 percent or more of
beneficial ownership of the company); |
• |
Limits
on employee contribution, which may be a fixed dollar amount or expressed
as a percent of base salary; |
• |
Company
matching contribution up to 25 percent of employee’s contribution, which
is effectively a discount of 20 percent from market value;
|
• |
No
discount on the stock price on the date of purchase when there is a
company matching contribution. |
• |
Addresses
administrative features only; or |
|
B-132 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Seeks
approval for Section 162(m) purposes only, and the plan administering
committee consists entirely of independent outsiders, per Glenmede
Policy’s Classification of Directors. Note that if the company is
presenting the plan to shareholders for the first time after the company’s
initial public offering (IPO), or if the proposal is bundled with other
material plan amendments, then the recommendation will be case-by-case
(see below). |
• |
Seeks
approval for Section 162(m) purposes only, and the plan administering
committee does not consist entirely of independent outsiders, per Glenmede Policy’s Classification of
Directors. |
• |
If
the proposal requests additional shares and/or the amendments may
potentially increase the transfer of shareholder value to employees, the
recommendation will be based on the Equity Plan Scorecard evaluation as
well as an analysis of the overall impact of the amendments.
|
• |
If
the plan is being presented to shareholders for the first time after the
company’s IPO, whether or not additional shares are being requested, the
recommendation will be based on the Equity Plan Scorecard evaluation as
well as an analysis of the overall impact of any amendments.
|
• |
If
there is no request for additional shares and the amendments are not
deemed to potentially increase the transfer of shareholder value to
employees, then the recommendation will be based entirely on an analysis
of the overall impact of the amendments, and the EPSC evaluation will be
shown for informational purposes. |
• |
Historic
trading patterns--the stock price should not be so volatile that the
options are likely to be back “in-the-money” over the near term;
|
• |
Rationale
for the re-pricing--was the stock price decline beyond management’s
control? |
• |
Is
this a value-for-value exchange? |
• |
Are
surrendered stock options added back to the plan reserve?
|
• |
Timing--repricing
should occur at least one year out from any precipitous drop in company’s
stock price; |
• |
Option
vesting--does the new option vest immediately or is there a black-out
period? |
• |
Term
of the option--the term should remain the same as that of the replaced
option; |
• |
Exercise
price--should be set at fair market or a premium to market;
|
• |
Participants--executive
officers and directors must be excluded. |
|
B-133 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Executive
officers and non-employee directors are excluded from participating;
|
• |
Stock
options are purchased by third-party financial institutions at a discount
to their fair value using option pricing models such as Black-Scholes or a
Binomial Option Valuation or other appropriate financial models;
|
• |
There
is a two-year minimum holding period for sale proceeds (cash or stock) for
all participants. |
• |
Eligibility;
|
• |
Vesting;
|
• |
Bid-price;
|
• |
Term
of options; |
• |
Cost
of the program and impact of the TSOs on company’s total option expense
|
• |
Option
repricing policy. |
|
B-134 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
If
the equity plan under which non-employee director grants are made is on
the ballot, whether or not it warrants support; and
|
• |
An
assessment of the following qualitative factors:
|
• |
The
relative magnitude of director compensation as compared to companies of a
similar profile; |
• |
The
presence of problematic pay practices relating to director compensation;
|
• |
Director
stock ownership guidelines and holding requirements;
|
• |
Equity
award vesting schedules; |
• |
The
mix of cash and equity-based compensation; |
• |
Meaningful
limits on director compensation; |
• |
The
availability of retirement benefits or perquisites; and
|
• |
The
quality of disclosure surrounding director compensation.
|
• |
The
total estimated cost of the company’s equity plans relative to
industry/market cap peers, measured by the company’s estimated Shareholder
Value Transfer (SVT) based on new shares requested plus shares remaining
for future grants, plus outstanding unvested/unexercised grants;
|
• |
The
company’s three-year burn rate relative to its industry/market cap peers;
and |
• |
The
presence of any egregious plan features (such as an option repricing
provision or liberal CIC vesting risk). |
• |
The
relative magnitude of director compensation as compared to companies of a
similar profile; |
• |
The
presence of problematic pay practices relating to director compensation;
|
• |
Director
stock ownership guidelines and holding requirements;
|
• |
Equity
award vesting schedules; |
• |
The
mix of cash and equity-based compensation; |
• |
Meaningful
limits on director compensation; |
• |
The
availability of retirement benefits or perquisites; and
|
• |
The
quality of disclosure surrounding director compensation.
|
|
B-135 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
company’s past practices regarding equity and cash compensation;
|
• |
Whether
the company has a holding period or stock ownership requirements in place,
such as a meaningful retention ratio (at least 50 percent for full
tenure); and |
• |
Whether
the company has a rigorous claw-back policy in place.
|
|
B-136 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
percentage/ratio of net shares required to be retained;
|
• |
The
time period required to retain the shares; |
• |
Whether
the company has equity retention, holding period, and/or stock ownership
requirements in place and the robustness of such requirements;
|
• |
Whether
the company has any other policies aimed at mitigating risk taking by
executives; |
• |
Executives’
actual stock ownership and the degree to which it meets or exceeds the
proponent’s suggested holding period/retention ratio or the company’s
existing requirements; and |
• |
First,
vote for shareholder proposals advocating the use of performance-based
equity awards, such as performance contingent options or restricted stock,
indexed options or premium-priced options, unless the proposal is overly
restrictive or if the company has demonstrated that it is using a
“substantial” portion of performance-based awards for its top executives.
Standard stock options and performance-accelerated awards do not meet the
criteria to be considered as performance-based awards. Further,
premium-priced options should have a meaningful premium to be considered
performance-based awards. |
• |
Second,
assess the rigor of the company’s performance-based equity program. If the
bar set for the performance-based program is too low based on the
company’s historical or peer group comparison, generally vote for the
proposal. Furthermore, if target performance results in an above target
payout, vote for the shareholder proposal due to program’s poor design. If
the company does not disclose the performance metric of the
performance-based equity program, vote for the shareholder proposal
regardless of the outcome of the first step to the test.
|
|
B-137 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Set
compensation targets for the plan’s annual and long-term incentive pay
components at or below the peer group median; |
• |
Deliver
a majority of the plan’s target long-term compensation through
performance-vested, not simply time-vested, equity awards;
|
• |
Provide
the strategic rationale and relative weightings of the financial and
non-financial performance metrics or criteria used in the annual and
performance-vested long-term incentive components of the plan;
|
• |
Establish
performance targets for each plan financial metric relative to the
performance of the company’s peer companies; |
• |
Limit
payment under the annual and performance-vested long-term incentive
components of the plan to when the company’s performance on its selected
financial performance metrics exceeds peer group median performance.
|
• |
What
aspects of the company’s annual and long-term equity incentive programs
are performance driven? |
• |
If
the annual and long-term equity incentive programs are performance driven,
are the performance criteria and hurdle rates disclosed to shareholders or
are they benchmarked against a disclosed peer group?
|
• |
Can
shareholders assess the correlation between pay and performance based on
the current disclosure? |
• |
What
type of industry and stage of business cycle does the company belong to?
|
• |
Adoption,
amendment, or termination of a 10b5-1 Plan must be disclosed within two
business days in a Form 8-K; |
• |
Amendment
or early termination of a 10b5-1 Plan is allowed only under extraordinary
circumstances, as determined by the board; |
• |
Ninety
days must elapse between adoption or amendment of a 10b5-1 Plan and
initial trading under the plan; |
• |
Reports
on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;
|
• |
An
executive may not trade in company stock outside the 10b5-1 Plan.
|
• |
Trades
under a 10b5-1 Plan must be handled by a broker who does not handle other
securities transactions for the executive. |
|
B-138 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
If
the company has adopted a formal recoupment policy;
|
• |
The
rigor of the recoupment policy focusing on how and under what
circumstances the company may recoup incentive or stock compensation;
|
• |
Whether
the company has chronic restatement history or material financial
problems; |
• |
Whether
the company’s policy substantially addresses the concerns raised by the
proponent; |
• |
Disclosure
of recoupment of incentive or stock compensation from senior executives or
lack thereof; or |
• |
Any
other relevant factors. |
• |
The
company’s severance or change-in-control agreements in place, and the
presence of problematic features (such as excessive severance
entitlements, single triggers, excise tax gross-ups,
etc.); |
• |
Any
existing limits on cash severance payouts or policies which require
shareholder ratification of severance payments exceeding a certain
level; |
• |
Any
recent severance-related controversies; and |
• |
Whether
the proposal is overly prescriptive, such as requiring shareholder
approval of severance that does not exceed market
norms. |
• |
The
frequency and timing of the company’s share buybacks;
|
• |
The
use of per-share metrics in incentive plans;
|
|
B-139 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
effect of recent buybacks on incentive metric results and payouts; and
|
• |
Whether
there is any indication of metric result manipulation.
|
• |
The
company’s current treatment of equity in change-of-control situations
(i.e. is it double triggered, does it allow for the assumption of equity
by acquiring company, the treatment of performance shares, etc.);
|
• |
Current
employment agreements, including potential poor pay practices such as
gross-ups embedded in those agreements. |
|
B-140 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
6. |
Social and Environmental Issues
|
• |
Whether
the proposal itself is well framed and reasonable;
|
• |
Whether
adoption of the proposal would have either a positive or negative impact
on the company’s short-term or long-term share value;
|
• |
The
percentage of sales, assets and earnings affected;
|
• |
Whether
the company has already responded in some appropriate manner to the
request embodied in a proposal; |
• |
Whether
the company’s analysis and voting recommendation to shareholders is
persuasive; |
• |
Whether
there are significant controversies, fines, penalties, or litigation
associated with the company’s environmental or social practices;
|
• |
What
other companies have done in response to the issue addressed in the
proposal; |
• |
Whether
implementation of the proposal would achieve the objectives sought in the
proposal; and |
• |
The
degree to which the company’s stated position on the issues raised in the
proposal could affect its reputation or sales, or leave it vulnerable to a
boycott or selective purchasing. |
• |
The
company has already published a set of animal welfare standards and
monitors compliance; |
• |
The
company’s standards are comparable to industry peers; and
|
• |
There
are no recent significant fines, litigation, or controversies related to
the company’s and/or its suppliers’ treatment of animals.
|
• |
The
company is conducting animal testing programs that are unnecessary or not
required by regulation; |
|
B-141 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
company is conducting animal testing when suitable alternatives are
commonly accepted and used by industry peers; or
|
• |
There
are recent, significant fines or litigation related to the company’s
treatment of animals. |
• |
The
potential impact of such labeling on the company’s business;
|
• |
The
quality of the company’s disclosure on GE product labeling, related
voluntary initiatives, and how this disclosure compares with industry peer
disclosure; and |
• |
Company’s
current disclosure on the feasibility of GE product labeling.
|
• |
Whether
the company has adequately disclosed mechanisms in place to prevent
abuses; |
• |
Whether
the company has adequately disclosed the financial risks of the
products/practices in question; |
• |
Whether
the company has been subject to violations of related laws or serious
controversies; and |
• |
Peer
companies’ policies/practices in this area. |
• |
Whether
the company has adequately disclosed mechanisms in place to prevent
abusive lending practices; |
|
B-142 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Whether
the company has adequately disclosed the financial risks of the lending
products in question; |
• |
Whether
the company has been subject to violations of lending laws or serious
lending controversies; and |
• |
Peer
companies’ policies to prevent abusive lending practices.
|
• |
The
potential for reputational, market, and regulatory risk exposure;
|
• |
Existing
disclosure of relevant policies; |
• |
Deviation
from established industry norms; |
• |
Relevant
company initiatives to provide research and/or products to disadvantaged
consumers; |
• |
Whether
the proposal focuses on specific products or geographic regions;
|
• |
The
potential burden and scope of the requested report; and
|
• |
Recent
significant controversies, litigation, or fines at the company.
|
• |
The
scope of the company’s operations in the affected/relevant area(s);
|
• |
The
company’s existing healthcare policies, including benefits and healthcare
access; and |
• |
Company
donations to relevant healthcare providers. |
|
B-143 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Recent
related fines, controversies, or significant litigation;
|
• |
Whether
the company complies with relevant laws and regulations on the marketing
of tobacco; |
• |
Whether
the company’s advertising restrictions deviate from those of industry
peers; |
• |
Whether
the company entered into the Master Settlement Agreement, which restricts
marketing of tobacco to youth; and |
• |
Whether
restrictions on marketing to youth extend to foreign countries.
|
• |
Whether
the company complies with all laws and regulations;
|
• |
The
degree that voluntary restrictions beyond those mandated by law might hurt
the company’s competitiveness; and |
• |
The
risk of any health-related liabilities. |
|
B-144 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Vote
for shareholder proposals seeking information on the financial, physical,
or regulatory risks it faces related to climate change- on its operations
and investments, or on how the company identifies, measures, and manage
such risks. |
• |
Vote
for shareholder proposals calling for the reduction of GHG emissions.
|
• |
Vote
for shareholder proposals seeking reports on responses to regulatory and
public pressures surrounding climate change, and for disclosure of
research that aided in setting company policies around climate change.
|
• |
Vote
for shareholder proposals requesting a report/disclosure of goals on GHG
emissions from company operations and/or products.
|
• |
The
extent to which the company’s climate related disclosures are in line with
TCFD recommendations and meet other market standards;
|
• |
Disclosure
of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);
|
• |
The
completeness and rigor of company’s short-, medium-, and long-term targets
for reducing operational and supply chain GHG emissions (Scopes 1, 2, and
3 if relevant); |
• |
Whether
the company has sought and approved third-party approval that its targets
are science-based; |
• |
Whether
the company has made a commitment to be “net zero” for operational and
supply chain emissions (Scopes 1, 2, and 3) by 2050;
|
• |
Whether
the company discloses a commitment to report on the implementation of its
plan in subsequent years; |
• |
Whether
the company’s climate data has received third-party assurance;
|
• |
Disclosure
of how the company’s lobbying activities and its capital expenditures
align with company strategy; |
• |
Whether
there are specific industry decarbonization challenges; and
|
• |
The
company’s related commitment, disclosure, and performance compared to its
industry peers. |
• |
The
completeness and rigor of the company’s climate-related disclosure;
|
• |
The
company’s actual GHG emissions performance;
|
23 |
Variations of this request
also include climate transition related ambitions, or commitment to
reporting on the implementation of a climate plan.
|
|
B-145 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Whether
the company has been the subject of recent, significant violations, fines,
litigation, or controversy related to its GHG emissions;
and |
• |
Whether
the proposal’s request is unduly burdensome (scope or timeframe) or overly
prescriptive. |
• |
The
gender and racial minority representation of the company’s board is
reasonably inclusive in relation to companies of similar size and
business; and |
• |
The
board already reports on its nominating procedures and gender and racial
minority initiatives on the board and within the
company. |
• |
The
company’s current policies and disclosure related to both its diversity
and inclusion policies and practices and its compensation philosophy and
fair and equitable compensation practices;
|
|
B-146 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to gender, race, or ethnicity pay gap issues;
|
• |
The
company’s disclosure regarding gender, race, or ethnicity pay gap policies
or initiatives compared to its industry peers; and
|
• |
Local
laws regarding categorization of race and/or ethnicity and definitions of
ethnic and/or racial minorities. |
• |
The
company’s compliance with applicable regulations and guidelines;
|
• |
The
company’s current level of disclosure regarding its security and safety
policies, procedures, and compliance monitoring; and
|
• |
The
existence of recent, significant violations, fines, or controversy
regarding the safety and security of the company’s operations and/or
facilities. |
• |
Operations
in the specified regions are not permitted by current laws or regulations;
|
• |
The
company does not currently have operations or plans to develop operations
in these protected regions; or |
• |
The
company’s disclosure of its operations and environmental policies in these
regions is comparable to industry peers. |
• |
The
nature of the company’s business; |
• |
The
current level of disclosure of the company’s existing related programs;
|
• |
The
timetable and methods of program implementation prescribed by the
proposal; |
• |
The
company’s ability to address the issues raised in the proposal; and
|
• |
How
the company’s recycling programs compare to similar programs of its
industry peers. |
|
B-147 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Vote
for shareholder proposals seeking greater disclosure on the company’s
environmental and social practices, and/or associated risks and
liabilities. |
• |
Vote
for shareholder proposals asking companies to report in accordance with
the Global Reporting Initiative (GRI). |
• |
Vote
for shareholder proposals seeking the preparation of sustainability
reports. |
• |
Vote
for shareholder proposals to study or implement the CERES Roadmap
2030. |
• |
Vote
for shareholder proposals to study or implement the Equator
Principles. |
• |
The
company’s current disclosure of relevant policies, initiatives, oversight
mechanisms, and water usage metrics; |
• |
Whether
or not the company’s existing water-related policies and practices are
consistent with relevant internationally recognized standards and
national/local regulations; |
• |
The
potential financial impact or risk to the company associated with
water-related concerns or issues; and |
• |
Recent,
significant company controversies, fines, or litigation regarding water
use by the company and its suppliers.
|
|
B-148 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
level of disclosure of company policies and procedures relating to data
security, privacy, freedom of speech, information access and management,
and Internet censorship; |
• |
Engagement
in dialogue with governments or relevant groups with respect to data
security, privacy, or the free flow of information on the Internet;
|
• |
The
scope of business involvement and of investment in countries whose
governments censor or monitor the Internet and other telecommunications;
|
• |
Applicable
market-specific laws or regulations that may be imposed on the company;
and |
• |
Controversies,
fines, or litigation related to data security, privacy, freedom of speech,
or Internet censorship. |
|
B-149 |
|
|
|
|
|
2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Generally
vote for proposals requesting a report on company or company supplier
labor and/or human rights standards and policies.
|
• |
Vote
for shareholder proposals to implement human rights standards and
workplace codes of conduct. |
• |
Vote
for shareholder proposals calling for the implementation and reporting on
ILO codes of conduct, SA 8000 Standards, or the Global Sullivan
Principles. |
• |
Vote
for shareholder proposals that call for the adoption and/or enforcement of
principles or codes relating to countries in which there are systematic
violations of human rights. |
• |
Vote
for shareholder proposals that call for independent monitoring programs in
conjunction with local and respected religious and human rights groups to
monitor supplier and licensee compliance with codes.
|
• |
Vote
for shareholder proposals that seek publication of a “Code of Conduct” to
the company’s foreign suppliers and licensees, requiring they satisfy all
applicable standards and laws protecting employees’ wages, benefits,
working conditions, freedom of association, and other rights.
|
• |
Vote
for shareholder proposals seeking reports on, or the adoption of, vendor
standards including: reporting on incentives to encourage suppliers to
raise standards rather than terminate contracts and providing public
disclosure of contract supplier reviews on a regular basis.
|
• |
Vote
for shareholder proposals to adopt labor standards for foreign and
domestic suppliers to ensure that the company will not do business with
foreign suppliers that manufacture products for sale using forced labor,
child labor, or that fail to comply with applicable laws protecting
employee’s wages and working conditions. |
• |
Vote
for proposals requesting that a company conduct an assessment of the human
rights risks in its operations or in its supply chain, or report on its
human rights risk assessment process. |
• |
The
company’s current policies and practices related to the use of mandatory
arbitration agreements on workplace claims; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to the use of mandatory arbitration agreements
on workplace claims; and |
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B-150 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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• |
The
company’s disclosure of its policies and practices related to the use of
mandatory arbitration agreements compared to its peers.
|
• |
Current
disclosure of applicable policies and risk assessment report(s) and risk
management procedures; |
• |
The
impact of regulatory non-compliance, litigation, remediation, or
reputational loss that may be associated with failure to manage the
company’s operations in question, including the management of relevant
community and stakeholder relations; |
• |
The
nature, purpose, and scope of the company’s operations in the specific
region(s); |
• |
The
degree to which company policies and procedures are consistent with
industry norms; and |
• |
Scope
of the resolution. |
• |
The
nature, purpose, and scope of the operations and business involved that
could be affected by social or political disruption;
|
• |
Current
disclosure of applicable risk assessment(s) and risk management
procedures; |
• |
Compliance
with U.S. sanctions and laws; |
• |
Consideration
of other international policies, standards, and laws; and
|
• |
Whether
the company has been recently involved in recent, significant
controversies, fines or litigation related to its operations in
“high-risk” markets. |
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B-151 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Controversies
surrounding operations in the relevant market(s);
|
• |
The
value of the requested report to shareholders; |
• |
The
company’s current level of disclosure of relevant information on
outsourcing and plant closure procedures; and |
• |
The
company’s existing human rights standards relative to industry peers.
|
• |
The
company’s current policies, practices, oversight mechanisms related to
preventing workplace sexual harassment; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to workplace sexual harassment issues; and
|
• |
The
company’s disclosure regarding workplace sexual harassment policies or
initiatives compared to its industry peers. |
• |
The
company’s current disclosure of relevant lobbying policies, and management
and board oversight; |
• |
The
company’s disclosure regarding trade associations or other groups that it
supports, or is a member of, that engage in lobbying activities; and
|
• |
Recent
significant controversies, fines, or litigation regarding the company’s
lobbying-related activities. |
|
B-152 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
The
company’s policies, and management and board oversight related to its
direct political contributions and payments to trade associations or other
groups that may be used for political purposes; |
• |
The
company’s disclosure regarding its support of, and participation in, trade
associations or other groups that may make political contributions; and
|
• |
Recent
significant controversies, fines, or litigation related to the company’s
political contributions or political activities.
|
• |
There
are no recent, significant controversies, fines, or litigation regarding
the company’s political contributions or trade association spending;
and |
• |
The
company has procedures in place to ensure that employee contributions to
company-sponsored political action committees (PACs) are strictly
voluntary and prohibit coercion. |
• |
The
company’s policies, management, board oversight, governance processes, and
level of disclosure related to direct political contributions, lobbying
activities, and payments to trade associations, political action
committees, or other groups that may be used for political purposes;
|
• |
The
company’s disclosure regarding: the reasons for its support of candidates
for public offices; the reasons for support of and participation in trade
associations or other groups that may make political contributions; and
other political activities; |
• |
Any
incongruencies identified between a company’s direct and indirect
political expenditures and its publicly stated values and priorities;
|
• |
Recent
significant controversies related to the company’s direct and indirect
lobbying, political contributions, or political activities.
|
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B-153 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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7. |
Mutual Fund Proxies
|
• |
Past
performance as a closed-end fund; |
• |
Market
in which the fund invests; |
• |
Measures
taken by the board to address the discount; and |
• |
Past
shareholder activism, board activity, and votes on related proposals.
|
• |
Past
performance relative to its peers; |
• |
Market
in which fund invests; |
• |
Measures
taken by the board to address the issues; |
• |
Past
shareholder activism, board activity, and votes on related proposals;
|
• |
Strategy
of the incumbents versus the dissidents; |
• |
Independence
of directors; |
• |
Experience
and skills of director candidates; |
• |
Governance
profile of the company; |
• |
Evidence
of management entrenchment. |
• |
Proposed
and current fee schedules; |
• |
Fund
category/investment objective; |
• |
Performance
benchmarks; |
• |
Share
price performance as compared with peers;
|
|
B-154 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Resulting
fees relative to peers; |
• |
Assignments
(where the advisor undergoes a change of control).
|
• |
Stated
specific financing purpose; |
• |
Possible
dilution for common shares; |
• |
Whether
the shares can be used for antitakeover purposes.
|
• |
Potential
competitiveness; |
• |
Regulatory
developments; |
• |
Current
and potential returns; and |
• |
Current
and potential risk. |
• |
The
fund’s target investments; |
• |
The
reasons given by the fund for the change; and |
• |
The
projected impact of the change on the portfolio.
|
• |
Political/economic
changes in the target market; |
• |
Consolidation
in the target market; and |
• |
Current
asset composition. |
|
B-155 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Potential
competitiveness; |
• |
Current
and potential returns; |
• |
Risk
of concentration; |
• |
Consolidation
in target industry. |
• |
The
proposal to allow share issuances below NAV has an expiration date no more
than one year from the date shareholders approve the underlying proposal,
as required under the Investment Company Act of 1940;
|
• |
The
sale is deemed to be in the best interests of shareholders by (1) a
majority of the company’s independent directors and (2) a majority of the
company’s directors who have no financial interest in the issuance; and
|
• |
The
company has demonstrated responsible past use of share issuances by
either: |
• |
Outperforming
peers in its 8-digit GICS group as measured by one- and three-year median
TSRs; or |
• |
Providing
disclosure that its past share issuances were priced at levels that
resulted in only small or moderate discounts to NAV and economic dilution
to existing non-participating shareholders. |
• |
Strategies
employed to salvage the company; |
• |
The
fund’s past performance; |
• |
The
terms of the liquidation. |
• |
The
degree of change implied by the proposal; |
• |
The
efficiencies that could result; |
• |
The
state of incorporation; |
• |
Regulatory
standards and implications. |
• |
Removal
of shareholder approval requirement to reorganize or terminate the trust
or any of its series; |
• |
Removal
of shareholder approval requirement for amendments to the new declaration
of trust; |
|
B-156 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Removal
of shareholder approval requirement to amend the fund’s management
contract, allowing the contract to be modified by the investment manager
and the trust management, as permitted by the 1940 Act;
|
• |
Allow
the trustees to impose other fees in addition to sales charges on
investment in a fund, such as deferred sales charges and redemption fees
that may be imposed upon redemption of a fund’s shares;
|
• |
Removal
of shareholder approval requirement to engage in and terminate subadvisory
arrangements; |
• |
Removal
of shareholder approval requirement to change the domicile of the fund.
|
• |
Regulations
of both states; |
• |
Required
fundamental policies of both states; |
• |
The
increased flexibility available. |
• |
Fees
charged to comparably sized funds with similar objectives;
|
• |
The
proposed distributor’s reputation and past performance;
|
• |
The
competitiveness of the fund in the industry; |
• |
The
terms of the agreement. |
• |
Resulting
fee structure; |
• |
Performance
of both funds; |
• |
Continuity
of management personnel; |
• |
Changes
in corporate governance and their impact on shareholder rights.
|
|
B-157 |
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2024
GLENMEDE – WOMEN IN LEADERSHIP PROXY VOTING GUIDELINES |
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|
• |
Performance
of the fund’s Net Asset Value (NAV); |
• |
The
fund’s history of shareholder relations; |
• |
The
performance of other funds under the advisor’s management.
|
8. |
Foreign Private Issuers Listed on U.S.
Exchanges |
|
B-158 |
|
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|
|
UNITED
STATES
Proxy
Voting Guidelines |
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|
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|
• |
U.S.
Domestic Issuers – which have a majority of outstanding shares held in the
U.S. and meet other criteria, as determined by the SEC, and are subject to
the same disclosure and listing standards as U.S. incorporated companies
(e.g. they are required to file DEF14A proxy statements) – are generally
covered under standard U.S. policy guidelines. |
• |
Foreign Private Issuers (FPIs) –
which are allowed to take exemptions from most disclosure requirements
(e.g., they are allowed to file 6-K for their proxy materials) and U.S.
listing standards – are generally covered under a combination of policy
guidelines: |
• |
FPI
Guidelines (see the Americas
Regional Proxy Voting Guidelines), may apply to companies
incorporated in governance havens, and apply certain minimum independence
and disclosure standards in the evaluation of key proxy ballot items, such
as the election of directors; and/or |
• |
Guidelines
for the market that is responsible for, or most relevant to, the item on
the ballot. |
|
B-167 |
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|
|
UNITED
STATES
Proxy
Voting Guidelines |
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|
1. |
Board of Directors |
• |
Independent
directors comprise 50 percent or less of the board;
|
• |
The
non-independent director serves on the audit, compensation, or nominating
committee; |
• |
The
company lacks an audit, compensation, or nominating committee so that the
full board functions as that committee; or |
• |
The
company lacks a formal nominating committee, even if the board attests
that the independent directors fulfill the functions of such a committee.
|
1 |
A “new nominee” is a director
who is being presented for election by shareholders for the first time.
Recommendations on new nominees who have served for less than one year are
made on a case-by-case basis depending on the timing of their appointment
and the problematic governance issue in
question. |
2 |
In general, companies with a
plurality vote standard use “Withhold” as the contrary vote option in
director elections; companies with a majority vote standard use “Against”.
However, it will vary by company and the proxy must be checked to
determine the valid contrary vote option for the particular
company. |
|
B-168 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
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|
|
1. |
Executive
Director |
1.1. |
Current
officer1 of the company
or one of its affiliates2. |
2. |
Non-Independent
Non-Executive Director |
2.1. |
Director
identified as not independent by the board. |
2.2. |
Beneficial
owner of more than 50 percent of the company’s voting power (this may be
aggregated if voting power is distributed among more than one member of a
group). |
2.3. |
Non-officer
employee of the firm (including employee
representatives). |
2.4. |
Officer1,
former officer, or general or limited partner of a joint venture or
partnership with the company. |
2.5. |
Former
CEO of the company.3,
4 |
2.6. |
Former
non-CEO officer1 of the
company or an affiliate2 within the past five
years. |
2.7. |
Former
officer1 of an acquired
company within the past five years.4 |
2.8. |
Officer1 of a former parent or
predecessor firm at the time the company was sold or split off within the
past five years. |
2.9. |
Former
interim officer if the service was longer than 18 months. If the service
was between 12 and 18 months an assessment of the interim officer’s
employment agreement will be made.5 |
2.10. |
Immediate
family member6 of a
current or former officer1of the company or its
affiliates2 within the
last five years. |
2.11. |
Immediate
family member6 of a
current employee of company or its affiliates2 where additional factors
raise concern (which may include, but are not limited to, the following: a
director related to numerous employees; the company or its affiliates
employ relatives of numerous board members; or a non-Section 16
officer in a key strategic role). |
2.12. |
Director
who (or whose immediate family member6) currently provides
professional services7
in excess of $10,000 per year to: the company, an affiliate2, or an individual officer
of the company or an affiliate; or who is (or whose immediate family
member6 is) a partner,
employee, or controlling shareholder of an organization which provides the
services. |
2.13. |
Director
who (or whose immediate family member6) currently has any material
transactional relationship8with the company or its
affiliates2; or who is
(or whose immediate family member6 is) a partner in, or a
controlling shareholder or an executive officer of, an organization which
has the material transactional relationship8 (excluding investments in
the company through a private placement). |
2.14. |
Director
who (or whose immediate family member6) is a trustee, director, or
employee of a charitable or non-profit organization that receives material
grants or endowments8
from the company or its affiliates2.
|
|
B-169 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
2.15. |
Party
to a voting agreement9
to vote in line with management on proposals being brought to shareholder
vote. |
2.16. |
Has
(or an immediate family member6 has) an interlocking
relationship as defined by the SEC involving members of the board of
directors or its Compensation Committee.10 |
2.17. |
Founder11 of the company but not
currently an employee. |
2.18. |
Director
with pay comparable to Named Executive Officers. |
2.19. |
Any
material12 relationship
with the company. |
3. |
Independent
Director |
3.1. |
No
material12 connection
to the company other than a board seat. |
1 |
The definition of officer will generally follow
that of a “Section 16 officer” (officers subject to Section 16
of the Securities and Exchange Act of 1934) and includes the chief
executive, operating, financial, legal, technology, and accounting
officers of a company (including the president, treasurer, secretary,
controller, or any vice president in charge of a principal business unit,
division, or policy function). Current interim officers are included in
this category. For private companies, the equivalent positions are
applicable. A non-employee director serving as an officer due to statutory
requirements (e.g. corporate secretary) will generally be classified as a
Non-Independent Non-Executive Director under “Any material relationship
with the company.” However, if the company provides explicit disclosure
that the director is not receiving additional compensation exceeding
$10,000 per year for serving in that capacity, then the director will be
classified as an Independent Director. |
2 |
“Affiliate” includes a subsidiary, sibling
company, or parent company. ISS uses 50 percent control ownership by the
parent company as the standard for applying its affiliate designation. The
manager/advisor of an externally managed issuer (EMI) is considered an
affiliate. |
3 |
Includes any former CEO of the company prior to
the company’s initial public offering (IPO).
|
4 |
When there is a former CEO of a special purpose
acquisition company (SPAC) serving on the board of an acquired company,
ISS will generally classify such directors as independent unless
determined otherwise taking into account the following factors: the
applicable listing standards determination of such director’s
independence; any operating ties to the firm; and the existence of any
other conflicting relationships or related party transactions.
|
5 |
ISS will look at the terms of the interim
officer’s employment contract to determine if it contains severance pay,
long-term health and pension benefits, or other such standard provisions
typically contained in contracts of permanent, non-temporary CEOs. ISS
will also consider if a formal search process was under way for a
full-time officer at the time. |
6 |
“Immediate family member” follows the SEC’s
definition of such and covers spouses, parents, children, step-parents,
step-children, siblings, in-laws, and any person (other than a tenant or
employee) sharing the household of any director, nominee for director,
executive officer, or significant shareholder of the
company. |
7 |
Professional services can be characterized as
advisory in nature, generally involve access to sensitive company
information or to strategic decision-making, and typically have a
commission- or fee-based payment structure. Professional services
generally include but are not limited to the following: investment
banking/financial advisory services, commercial banking (beyond deposit
services), investment services, insurance services, accounting/audit
services, consulting services, marketing services, legal services,
property management services, realtor services, lobbying services,
executive search services, and IT consulting services. The following would
generally be considered transactional relationships and not professional
services: deposit services, IT tech support services, educational
services, and construction services. The case of participation in a
banking syndicate by a non-lead bank should be considered a transactional
(and hence subject to the associated materiality test) rather than a
professional relationship. “Of Counsel” relationships are only considered
immaterial if the individual does not receive any form of compensation (in
excess of $10,000 per year) from, or is a retired partner of, the firm
providing the professional service. The case of a company providing a
professional service to one of its directors or to an entity with which
one of its directors is affiliated, will be considered a transactional
rather than a professional relationship. Insurance services and marketing
services are assumed to be professional services unless the company
explains why such services are not
advisory. |
8 |
A material transactional relationship,
including grants to non-profit organizations, exists if the company makes
annual payments to, or receives annual payments from, another entity,
exceeding the greater of: $200,000 or 5 percent of the recipient’s gross
|
|
B-170 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
9 |
Dissident directors who are parties to a voting
agreement pursuant to a settlement or similar arrangement may be
classified as Independent Directors if an analysis of the following
factors indicates that the voting agreement does not compromise their
alignment with all shareholders’ interests: the terms of the agreement;
the duration of the standstill provision in the agreement; the limitations
and requirements of actions that are agreed upon; if the dissident
director nominee(s) is subject to the standstill; and if there any
conflicting relationships or related party
transactions. |
10 |
Interlocks include: executive officers serving
as directors on each other’s compensation or similar committees (or, in
the absence of such a committee, on the board); or executive officers
sitting on each other’s boards and at least one serves on the other’s
compensation or similar committees (or, in the absence of such a
committee, on the board). |
11 |
The operating involvement of the founder with
the company will be considered; if the founder was never employed by the
company, ISS may deem him or her an Independent
Director. |
12 |
For purposes of ISS’s director independence
classification, “material” will be defined as a standard of relationship
(financial, personal, or otherwise) that a reasonable person might
conclude could potentially influence one’s objectivity in the boardroom in
a manner that would have a meaningful impact on an individual’s ability to
satisfy requisite fiduciary standards on behalf of
shareholders. |
|
B-171 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Medical
issues/illness; |
• |
Family
emergencies; and |
• |
Missing
only one meeting (when the total of all meetings is three or fewer).
|
• |
Sit
on more than five public company boards; or |
• |
Are
CEOs of public companies who sit on the boards of more than two public
companies besides their own—withhold only at their outside boards4. |
• |
The
board failed to act on a shareholder proposal that received the support of
a majority of the shares cast in the previous year or failed to act on a
management proposal seeking to ratify an existing charter/bylaw provision
that received opposition of a majority of the shares cast in the previous
year. Factors that will be considered are: |
• |
Disclosed
outreach efforts by the board to shareholders in the wake of the vote;
|
• |
Rationale
provided in the proxy statement for the level of implementation;
|
• |
The
subject matter of the proposal; |
3 |
Nominees who served for only
part of the fiscal year are generally exempted from the attendance
policy. |
4 |
Although all of a CEO’s
subsidiary boards with publicly-traded common stock will be counted as
separate boards, ISS will not recommend a withhold vote for the CEO of a
parent company board or any of the controlled (>50 percent ownership)
subsidiaries of that parent but may do so at subsidiaries that are less
than 50 percent controlled and boards outside the parent/subsidiary
relationships. |
5 |
Aggregate diversity statistics
provided by the board will only be considered if specific to racial and/or
ethnic diversity. |
|
B-172 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
level of support for and opposition to the resolution in past meetings;
|
• |
Actions
taken by the board in response to the majority vote and its engagement
with shareholders; |
• |
The
continuation of the underlying issue as a voting item on the ballot (as
either shareholder or management proposals); and
|
• |
Other
factors as appropriate. |
• |
The
board failed to act on takeover offers where the majority of shares are
tendered; or |
• |
At
the previous board election, any director received more than 50 percent
withhold/against votes of the shares cast and the company has failed to
address the issue(s) that caused the high withhold/against vote.
|
• |
The
company’s previous say-on-pay received the support of less than 70 percent
of votes cast. Factors that will be considered are:
|
• |
The
company’s response, including: |
• |
Disclosure
of engagement efforts with major institutional investors, including the
frequency and timing of engagements and the company participants
(including whether independent directors participated);
|
• |
Disclosure
of the specific concerns voiced by dissenting shareholders that led to the
say-on-pay opposition; and |
• |
Disclosure
of specific and meaningful actions taken to address shareholders’
concerns; |
• |
Other
recent compensation actions taken by the company;
|
• |
Whether
the issues raised are recurring or isolated; |
• |
The
company’s ownership structure; and |
• |
Whether
the support level was less than 50 percent, which would warrant the
highest degree of responsiveness. |
• |
The
board implements an advisory vote on executive compensation on a less
frequent basis than the frequency that received the plurality of votes
cast. |
• |
The
company has a poison pill with a deadhand or slowhand feature6; |
• |
The
board makes a material adverse modification to an existing pill,
including, but not limited to, extension, renewal, or lowering the
trigger, without shareholder approval; or |
• |
The
company has a long-term poison pill (with a term of over one year) that
was not approved by the public shareholders7. |
• |
The
disclosed rationale for the adoption; |
6 |
If a short-term pill with a
deadhand or slowhand feature is enacted but expires before the next
shareholder vote, ISS will generally still recommend withhold/against
nominees at the next shareholder meeting following its
adoption. |
7 |
Approval prior to, or in
connection, with a company’s becoming publicly-traded, or in connection
with a de-SPAC transaction, is
insufficient. |
|
B-173 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
trigger; |
• |
The
company’s market capitalization (including absolute level and sudden
changes); |
• |
A
commitment to put any renewal to a shareholder vote; and
|
• |
Other
factors as relevant. |
• |
Newly-public
companies9 with a sunset
provision of no more than seven years from the date of going public;
|
• |
Limited
Partnerships and the Operating Partnership (OP) unit structure of REITs;
|
• |
Situations
where the super-voting shares represent less than 5% of total voting power
and therefore considered to be de
minimis; or |
• |
The
company provides sufficient protections for minority shareholders, such as
allowing minority shareholders a regular binding vote on whether the
capital structure should be maintained. |
• |
Supermajority
vote requirements to amend the bylaws or charter;
|
• |
A
classified board structure; or |
• |
Other
egregious provisions. |
• |
The
board’s rationale for adopting the bylaw/charter amendment without
shareholder ratification; |
• |
Disclosure
by the company of any significant engagement with shareholders regarding
the amendment; |
• |
The
level of impairment of shareholders’ rights caused by the board’s
unilateral amendment to the bylaws/charter;
|
8 |
This generally includes
classes of common stock that have additional votes per share than other
shares; classes of shares that are not entitled to vote on all the same
ballot items or nominees; or stock with time-phased voting rights
(“loyalty shares”). |
9 |
Includes companies that emerge
from bankruptcy, SPAC transactions, spin-offs, direct listings, and those
who complete a traditional initial public
offering. |
|
B-174 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
board’s track record with regard to unilateral board action on
bylaw/charter amendments or other entrenchment provisions;
|
• |
The
company’s ownership structure; |
• |
The
company’s existing governance provisions; |
• |
The
timing of the board’s amendment to the bylaws/charter in connection with a
significant business development; and |
• |
Other
factors, as deemed appropriate, that may be relevant to determine the
impact of the amendment on shareholders. |
• |
Classified
the board; |
• |
Adopted
supermajority vote requirements to amend the bylaws or charter;
|
• |
Eliminated
shareholders’ ability to amend bylaws; |
• |
Adopted
a fee-shifting provision;
or |
• |
Adopted
another provision deemed egregious. |
• |
The
company’s governing documents impose undue restrictions on shareholders’
ability to amend the bylaws. Such restrictions include but are not limited
to: outright prohibition on the submission of binding shareholder
proposals or share ownership requirements, subject matter restrictions, or
time holding requirements in excess of SEC Rule 14a-8. Vote against
or withhold on an ongoing basis. |
• |
A
classified board structure; |
• |
A
supermajority vote requirement; |
• |
Either
a plurality vote standard in uncontested director elections, or a majority
vote standard in contested elections; |
• |
The
inability of shareholders to call special meetings;
|
• |
The
inability of shareholders to act by written consent;
|
• |
A
multi-class capital structure; and/or |
• |
A
non-shareholder-approved poison pill. |
• |
The
presence of a shareholder proposal addressing the same issue on the same
ballot; |
|
B-175 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
board’s rationale for seeking ratification; |
• |
Disclosure
of actions to be taken by the board should the ratification proposal fail;
|
• |
Disclosure
of shareholder engagement regarding the board’s ratification request;
|
• |
The
level of impairment to shareholders’ rights caused by the existing
provision; |
• |
The
history of management and shareholder proposals on the provision at the
company’s past meetings; |
• |
Whether
the current provision was adopted in response to the shareholder proposal;
|
• |
The
company’s ownership structure; and |
• |
Previous
use of ratification proposals to exclude shareholder proposals.
|
• |
The
non-audit fees paid to the auditor are excessive;
|
• |
The
company receives an adverse opinion on the company’s financial statements
from its auditor; or |
• |
There
is persuasive evidence that the Audit Committee entered into an
inappropriate indemnification agreement with its auditor that limits the
ability of the company, or its shareholders, to pursue legitimate legal
recourse against the audit firm. |
• |
Poor
accounting practices are identified that rise to a level of serious
concern, such as: fraud; misapplication of GAAP; and material weaknesses
identified in Section 404 disclosures. Examine the severity, breadth,
chronological sequence, and duration, as well as the company’s efforts at
remediation or corrective actions, in determining whether withhold/against
votes are warranted. |
• |
There
is an unmitigated misalignment between CEO pay and company performance
(pay for performance);
|
• |
The
company maintains significant problematic pay practices; or
|
• |
The
board exhibits a significant level of poor communication and
responsiveness to shareholders. |
• |
The
company fails to include a Say on Pay ballot item when required under SEC
provisions, or under the company’s declared frequency of say on pay; or
|
• |
The
company fails to include a Frequency of Say on Pay ballot item when
required under SEC provisions. |
• |
The
presence of an anti-pledging policy, disclosed in the proxy statement,
that prohibits future pledging activity;
|
|
B-176 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
magnitude of aggregate pledged shares in terms of total common shares
outstanding, market value, and trading volume; |
• |
Disclosure
of progress or lack thereof in reducing the magnitude of aggregate pledged
shares over time; |
• |
Disclosure
in the proxy statement that shares subject to stock ownership and holding
requirements do not include pledged company stock; and
|
• |
Any
other relevant factors. |
• |
Detailed
disclosure of climate-related risks, such as according to the framework
established by the Task Force on Climate-related Financial Disclosures
(TCFD), including: |
• |
Board
governance measures; |
• |
Corporate
strategy; |
• |
Risk
management analyses; and |
• |
Metrics
and targets. |
• |
Appropriate
GHG emissions reduction targets. |
• |
Material
failures of governance, stewardship, risk oversight11, or fiduciary
responsibilities at the company; |
• |
Failure
to replace management as appropriate; or |
• |
Egregious
actions related to a director’s service on other boards that raise
substantial doubt about his or her ability to effectively oversee
management and serve the best interests of shareholders at any company.
|
10 |
Companies defined as
“significant GHG emitters” will be those on the current Climate Action
100+ Focus Group list. |
11 |
Examples of failure of risk
oversight include but are not limited to: bribery; large or serial fines
or sanctions from regulatory bodies;
demonstrably poor risk oversight of environmental
and social issues, including climate change; significant adverse
legal judgments or settlement; or hedging of company
stock. |
|
B-177 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Long-term
financial performance of the company relative to its industry;
|
• |
Management’s
track record; |
• |
Background
to the contested election; |
• |
Nominee
qualifications and any compensatory arrangements;
|
• |
Strategic
plan of dissident slate and quality of the critique against management;
|
• |
Likelihood
that the proposed goals and objectives can be achieved (both slates); and
|
• |
Stock
ownership positions. |
• |
The
rationale provided for adoption of the term/tenure limit;
|
• |
The
robustness of the company’s board evaluation process;
|
• |
Whether
the limit is of sufficient length to allow for a broad range of director
tenures; |
• |
Whether
the limit would disadvantage independent directors compared to
non-independent directors; and |
• |
Whether
the board will impose the limit evenly, and not have the ability to waive
it in a discriminatory manner. |
• |
The
scope of the shareholder proposal; and |
• |
Evidence
of problematic issues at the company combined with, or exacerbated by, a
lack of board refreshment. |
|
B-178 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
reasonableness/scope of the request; and |
• |
The
company’s existing disclosure on its current CEO succession planning
process. |
• |
The
company has proxy access12, thereby allowing
shareholders to nominate directors to the company’s ballot; and
|
• |
The
company has adopted a majority vote standard, with a carve-out for
plurality voting in situations where there are more nominees than seats,
and a director resignation policy to address failed elections.
|
• |
Eliminate
directors’ and officers’ liability for monetary damages for violating the
duty of care; |
• |
Eliminate
directors’ and officers’ liability for monetary damages for violating the
duty of loyalty; |
• |
Expand
coverage beyond just legal expenses to liability for acts that are more
serious violations of fiduciary obligation than mere carelessness;
and |
• |
Expand
the scope of indemnification to provide for mandatory
indemnification of company officials in connection with acts that
previously the company was permitted to provide indemnification for, at
the discretion of the company’s board (i.e., “permissive indemnification”), but
that previously the company was not required to indemnify.
|
12 |
A proxy access right that
meets the recommended
guidelines. |
13 |
Indemnification: the condition of being
secured against loss or damage. |
|
B-179 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
If
the individual was found to have acted in good faith and in a manner that
the individual reasonably believed was in the best interests of the
company; and |
• |
If
only the individual’s legal expenses would be covered.
|
• |
The
company’s board committee structure, existing subject matter expertise,
and board nomination provisions relative to that of its
peers; |
• |
The
company’s existing board and management oversight mechanisms regarding the
issue for which board oversight is sought; |
• |
The
company’s disclosure and performance relating to the issue for which board
oversight is sought and any significant related controversies; and
|
• |
The
scope and structure of the proposal. |
• |
Existing
oversight mechanisms (including current committee structure) regarding the
issue for which board oversight is sought; |
• |
Level of
disclosure regarding the issue for which board oversight is sought;
|
• |
Company
performance related to the issue for which board oversight is sought;
|
• |
Board
committee structure compared to that of other companies in its industry
sector; and |
• |
The
scope and structure of the proposal. |
• |
The
scope and rationale of the proposal; |
• |
The
company’s current board leadership structure; |
• |
The
company’s governance structure and practices;
|
|
B-180 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Company
performance; and |
• |
Any
other relevant factors that may be applicable. |
• |
A
majority non-independent board and/or the presence of non-independent
directors on key board committees; |
• |
A
weak or poorly-defined lead independent director role that fails to serve
as an appropriate counterbalance to a combined CEO/chair role;
|
• |
The
presence of an executive or non-independent chair in addition to the CEO,
a recent recombination of the role of CEO and chair, and/or departure from
a structure with an independent chair; |
• |
Evidence
that the board has failed to oversee and address material risks facing the
company; |
• |
A
material governance failure, particularly if the board has failed to
adequately respond to shareholder concerns or if the board has materially
diminished shareholder rights; or |
• |
Evidence
that the board has failed to intervene when management’s interests are
contrary to shareholders’ interests. |
• |
Ownership threshold: maximum requirement
not more than three percent (3%) of the voting power;
|
• |
Ownership duration: maximum requirement
not longer than three (3) years of continuous ownership for each member of
the nominating group; |
• |
Aggregation:
minimal or no limits on the number of shareholders permitted to form a
nominating group; and |
• |
Cap: cap on nominees of generally
twenty-five percent (25%) of the board. |
|
B-181 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Established
a communication structure that goes beyond the exchange requirements to
facilitate the exchange of information between shareholders and members of
the board; |
• |
Effectively
disclosed information with respect to this structure to its shareholders;
|
• |
Company
has not ignored majority-supported shareholder proposals, or a majority
withhold vote on a director nominee; and |
• |
The
company has an independent chair or a lead director, according to ISS’ definition. This individual
must be made available for periodic consultation and direct communication
with major shareholders. |
2. |
Audit-Related |
• |
The
terms of the auditor agreement—the degree to which these agreements impact
shareholders’ rights; |
• |
The
motivation and rationale for establishing the agreements;
|
• |
The
quality of the company’s disclosure; and |
• |
The
company’s historical practices in the audit area.
|
• |
An
auditor has a financial interest in or association with the company, and
is therefore not independent; |
• |
There
is reason to believe that the independent auditor has rendered an opinion
that is neither accurate nor indicative of the company’s financial
position; |
• |
Poor
accounting practices are identified that rise to a serious level of
concern, such as fraud or misapplication of GAAP; or
|
• |
Fees
for non-audit services (“Other” fees) are excessive.
|
• |
Non-audit
(“other”) fees > audit fees + audit-related fees + tax
compliance/preparation fees |
|
B-182 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
tenure of the audit firm; |
• |
The
length of rotation specified in the proposal; |
• |
Any
significant audit-related issues at the company;
|
• |
The
number of Audit Committee meetings held each year;
|
• |
The
number of financial experts serving on the committee; and
|
• |
Whether
the company has a periodic renewal process where the auditor is evaluated
for both audit quality and competitive price. |
3. |
Shareholder Rights & Defenses
|
• |
Any
impediments to shareholders’ ability to amend the bylaws (i.e.
supermajority voting requirements); |
• |
The
company’s ownership structure and historical voting turnout;
|
• |
Whether
the board could amend bylaws adopted by shareholders; and
|
• |
Whether
shareholders would retain the ability to ratify any board-initiated
amendments. |
|
B-183 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
|
B-184 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company’s stated rationale for adopting such a provision;
|
• |
Disclosure
of past harm from duplicative shareholder lawsuits in more than one forum;
|
• |
The
breadth of application of the charter or bylaw provision, including the
types of lawsuits to which it would apply and the definition of key terms;
and |
• |
Governance
features such as shareholders’ ability to repeal the provision at a later
date (including the vote standard applied when shareholders attempt to
amend the charter or bylaws) and their ability to hold directors
accountable through annual director elections and a majority vote standard
in uncontested elections. |
|
B-185 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
ownership threshold (NOL protective amendments generally prohibit stock
ownership transfers that would result in a new 5-percent holder or
increase the stock ownership percentage of an existing 5-percent holder);
|
• |
The
value of the NOLs; |
• |
Shareholder
protection mechanisms (sunset provision or commitment to cause expiration
of the protective amendment upon exhaustion or expiration of the NOL);
|
• |
The
company’s existing governance structure including: board independence,
existing takeover defenses, track record of responsiveness to
shareholders, and any other problematic governance concerns; and
|
• |
Any
other factors that may be applicable. |
• |
Shareholders
have approved the adoption of the plan; or |
• |
The
board, in its exercise of its fiduciary responsibilities, determines that
it is in the best interest of shareholders under the circumstances to
adopt a pill without the delay in adoption that would result from seeking
stockholder approval (i.e., the “fiduciary out” provision). A poison pill
adopted under this fiduciary out will be put to a shareholder ratification
vote within 12 months of adoption or expire. If the pill is not approved
by a majority of the votes cast on this issue, the plan will immediately
terminate. |
• |
No
lower than a 20 percent trigger, flip-in or flip-over;
|
• |
A
term of no more than three years; |
• |
No
deadhand, slowhand, no-hand, or similar feature that limits the ability of
a future board to redeem the pill; and |
• |
Shareholder
redemption feature (qualifying offer clause); if the board refuses to
redeem the pill 90 days after a qualifying offer is announced, 10 percent
of the shares may call a special meeting or seek a written consent to vote
on rescinding the pill. |
|
B-186 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
ownership threshold to transfer (NOL pills generally have a trigger
slightly below 5 percent); |
• |
The
value of the NOLs; |
• |
Shareholder
protection mechanisms (sunset provision, or commitment to cause expiration
of the pill upon exhaustion or expiration of NOLs);
|
• |
The
company’s existing governance structure, including: board independence,
existing takeover defenses, track record of responsiveness to
shareholders, and any other problematic governance concerns; and
|
• |
Any
other factors that may be applicable. |
• |
The
scope and structure of the proposal; |
• |
The
company’s stated confidential voting policy (or other relevant policies)
and whether it ensures a “level playing field” by providing
shareholder proponents with equal access to vote information prior to the
annual meeting; |
• |
The
company’s vote standard for management and shareholder proposals and
whether it ensures consistency and fairness in the proxy voting
process and maintains the integrity of vote results;
|
• |
Whether
the company’s disclosure regarding its vote counting method and other
relevant voting policies with respect to management and shareholder
proposals are consistent and clear; |
• |
Any
recent controversies or concerns related to the company’s proxy voting
mechanics; |
• |
Any
unintended consequences resulting from implementation of the
proposal; and |
• |
Any
other factors that may be relevant. |
• |
The
presence of a shareholder proposal addressing the same issue on the same
ballot; |
• |
The
board’s rationale for seeking ratification; |
• |
Disclosure
of actions to be taken by the board should the ratification proposal fail;
|
• |
Disclosure
of shareholder engagement regarding the board’s ratification request;
|
|
B-187 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
level of impairment to shareholders’ rights caused by the existing
provision; |
• |
The
history of management and shareholder proposals on the provision at the
company’s past meetings; |
• |
Whether
the current provision was adopted in response to the shareholder proposal;
|
• |
The
company’s ownership structure; and |
• |
Previous
use of ratification proposals to exclude shareholder proposals.
|
• |
The
election of fewer than 50 percent of the directors to be elected is
contested in the election; |
• |
One
or more of the dissident’s candidates is elected;
|
• |
Shareholders
are not permitted to cumulate their votes for directors; and
|
• |
The
election occurred, and the expenses were incurred, after the adoption of
this bylaw. |
• |
Reasons
for reincorporation; |
• |
Comparison
of company’s governance practices and provisions prior to and following
the reincorporation; and |
• |
Comparison
of corporation laws of original state and destination state.
|
• |
Shareholders’
current right to act by written consent; |
• |
The
consent threshold; |
• |
The
inclusion of exclusionary or prohibitive language;
|
• |
Investor
ownership structure; and |
• |
Shareholder
support of, and management’s response to, previous shareholder proposals.
|
|
B-188 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
An
unfettered14 right for
shareholders to call special meetings at a 10 percent threshold;
|
• |
A
majority vote standard in uncontested director elections;
|
• |
No
non-shareholder-approved pill; and |
• |
An
annually elected board. |
• |
Shareholders’
current right to call special meetings; |
• |
Minimum
ownership threshold necessary to call special meetings (10 percent
preferred); |
• |
The
inclusion of exclusionary or prohibitive language;
|
• |
Investor
ownership structure; and |
• |
Shareholder
support of, and management’s response to, previous shareholder proposals.
|
• |
Ownership
structure; |
• |
Quorum
requirements; and |
• |
Vote
requirements. |
14 |
“Unfettered” means no
restrictions on agenda items, no restrictions on the number of
shareholders who can group together to reach the 10 percent threshold, and
only reasonable limits on when a meeting can be called: no greater than 30
days after the last annual meeting and no greater than 90 prior to the
next annual meeting. |
|
B-189 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Scope
and rationale of the proposal; and |
• |
Concerns
identified with the company’s prior meeting practices.
|
4. |
Capital/Restructuring
|
• |
If
share usage (outstanding plus reserved) is less than 50% of the current
authorized shares, vote for an increase of up to 50% of current
authorized share; |
• |
If
share usage is 50% to 100% of the current authorized, vote for an increase
of up to 100% of current authorized
shares; |
• |
If
share usage is greater than current authorized shares, vote for an
increase of up to the current share usage; or |
• |
In
the case of a stock split, the allowable increase is calculated (per
above) based on the post-split adjusted authorization.
|
• |
The
proposal seeks to increase the number of authorized shares of the class of
common stock that has superior voting rights to other share classes;
|
• |
On
the same ballot is a proposal for a reverse split for which support is
warranted despite the fact that it would result in an excessive increase
in the share authorization; |
• |
The
company has a non-shareholder approved poison pill (including an NOL
pill); or |
• |
The
company has previous sizeable placements (within the past 3 years) of
stock with insiders at prices substantially below market value, or with
problematic voting rights, without shareholder approval.
|
• |
In,
or subsequent to, the company’s most recent 10-K filing, the company
discloses that there is substantial doubt about its ability to continue as
a going concern; |
• |
The
company states that there is a risk of imminent bankruptcy or imminent
liquidation if shareholders do not approve the increase in authorized
capital; or |
15 |
Virtual-only shareholder
meeting” refers to a meeting of shareholders that is held exclusively
using technology without a corresponding in-person
meeting. |
|
B-190 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
A
government body has in the past year required the company to increase its
capital ratios. |
• |
twice
the amount needed to support the transactions on the ballot, and
|
• |
the
allowable increase as calculated for general issuances above.
|
• |
The
company discloses a compelling rationale for the dual-class capital
structure, such as: |
• |
The
company’s auditor has concluded that there is substantial doubt about the
company’s ability to continue as a going concern; or
|
• |
The
new class of shares will be transitory; |
• |
The
new class is intended for financing purposes with minimal or no dilution
to current shareholders in both the short term and long term; and
|
• |
The
new class is not designed to preserve or increase the voting power of an
insider or significant shareholder. |
• |
The
size of the company; |
• |
The
shareholder base; and |
• |
The
liquidity of the stock. |
• |
If
share usage (outstanding plus reserved) is less than 50% of the current
authorized shares, vote for an increase of up to 50% of current
authorized shares; |
• |
If
share usage is 50% to 100% of the current authorized, vote for an increase
of up to 100% of current authorized
shares; |
• |
If
share usage is greater than current authorized shares, vote for an
increase of up to the current share usage.
|
|
B-191 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
In
the case of a stock split, the allowable increase is calculated (per
above) based on the post-split adjusted authorization;
or |
• |
If
no preferred shares are currently issued and outstanding, vote against the
request, unless the company discloses a specific use for the shares.
|
• |
If
the shares requested are blank check preferred shares that can be used for
antitakeover purposes;16
|
• |
The
company seeks to increase a class of non-convertible preferred shares
entitled to more than one vote per share on matters that do not solely
affect the rights of preferred stockholders “supervoting shares”);
|
• |
The
company seeks to increase a class of convertible preferred shares entitled
to a number of votes greater than the number of common shares into which
they are convertible (“supervoting shares”) on matters that do not solely
affect the rights of preferred stockholders; |
• |
The
stated intent of the increase in the general authorization is to allow the
company to increase an existing designated class of supervoting preferred
shares; |
• |
On
the same ballot is a proposal for a reverse split for which support is
warranted despite the fact that it would result in an excessive increase
in the share authorization; |
• |
The
company has a non-shareholder approved poison pill (including an NOL
pill); and |
• |
The
company has previous sizeable placements (within the past 3 years) of
stock with insiders at prices substantially below market value, or with
problematic voting rights, without shareholder approval.
|
• |
In,
or subsequent to, the company’s most recent 10-K filing, the company
discloses that there is substantial doubt about its ability to continue as
a going concern; |
• |
The
company states that there is a risk of imminent bankruptcy or imminent
liquidation if shareholders do not approve the increase in authorized
capital; or |
• |
A
government body has in the past year required the company to increase its
capital ratios. |
• |
twice
the amount needed to support the transactions on the ballot, and
|
• |
the
allowable increase as calculated for general issuances
above. |
16 |
To be acceptable, appropriate
disclosure would be needed that the shares are “declawed”: i.e.,
representation by the board that it will not, without prior stockholder
approval, issue or use the preferred stock for any defensive or
anti-takeover purpose or for the purpose of implementing any stockholder
rights plan. |
|
B-192 |
|
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|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
More
simplified capital structure; |
• |
Enhanced
liquidity; |
• |
Fairness
of conversion terms; |
• |
Impact
on voting power and dividends; |
• |
Reasons
for the reclassification; |
• |
Conflicts
of interest; and |
• |
Other
alternatives considered. |
• |
The
number of authorized shares will be proportionately reduced; or
|
• |
The
effective increase in authorized shares is equal to or less than the
allowable increase calculated in accordance with ISS’ Common Stock Authorization
policy. |
• |
Stock
exchange notification to the company of a potential delisting;
|
• |
Disclosure
of substantial doubt about the company’s ability to continue as a going
concern without additional financing; |
• |
The
company’s rationale; or |
• |
Other
factors as applicable. |
• |
Greenmail;
|
• |
The
use of buybacks to inappropriately manipulate incentive compensation
metrics; |
• |
Threats
to the company’s long-term viability; or
|
|
B-193 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Other
company-specific factors as warranted. |
• |
Adverse
governance changes; |
• |
Excessive
increases in authorized capital stock; |
• |
Unfair
method of distribution; |
• |
Diminution
of voting rights; |
• |
Adverse
conversion features; |
• |
Negative
impact on stock option plans; and |
• |
Alternatives
such as spin-off. |
• |
Purchase
price; |
• |
Fairness
opinion; |
• |
Financial
and strategic benefits; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest; |
• |
Other
alternatives for the business; and |
• |
Non-completion
risk. |
|
B-194 |
|
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|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Impact
on the balance sheet/working capital; |
• |
Potential
elimination of diseconomies; |
• |
Anticipated
financial and operating benefits; |
• |
Anticipated
use of funds; |
• |
Value
received for the asset; |
• |
Fairness
opinion; |
• |
How
the deal was negotiated; and |
• |
Conflicts
of interest. |
• |
Dilution
to existing shareholders’ positions; |
• |
Terms
of the offer - discount/premium in purchase price to investor, including
any fairness opinion; termination penalties; exit strategy;
|
• |
Financial
issues - company’s financial situation; degree of need for capital; use of
proceeds; effect of the financing on the company’s cost of capital;
|
• |
Management’s
efforts to pursue other alternatives; |
• |
Control
issues - change in management; change in control, guaranteed board and
committee seats; standstill provisions; voting agreements; veto power over
certain corporate actions; and |
• |
Conflict
of interest - arm’s length transaction, managerial incentives.
|
|
B-195 |
|
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|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
reasons for the change; |
• |
Any
financial or tax benefits; |
• |
Regulatory
benefits; |
• |
Increases
in capital structure; and |
• |
Changes
to the articles of incorporation or bylaws of the company.
|
• |
Increases
in common or preferred stock in excess of the allowable maximum (see
discussion under “Capital”); or |
• |
Adverse
changes in shareholder rights. |
• |
Offer
price/premium; |
• |
Fairness
opinion; |
• |
How
the deal was negotiated; |
• |
Conflicts
of interest; |
• |
Other
alternatives/offers considered; and |
• |
Non-completion
risk. |
• |
Whether
the company has attained benefits from being publicly-traded (examination
of trading volume, liquidity, and market research of the stock);
and |
• |
Balanced
interests of continuing vs. cashed-out shareholders, taking into account
the following: |
• |
Are
all shareholders able to participate in the transaction?
|
• |
Will
there be a liquid market for remaining shareholders following the
transaction? |
• |
Does
the company have strong corporate governance? |
• |
Will
insiders reap the gains of control following the proposed transaction?
and |
• |
Does
the state of incorporation have laws requiring continued reporting that
may benefit shareholders? |
• |
Percentage
of assets/business contributed; |
• |
Percentage
ownership; |
• |
Financial
and strategic benefits; |
• |
Governance
structure; |
• |
Conflicts
of interest; |
• |
Other
alternatives; and |
|
B-196 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Non-completion
risk. |
• |
Management’s
efforts to pursue other alternatives; |
• |
Appraisal
value of assets; and |
• |
The
compensation plan for executives managing the liquidation.
|
• |
Valuation - Is the value to be received
by the target shareholders (or paid by the acquirer) reasonable? While the
fairness opinion may provide an initial starting point for assessing
valuation reasonableness, emphasis is placed on the offer premium, market
reaction, and strategic rationale. |
• |
Market reaction - How has the market
responded to the proposed deal? A negative market reaction should cause
closer scrutiny of a deal. |
• |
Strategic rationale - Does the deal make
sense strategically? From where is the value derived? Cost and revenue
synergies should not be overly aggressive or optimistic, but reasonably
achievable. Management should also have a favorable track record of
successful integration of historical acquisitions.
|
• |
Negotiations and process - Were the
terms of the transaction negotiated at arm’s-length? Was the process fair
and equitable? A fair process helps to ensure the best price for
shareholders. Significant negotiation “wins” can also signify the deal
makers’ competency. The comprehensiveness of the sales process (e.g., full
auction, partial auction, no auction) can also affect shareholder value.
|
• |
Conflicts of interest - Are insiders
benefiting from the transaction disproportionately and inappropriately as
compared to non-insider shareholders? As the result of potential
conflicts, the directors and officers of the company may be more likely to
vote to approve a merger than if they did not hold these interests.
Consider whether these interests may have influenced these directors and
officers to support or recommend the merger. The CIC figure presented in
the “ISS Transaction Summary” section of this report is an aggregate
figure that can in certain cases be a misleading indicator of the true
value transfer from shareholders to insiders. Where such figure appears to
be excessive, analyze the underlying assumptions to determine whether a
potential conflict exists. |
• |
Governance - Will the combined company
have a better or worse governance profile than the current governance
profiles of the respective parties to the transaction? If the governance
profile is to change for the worse, the burden is on the company to prove
that other issues (such as valuation) outweigh any deterioration in
governance. |
• |
Dilution
to existing shareholders’ position: The amount and timing of shareholder
ownership dilution should be weighed against the needs and proposed
shareholder benefits of the capital infusion. Although newly issued common
stock, absent preemptive rights, is typically dilutive to existing
shareholders, share price appreciation is often the necessary event to
trigger the exercise of “out of the money” warrants and convertible debt.
In these instances from a value standpoint, the negative impact of
dilution is mitigated by the increase in the company’s stock price that
must occur to trigger the dilutive event.
|
|
B-197 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Terms
of the offer (discount/premium in purchase price to investor, including
any fairness opinion, conversion features, termination penalties, exit
strategy): |
• |
The
terms of the offer should be weighed against the alternatives of the
company and in light of company’s financial condition. Ideally, the
conversion price for convertible debt and the exercise price for warrants
should be at a premium to the then prevailing stock price at the time of
private placement. |
• |
When
evaluating the magnitude of a private placement discount or premium,
consider factors that influence the discount or premium, such as,
liquidity, due diligence costs, control and monitoring costs, capital
scarcity, information asymmetry, and anticipation of future performance.
|
• |
Financial
issues: |
• |
The
company’s financial condition; |
• |
Degree
of need for capital; |
• |
Use
of proceeds; |
• |
Effect
of the financing on the company’s cost of capital;
|
• |
Current
and proposed cash burn rate; and |
• |
Going
concern viability and the state of the capital and credit markets.
|
• |
Management’s
efforts to pursue alternatives and whether the company engaged in a
process to evaluate alternatives: A fair, unconstrained process helps to
ensure the best price for shareholders. Financing alternatives can include
joint ventures, partnership, merger, or sale of part or all of the
company. |
• |
Control
issues: |
• |
Change
in management; |
• |
Change
in control; |
• |
Guaranteed
board and committee seats; |
• |
Standstill
provisions; |
• |
Voting
agreements; |
• |
Veto
power over certain corporate actions; and |
• |
Minority
versus majority ownership and corresponding minority discount or majority
control premium. |
• |
Conflicts
of interest: |
• |
Conflicts
of interest should be viewed from the perspective of the company and the
investor; and |
• |
Were
the terms of the transaction negotiated at arm’s length? Are managerial
incentives aligned with shareholder interests? |
• |
Market
reaction: |
• |
The
market’s response to the proposed deal. A negative market reaction is a
cause for concern. Market reaction may be addressed by analyzing the
one-day impact on the unaffected stock price. |
• |
Estimated
value and financial prospects of the reorganized company;
|
• |
Percentage
ownership of current shareholders in the reorganized company;
|
|
B-198 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Whether
shareholders are adequately represented in the reorganization process
(particularly through the existence of an Official Equity Committee);
|
• |
The
cause(s) of the bankruptcy filing, and the extent to which the plan of
reorganization addresses the cause(s); |
• |
Existence
of a superior alternative to the plan of reorganization; and
|
• |
Governance
of the reorganized company. |
• |
Valuation - Is the value being paid by
the SPAC reasonable? SPACs generally lack an independent fairness opinion
and the financials on the target may be limited. Compare the conversion
price with the intrinsic value of the target company provided in the
fairness opinion. Also, evaluate the proportionate value of the combined
entity attributable to the SPAC IPO shareholders versus the pre-merger
value of SPAC. Additionally, a private company discount may
be applied to the target if it is a private entity.
|
• |
Market reaction - How has the market
responded to the proposed deal? A negative market reaction may be a
cause for concern. Market reaction may be addressed by analyzing the
one-day impact on the unaffected stock price. |
• |
Deal timing - A main driver for most
transactions is that the SPAC charter typically requires the deal to
be complete within 18 to 24 months, or the SPAC is to be liquidated.
Evaluate the valuation, market reaction, and potential conflicts of
interest for deals that are announced close to the liquidation date.
|
• |
Negotiations and process - What was the
process undertaken to identify potential target companies within specified
industry or location specified in charter? Consider the background of the
sponsors. |
• |
Conflicts of interest - How are sponsors
benefiting from the transaction compared to IPO shareholders? Potential
conflicts could arise if a fairness opinion is issued by the insiders to
qualify the deal rather than a third party or if management is encouraged
to pay a higher price for the target because of an 80 percent rule (the
charter requires that the fair market value of the target is at least
equal to 80 percent of net assets of the SPAC). Also, there may be sense
of urgency by the management team of the SPAC to close the deal since its
charter typically requires a transaction to be completed within the
18-24-month timeframe. |
• |
Voting agreements - Are the sponsors
entering into enter into any voting agreements/tender offers with
shareholders who are likely to vote against the proposed merger or
exercise conversion rights? |
• |
Governance - What is the impact of
having the SPAC CEO or founder on key committees following the proposed
merger? |
• |
Length of request: Typically, extension
requests range from two to six months, depending on the progression of the
SPAC’s acquistion process. |
• |
Pending transaction(s) or progression of the acquisition process:
Sometimes an intial business combination was already put to a shareholder
vote, but, for varying reasons, the transaction could not be consummated
by the termination date and the SPAC is requesting an extension. Other
times, the SPAC has entered into a definitive transaction agreement, but
needs additional time to consummate or hold the shareholder meeting.
|
• |
Added incentive for non-redeeming
shareholders: Sometimes the SPAC sponsor (or other insiders) will
contribute, typically as a loan to the company, additional funds that will
be added to the redemption value of |
|
B-199 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Prior extension requests: Some SPACs
request additional time beyond the extension period sought in prior
extension requests. |
• |
Tax
and regulatory advantages; |
• |
Planned
use of the sale proceeds; |
• |
Valuation
of spinoff; |
• |
Fairness
opinion; |
• |
Benefits
to the parent company; |
• |
Conflicts
of interest; |
• |
Managerial
incentives; |
• |
Corporate
governance changes; and |
• |
Changes
in the capital structure. |
• |
Hiring
a financial advisor to explore strategic alternatives;
|
• |
Selling
the company; or |
• |
Liquidating
the company and distributing the proceeds to shareholders.
|
• |
Prolonged
poor performance with no turnaround in sight; |
• |
Signs
of entrenched board and management (such as the adoption of takeover
defenses); |
• |
Strategic
plan in place for improving value; |
• |
Likelihood
of receiving reasonable value in a sale or dissolution; and
|
• |
The
company actively exploring its strategic options, including retaining a
financial advisor. |
5. |
Compensation |
1. |
Maintain
appropriate pay-for-performance alignment, with emphasis on long-term
shareholder value: This principle encompasses overall executive pay
practices, which must be designed to attract, retain, and appropriately
motivate the key employees who drive shareholder value creation over the
long term. It will take into consideration, among other factors, the link
between pay and performance; the mix between fixed and variable pay;
performance goals; and equity-based plan costs; |
2. |
Avoid
arrangements that risk “pay for failure”: This principle addresses the
appropriateness of long or indefinite contracts, excessive severance
packages, and guaranteed compensation;
|
|
B-200 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
3. |
Maintain
an independent and effective compensation committee: This principle
promotes oversight of executive pay programs by directors with appropriate
skills, knowledge, experience, and a sound process for compensation
decision-making (e.g., including
access to independent expertise and advice when needed);
|
4. |
Provide
shareholders with clear, comprehensive compensation disclosures: This
principle underscores the importance of informative and timely disclosures
that enable shareholders to evaluate executive pay practices fully and
fairly; and |
5. |
Avoid
inappropriate pay to non-executive directors: This principle recognizes
the interests of shareholders in ensuring that compensation to outside
directors is reasonable and does not compromise their independence and
ability to make appropriate judgments in overseeing managers’ pay and
performance. At the market level, it may incorporate a variety of
generally accepted best practices. |
• |
There
is an unmitigated misalignment between CEO pay and company performance
(pay for performance);
|
• |
The
company maintains significant problematic pay practices;
or |
• |
The
board exhibits a significant level of poor communication and
responsiveness to shareholders. |
• |
There
is no SOP on the ballot, and an against vote on an SOP would otherwise be
warranted due to pay-for-performance misalignment, problematic pay
practices, or the lack of adequate responsiveness on compensation issues
raised previously, or a combination thereof; |
• |
The
board fails to respond adequately to a previous SOP proposal that received
less than 70 percent support of votes cast; |
• |
The
company has recently practiced or approved problematic pay practices, such
as option repricing or option backdating; or |
• |
The
situation is egregious. |
1. |
Peer
Group18 Alignment:
|
• |
The
degree of alignment between the company’s annualized TSR rank and the
CEO’s annualized total pay rank within a peer group, each measured over a
three-year period. |
• |
The
rankings of CEO total pay and company financial performance within a peer
group, each measured over a three-year period.
|
17 |
The Russell 3000E Index includes
approximately 4,000 of the largest U.S. equity
securities. |
18 |
The revised peer group is
generally comprised of 14-24 companies that are selected using market cap,
revenue (or assets for certain financial firms), GICS industry group, and
company’s selected peers’ GICS industry group, with size constraints, via
a process designed to select peers that are comparable to the subject
company in terms of revenue/assets and industry, and also within a
market-cap bucket that is reflective of the company’s market cap. For Oil,
Gas & Consumable Fuels companies, market cap is the only size
determinant. |
|
B-201 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
multiple of the CEO’s total pay relative to the peer group median in the
most recent fiscal year. |
2. |
Absolute
Alignment19 – the
absolute alignment between the trend in CEO pay and company TSR over the
prior five fiscal years – i.e., the difference between the trend in annual
pay changes and the trend in annualized TSR during the period.
|
• |
The
ratio of performance- to time-based incentive awards;
|
• |
The
overall ratio of performance-based compensation to fixed or discretionary
pay; |
• |
The
rigor of performance goals; |
• |
The
complexity and risks around pay program design; |
• |
The
transparency and clarity of disclosure; |
• |
The
company’s peer group benchmarking practices; |
• |
Financial/operational
results, both absolute and relative to peers; |
• |
Special
circumstances related to, for example, a new CEO in the prior FY or
anomalous equity grant practices (e.g., bi-annual awards);
|
• |
Realizable
pay20 compared to grant
pay; and |
• |
Any
other factors deemed relevant. |
• |
Problematic
practices related to non-performance-based compensation elements;
|
• |
Incentives
that may motivate excessive risk-taking or present a windfall risk; and
|
• |
Pay
decisions that circumvent pay-for-performance, such as options backdating
or waiving performance requirements. |
• |
Repricing
or replacing of underwater stock options/SARs without prior shareholder
approval (including cash buyouts and voluntary surrender of underwater
options); |
• |
Extraordinary
perquisites or tax gross-ups; |
• |
New
or materially amended agreements that provide for:
|
• |
Excessive
termination or CIC severance payments (generally exceeding 3 times base
salary and average/target/most recent bonus); |
• |
CIC
severance payments without involuntary job loss or substantial diminution
of duties (“single” or “modified single” triggers) or in connection with a
problematic Good Reason definition; |
• |
CIC
excise tax gross-up entitlements (including “modified” gross-ups);
and/or |
• |
Multi-year
guaranteed awards that are not at risk due to rigorous performance
conditions; |
19 |
Only Russell 3000 Index
companies are subject to the Absolute Alignment
analysis. |
20 |
ISS research reports include
realizable pay for S&P1500
companies. |
|
B-202 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Liberal
CIC definition combined with any single-trigger CIC benefits;
|
• |
Insufficient
executive compensation disclosure by externally-managed issuers (EMIs)
such that a reasonable assessment of pay programs and practices applicable
to the EMI’s executives is not possible; |
• |
Severance
payments made when the termination is not clearly disclosed as involuntary
(for example, a termination without cause or resignation for good reason);
and/or |
• |
Any
other provision or practice deemed to be egregious and present a
significant risk to investors. |
• |
Reason
and motive for the options backdating issue, such as inadvertent vs.
deliberate grant date changes; |
• |
Duration
of options backdating; |
• |
Size
of restatement due to options backdating; |
• |
Corrective
actions taken by the board or compensation committee, such as canceling or
re-pricing backdated options, the recouping of option gains on backdated
grants; and |
• |
Adoption
of a grant policy that prohibits backdating and creates a fixed grant
schedule or window period for equity grants in the future.
|
• |
Failure
to respond to majority-supported shareholder proposals on executive pay
topics; or |
• |
Failure
to adequately respond to the company’s previous say-on-pay proposal that
received the support of less than 70 percent of votes cast, taking into
account: |
• |
Disclosure
of engagement efforts with major institutional investors, including the
frequency and timing of engagements and the company participants
(including whether independent directors participated);
|
• |
Disclosure
of the specific concerns voiced by dissenting shareholders that led to the
say-on-pay opposition; |
• |
Disclosure
of specific and meaningful actions taken to address shareholders’
concerns; |
• |
Other
recent compensation actions taken by the company;
|
• |
Whether
the issues raised are recurring or isolated; |
• |
The
company’s ownership structure; and |
• |
Whether
the support level was less than 50 percent, which would warrant the
highest degree of responsiveness. |
|
B-203 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Single-
or modified-single-trigger cash severance; |
• |
Single-trigger
acceleration of unvested equity awards; |
• |
Full
acceleration of equity awards granted shortly before the change in
control; |
• |
Acceleration
of performance awards above the target level of performance without
compelling rationale; |
• |
Excessive
cash severance (generally >3x base salary and bonus);
|
• |
Excise
tax gross-ups triggered and payable; |
• |
Excessive
golden parachute payments (on an absolute basis or as a percentage of
transaction equity value); or |
• |
Recent
amendments that incorporate any problematic features (such as those above)
or recent actions (such as extraordinary equity grants) that may make
packages so attractive as to influence merger agreements that may not be
in the best interests of shareholders; or |
• |
The
company’s assertion that a proposed transaction is conditioned on
shareholder approval of the golden parachute advisory vote.
|
• |
Plan Cost: The total estimated cost of
the company’s equity plans relative to industry/market cap peers, measured
by the company’s estimated Shareholder Value Transfer (SVT) in relation to
peers and considering both: |
• |
SVT
based on new shares requested plus shares remaining for future grants,
plus outstanding unvested/unexercised grants; and
|
• |
SVT
based only on new shares requested plus shares remaining for future
grants. |
• |
Plan Features: |
• |
Quality
of disclosure around vesting upon a change in control (CIC);
|
• |
Discretionary
vesting authority; |
21 |
Proposals evaluated under the
EPSC policy generally include those to approve or amend (1) stock option
plans for employees and/or employees and directors, (2) restricted stock
plans for employees and/or employees and directors, and (3) omnibus stock
incentive plans for employees and/or employees and directors; amended
plans will be further evaluated
case-by-case. |
|
B-204 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Liberal
share recycling on various award types; |
• |
Lack
of minimum vesting period for grants made under the plan;
and |
• |
Dividends
payable prior to award vesting. |
• |
Grant Practices:
|
• |
The
company’s three-year burn rate relative to its industry/market cap peers;
|
• |
Vesting
requirements in CEO’s recent equity grants (3-year look-back);
|
• |
The
estimated duration of the plan (based on the sum of shares remaining
available and the new shares requested, divided by the average annual
shares granted in the prior three years); |
• |
The
proportion of the CEO’s most recent equity grants/awards subject to
performance conditions; |
• |
Whether
the company maintains a sufficient claw-back policy;
and |
• |
Whether
the company maintains sufficient post-exercise/vesting share-holding
requirements. |
• |
Awards
may vest in connection with a liberal change-of-control definition;
|
• |
The
plan would permit repricing or cash buyout of underwater options without
shareholder approval (either by expressly permitting it – for NYSE and
Nasdaq listed companies – or by not prohibiting it when the company has a
history of repricing – for non-listed companies);
|
• |
The
plan is a vehicle for problematic pay practices or a significant
pay-for-performance disconnect under certain circumstances;
|
• |
The
plan is excessively dilutive to shareholders’ holdings;
|
• |
The
plan contains an evergreen (automatic share replenishment) feature; or
|
• |
Any
other plan features are determined to have a significant negative impact
on shareholder interests. |
22 |
For plans evaluated under the
Equity Plan Scorecard policy, the company’s SVT benchmark is considered
along with other factors. |
|
B-205 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Amend
the terms of outstanding options or SARs to reduce the exercise price of
such outstanding options or SARs; |
• |
Cancel
outstanding options or SARs in exchange for options or SARs with an
exercise price that is less than the exercise price of the original
options or SARs; |
• |
Cancel
underwater options in exchange for stock awards; or
|
• |
Provide
cash buyouts of underwater options. |
• |
Severity
of the pay-for-performance misalignment; |
• |
Whether
problematic equity grant practices are driving the misalignment; and/or
|
• |
Whether
equity plan awards have been heavily concentrated to the CEO and/or the
other NEOs. |
|
B-206 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Addresses
administrative features only; or |
• |
Seeks
approval for Section 162(m) purposes only, and the plan administering
committee consists entirely of independent directors, per ISS’
Classification of Directors. Note that if the company is presenting
the plan to shareholders for the first time for any reason (including
after the company’s initial public offering), or if the proposal is
bundled with other material plan amendments, then the recommendation will
be case-by-case (see below). |
• |
Seeks
approval for Section 162(m) purposes only, and the plan administering
committee does not consist entirely of independent directors, per ISS’ Classification of
Directors. |
• |
If
the proposal requests additional shares and/or the amendments include a
term extension or addition of full value awards as an award type, the
recommendation will be based on the Equity Plan Scorecard evaluation as
well as an analysis of the overall impact of the
amendments; |
• |
If
the plan is being presented to shareholders for the first time (including
after the company’s IPO), whether or not additional shares are being
requested, the recommendation will be based on the Equity Plan Scorecard
evaluation as well as an analysis of the overall impact of any amendments;
and |
• |
If
there is no request for additional shares and the amendments do not
include a term extension or addition of full value awards as an award
type, then the recommendation will be based entirely on an analysis of the
overall impact of the amendments, and the EPSC evaluation will be shown
only for informational purposes. |
|
B-207 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Purchase
price is at least 85 percent of fair market value;
|
• |
Offering
period is 27 months or less; and |
• |
The
number of shares allocated to the plan is 10 percent or less of the
outstanding shares. |
• |
Broad-based
participation; |
• |
Limits
on employee contribution, which may be a fixed dollar amount or expressed
as a percent of base salary; |
• |
Company
matching contribution up to 25 percent of employee’s contribution, which
is effectively a discount of 20 percent from market value; and
|
• |
No
discount on the stock price on the date of purchase when there is a
company matching contribution. |
• |
Historic
trading patterns--the stock price should not be so volatile that the
options are likely to be back “in-the-money” over the near term;
|
• |
Rationale
for the re-pricing--was the stock price decline beyond management’s
control?; |
• |
Is
this a value-for-value exchange?; |
• |
Are
surrendered stock options added back to the plan reserve?;
|
• |
Timing--repricing
should occur at least one year out from any precipitous drop in company’s
stock price; |
• |
Option
vesting--does the new option vest immediately or is there a black-out
period?; |
• |
Term
of the option--the term should remain the same as that of the replaced
option; |
• |
Exercise
price--should be set at fair market or a premium to market;
and |
• |
Participants--executive
officers and directors must be excluded. |
|
B-208 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Executive
officers and non-employee directors are excluded from participating;
|
• |
Stock
options are purchased by third-party financial institutions at a discount
to their fair value using option pricing models such as Black-Scholes or a
Binomial Option Valuation or other appropriate financial models; and
|
• |
There
is a two-year minimum holding period for sale proceeds (cash or stock) for
all participants. |
• |
Eligibility;
|
• |
Vesting;
|
• |
Bid-price;
|
• |
Term
of options; |
• |
Cost
of the program and impact of the TSOs on company’s total option expense;
and |
• |
Option
repricing policy. |
|
B-209 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
If
the equity plan under which non-employee director grants are made is on
the ballot, whether or not it warrants support; and
|
• |
An
assessment of the following qualitative factors:
|
• |
The
relative magnitude of director compensation as compared to companies of a
similar profile; |
• |
The
presence of problematic pay practices relating to director compensation;
|
• |
Director
stock ownership guidelines and holding requirements;
|
• |
Equity
award vesting schedules; |
• |
The
mix of cash and equity-based compensation; |
• |
Meaningful
limits on director compensation; |
• |
The
availability of retirement benefits or perquisites; and
|
• |
The
quality of disclosure surrounding director compensation.
|
• |
The
total estimated cost of the company’s equity plans relative to
industry/market cap peers, measured by the company’s estimated Shareholder
Value Transfer (SVT) based on new shares requested plus shares remaining
for future grants, plus outstanding unvested/unexercised grants;
|
• |
The
company’s three-year burn rate relative to its industry/market cap peers
(in certain circumstances); and |
• |
The
presence of any egregious plan features (such as an option repricing
provision or liberal CIC vesting risk). |
• |
The
relative magnitude of director compensation as compared to companies of a
similar profile; |
• |
The
presence of problematic pay practices relating to director compensation;
|
• |
Director
stock ownership guidelines and holding requirements;
|
• |
Equity
award vesting schedules; |
• |
The
mix of cash and equity-based compensation; |
• |
Meaningful
limits on director compensation; |
• |
The
availability of retirement benefits or perquisites; and
|
• |
The
quality of disclosure surrounding director compensation.
|
|
B-210 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company’s past practices regarding equity and cash compensation;
|
• |
Whether
the company has a holding period or stock ownership requirements in place,
such as a meaningful retention ratio (at least 50 percent for full
tenure); and |
• |
Whether
the company has a rigorous claw-back policy in place.
|
• |
The
percentage/ratio of net shares required to be retained;
|
• |
The
time period required to retain the shares; |
• |
Whether
the company has equity retention, holding period, and/or stock ownership
requirements in place and the robustness of such requirements;
|
|
B-211 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Whether
the company has any other policies aimed at mitigating risk taking by
executives; |
• |
Executives’
actual stock ownership and the degree to which it meets or exceeds the
proponent’s suggested holding period/retention ratio or the company’s
existing requirements; and |
• |
Problematic
pay practices, current and past, which may demonstrate a short-term versus
long-term focus. |
• |
The
company’s current level of disclosure of its executive compensation
setting process, including how the company considers pay disparity;
|
• |
If
any problematic pay practices or pay-for-performance concerns have been
identified at the company; and |
• |
The
level of shareholder support for the company’s pay programs.
|
• |
First,
vote for shareholder proposals advocating the use of performance-based
equity awards, such as performance contingent options or restricted stock,
indexed options, or premium-priced options, unless the proposal is overly
restrictive or if the company has demonstrated that it is using a
“substantial” portion of performance-based awards for its top executives.
Standard stock options and performance-accelerated awards do not meet the
criteria to be considered as performance-based awards. Further,
premium-priced options should have a meaningful premium to be considered
performance-based awards; and |
• |
Second,
assess the rigor of the company’s performance-based equity program. If the
bar set for the performance-based program is too low based on the
company’s historical or peer group comparison, generally vote for the
proposal. Furthermore, if target performance results in an above target
payout, vote for the shareholder proposal due to program’s poor design. If
the company does not disclose the performance metric of the
performance-based equity program, vote for the shareholder proposal
regardless of the outcome of the first step to the test.
|
• |
Set
compensation targets for the plan’s annual and long-term incentive pay
components at or below the peer group median; |
• |
Deliver
a majority of the plan’s target long-term compensation through
performance-vested, not simply time-vested, equity awards;
|
• |
Provide
the strategic rationale and relative weightings of the financial and
non-financial performance metrics or criteria used in the annual and
performance-vested long-term incentive components of the plan;
|
• |
Establish
performance targets for each plan financial metric relative to the
performance of the company’s peer companies;
and |
|
B-212 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Limit
payment under the annual and performance-vested long-term incentive
components of the plan to when the company’s performance on its selected
financial performance metrics exceeds peer group median performance.
|
• |
What
aspects of the company’s annual and long-term equity incentive programs
are performance driven? |
• |
If
the annual and long-term equity incentive programs are performance driven,
are the performance criteria and hurdle rates disclosed to shareholders or
are they benchmarked against a disclosed peer group?
|
• |
Can
shareholders assess the correlation between pay and performance based on
the current disclosure? and |
• |
What
type of industry and stage of business cycle does the company belong to?
|
• |
Adoption,
amendment, or termination of a 10b5-1 Plan must be disclosed in a
Form 8-K; |
• |
Amendment
or early termination of a 10b5-1 Plan allowed only under extraordinary
circumstances, as determined by the board; |
• |
Request
that a certain number of days that must elapse between adoption or
amendment of a 10b5-1 Plan and initial trading under the plan;
|
• |
Reports
on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;
|
• |
An
executive may not trade in company stock outside the 10b5-1 Plan;
and |
• |
Trades
under a 10b5-1 Plan must be handled by a broker who does not handle other
securities transactions for the executive. |
• |
If
the company has adopted a formal recoupment policy;
|
• |
The
rigor of the recoupment policy focusing on how and under what
circumstances the company may recoup incentive or stock compensation;
|
• |
Whether
the company has chronic restatement history or material financial
problems; |
|
B-213 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Whether
the company’s policy substantially addresses the concerns raised by the
proponent; |
• |
Disclosure
of recoupment of incentive or stock compensation from senior executives or
lack thereof; and |
• |
Any
other relevant factors. |
• |
The
company’s severance or change-in-control agreements in place, and the
presence of problematic features (such as excessive severance
entitlements, single triggers, excise tax gross-ups,
etc.); |
• |
Any
existing limits on cash severance payouts or policies which require
shareholder ratification of severance payments exceeding a certain
level; |
• |
Any
recent severance-related controversies; and |
• |
Whether
the proposal is overly prescriptive, such as requiring shareholder
approval of severance that does not exceed market
norms. |
• |
The
frequency and timing of the company’s share buybacks;
|
• |
The
use of per-share metrics in incentive plans; |
• |
The
effect of recent buybacks on incentive metric results and payouts; and
|
• |
Whether
there is any indication of metric result manipulation.
|
|
B-214 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company’s current treatment of equity upon employment termination and/or
in change-in-control situations (i.e., vesting is double triggered and/or
pro rata, does it allow for the assumption of equity by acquiring company,
the treatment of performance shares, etc.); and |
• |
Current
employment agreements, including potential poor pay practices such as
gross-ups embedded in those agreements. |
6. |
Routine/Miscellaneous
|
• |
The
new quorum threshold requested; |
• |
The
rationale presented for the reduction; |
• |
The
market capitalization of the company (size, inclusion in indices);
|
• |
The
company’s ownership structure; |
• |
Previous
voter turnout or attempts to achieve quorum; |
• |
Any
provisions or commitments to restore quorum to a majority of shares
outstanding, should voter turnout improve sufficiently; and
|
• |
Other
factors as appropriate. |
|
B-215 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
7. |
Social and Environmental Issues
|
• |
If
the issues presented in the proposal are being appropriately or
effectively dealt with through legislation or government regulation;
|
• |
If
the company has already responded in an appropriate and sufficient manner
to the issue(s) raised in the proposal; |
• |
Whether
the proposal’s request is unduly burdensome (scope or timeframe) or overly
prescriptive; |
• |
The
company’s approach compared with any industry standard practices for
addressing the issue(s) raised by the proposal; |
• |
Whether
there are significant controversies, fines, penalties, or litigation
associated with the company’s practices related to the issue(s) raised in
the proposal; |
• |
If
the proposal requests increased disclosure or greater transparency,
whether reasonable and sufficient information is currently available to
shareholders from the company or from other publicly available sources;
and |
• |
If
the proposal requests increased disclosure or greater transparency,
whether implementation would reveal proprietary or confidential
information that could place the company at a competitive disadvantage.
|
|
B-216 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company has already published a set of animal welfare standards and
monitors compliance; |
• |
The
company’s standards are comparable to industry peers; and
|
• |
There
are no recent significant fines, litigation, or controversies related to
the company’s and/or its suppliers’ treatment of animals.
|
• |
The
company is conducting animal testing programs that are unnecessary or not
required by regulation; |
• |
The
company is conducting animal testing when suitable alternatives are
commonly accepted and used by industry peers; or
|
• |
There
are recent, significant fines or litigation related to the company’s
treatment of animals. |
• |
The
potential impact of such labeling on the company’s business;
|
• |
The
quality of the company’s disclosure on GE product labeling, related
voluntary initiatives, and how this disclosure compares with industry peer
disclosure; and |
• |
Company’s
current disclosure on the feasibility of GE product labeling.
|
|
B-217 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Whether
the company has adequately disclosed mechanisms in place to prevent
abuses; |
• |
Whether
the company has adequately disclosed the financial risks of the
products/practices in question; |
• |
Whether
the company has been subject to violations of related laws or serious
controversies; and |
• |
Peer
companies’ policies/practices in this area. |
• |
The
potential for reputational, market, and regulatory risk exposure;
|
• |
Existing
disclosure of relevant policies; |
• |
Deviation
from established industry norms; |
• |
Relevant
company initiatives to provide research and/or products to disadvantaged
consumers; |
• |
Whether
the proposal focuses on specific products or geographic regions;
|
• |
The
potential burden and scope of the requested report;
and |
• |
Recent
significant controversies, litigation, or fines at the company.
|
• |
The
company already discloses similar information through existing reports
such as a supplier code of conduct and/or a sustainability report;
|
• |
The
company has formally committed to the implementation of a toxic/hazardous
materials and/or product safety and supply chain reporting and monitoring
program based on industry norms or similar standards within a specified
time frame; or |
• |
The
company has not been recently involved in relevant significant
controversies, fines, or litigation. |
• |
The
company’s current level of disclosure regarding its product safety
policies, initiatives, and oversight mechanisms;
|
|
B-218 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Current
regulations in the markets in which the company operates; and
|
• |
Recent
significant controversies, litigation, or fines stemming from
toxic/hazardous materials at the company. |
• |
Recent
related fines, controversies, or significant litigation;
|
• |
Whether
the company complies with relevant laws and regulations on the marketing
of tobacco; |
• |
Whether
the company’s advertising restrictions deviate from those of industry
peers; |
• |
Whether
the company entered into the Master Settlement Agreement, which restricts
marketing of tobacco to youth; and |
• |
Whether
restrictions on marketing to youth extend to foreign countries.
|
• |
Whether
the company complies with all laws and regulations;
|
• |
The
degree that voluntary restrictions beyond those mandated by law might hurt
the company’s competitiveness; and |
• |
The
risk of any health-related liabilities. |
• |
The
extent to which the company’s climate related disclosures are in line with
TCFD recommendations and meet other market standards;
|
• |
Disclosure
of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);
|
• |
The
completeness and rigor of company’s short-, medium-, and long-term targets
for reducing operational and supply chain GHG emissions (Scopes 1, 2, and
3 if relevant); |
• |
Whether
the company has sought and received third-party approval that its targets
are science-based; |
• |
Whether
the company has made a commitment to be “net zero” for operational and
supply chain emissions (Scopes 1, 2, and 3) by 2050;
|
• |
Whether
the company discloses a commitment to report on the implementation of its
plan in subsequent years; |
• |
Whether
the company’s climate data has received third-party assurance;
|
23 |
Variations of this request
also include climate transition related ambitions, or commitment to
reporting on the implementation of a climate
plan. |
|
B-219 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Disclosure
of how the company’s lobbying activities and its capital expenditures
align with company strategy; |
• |
Whether
there are specific industry decarbonization challenges; and
|
• |
The
company’s related commitment, disclosure, and performance compared to its
industry peers. |
• |
The
completeness and rigor of the company’s climate-related disclosure;
|
• |
The
company’s actual GHG emissions performance; |
• |
Whether
the company has been the subject of recent, significant violations, fines,
litigation, or controversy related to its GHG emissions; and
|
• |
Whether
the proposal’s request is unduly burdensome (scope or timeframe) or overly
prescriptive. |
• |
Whether
the company already provides current, publicly-available information on
the impact that climate change may have on the company as well as
associated company policies and procedures to address related risks and/or
opportunities; |
• |
The
company’s level of disclosure compared to industry peers; and
|
• |
Whether
there are significant controversies, fines, penalties, or litigation
associated with the company’s climate change-related performance.
|
• |
The
company already discloses current, publicly-available information on the
impacts that GHG emissions may have on the company as well as associated
company policies and procedures to address related risks and/or
opportunities; |
• |
The
company’s level of disclosure is comparable to that of industry peers;
or |
• |
There
are no significant, controversies, fines, penalties, or litigation
associated with the company’s GHG emissions. |
• |
Whether
the company provides disclosure of year-over-year GHG emissions
performance data; |
• |
Whether
company disclosure lags behind industry peers; |
• |
The
company’s actual GHG emissions performance; |
• |
The
company’s current GHG emission policies, oversight mechanisms, and related
initiatives; and |
• |
Whether
the company has been the subject of recent, significant violations, fines,
litigation, or controversy related to GHG emissions.
|
|
B-220 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company complies with applicable energy efficiency regulations and laws,
and discloses its participation in energy efficiency policies and
programs, including disclosure of benchmark data, targets, and performance
measures; or |
• |
The
proponent requests adoption of specific energy efficiency goals within
specific timelines. |
• |
The
scope and structure of the proposal; |
• |
The
company’s current level of disclosure on renewable energy use and GHG
emissions; and |
• |
The
company’s disclosure of policies, practices, and oversight implemented to
manage GHG emissions and mitigate climate change risks.
|
• |
The
gender and racial minority representation of the company’s board is
reasonably inclusive in relation to companies of similar size and
business; or |
• |
The
board already reports on its nominating procedures and gender and racial
minority initiatives on the board and within the company.
|
• |
The
degree of existing gender and racial minority diversity on the company’s
board and among its executive officers; |
• |
The
level of gender and racial minority representation that exists at the
company’s industry peers; |
• |
The
company’s established process for addressing gender and racial minority
board representation; |
• |
Whether
the proposal includes an overly prescriptive request to amend nominating
committee charter language; |
• |
The
independence of the company’s nominating committee;
|
• |
Whether
the company uses an outside search firm to identify potential director
nominees; and |
• |
Whether
the company has had recent controversies, fines, or litigation regarding
equal employment practices. |
|
B-221 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company publicly discloses equal opportunity policies and initiatives in a
comprehensive manner; |
• |
The
company already publicly discloses comprehensive workforce diversity data;
or |
• |
The
company has no recent significant EEO-related violations or litigation.
|
• |
The
company’s current policies and disclosure related to both its diversity
and inclusion policies and practices and its compensation philosophy on
fair and equitable compensation practices; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to gender, race, or ethnicity pay gap issues;
|
• |
The
company’s disclosure regarding gender, race, or ethnicity pay gap policies
or initiatives compared to its industry peers; and
|
• |
Local
laws regarding categorization of race and/or ethnicity and definitions of
ethnic and/or racial minorities. |
• |
The
company’s established process or framework for addressing racial inequity
and discrimination internally; |
• |
Whether
the company adequately discloses workforce diversity and inclusion metrics
and goals; |
• |
Whether
the company has issued a public statement related to its racial justice
efforts in recent years, or has committed to internal policy review;
|
• |
Whether
the company has engaged with impacted communities, stakeholders, and civil
rights experts; |
• |
The
company’s track record in recent years of racial justice measures and
outreach externally; and |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to racial inequity or discrimination.
|
|
B-222 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company’s current level of disclosure of its workplace health and safety
performance data, health and safety management policies, initiatives, and
oversight mechanisms; |
• |
The
nature of the company’s business, specifically regarding company and
employee exposure to health and safety risks; |
• |
Recent
significant controversies, fines, or violations related to workplace
health and safety; and |
• |
The
company’s workplace health and safety performance relative to industry
peers. |
• |
The
company’s compliance with applicable regulations and guidelines;
|
• |
The
company’s current level of disclosure regarding its security and safety
policies, procedures, and compliance monitoring; and
|
• |
The
existence of recent, significant violations, fines, or controversy
regarding the safety and security of the company’s operations and/or
facilities. |
• |
Current
disclosure of applicable policies and risk assessment report(s) and risk
management procedures; |
• |
The
impact of regulatory non-compliance, litigation, remediation, or
reputational loss that may be associated with failure to manage the
company’s operations in question, including the management of relevant
community and stakeholder relations; |
• |
The
nature, purpose, and scope of the company’s operations in the specific
region(s); |
• |
The
degree to which company policies and procedures are consistent with
industry norms; and |
• |
The
scope of the resolution. |
• |
The
company’s current level of disclosure of relevant policies and oversight
mechanisms; |
• |
The
company’s current level of such disclosure relative to its industry peers;
|
• |
Potential
relevant local, state, or national regulatory developments; and
|
• |
Controversies,
fines, or litigation related to the company’s hydraulic fracturing
operations. |
• |
Operations
in the specified regions are not permitted by current laws or regulations;
|
|
B-223 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company does not currently have operations or plans to develop operations
in these protected regions; or |
• |
The
company’s disclosure of its operations and environmental policies in these
regions is comparable to industry peers. |
• |
The
nature of the company’s business; |
• |
The
current level of disclosure of the company’s existing related programs;
|
• |
The
timetable and methods of program implementation prescribed by the
proposal; |
• |
The
company’s ability to address the issues raised in the proposal; and
|
• |
How
the company’s recycling programs compare to similar programs of its
industry peers. |
• |
The
company already discloses similar information through existing reports or
policies such as an environment, health, and safety (EHS) report; a
comprehensive code of corporate conduct; and/or a diversity report; or
|
• |
The
company has formally committed to the implementation of a reporting
program based on Global Reporting Initiative (GRI) guidelines or a similar
standard within a specified time frame. |
• |
The
company’s current disclosure of relevant policies, initiatives, oversight
mechanisms, and water usage metrics; |
• |
Whether
or not the company’s existing water-related policies and practices are
consistent with relevant internationally recognized standards and
national/local regulations; |
• |
The
potential financial impact or risk to the company associated with
water-related concerns or issues; and |
• |
Recent,
significant company controversies, fines, or litigation regarding water
use by the company and its suppliers. |
|
B-224 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
level of disclosure of company policies and procedures relating to data
security, privacy, freedom of speech, information access and management,
and Internet censorship; |
• |
Engagement
in dialogue with governments or relevant groups with respect to data
security, privacy, or the free flow of information on the Internet;
|
• |
The
scope of business involvement and of investment in countries whose
governments censor or monitor the Internet and other telecommunications;
|
• |
Applicable
market-specific laws or regulations that may be imposed on the company;
and |
• |
Controversies,
fines, or litigation related to data security, privacy, freedom of speech,
or Internet censorship. |
• |
The
scope and prescriptive nature of the proposal; |
• |
The
company’s current level of disclosure regarding its environmental and
social performance and governance; |
• |
The
degree to which the board or compensation committee already discloses
information on whether it has considered related E&S criteria; and
|
• |
Whether
the company has significant controversies or regulatory violations
regarding social or environmental issues. |
• |
The
degree to which existing relevant policies and practices are disclosed;
|
• |
Whether
or not existing relevant policies are consistent with internationally
recognized standards; |
• |
Whether
company facilities and those of its suppliers are monitored and how;
|
• |
Company
participation in fair labor organizations or other internationally
recognized human rights initiatives; |
• |
Scope
and nature of business conducted in markets known to have higher risk of
workplace labor/human rights abuse; |
• |
Recent,
significant company controversies, fines, or litigation regarding human
rights at the company or its suppliers; |
• |
The
scope of the request; and |
• |
Deviation
from industry sector peer company standards and practices.
|
• |
The
degree to which existing relevant policies and practices are disclosed,
including information on the implementation of these policies and any
related oversight mechanisms; |
• |
The
company’s industry and whether the company or its suppliers operate in
countries or areas where there is a history of human rights concerns;
|
|
B-225 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Recent
significant controversies, fines, or litigation regarding human rights
involving the company or its suppliers, and whether the company has taken
remedial steps; and |
• |
Whether
the proposal is unduly burdensome or overly prescriptive.
|
• |
The
company’s current policies and practices related to the use of mandatory
arbitration agreements on workplace claims; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to the use of mandatory arbitration agreements
on workplace claims; and |
• |
The
company’s disclosure of its policies and practices related to the use of
mandatory arbitration agreements compared to its peers.
|
• |
The
nature, purpose, and scope of the operations and business involved that
could be affected by social or political disruption;
|
• |
Current
disclosure of applicable risk assessment(s) and risk management
procedures; |
• |
Compliance
with U.S. sanctions and laws; |
• |
Consideration
of other international policies, standards, and laws; and
|
• |
Whether
the company has been recently involved in recent, significant
controversies, fines, or litigation related to its operations in
“high-risk” markets. |
• |
Controversies
surrounding operations in the relevant market(s);
|
• |
The
value of the requested report to shareholders; |
• |
The
company’s current level of disclosure of relevant information on
outsourcing and plant closure procedures; and |
• |
The
company’s existing human rights standards relative to industry peers.
|
• |
The
company’s current policies, practices, oversight mechanisms related to
preventing workplace sexual harassment; |
• |
Whether
the company has been the subject of recent controversy, litigation, or
regulatory actions related to workplace sexual harassment issues; and
|
|
B-226 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company’s disclosure regarding workplace sexual harassment policies or
initiatives compared to its industry peers. |
• |
The
company’s current disclosure of relevant lobbying policies, and management
and board oversight; |
• |
The
company’s disclosure regarding trade associations or other groups that it
supports, or is a member of, that engage in lobbying activities; and
|
• |
Recent
significant controversies, fines, or litigation regarding the company’s
lobbying-related activities. |
• |
The
company’s policies, and management and board oversight related to its
direct political contributions and payments to trade associations or other
groups that may be used for political purposes; |
• |
The
company’s disclosure regarding its support of, and participation in, trade
associations or other groups that may make political contributions; and
|
• |
Recent
significant controversies, fines, or litigation related to the company’s
political contributions or political activities.
|
• |
The
company’s policies, management, board oversight, governance processes, and
level of disclosure related to direct political contributions, lobbying
activities, and payments to trade associations, political action
committees, or other groups that may be used for political purposes;
|
|
B-227 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
company’s disclosure regarding: the reasons for its support of candidates
for public offices; the reasons for support of and participation in trade
associations or other groups that may make political contributions; and
other political activities; |
• |
Any
incongruencies identified between a company’s direct and indirect
political expenditures and its publicly stated values and priorities;
and |
• |
Recent
significant controversies related to the company’s direct and indirect
lobbying, political contributions, or political activities.
|
• |
There
are no recent, significant controversies, fines, or litigation regarding
the company’s political contributions or trade association spending; and
|
• |
The
company has procedures in place to ensure that employee contributions to
company-sponsored political action committees (PACs) are strictly
voluntary and prohibit coercion. |
8. |
Mutual Fund Proxies
|
• |
Past
performance as a closed-end fund; |
• |
Market
in which the fund invests; |
• |
Measures
taken by the board to address the discount; and |
• |
Past
shareholder activism, board activity, and votes on related proposals.
|
• |
Past
performance relative to its peers; |
• |
Market
in which the fund invests; |
|
B-228 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Measures
taken by the board to address the issues; |
• |
Past
shareholder activism, board activity, and votes on related proposals;
|
• |
Strategy
of the incumbents versus the dissidents; |
• |
Independence
of directors; |
• |
Experience
and skills of director candidates; |
• |
Governance
profile of the company; and |
• |
Evidence
of management entrenchment. |
• |
Proposed
and current fee schedules; |
• |
Fund
category/investment objective; |
• |
Performance
benchmarks; |
• |
Share
price performance as compared with peers; |
• |
Resulting
fees relative to peers; and |
• |
Assignments
(where the advisor undergoes a change of control).
|
• |
Stated
specific financing purpose; |
• |
Possible
dilution for common shares; and |
• |
Whether
the shares can be used for antitakeover purposes.
|
• |
Potential
competitiveness; |
• |
Regulatory
developments; |
• |
Current
and potential returns; and |
• |
Current
and potential risk. |
• |
The
fund’s target investments; |
• |
The
reasons given by the fund for the change; and
|
|
B-229 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
projected impact of the change on the portfolio.
|
• |
Political/economic
changes in the target market; |
• |
Consolidation
in the target market; and |
• |
Current
asset composition. |
• |
Potential
competitiveness; |
• |
Current
and potential returns; |
• |
Risk
of concentration; and |
• |
Consolidation
in target industry. |
• |
The
proposal to allow share issuances below NAV has an expiration date no more
than one year from the date shareholders approve the underlying proposal,
as required under the Investment Company Act of 1940;
|
• |
The
sale is deemed to be in the best interests of shareholders by (1) a
majority of the company’s independent directors and (2) a majority of the
company’s directors who have no financial interest in the issuance; and
|
• |
The
company has demonstrated responsible past use of share issuances by
either: |
• |
Outperforming
peers in its 8-digit GICS group as measured by one- and three-year median
TSRs; or |
• |
Providing
disclosure that its past share issuances were priced at levels that
resulted in only small or moderate discounts to NAV and economic dilution
to existing non-participating shareholders. |
• |
Strategies
employed to salvage the company; |
• |
The
fund’s past performance; and |
• |
The
terms of the liquidation. |
• |
The
degree of change implied by the proposal; |
• |
The
efficiencies that could result; |
|
B-230 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
The
state of incorporation; and |
• |
Regulatory
standards and implications. |
• |
Removal
of shareholder approval requirement to reorganize or terminate the trust
or any of its series; |
• |
Removal
of shareholder approval requirement for amendments to the new declaration
of trust; |
• |
Removal
of shareholder approval requirement to amend the fund’s management
contract, allowing the contract to be modified by the investment manager
and the trust management, as permitted by the 1940 Act;
|
• |
Allow
the trustees to impose other fees in addition to sales charges on
investment in a fund, such as deferred sales charges and redemption fees
that may be imposed upon redemption of a fund’s shares;
|
• |
Removal
of shareholder approval requirement to engage in and terminate subadvisory
arrangements; or |
• |
Removal
of shareholder approval requirement to change the domicile of the fund.
|
• |
Regulations
of both states; |
• |
Required
fundamental policies of both states; and |
• |
The
increased flexibility available. |
• |
Fees
charged to comparably sized funds with similar objectives;
|
• |
The
proposed distributor’s reputation and past performance;
|
• |
The
competitiveness of the fund in the industry; and |
• |
The
terms of the agreement. |
• |
Resulting
fee structure; |
• |
Performance
of both funds; |
• |
Continuity
of management personnel; and |
• |
Changes
in corporate governance and their impact on shareholder rights.
|
|
B-231 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
• |
Performance
of the fund’s Net Asset Value (NAV); |
• |
The
fund’s history of shareholder relations; and |
• |
The
performance of other funds under the advisor’s management.
|
|
B-232 |
|
|
|
|
|
UNITED
STATES
Proxy
Voting Guidelines |
|
|
|
|
|
|
|
|
B-233 |
|
|
|
|
|
INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-235 |
|
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-236 |
|
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-237 |
|
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|
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
|
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|
|
B-238 |
|
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|
|
INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
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|
1. |
Operational Items
|
• |
There
are concerns about the accounts presented or audit procedures used; or
|
• |
The
company is not responsive to shareholder questions about specific items
that should be publicly disclosed. |
• |
The
name of the proposed auditors has not been published;
|
• |
There
are serious concerns about the effectiveness of the auditors;
|
• |
The
lead audit partner(s) has been linked with a significant auditing
controversy; |
• |
There
is reason to believe that the auditor has rendered an opinion which is
neither accurate nor indicative of the company’s financial position;
|
• |
The
lead audit partner(s) has previously served the company in an executive
capacity or can otherwise be considered affiliated with the company;
|
• |
The
auditors are being changed without explanation; |
• |
Fees
for non-audit services exceed either 100 percent of standard audit-related
fees or any stricter limit set in local best practice recommendations or
law; or |
• |
Audit
fees are undisclosed. |
• |
There
are serious concerns about the statutory reports presented or the audit
procedures used; |
• |
Questions
exist concerning any of the statutory auditors being appointed; or
|
• |
The
auditors have previously served the company in an executive capacity or
can otherwise be considered affiliated with the
company. |
|
B-239 |
|
|
|
|
|
INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
The
dividend payout ratio has been consistently below 30 percent without
adequate explanation; or |
• |
The
payout is excessive given the company’s financial position.
|
• |
Whether
the proposal allows for a cash option; and |
• |
If
the proposal is in line with market standards. |
• |
Whether
the company has committed to ensuring shareholders will have the same
rights participating electronically as they would have for an in-person
meeting; |
• |
Rationale
of the circumstances under which virtual-only meetings would be held;
|
• |
In-person
or hybrid meetings are not precluded; |
• |
Whether
an authorization is restricted in time or allows for the possibility of
virtual-only meetings indefinitely; and |
• |
Local
laws and regulations concerning the convening of virtual meetings.
|
1 |
The phrase “hybrid shareholder
meeting” refers to an in-person meeting in which shareholders are also
permitted to participate online. |
2 |
The phrase “virtual-only
shareholder meeting” refers to a meeting of shareholders that is held
exclusively through the use of online technology without a corresponding
in-person meeting. |
|
B-240 |
|
|
|
|
|
INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
2. |
Board of Directors
|
• |
Adequate
disclosure has not been provided in a timely manner;
|
• |
There
are clear concerns over questionable finances or restatements;
|
• |
There
have been questionable transactions with conflicts of interest;
|
• |
There
are any records of abuses against minority shareholder interests;
|
• |
The
board fails to meet minimum corporate governance standards, including
board independence standards; |
• |
There
are specific concerns about the individual, such as criminal wrongdoing or
breach of fiduciary responsibilities; or |
• |
Repeated
absences at board and key committee3 meetings have not been
explained (in countries where this information is disclosed).
|
• |
For
Japan, if the company has an
audit-committee-board structure or a traditional two-tier board structure
as opposed to three committees, vote against incumbent representative
directors if the board lacks at least one director of an underrepresented
gender identity. |
• |
For
Malaysia, vote against or withhold
from incumbent members of the nominating committee if the board is not
comprised of at least 30 percent underrepresented gender
identities. |
• |
For
Canada, vote against or withhold
from the chair of the nominating committee if: |
• |
the
board is not comprised of at least 30 percent underrepresented gender
identities; or |
• |
the
board lacks at least one racially or ethnically diverse director.
|
• |
For
the UK, generally vote against or
withhold from the incumbent chair of the nominating committee if:
|
• |
the
board is not comprised of at least 33 percent underrepresented gender
identities; or |
• |
the
board lacks at least one racially diverse director.
|
• |
For
Australia, vote against or withhold
votes from the chair of the nominating committee if the board is not
comprised of at least 30 percent underrepresented gender identities.
|
• |
For
Continental European markets,
generally vote against or withhold from incumbent members of the
nominating committee if the board is not comprised of at least 40 percent
underrepresented gender identities. |
• |
Vote
against or withhold from other director nominees on a case-by-case basis.
|
3 |
Key committees are usually the
ones performing the functions of audit, remuneration and nomination (plus
risk for financial institutions). |
4 |
Underrepresented gender
identities include directors who identify as women or as non-binary.
|
|
B-241 |
|
|
|
|
|
INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
|
|
|
|
|
|
|
• |
Material
failures of governance, stewardship, risk oversight5, or fiduciary
responsibilities at the company, including failure to adequately manage or
mitigate environmental, social and governance (ESG) risks;
|
• |
A
lack of sustainability reporting in the company’s public documents and/or
website in conjunction with a failure to adequately manage or mitigate ESG
risks; |
• |
Failure
to replace management as appropriate; or |
• |
Egregious
actions related to the director(s)’ service on the boards that raise
substantial doubt about his or her ability to effectively oversee
management and serve the best interests of shareholders at any company.
|
• |
Detailed
disclosure of climate-related risks, such as according to the framework
established by the Task Force on Climate-related Financial Disclosures
(TCFD), including: |
• |
Board
governance measures; |
• |
Corporate
strategy; |
• |
Risk
management analyses; and |
• |
Metrics
and targets. |
• |
The
company has declared a target of Net Zero by 2050 or sooner and the target
includes scope 1, 2, and relevant scope 3 emissions.
|
• |
The
company has set a medium-term target for reducing its GHG emissions.
|
• |
The
board is less than majority independent; or |
• |
The
board lacks a separate compensation or nominating committee.
|
5 |
Examples of failure of risk
oversight include but are not limited to: bribery; large or serial fines
or sanctions from regulatory bodies; demonstrably poor risk oversight of
environmental and social issues, including climate change; significant
environmental incidents including spills and pollution; large scale or
repeat workplace fatalities or injuries; significant adverse legal
judgments or settlements; or hedging of company stock.
|
6 |
For 2024, companies defined as
“significant GHG emitters” will be those on the current Climate Action
100+ Focus Group list. |
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SUSTAINABILITY PROXY VOTING GUIDELINES |
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Are
Executive Directors; |
• |
Are
Controlling Shareholders; or |
• |
Is
a Non-employee officer of the company or its affiliates if he/she is among
the five most highly compensated. |
• |
Are
members of the audit committee; |
• |
Are
members of the compensation committee or the nominating committee and the
committee is not majority independent; or |
• |
Are
board members and the entire board fulfills the role of a compensation
committee or a nominating committee and the board is not majority
independent. |
• |
Are
non-CEO directors and serve on more than five public company boards; or
|
• |
Are
CEOs of public companies who serve on the boards of more than two public
companies besides their |
• |
Transitioning directors: It is preferable
for a director to step down from a board at the annual meeting to ensure
orderly transitions, which may result in a director being temporarily
overboarded (e.g. joining a new board in March but stepping off another
board in June). Sustainability Advisory Services will generally not count
a board for policy application purposes when it is publicly-disclosed that
the director will be stepping off that board at its next annual meeting.
This disclosure must be included within the company’s proxy circular to be
taken into consideration. Conversely, Sustainability Advisory Services
will include the new boards that the director is joining even if the
shareholder meeting with his or her election has not yet taken place.
|
• |
The
size and scope of the management services agreement;
|
• |
Executive
compensation in comparison to issuer peers and/or similarly structured
issuers; |
• |
Overall
performance; |
• |
Related
party transactions; |
7 |
Although a CEO’s subsidiary
boards will be counted as separate boards, Sustainability Advisory
Services will not recommend a withhold vote for the CEO of a parent
company board or any of the controlled (>50 percent ownership)
subsidiaries of that parent but may do so at subsidiaries that are less
than 50 percent controlled and boards outside the parent/subsidiary
relationship. |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Board
and committee independence; |
• |
Conflicts
of interest and process for managing conflicts effectively;
|
• |
Disclosure
and independence of the decision-making process involved in the selection
of the management services provider; |
• |
Risk
mitigating factors included within the management services agreement such
as fee recoupment mechanisms; |
• |
Historical
compensation concerns; |
• |
Executives’
responsibilities; and |
• |
Other
factors that may reasonably be deemed appropriate to assess an
externally-managed issuer’s governance framework.
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INTERNATIONAL
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SUSTAINABILITY PROXY VOTING GUIDELINES |
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Fewer
than 50 percent of the board members elected by shareholders – excluding,
where relevant, employee shareholder representatives – would be
independent; or |
• |
Fewer
than one-third of all board members would be independent.
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B-245 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Any
person who holds more than five mandates at listed companies will be
classified as overboarded. For the purposes of calculating this limit, a
non-executive directorship counts as one mandate, a non-executive chair
position counts as two mandates, and a position as executive director (or
a comparable role) is counted as three mandates.
|
• |
Also,
any person who holds the position of executive director (or a comparable
role) at one company and serves as a non-executive chair at a different
company will be classified as overboarded. |
• |
An
adverse vote recommendation will not be applied to a director within a
company where they serve as CEO; instead, any adverse vote recommendations
will be applied to their additional seats on other company boards. For
chairs, negative recommendations would first be applied towards
non-executive positions held, but the chair position itself would be
targeted where they are being elected as chair for the first time or, when
in aggregate their chair positions are three or more in number, or if the
chair holds an outside executive position. |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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Newly-public
companies9 with a sunset
provision of no more than seven years from the date of going public;
|
• |
Situations
where the unequal voting rights are considered de minimis10; or
|
• |
The
company provides sufficient protections for minority shareholders, for
example such as allowing minority shareholders a regular binding vote on
whether the capital structure should be maintained or a commitment to
abolish the structure by the next AGM. |
8 |
This generally includes
classes of common stock that have additional votes per share than other
shares; classes of shares that are not entitled to vote on all the same
ballot items or nominees; or stock with time-phased voting rights
(“loyalty shares” or “double-voting” shares).
|
9 |
Newly-public companies
generally include companies that emerge from bankruptcy, SPAC
transactions, spin-offs, direct listings, and those who complete a
traditional initial public offering.
|
10 |
Distortion between voting and
economic power does not exceed 10 percent, where this is calculated
relative to the entire share capital for multiple share classes and on
individual shareholder or concert level in case of loyalty share
structures. |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
A
member of the executive management would be a member of the committee;
|
• |
More
than one board member who is dependent on a major shareholder would be on
the committee; or |
• |
The
chair of the board would also be the chair of the committee.
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B-248 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Sit
on more than five public company boards; or |
• |
Are
CEOs of public companies who sit on the boards of more than two public
companies besides their own— recommend against only at their outside
boards11
|
• |
Candidates
who can be identified as representatives of minority shareholders of the
company, or independent candidates: |
• |
Candidates
whose professional background may have the following benefits:
|
• |
Increasing
the diversity of incumbent directors’ professional profiles and skills
(thanks to their financial expertise, international experience, executive
positions/directorships at other listed companies, or other relevant
factors. |
• |
Bringing
to the current board of directors relevant experience in areas linked to
the company’s business, evidenced by current or past board memberships or
management functions at other companies. |
• |
Incumbent
board members and candidates explicitly supported by the company’s
management. |
• |
Employee
or executive of the company or a wholly-owned subsidiary of the company;
|
• |
Any
director who is classified as a non-executive, but receives salary, fees,
bonus, and/or other benefits that are in line with the highest-paid
executives of the company. |
11 |
Although all of a CEO’s
subsidiary boards with publicly-traded common stock will be counted as
separate boards, Sustainability Advisory Services will not recommend an
against vote for the CEO of a parent company board or any of the
controlled (>50 percent ownership) subsidiaries of that parent but may
do so at subsidiaries that are less than 50 percent controlled and boards
outside the parent/subsidiary
relationships. |
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B-249 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Any
director who is attested by the board to be a non-independent NED;
|
• |
Any
director specifically designated as a representative of a shareholder of
the company; |
• |
Any
director who is also an employee or executive of a significant1 shareholder of the company;
|
• |
Any
director who is also an employee or executive of a subsidiary, associate,
joint venture, or company that is affiliated with a significant1 shareholder of the company;
|
• |
Any
director who is nominated by a dissenting significant shareholder unless
there is a clear lack of material2 connection with the
dissident, either currently or historically; |
• |
Beneficial
owner (direct or indirect) of at least 10 percent of the company’s stock,
either in economic terms or in voting rights (this may be aggregated if
voting power is distributed among more than one member of a defined group,
e.g., members of a family that beneficially own less than 10 percent
individually, but collectively own more than 10 percent), unless market
best practice dictates a lower ownership and/or disclosure threshold (and
in other special market-specific circumstances);
|
• |
Government
representative; |
• |
Currently
provides or has provided (or a relative3 provides) during the most
recently concluded financial year under review professional services4 to the company, to an
affiliate of the company, or to an individual officer of the company or of
one of its affiliates in the latest fiscal year in excess of USD 10,000
per year; |
• |
Represents
customer, supplier, creditor, banker, or other entity with which the
company maintains a transactional/commercial relationship (unless the
company discloses information to apply a materiality test3); |
• |
Any
director who has a conflicting relationship with the company, including
but not limited to cross-directorships with executive directors or the
chair of the company; |
• |
Relative3
of a current or former executive of the company or its affiliates;
|
• |
A
new appointee elected other than by a formal process through the general
meeting (such as a contractual appointment by a substantial shareholder);
|
• |
Founder/co-founder/member
of founding family but not currently an employee or executive;
|
• |
Former
executive or employee (five-year cooling off period); Years of service is
generally not a determining factor unless it is recommended best practice
in a market and/or in extreme circumstances, in which case it may be
considered6.
|
• |
Any
additional relationship or principle considered to compromise independence
under local corporate governance best practice guidance7. |
• |
No
material2 connection, either direct or indirect, to the company
(other than a board seat) or to a significant shareholder.
|
• |
Represents
employees or employee shareholders of the company (classified as “employee
representative” and considered a non-independent NED).
|
1 |
At least 10 percent of the
company’s stock, unless market best practice dictates a lower ownership
and/or disclosure threshold. |
2 |
For purposes of Sustainability
Advisory Services’ director independence classification, “material” will
be defined as a standard of relationship financial, personal, or otherwise
that a reasonable person might conclude could potentially influence one’s
objectivity in the boardroom in a manner that would have a meaningful
impact on an individual’s ability to satisfy requisite fiduciary standards
on behalf of shareholders. |
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B-250 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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3 |
“Relative” follows the
definition of “immediate family members” which covers spouses, parents,
children, stepparents, step-children, siblings, in-laws, and any person
(other than a tenant or employee) sharing the household of any director,
nominee for director, executive officer, or significant shareholder of the
company. |
4 |
Professional services can be
characterized as advisory in nature and generally include the following:
investment banking/financial advisory services; commercial banking (beyond
deposit services); investment services; insurance services;
accounting/audit services; consulting services; marketing services; and
legal services. The case of participation in a banking syndicate by a
non-lead bank should be considered a transaction (and hence subject to the
associated materiality test) rather than a professional relationship.
|
5 |
A business relationship may be
material if the transaction value (of all outstanding transactions)
entered into between the company and the company or organization with
which the director is associated is equivalent to either 1 percent of the
company’s turnover or 1 percent of the turnover of the company or
organization with which the director is associated; or
|
6 |
For example, in continental
Europe and Latin America, directors with a tenure exceeding 12 years will
be considered non-independent. In the United Kingdom, Ireland, Hong Kong
and Singapore, directors with a tenure exceeding nine years will be
considered non-independent, unless the company provides sufficient and
clear justification that the director is independent despite his long
tenure. For purposes of independence
classification of directors incorporated in the Middle East and Africa
region, this criterion will be taken into account in accordance with
market best practice and disclosure standards and availability.
|
7 |
For MEA markets, directors’
past services as statutory auditor/partner of the statutory audit firm
will be taken into account, with cooling-off periods in accordance with
local market best practice. |
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B-251 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Company
performance relative to its peers; |
• |
Strategy
of the incumbents versus the dissidents; |
• |
Independence
of directors/nominees; |
• |
Experience
and skills of board candidates; |
• |
Governance
profile of the company; |
• |
Evidence
of management entrenchment; |
• |
Responsiveness
to shareholders; |
• |
Whether
a takeover offer has been rebuffed; and |
• |
Whether
minority or majority representation is being sought.
|
• |
A
lack of oversight or actions by board members which invoke shareholder
distrust related to malfeasance or poor supervision, such as operating in
private or company interest rather than in shareholder interest;
|
• |
Any
legal issues (e.g. civil/criminal) aiming to hold the board responsible
for breach of trust in the past or related to currently alleged actions
yet to be confirmed (and not only the fiscal year in question), such as
price fixing, insider trading, bribery, fraud, and other illegal actions;
or |
• |
Other
material failures of governance or fiduciary responsibilities at the
company, including failure to adequately manage or mitigate environmental,
social and governance (ESG) risks; or |
• |
A
lack of sustainability reporting in the company’s public documents and/or
website in conjunction with a failure to adequately manage or mitigate
environmental, social and governance (ESG) risks.
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B-252 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Vote
proposals seeking indemnification and liability protection for directors
and officers on a case-by-case basis. |
• |
Vote
against proposals to indemnify auditors. |
• |
Vote
for proposals to fix board size. |
• |
Vote
against the introduction of classified boards and mandatory retirement
ages for directors. |
• |
Vote
against proposals to alter board structure or size in the context of a
fight for control of the company or the board. |
3. |
Capital Structure |
• |
The
general issuance authority exceeds one-third (33 percent) of the issued
share capital. Assuming it is no more than one-third, a further one-third
of the issued share capital may also be applied to a fully pre-emptive
rights issue taking the acceptable aggregate authority to two-thirds (66
percent); or |
• |
The
routine authority to disapply pre-emption rights exceeds 20 percent of the
issued share capital, provided that any amount above 10 percent is to be
used for the purposes of an acquisition or a specified capital investment.
For the general disapplication authority and specific disapplication
authority, a further disapplication of up to 2 percent may be used for
each authority for the purposes of a follow-on offer.
|
• |
Vote
for general issuance requests with preemptive rights, or without
preemptive rights but with a binding “priority right,” for a maximum of 50
percent over currently issued capital. |
• |
Generally
vote for general authorities to issue shares without preemptive rights up
to a maximum of 10 percent of share capital. When companies are listed on
a regulated market, the maximum discount on share issuance price proposed
in the resolution must, in addition, comply with the legal discount for a
vote for to be warranted. |
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B-253 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Limit
the issuance request to 10 percent or less of the relevant class of issued
share capital for cash and non-cash consideration;
|
• |
Limit
the discount to 10 percent of the market price of shares (rather than the
maximum 20 percent permitted by the Listing Rules ) for issuance for cash
and non-cash consideration; and |
• |
Have
no history of renewing the General Issuance Mandate several times within a
period of one year which may result in the share issuance limit exceeding
10 percent of the relevant class of issued share capital for issuance for
cash and non-cash consideration within the 12-month period.
|
• |
Whether
the company has provided adequate and timely disclosure including detailed
information regarding the rationale for the proposed program;
|
• |
Whether
the proposed amount to be approved under such authority, the use of the
resources, the length of the authorization, the nature of the securities
to be issued under such authority, including any potential risk of
dilution to shareholders is disclosed; and |
• |
Whether
there are concerns regarding questionable finances, the use of the
proceeds, or other governance concerns. |
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B-254 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Vote
for the creation of a new class of preferred stock or for issuances of
preferred stock up to 50 percent of issued capital unless the terms of the
preferred stock would adversely affect the rights of existing
shareholders. |
• |
Vote
for the creation/issuance of convertible preferred stock as long as the
maximum number of common shares that could be issued upon conversion meets
the guidelines on equity issuance requests. |
• |
Vote
against the creation of a new class of preference shares that would carry
superior voting rights to the common shares. |
• |
Vote
against the creation of blank check preferred stock unless the board
clearly states that the authorization will not be used to thwart a
takeover bid. |
• |
Vote
proposals to increase blank check preferred authorizations on a
case-by-case basis. |
• |
A
repurchase limit of up to 10 percent of issued share capital;
|
• |
A
holding limit of up to 10 percent of a company’s issued share capital in
treasury (“on the shelf”); and |
• |
Duration
of no more than 5 years, or such lower threshold as may be set by
applicable law, regulation, or code of governance best practice.
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B-255 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
A
holding limit of up to 10 percent of a company’s issued share capital in
treasury (“on the shelf”); and |
• |
Duration
of no more than 18 months. |
• |
A
holding limit of up to 10 percent of a company’s issued share capital in
treasury (“on the shelf”); and |
• |
Duration
of no more than 18 months. |
• |
The
repurchase can be used for takeover defenses; |
• |
There
is clear evidence of abuse; |
• |
There
is no safeguard against selective buybacks; |
• |
Pricing
provisions and safeguards are deemed to be unreasonable in light of market
practice. |
• |
Whether
other resolutions are bundled with the issuance;
|
• |
Whether
the rationale for the private placement issuance is disclosed;
|
• |
Dilution
to existing shareholders’ position: |
• |
issuance
that represents no more than 30 percent of the company’s outstanding
shares on a non-diluted basis is considered generally acceptable;
|
• |
Discount/premium
in issuance price to the unaffected share price before the announcement of
the private placement; |
• |
Market
reaction: The market’s response to the proposed private placement since
announcement; and |
• |
Other
applicable factors, including conflict of interest, change in
control/management, evaluation of other alternatives.
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B-256 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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4. |
Compensation |
• |
Provide
shareholders with clear, comprehensive compensation disclosures;
|
• |
Maintain
appropriate pay structure with emphasis on long-term shareholder value;
|
• |
Avoid
arrangements that risk “pay for failure;” |
• |
Maintain
an independent and effective compensation committee;
|
• |
Avoid
inappropriate pay to non-executive directors. |
• |
Executive
compensation-related proposals; and |
• |
Non-executive
director compensation-related proposals |
12 |
Definition of Pay-for-Performance Evaluation:
|
• |
Peer
Group Alignment:
|
• |
The
degree of alignment between the company’s annualized TSR rank and the
CEO’s annualized total pay rank within a peer group, each measured over a
three-year period. |
• |
The
multiple of the CEO’s total pay relative to the peer group median.
|
• |
Absolute
Alignment – the absolute alignment
between the trend in CEO pay and company TSR over the prior five fiscal
years – i.e., the difference between the trend in annual pay changes and
the trend in annualized TSR during the period.
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B-257 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Provide
shareholders with clear and comprehensive compensation disclosures:
|
• |
Information
on compensation-related proposals shall be made available to shareholders
in a timely manner; |
• |
The
level of disclosure of the proposed compensation policy and remuneration
report shall be sufficient for shareholders to make an informed decision
and shall be in line with what local market best practice standards
dictate; |
• |
Remuneration
report disclosure is expected to include amongst others: amounts paid to
executives, alignment between company performance and payout to
executives, disclosure of variable incentive targets and according levels
of achievement and performance awards made, after the relevant performance
period (ex-post), and disclosure and explanation of use of any
discretionary authority or derogation clause by the board or remuneration
committee to adjust pay outcomes. |
• |
Companies
are expected to provide meaningful information regarding the average
remuneration of employees of the company, in a manner which permits
comparison with directors’ remuneration. |
• |
Companies
shall adequately disclose all elements of the compensation, including:
|
• |
Any
short- or long-term compensation component must include a maximum award
limit. |
• |
Long-term
incentive plans must provide sufficient disclosure of (i) the exercise
price/strike price (options); (ii) discount on grant; (iii) grant
date/period; (iv) exercise/vesting period; and, if applicable, (v)
performance criteria. |
• |
Discretionary
payments, if applicable. |
• |
The
derogation policy, if applicable, which shall clearly define and limit any
elements (e.g., base salary, STI, LTI, etc.) and extent (e.g., caps,
weightings, etc.) to which derogations may apply.
|
• |
Maintain
appropriate pay structure with emphasis on long-term shareholder value:
|
• |
The
structure of the company’s short-term incentive plan shall be appropriate.
|
• |
The
compensation policy must notably avoid guaranteed or discretionary
compensation. |
• |
The
structure of the company’s long-term incentives shall be appropriate,
including, but not limited to, dilution, vesting period, and, if
applicable, performance conditions. |
• |
Equity-based
plans or awards that are linked to long-term company performance will be
evaluated using Sustainability Advisory Services’ general policy for
equity-based plans; and |
• |
For
awards granted to executives, Sustainability Advisory Services will
generally require a clear link between shareholder value and awards, and
stringent performance-based elements. |
• |
The
balance between short- and long-term variable compensation shall be
appropriate. |
• |
The
company’s executive compensation policy must notably avoid
disproportionate focus on short-term variable element(s)
|
• |
Avoid
arrangements that risk “pay for failure”: |
• |
The
board shall demonstrate good stewardship of investor’s interests regarding
executive compensation practices (principle being supported by Pay for
Performance Evaluation). |
• |
There
shall be a clear link between the company’s performance and variable
incentives. Financial and non-financial conditions, including ESG
criteria, are relevant as long as they reward an effective performance in
line with the purpose, strategy, and objectives adopted by the company.
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B-258 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
There
shall not be significant discrepancies between the company’s performance,
financial and non-financial, and real executive payouts.
|
• |
The
level of pay for the CEO and members of executive management should not be
excessive relative to peers, company performance, and market practices.
|
• |
Significant
pay increases shall be explained by a detailed and compelling disclosure.
|
• |
Termination
payments13 must not be
in excess of (i) 24 months’ pay or of (ii) any more restrictive provision
pursuant to local legal requirements and/or market best practices.
|
• |
Arrangements
with a company executive regarding pensions and post-mandate exercise of
equity-based awards must not result in an adverse impact on shareholders’
interests or be misaligned with good market practices.
|
• |
Maintain
an independent and effective compensation committee:
|
• |
No
executives may serve on the compensation committee.
|
• |
In
certain markets the compensation committee shall be composed of a majority
of independent members, as per Sustainability Advisory Services policies
on director election and board or committee composition.
|
• |
Compensation
committees should use the discretion afforded them by shareholders to
ensure that rewards properly reflect business performance14. |
• |
Avoid
inappropriate pay to non-executive directors. |
• |
Documents
(including general meeting documents, annual report) provided prior to the
general meeting do not mention fees paid to non-executive directors.
|
• |
Proposed
amounts are excessive relative to other companies in the country or
industry. |
• |
The
company intends to increase the fees excessively in comparison with
market/sector practices, without stating compelling reasons that justify
the increase. |
• |
Proposals
provide for the granting of stock options, performance-based equity
compensation (including stock appreciation rights and performance-vesting
restricted stock), and performance-based cash to non-executive directors.
|
• |
Proposals
introduce retirement benefits for non-executive directors.
|
13 |
Termination payments’ means
any payment linked to early termination of contracts for executive or
managing directors, including payments related to the duration of a notice
period or a non-competition clause included in the contract.
|
14 |
In cases where a remuneration
committee uses its discretion to determine payments, it should provide a
clear explanation of its reasons, which are expected to be clearly
justified by the financial results and the underlying performance of the
company. |
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B-259 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Proposals
include both cash and share-based components to non-executive directors.
|
• |
Proposals
bundle compensation for both non-executive and executive directors into a
single resolution. |
• |
The
volume of awards (to be) transferred to participants under all outstanding
plans must not be excessive: the awards must not exceed 5 percent of a
company’s issued share capital. This number can be up to 10 percent for
high-growth companies or particularly well-designed plans (e.g., with
challenging performance criteria, extended vesting/performance period,
etc.). |
• |
The
plan(s) must be sufficiently long-term in nature/structure: the vesting of
awards (i) must occur no less than three years from the grant date, and
(ii) if applicable, should be conditioned on meeting performance targets
that are measured over a period of at least three consecutive years;
|
• |
If
applicable, performance criteria must be fully disclosed, measurable,
quantifiable, and long-term oriented. |
• |
The
awards must be granted at market price. Discounts, if any, must be
mitigated by performance criteria or other features that justify such
discount. |
• |
To
have egregious remuneration practices; |
• |
To
have failed to follow market practice by not submitting expected
resolutions on executive compensation; or |
• |
To
have failed to respond to significant shareholder dissent on
remuneration-related proposals; |
• |
The
reelection of the chair of the remuneration committee or, where relevant,
any other members of the remuneration committee;
|
• |
The
reelection of the board chair; |
• |
The
discharge of directors; or |
• |
The
annual report and accounts. |
|
B-260 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Adjusting
the strike price for future ordinary dividends AND including expected
dividend yield above 0 percent when determining the number of options
awarded under the plan; |
• |
Having
significantly higher expected dividends than actual historical dividends;
|
• |
Favorably
adjusting the terms of existing options plans without valid reason; and/or
|
• |
Any
other provisions or performance measures that result in undue award.
|
• |
For
every share matching plan, Sustainability requires a holding period.
|
• |
For
plans without performance criteria, the shares must be purchased at market
price. |
• |
For
broad-based share matching plans directed at all employees, Sustainability
accepts an arrangement up to a |
• |
There
is a misalignment between CEO pay and company performance (pay for
performance); |
• |
The
company maintains problematic pay practices; or |
• |
The
board exhibits poor communication and responsiveness to shareholders.
|
• |
Rationale
for determining compensation (e.g., why certain elements and pay targets
are used, how they are used in relation to the company’s business
strategy, and specific incentive plan goals, especially retrospective
goals) and linkage of compensation to long-term performance;
|
• |
Evaluation
of peer group benchmarking used to set target pay or award opportunities;
|
• |
Analysis
of company performance and executive pay trends over time, taking into
account our Pay-for- Performance policy;
|
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B-261 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Mix
of fixed versus variable and performance versus non-performance-based pay.
|
• |
Assessment
of compensation components included in the Problematic Pay Practices
policy such as: perks, severance packages, employee loans, supplemental
executive pension plans, internal pay disparity and equity
|
• |
Existence
of measures that discourage excessive risk taking which include but are
not limited to: clawbacks, holdbacks, stock ownership requirements,
deferred compensation practices etc. |
• |
Clarity
of disclosure (e.g. whether the company’s Form 51-102F6 disclosure
provides timely, accurate, clear information about compensation practices
in both tabular format and narrative discussion);
|
• |
Assessment
of board’s responsiveness to investor concerns on compensation issues
(e.g., whether the company engaged with shareholders and / or responded to
majority-supported shareholder proposals relating to executive pay).
|
• |
Plan Cost: The total estimated cost of
the company’s equity plans relative to industry/market cap peers, measured
by the company’s estimated Shareholder Value Transfer (SVT) in relation to
peers and considering both: |
• |
SVT
based on new shares requested plus shares remaining for future grants,
plus outstanding unvested/unexercised grants; and
|
• |
SVT
based only on new shares requested plus shares remaining for future
grants. |
• |
Plan Features: |
• |
Absence
of problematic change-in-control (CIC) provisions, including:
|
• |
Single-trigger
acceleration of award vesting in connection with a CIC; and
|
15 |
In cases where certain
historic grant data are unavailable (e.g. following an IPO or emergence
from bankruptcy), Special Cases models will be applied which omit factors
requiring these data. |
|
B-262 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Settlement
of performance-based equity at target or above in the event of a
CIC-related acceleration of vesting regardless of performance.
|
• |
No
financial assistance to plan participants for the exercise or settlement
of awards; |
• |
Public
disclosure of the full text of the plan document; and
|
• |
Reasonable
share dilution from equity plans relative to market best practices.
|
• |
Grant Practices:
|
• |
Reasonable
three-year average burn rate relative to market best practices;
|
• |
Meaningful
time vesting requirements for the CEO’s most recent equity grants
(three-year lookback); |
• |
The
issuance of performance-based equity to the CEO;
|
• |
A
clawback provision applicable to equity awards; and
|
• |
Post-exercise
or post-settlement share-holding requirements (S&P/TSX Composite Index
only). |
• |
Discretionary
or insufficiently limited non-employee director participation;
|
• |
An
amendment provision which fails to adequately restrict the company’s
ability to amend the plan without shareholder approval;
|
• |
A
history of repricing stock options without shareholder approval
(three-year look-back); |
• |
The
plan is a vehicle for problematic pay practices or a significant
pay-for-performance disconnect under certain circumstances; or
|
• |
Any
other plan features that are determined to have a significant negative
impact on shareholder interests. |
• |
Excessive
(relative to standard market practice) inducement grants issued upon the
appointment or election of a new director to the board (consideration will
be given to the form in which the compensation has been issued and the
board’s rationale for the inducement grant); |
• |
Performance-based
equity grants to non-employee directors which could pose a risk of
aligning directors’ interests away from those of shareholders and toward
those of management; and |
• |
Other
significant problematic practices relating to director compensation.
|
• |
Reasonable
limit on employee contribution (may be expressed as a fixed dollar amount
or as a percentage of base salary excluding bonus, commissions and special
compensation); |
|
B-263 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Employer
contribution of up to 25 percent of employee contribution and no purchase
price discount or employer contribution of more than 25 percent of
employee contribution and SVT cost of the company’s equity plans is within
the allowable cap for the company; |
• |
Purchase
price is at least 80 percent of fair market value with no employer
contribution; |
• |
Potential
dilution together with all other equity-based plans is 10 percent of
outstanding common shares or less; and |
• |
The
Plan Amendment Provision requires shareholder approval for amendments to:
|
• |
The
number of shares reserved for the plan; |
• |
The
allowable purchase price discount; |
• |
The
employer matching contribution amount. |
• |
Potential
dilution together with all other equity-based compensation is ten percent
of the outstanding common shares or less. |
• |
Director
stock ownership guidelines of a minimum of three times annual cash
retainer; |
• |
Vesting
schedule or mandatory deferral period which requires that shares in
payment of deferred units may not be paid out until the end of three
years; |
• |
The
mix of remuneration between cash and equity; and
|
• |
Other
forms of equity-based compensation, i.e. stock options, restricted stock.
|
5. |
Environmental and Social Issues
|
• |
Whether
the proposal itself is well framed and reasonable;
|
|
B-264 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Whether
adoption of the proposal would have either a positive or negative impact
on the company’s short-term or long-term share value;
|
• |
The
percentage of sales, assets and earnings affected;
|
• |
Whether
the company has already responded in some appropriate manner to the
request embodied in a proposal; |
• |
Whether
the company’s analysis and voting recommendation to shareholders is
persuasive; |
• |
What
other companies have done in response to the issue;
|
• |
Whether
there are significant controversies, fines, penalties, or litigation
associated with the company’s environmental or social practices;
|
• |
Whether
implementation of the proposal would achieve the objectives sought in the
proposal. |
• |
Vote
for shareholder proposals seeking information on the financial, physical,
or regulatory risks it faces related to climate change- on its operations
and investments, or on how the company identifies, measures, and manage
such risks. |
• |
Vote
for shareholder proposals calling for the reduction of GHG emissions.
|
• |
Vote
for shareholder proposals seeking reports on responses to regulatory and
public pressures surrounding climate change, and for disclosure of
research that aided in setting company policies around climate change.
|
• |
Vote
for shareholder proposals requesting a report/disclosure of goals on GHG
emissions from company operations and/or products.
|
• |
Vote
case-by-case on shareholder proposals that request the company to its
upcoming/approved climate transition action plan and provide shareholders
the opportunity to express approval or disapproval of its GHG emissions
reduction plan. Factors such as the completeness and rigor of the
company’s climate-related disclosure, the company’s actual GHG emissions
performance, whether the company has been the subject of recent,
significant violations, fines, litigation, or controversy related to its
GHG emissions, and whether the proposal’s request is unduly burdensome
(scope or timeframe) or overly prescriptive will be taken into account.
|
• |
The
extent to which the company’s climate related disclosures are in line with
TCFD recommendations and meet other market standards;
|
• |
Disclosure
of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);
|
• |
The
completeness and rigor of company’s short-, medium-, and long-term targets
for reducing operational and supply chain GHG emissions in line with Paris
Agreement goals (Scopes 1, 2, and 3 if relevant);
|
• |
Whether
the company has sought and received third-party approval that its targets
are science-based; |
• |
Whether
the company has made a commitment to be “net zero” for operational and
supply chain emissions (Scopes 1, 2, and 3) by 2050;
|
16 |
Variations of this request
also include climate transition related ambitions, or commitment to
reporting on the implementation of a climate
plan. |
|
B-265 |
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|
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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• |
Whether
the company discloses a commitment to report on the implementation of its
plan in subsequent years; |
• |
Whether
the company’s climate data has received third-party assurance;
|
• |
Disclosure
of how the company’s lobbying activities and its capital expenditures
align with company strategy; |
• |
Whether
there are specific industry decarbonization challenges; and
|
• |
The
company’s related commitment, disclosure, and performance compared to its
industry peers. |
6. |
Other Items |
• |
Valuation - Is the value
to be received by the target shareholders (or paid by the acquirer)
reasonable? While the fairness opinion may provide an initial starting
point for assessing valuation reasonableness, Sustainability places
emphasis on the offer premium, market reaction, and strategic rationale;
|
• |
Market
reaction - How has the market responded to the proposed
deal? A negative market reaction will cause Sustainability to scrutinize a
deal more closely; |
• |
Strategic rationale -
Does the deal make sense strategically? From where is the value derived?
Cost and revenue synergies should not be overly aggressive or optimistic,
but reasonably achievable. Management should also have a favorable track
record of successful integration of historical acquisitions;
|
• |
Conflicts of interest -
Are insiders benefiting from the transaction disproportionately and
inappropriately as compared to non-insider shareholders? Sustainability
will consider whether any special interests may have influenced these
directors and officers to support or recommend the merger;
|
• |
Governance - Will the
combined company have a better or worse governance profile than the
current governance profiles of the respective parties to the transaction?
If the governance profile is to change for the worse, the burden is on the
company to prove that other issues (such as valuation) outweigh any
deterioration in governance. |
• |
Stakeholder impact -
Impact on community stakeholders including impact on workforce,
environment, etc. |
|
B-266 |
|
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|
|
INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
The
parties on either side of the transaction; |
• |
The
nature of the asset to be transferred/service to be provided;
|
• |
The
pricing of the transaction (and any associated professional valuation);
|
• |
The
views of independent directors (where provided);
|
• |
The
views of an independent financial adviser (where appointed);
|
• |
Whether
any entities party to the transaction (including advisers) is conflicted;
and |
• |
The
stated rationale for the transaction, including discussions of timing.
|
• |
Transactions
involving the sale or purchase of property and/or assets;
|
• |
Transactions
involving the lease of property and/or assets;
|
• |
Transactions
involving the provision or receipt of services or leases; and
|
• |
Transactions
involving the acquisition or transfer of intangible items (e.g., research
and development, trademarks, license agreements).
|
• |
Jurisdiction
of incorporation; |
• |
Board
rationale for adopting exclusive forum;
|
• |
Legal
actions subject to the exclusive forum provision;
|
• |
Evidence
of past harm as a result of shareholder legal action against the
company originating outside of the jurisdiction of
incorporation; |
|
B-267 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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|
• |
Company
corporate governance provisions and shareholder rights;
|
• |
Any
other problematic provisions that raise concerns regarding
shareholder rights. |
7. |
Foreign Private Issuers
|
|
B-268 |
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INTERNATIONAL
2024
SUSTAINABILITY PROXY VOTING GUIDELINES |
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B-269 |
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