|
Class
N
(formerly,
Institutional
Class) |
Class
A |
Class
I |
Class
K |
SSGA
Domestic Equity Funds | ||||
STATE
STREET S&P 500 INDEX FUND |
SVSPX |
N/A |
N/A |
N/A |
SSGA
International Equity Funds | ||||
STATE
STREET INTERNATIONAL STOCK SELECTION FUND |
SSAIX |
SSILX |
SSIPX |
SSIQX |
Fund |
2022 |
2021 |
State
Street S&P 500 Index Fund |
2% |
4% |
State
Street International Stock Selection Fund |
120% |
111% |
Name,
Address,
and
Year of Birth |
Position(s)
Held
With
Trust |
Term
of
Office
and
Length
of
Time
Served |
Principal
Occupation
During
Past
Five
Years
and
Relevant
Experience |
Number
of
Funds
in
Fund
Complex
Overseen
by
Trustee† |
Other
Directorships
Held
by
Trustee
During
Past
Five
Years |
INDEPENDENT
TRUSTEES | |||||
MICHAEL
F. HOLLAND(1)
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1944 |
Trustee
and
Co-Chairperson
of
the Board |
Term:
Indefinite
Elected:
1/14 |
Chairman,
Holland &
Company
L.L.C.
(investment
adviser)
(1995
– present). |
56 |
Director,
the Holland
Series
Fund, Inc.;
Director,
The China
Fund,
Inc. (1992 –
2017);
Director, The
Taiwan
Fund, Inc. (2007
–
2017); Director,
Reaves
Utility Income
Fund,
Inc.; and Director,
Blackstone/GSO
Loans
(and
Real Estate)
Funds. |
PATRICK
J. RILEY
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1948 |
Trustee
and
Co-Chairperson
of
the Board |
Term:
Indefinite
Elected:
1988 |
Associate
Justice of the
Superior
Court,
Commonwealth
of
Massachusetts
(2002 –
May
2010); Partner,
Riley,
Burke & Donahue,
L.L.P.
(law firm) (1985 –
2002);
Independent
Director,
State Street
Global
Advisors Europe
Limited
(investment
company)
(1998 –
present);
Independent
Director,
SSGA Liquidity
plc
(formerly, SSGA
Cash
Management Fund
plc)
(1998 – present);
Independent
Director,
SSGA
Fixed Income plc
(January
2009 –
present);
Independent
Director,
SSGA Qualified
Funds
PLC (January
2009
– 2019. |
56 |
Board
Director and
Chairman,
SPDR
Europe
1PLC Board
(2011
– present); Board
Director
and Chairman,
SPDR
Europe II, PLC
(2013
– present). |
JOHN
R. COSTANTINO
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1946 |
Trustee
and
Chairperson
of
the
Qualified
Legal
Compliance
Committee |
Term:
Indefinite
Elected:
12/18 |
Senior
Advisor to NGN
Capital
LLC (January
2020
– present);
Managing
General
Partner,
NGN Capital
LLC
(2006 – December
2019). |
56 |
Director
of Kleinfeld
Bridal
Corp. (January
2016
– present); Trustee
of
Neuroscience
Research
Institute (1986
–
2017); Trustee of
Fordham
University
(1989
– 1995 and 2001
–
2007) and Trustee
Emeritus
(2007 –
present);
Trustee and
Independent
Chairperson
of GE
Funds
(1993 – February
2011);
Director,
Muscular
Dystrophy
Association
(2019 –
present);
Trustee of
Gregorian
University
Foundation
(1992 –
2007);
Chairman of the
Board
of Directors,
Vivaldi
Biosciences Inc. |
Name,
Address,
and
Year of Birth |
Position(s)
Held
With
Trust |
Term
of
Office
and
Length
of
Time
Served |
Principal
Occupation
During
Past
Five
Years
and
Relevant
Experience |
Number
of
Funds
in
Fund
Complex
Overseen
by
Trustee† |
Other
Directorships
Held
by
Trustee
During
Past
Five
Years |
|
|
|
|
|
(May
2017 - present);
Chairman
of the
Supervisory
Board,
Vivaldi
Biosciences AG.
(May
2017 - present);
Trustee,
Gallim Dance
(December
2021 -
present). |
MICHAEL
A. JESSEE
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1946 |
Trustee
and
Chairperson
of
the
Valuation
Committee |
Term:
Indefinite
Appointed:
7/16
Elected:
12/18 |
Retired;
formerly,
President
and Chief
Executive
Officer of the
Federal
Home Loan
Bank
of Boston (1989 –
2009);
Trustee,
Randolph-Macon
College
(2004 – 2016). |
56 |
None. |
MARGARET
MCLAUGHLIN
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1967 |
Trustee |
Term:
Indefinite
Appointed:
9/22 |
Consultant,
Bates Group
(consultants)
(since
2020);
Consultant,
Madison
Dearborn
Partners
(private equity)
(2019
– 2020); General
Counsel/CCO,
Kramer
Van
Kirk Credit
Strategies
L.P./Mariana
Systems
LLC
(Investment
Adviser/SaaS
Technology)
(2011 –
2019). |
56 |
Director,
Manning &
Napier
Fund Inc (2021 –
2022). |
GEORGE
M. PEREIRA
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1964 |
Trustee |
Term:
Indefinite
Appointed:
9/22 |
Chief
Operating Officer
(January
2011 –
September
2020) and
Chief
Financial Officer
(November
2004 –
September
2020),
Charles
Schwab
Investment
Management. |
56 |
Director,
Pacific Premier
Bancorp,
Pacific Premier
Bank
(2021 – present);
Director,
Charles
Schwab
Asset
Management
(Ireland)
Ltd.,
& Charles Schwab
Worldwide
Funds plc.
(2005
– 2020); Director,
Rotaplast
International,
Inc.
(non-profit providing
free
medical services to
children
worldwide)
(2012
– 2018). |
DONNA
M. RAPACCIOLI
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1962 |
Trustee
and
Chairperson
of
the
Audit
Committee |
Term:
Indefinite
Elected:
12/18 |
Dean
of the Gabelli
School
of Business
(2007
– June 2022) and
Accounting
Professor
(1987
– present) at
Fordham
University. |
56 |
Director-
Graduate
Management
Admissions
Council
(2015
– present);
Trustee
of Emmanuel
College
(2010 – 2019). |
RICHARD
D. SHIRK
c/o
SSGA Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1945 |
Trustee
and
Chairperson
of
the
Nominating
Committee
and
Chairperson
of
the
Governance
Committee |
Term:
Indefinite
Elected:
1988 |
Chairman
(March 2001 -
April
2002), President
and
Chief Executive
Officer
(1996 - March
2001),
Cerulean
Companies,
Inc. (holding
company)
(Retired);
President
and Chief
Executive
Officer, Blue
Cross
Blue Shield of
Georgia
(health insurer,
managed
healthcare)
(1992
- March 2001). |
56 |
Chairman
and Board
Member
(1998 -
December
2008) and
Investment
Committee
Member
(December
2008
- present),
Healthcare
Georgia
Foundation
(private
foundation);
Lead
Director
and Board
Member,
Amerigroup
Corp.
(managed health
care)
(September 2002 |
Name,
Address,
and
Year of Birth |
Position(s)
Held
With
Trust |
Term
of
Office
and
Length
of
Time
Served |
Principal
Occupation
During
Past
Five
Years
and
Relevant
Experience |
Number
of
Funds
in
Fund
Complex
Overseen
by
Trustee† |
Other
Directorships
Held
by
Trustee
During
Past
Five
Years |
|
|
|
|
|
–
2012); Board Member
(1999
- 2013) and
Investment
Committee
Member
(2001 - 2017),
Woodruff
Arts Center;
Trustee,
Gettysburg
College
(2003 - 2009);
Board
member,
Aerocare
Holdings
(2003
- January 2021),
Regenesis
Biomedical
Inc.
(April 2012 -
present). |
INTERESTED
TRUSTEE(2) | |||||
ELLEN
M. NEEDHAM(3)
SSGA
Funds
Management,
Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1967 |
Trustee
and
President |
Term:
Indefinite
Elected:
12/18 |
Chairman,
SSGA Funds
Management,
Inc.
(March
2020 – present);
President
and Director,
SSGA
Funds
Management,
Inc. (2001
–
present)*; Senior
Managing
Director, State
Street
Global Advisors
(1992
– present)*;
Manager,
State Street
Global
Advisors Funds
Distributors,
LLC (May
2017
– present). |
56 |
Board
Director, SSGA
SPDR
ETFs Europe I
plc
(May 2020 –
present);
Board Director,
SSGA
SPDR ETFs
Europe
II plc (May 2020
–
present). |
Name,
Address,
and
Year of Birth |
Position(s)
Held
With
Trust |
Term
of
Office
and
Length
of
Time
Served |
Principal
Occupation
During
Past Five Years |
OFFICERS: | |||
ELLEN
M. NEEDHAM
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1967 |
President,
Trustee |
Term:
Indefinite
Elected:
10/12 |
Chairman,
SSGA Funds Management, Inc. (March 2020
–
present); President and Director, SSGA Funds
Management,
Inc. (2001 – present)*; Senior Managing
Director,
State Street Global Advisors (1992 – present)*;
Manager,
State Street Global Advisors Funds
Distributors,
LLC (May 2017 – present). |
BRUCE
S. ROSENBERG
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1961 |
Treasurer |
Term:
Indefinite
Elected:
2/16 |
Managing
Director, State Street Global Advisors and
SSGA
Funds Management, Inc. (July 2015 – present);
Director,
Credit Suisse (April 2008 – July 2015). |
ANN
M. CARPENTER
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1966 |
Vice
President and
Deputy
Treasurer |
Term:
Indefinite
Elected:
10/12
Term:
Indefinite
Elected:
2/16 |
Chief
Operating Officer, SSGA Funds Management, Inc.
(April
2005 – present)*; Managing Director, State Street
Global
Advisors (April 2005 –
present).* |
Name,
Address,
and
Year of Birth |
Position(s)
Held
With
Trust |
Term
of
Office
and
Length
of
Time
Served |
Principal
Occupation
During
Past Five Years |
CHAD
C. HALLETT
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1969 |
Deputy
Treasurer |
Term:
Indefinite
Elected:
2/16 |
Vice
President, State Street Global Advisors and SSGA
Funds
Management, Inc. (November 2014 – present). |
DARLENE
ANDERSON-VASQUEZ
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1968 |
Deputy
Treasurer |
Term:
Indefinite
Elected:
11/16 |
Managing
Director, State Street Global Advisors and
SSGA
Funds Management, Inc. (May 2016 – present);
Senior
Vice President, John Hancock Investments
(September
2007 – May 2016). |
ARTHUR
A. JENSEN
SSGA
Funds Management, Inc.
1600
Summer Street
Stamford,
CT 06905
YOB:
1966 |
Deputy
Treasurer |
Term:
Indefinite
Elected:
9/17 |
Vice
President, State Street Global Advisors and SSGA
Funds
Management, Inc. (July 2016 – present); Mutual
Funds
Controller, GE Asset Management Incorporated
(April
2011 – July 2016). |
DAVID
LANCASTER
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1971 |
Assistant
Treasurer |
Term:
Indefinite
Elected:
11/20 |
Vice
President, State Street Global Advisors and SSGA
Funds
Management, Inc. (July 2017 – present);
Assistant
Vice President, State Street Bank and Trust
Company
(November 2011 – July 2017).* |
RYAN
HILL
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1982 |
Assistant
Treasurer |
Term:
Indefinite
Elected:
5/22 |
Vice
President, State Street Global Advisors and SSGA
Funds
Management, Inc. (May 2017 – present);
Assistant
Vice President, State Street Bank and Trust
Company
(May 2014 – May 2017). |
JOHN
BETTENCOURT
SSGA
Funds Management, Inc.
One
Iron Street,
Boston,
MA 02210
YOB:1976 |
Assistant
Treasurer |
Term:
Indefinite
Elected:
5/22 |
Vice
President, State Street Global Advisors and SSGA
Funds
Management, Inc. (March 2020 – present);
Assistant
Vice President, State Street Global Advisors
(June
2007 – March 2020). |
BRIAN
HARRIS
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1973 |
Chief
Compliance
Officer,
Anti-
Money
Laundering
Officer
and Code
of
Ethics
Compliance
Officer |
Term:
Indefinite
Elected:
11/13
Term:
Indefinite
Elected:
9/16 |
Managing
Director, State Street Global Advisors and
SSGA
Funds Management, Inc. (June 2013 – present).* |
SEAN
O'MALLEY
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1969 |
Chief
Legal Officer |
Term:
Indefinite
Elected:
8/19 |
Senior
Vice President and Deputy General Counsel,
State
Street Global Advisors (November 2013 –
present). |
DAVID
BARR
SSGA
Funds Management, Inc.
One
Iron Street,
Boston,
MA 02210
YOB:1974 |
Secretary |
Term:
Indefinite
Elected:
9/20 |
Vice
President and Senior Counsel, State Street Global
Advisors
(October 2019 – present); Vice President and
Counsel,
Eaton Vance Corp. (October 2010 – October
2019). |
DAVID
URMAN
SSGA
Funds Management, Inc.
One
Iron Street
Boston,
MA 02210
YOB:
1985 |
Assistant
Secretary |
Term:
Indefinite
Elected:
8/19 |
Vice
President and Senior Counsel, State Street Global
Advisors
(April 2019 – present); Vice President and
Counsel,
State Street Global Advisors (August 2015 –
April
2019); Associate, Ropes & Gray LLP (November
2012
– August 2015). |
Name
of Trustee |
Aggregate
Compensation
from
the Trust |
Pension
or
Retirement
Benefits
Accrued
as
Part
of Trust
Expenses |
Estimated
Annual
Benefits
Upon
Retirement |
Total
Compensation
from
the Trust and
Fund
Complex
Paid
to Trustees |
Independent
Trustees: | ||||
Michael
F. Holland |
$13,273 |
$0 |
$0 |
$405,000 |
Patrick
J. Riley |
$13,273 |
$0 |
$0 |
$405,000 |
John
R. Costantino |
$10,703 |
$0 |
$0 |
$345,000 |
Michael
A. Jessee |
$10,703 |
$0 |
$0 |
$345,000 |
Donna
M. Rapaccioli |
$10,703 |
$0 |
$0 |
$345,000 |
Richard
D. Shirk |
$10,703 |
$0 |
$0 |
$345,000 |
Margaret
McLaughlin(1) |
$0 |
$0 |
$0 |
$0 |
George
M. Pereira(1) |
$0 |
$0 |
$0 |
$0 |
Bruce
D. Taber(2) |
$2,648 |
$0 |
$0 |
$94,350 |
Interested
Trustee: | ||||
Ellen
M. Needham |
$0 |
$0 |
$0 |
$0 |
Name
of Trustee |
Fund |
Dollar
Range Of
Equity
Securities In
Each
Fund |
Aggregate
Dollar Range
Of
Equity Securities In
All
Registered Investment
Companies
Overseen By
Trustees
In Family of
Investment
Companies |
Independent
Trustees: |
|
|
|
Michael
F. Holland |
None |
None |
None |
Patrick
J. Riley |
State Street
S&P 500 Index Fund |
Over
$100,000 |
Over
$100,000 |
John
R. Costantino |
None |
None |
None |
Michael
A. Jessee |
None |
None |
None |
Donna
M. Rapaccioli |
None |
None |
None |
Margaret
McLaughlin(1) |
None |
None |
None |
George
M. Pereira(1) |
None |
None |
None |
Richard
D. Shirk |
None |
None |
Over
$100,000 |
Interested
Trustee: |
|
|
|
Ellen
M. Needham |
None |
None |
None |
Fund |
2022 |
2021 |
2020 |
State
Street S&P 500 Index Fund |
$466,243 |
$465,341 |
$459,670 |
State
Street International Stock Selection Fund |
$1,340,152 |
$1,417,507 |
$1,366,304 |
Fund |
Expense
Limitation |
State
Street S&P 500 Index Fund |
0.157% |
State
Street International Stock Selection Fund |
0.75% |
Fund |
2022 |
2021 |
2020 |
State
Street S&P 500 Index Fund |
$271,063 |
$402,895 |
$503,835 |
State
Street International Stock Selection Fund |
$430,560 |
$492,916 |
$517,114 |
Portfolio
Manager |
Registered
Investment
Company
Accounts |
Assets
Managed
(billions) |
Other
Pooled
Investment
Vehicle
Accounts |
Assets
Managed
(billions) |
Other
Accounts |
Assets
Managed
(billions) |
Total
Assets
Managed
(billions) |
Adel
Daghmouri |
1 |
$0.37 |
34* |
$5.99* |
22** |
$8.14** |
$14.50 |
Emiliano
Rabinovich |
134 |
$834.42 |
379 |
$691.90 |
518 |
$463.00 |
$1,989.32 |
Karl
Schneider |
134 |
$834.42 |
379 |
$691.90 |
518 |
$463.00 |
$1,989.32 |
Amy
Scofield |
134 |
$834.42 |
379 |
$691.90 |
518 |
$463.00 |
$1,989.32 |
Fund |
2022 |
2021 |
2020 |
State
Street S&P 500 Index Fund |
$777,072 |
$775,568 |
$766,117 |
State
Street International Stock Selection Fund |
$89,344 |
$94,501 |
$91,087 |
Fund |
2022 |
2021 |
2020 |
State
Street S&P 500 Index Fund |
$79,309 |
$118,882 |
$118,490 |
State
Street International Stock Selection Fund |
$102,455 |
$120,593 |
$135,755 |
|
Gross
income
earned
by
the
Fund
from
securities
lending
activities |
Fees
and/or compensation paid by the Fund for securities lending activities
and
related
services |
Aggregate
fees
and/or
compensation
paid
by
the
Fund
for
securities
lending
activities
and
related
services |
Net
income
from
securities
lending
activities | |||||
Fees
paid
to
State
Street
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 a
revenue
split |
Admini-
strative
fees
not
included
in
a
revenue
split |
Indemnifi-
cation
fees
not
included
in
a
revenue
split |
Rebate
(paid
to
borrower) |
Other
fees
not
included
in
a
revenue
split | ||||
State
Street
International
Stock
Selection
Fund |
$105,251 |
$12,009 |
$693 |
$0 |
$0 |
$7,089 |
$0 |
$19,791 |
$85,460 |
State
Street S&P
500
Index
Fund |
$15,551 |
$396 |
$487 |
$0 |
$0 |
$11,560 |
$0 |
$12,443 |
$3,108 |
|
Annual
12b-1 Fee |
Class
N |
0.25% |
Class
A |
0.25% |
Class
I |
0.00% |
Class
K |
0.00% |
Fund
– Class N |
2022 |
2021 |
2020 |
State
Street S&P 500 Index Fund |
$948,028 |
$946,192 |
$934,663 |
State
Street International Stock Selection Fund |
$258,505 |
$277,660 |
$294,635 |
Fund
– Class A |
2022 |
2021 |
2020 |
State
Street International Stock Selection Fund |
$10,583 |
$11,268 |
$10,257 |
Fund
- Class N |
Advertising |
Printing |
Compensation to
Dealers |
Compensation
to
Sales
Personnel |
Other* |
State
Street S&P 500 Index Fund |
$10 |
$401 |
$799,554 |
$196,447 |
$159,558 |
State
Street International Stock Selection
Fund |
$1 |
$27 |
$224,142 |
$13,174 |
$10,707 |
Fund
- Class A |
Advertising |
Printing |
Compensation to
Dealers |
Compensation
to
Sales
Personnel |
Other* |
State
Street International Stock Selection
Fund |
$0 |
$1 |
$10,578 |
$535 |
$435 |
Fund |
2022 |
2021 |
2020 |
State
Street International Stock Selection Fund |
$119,512 |
$111,467 |
$115,595 |
State
Street S&P 500 Index Fund |
$10,219 |
$35,671 |
$26,848 |
J.P.
Morgan Securities LLC |
$13,689,908.00 |
BofA
Securities, Inc. |
$9,796,172.00 |
Wells
Fargo Securities, LLC |
$6,759,577.00 |
Morgan
Stanley & Co. LLC |
$4,930,914.00 |
Goldman
Sachs & Co. LLC |
$4,719,922.00 |
Citigroup
Global Markets Inc. |
$3,845,886.00 |
UBS
Securities LLC |
$2,000,410.00 |
SG
Americas Securities, LLC |
$699,391.00 |
BNP
Paribas Securities Corp. |
$36,711.00 |
|
|
|
March
2022 |
|
Global
Proxy Voting and
Engagement
Principles |
|
State
Street Global Advisors, one of the industry's
largest
institutional asset managers, is the investment
management
arm of State Street Corporation, a leading
provider
of financial services to institutional investors. As
an
investment manager, State Street Global Advisors
has
discretionary proxy voting authority over most of its
client
accounts, and State Street Global Advisors votes
these
proxies in the manner that we believe will most
likely
protect and promote the long-term economic value
of
client investments, as described in this document.i |
|
|
|
|
|
|
|
State
Street Global Advisors maintains Proxy Voting and Engagement Guidelines
for select
markets,
including: Australia, continental Europe, Japan, New Zealand, North
America
(Canada
and the US), the UK and Ireland, and emerging markets. International
markets
not
covered by our market-specific guidelines are reviewed and voted in a
manner that is
consistent
with our Global Proxy Voting and Engagement Principles (the “Principles”);
however,
State Street Global Advisors also endeavors to show sensitivity to local
market
practices
when voting in these various markets. In limited circumstances, certain
pooled
investment
vehicles for which State Street Global Advisors acts as investment manager
may,
pursuant to their governing documents, utilize proxy voting guidelines
developed by
third-party
advisors. |
|
|
State
Street Global
Advisors'
Approach to
Proxy
Voting and Issuer
Engagement |
At
State Street Global Advisors, we take our fiduciary duties as an asset
manager very
seriously.
We have a dedicated team of corporate governance professionals who help us
carry
out our duties as a responsible investor. These duties include engaging
with
companies,
developing and enhancing in-house corporate governance guidelines,
analyzing
corporate governance issues on a case-by-case basis at the company level,
and
exercising
our voting rights. The underlying goal is to maximize shareholder
value. |
|
The
Principles may take different perspectives on common governance issues
that vary
from
one market to another. Similarly, engagement activity may take different
forms in
order
to best achieve long-term engagement goals. We believe that proxy voting
and
engagement
with portfolio companies is often the most direct and productive way for
shareholders
to exercise their ownership rights. This comprehensive toolkit is an
integral
part
of the overall investment process. |
|
We
believe engagement and voting activity have a direct relationship. As a
result, the
integration
of our engagement activities, while leveraging the exercise of our voting
rights,
provides
a meaningful shareholder tool that we believe protects and enhances the
long-term
economic value of the holdings in our client accounts. We maximize our
voting
power
and engagement by maintaining a centralized proxy voting and active
ownership
process
covering all holdings, regardless of strategy. Despite the vast investment
strategies
and objectives across State Street Global Advisors, the fiduciary
responsibilities
of
share ownership and voting for which State Street Global Advisors has
voting discretion
are
carried out with a single voice and objective. In those limited
circumstances in which
State
Street Global Advisors acts as investment manager to a pooled investment
vehicle
that,
pursuant to its governing documents, utilizes guidelines developed by a
third-party
advisor,
the proxy votes implemented with respect to such a fund may differ from
and be
contrary
to those votes implemented for other portfolios managed by State Street
Global
Advisors
pursuant to its proprietary proxy voting guidelines. With respect to such
funds
utilizing
third-party guidelines, the terms of the applicable third-party guidelines
shall apply
in
place of the Principles described
herein. |
|
The
Principles support governance structures that we believe add to, or
maximize,
shareholder
value for the companies held in our clients' portfolios. We conduct issuer
specific
engagements with companies to discuss our principles, including
sustainability-
related
risks. In addition, we encourage issuers to find ways to increase the
amount of
direct
communication board members have with shareholders. Direct communication
with
executive
board members and independent non-executive directors is critical to
helping
companies
understand shareholder concerns. Conversely, we conduct collaborative
engagement
activities with multiple shareholders and communicate with company
representatives
about common concerns where appropriate. |
|
In
conducting our engagements, we also evaluate the various factors that
influence the
corporate
governance framework of a country, including the macroeconomic conditions
and
broader political system, the quality of regulatory oversight, the
enforcement of
property
and shareholder rights, and the independence of the judiciary. We
understand
that
regulatory requirements and investor expectations relating to governance
practices
and
engagement activities differ from country to country. As a result, we
engage with
issuers,
regulators, or a combination of the two depending upon the market. We are
also a
member
of various investor associations that seek to address broader corporate
governance-related
policy at the country level, as well as issuer-specific concerns at a
company
level. |
|
The
State Street Global Advisors Asset Stewardship Team may collaborate with
members
of
the Active Fundamental and various other investment teams to engage with
companies
on
corporate governance issues and to address any specific concerns. This
facilitates our
comprehensive
approach to information gathering as it relates to shareholder items that
are
to be voted upon at upcoming shareholder meetings. We also conduct
issuer-specific
engagements
with companies, covering various corporate governance and
sustainability-
related
topics outside of proxy season. |
|
The
Asset Stewardship Team employs a blend of quantitative and qualitative
research,
analysis
and data in order to support screens that identify issuers where active
engagement
may be necessary to protect and promote shareholder value. Issuer
engagement
may also be event driven, focusing on issuer-specific corporate
governance,
sustainability
concerns, or more broad industry-related trends. We also consider the size
of
our
total position of the issuer in question and/or the potential negative
governance,
performance
profile, and circumstance at hand. As a result, we believe issuer
engagement
can
take many forms and be triggered by numerous circumstances. The following
approaches
represent how we define engagement methods: |
|
|
Active |
We
use screening tools designed to capture a mix of company-specific data,
including
governance
and sustainability profiles, to help us focus our voting and engagement
activity. |
|
We
will actively seek direct dialogue with the board and management of
companies that
we
have identified through our screening processes. Such engagements may lead
to
further
monitoring to ensure that the company improves its governance or
sustainability
practices.
In these cases, the engagement process represents the most meaningful
opportunity
for us to protect long-term shareholder value from excessive risk due to
poor
governance
and sustainability practices. |
|
|
Reactive |
Reactive
engagement is initiated by the issuers. We routinely discuss specific
voting issues
and
items with the issuer community. Reactive engagement is an opportunity to
address
not
only voting items, but also a wide range of governance and sustainability
issues. |
|
We
have established an engagement protocol that further describes our
approach to
issuer
engagement. |
|
|
Measurement |
Assessing
the effectiveness of our issuer engagement process is often difficult. In
order to
limit
the subjectivity of effectiveness measurement, we actively seek issuer
feedback and
monitor
the actions issuers take post-engagement in order to identify tangible
changes.
Thus,
we are able to establish indicators to gauge how issuers respond to our
concerns
and
to what degree these responses satisfy our requests. It is also important
to note that
successful
engagement activity can be measured over differing time periods depending
upon
the relevant facts and circumstances. Engagements can last as briefly as a
single
meeting
or span multiple years. |
|
Depending
upon the issue and whether the engagement activity is reactive, recurring,
or
active,
engagement with issuers can take the form of written communication,
conference
calls,
or in-person meetings. We believe active engagement is best conducted
directly with
company
management or board members. Collaborative engagement, where multiple
shareholders
communicate with company representatives, can serve as a potential forum
for
issues that are not identified by us as requiring active engagement. An
example of such
a
forum is a shareholder conference call. |
|
|
Proxy
Voting Procedure |
|
|
|
Oversight |
The
Asset Stewardship Team is responsible for developing and implementing
State Street
Global
Advisors' proprietary Proxy Voting and Engagement Guidelines (the
“Guidelines”),
the
implementation of third-party proxy voting guidelines where applicable,
case-by-case
voting
items, issuer engagement activities, and research and analysis of
governance-
related
issues. The Stewardship Team's activities are overseen by the State Street
Global
Advisors
ESG Committee. The ESG Committee is responsible for reviewing State Street
Global
Advisors' stewardship strategy, engagement priorities, and proxy voting
guidelines
and
monitors the delivery of voting objectives. In addition, the ESG Committee
provides
oversight
of the State Street Global Advisors Stewardship Team, reviews departures
from
State
Street Global Advisors' proxy voting guidelines, and reviews conflicts of
interest
involving
proxy voting. |
|
|
Proxy
Voting Process |
In
order to facilitate our proxy voting process, we retain Institutional
Shareholder Services
Inc.
(“ISS”),
a firm with expertise in proxy voting and corporate governance. We utilize
ISS
to:
(1) act as our proxy voting agent (providing State Street Global
Advisors with vote
execution
and administration services), (2) assist in applying the Guidelines,
(3) provide
research
and analysis relating to general corporate governance issues and specific
proxy
items,
and (4) provide proxy voting guidelines in limited
circumstances. |
|
The
Asset Stewardship Team reviews with ISS its Guidelines and the services
that ISS
provides
to State Street Global Advisors on an annual or case-by-case basis. As
part of its
role
as proxy agent and prior to providing vote execution services, ISS
pre-populates on an
electronic
platform certain preliminary proxy votes in accordance with the proxy
voting
guidelines
identified by State Street Global Advisors. On most routine proxy voting
items
(e.g.,
ratification of auditors), ISS will shortly before applicable submission
deadlines use
an
automated process to affect the pre-populated proxy votes. To the extent
the Asset
Stewardship
Team becomes aware of material new information within a reasonable period
of
time before ISS affects such votes, the Asset Stewardship Team will assess
whether the
pre-populated
votes should be updated. |
|
In
other cases, the Asset Stewardship Team will evaluate the proxy
solicitation to
determine
how to vote based upon the facts and circumstances, consist with our
Principles
and
accompanying Guidelines. |
|
In
some instances, the Asset Stewardship Team may refer significant issues to
the ESG
Committee
for a determination of the proxy vote. In addition, in determining whether
to
refer
a proxy vote to the ESG Committee, the Asset Stewardship Team will
consider
whether
a material conflict of interest exists between the interests of our client
and those
of
State Street Global Advisors or its affiliates (as explained in greater
detail in our Conflict
Mitigation
Guidelines). |
|
We
vote in all markets where it is feasible; however, we may refrain from
voting meetings
when
power of attorney documentation is required, where voting will have a
material
impact
on our ability to trade the security, where voting is not permissible due
to sanctions
affecting
a company or an individual, where issuer-specific special documentation is
required,
or where various market or issuer certifications are required. We are
unable to
vote
proxies when certain custodians, used by our clients, do not offer proxy
voting in a
jurisdiction
or when they charge a meeting specific fee in excess of the typical
custody
service
agreement. |
|
|
Conflict
of Interest |
See
our standalone Conflict Mitigation Guidelines. |
|
|
Proxy
Voting and
Engagement
Principles |
|
|
|
Directors
and Boards |
The
election of directors is one of the most important fiduciary duties we
perform as a
shareholder.
We believe that well-governed companies can protect and pursue shareholder
interests
better and withstand the challenges of an uncertain economic environment.
As
such,
we seek to vote director elections in a way that we believe will maximize
the
long-term
value of each portfolio's
holdings. |
|
Principally,
a board acts on behalf of shareholders by protecting their interests and
preserving
their rights. This concept establishes the standard by which board and
director
performance
is measured. In order to achieve this fundamental principle, the role of
the
board
is to carry out its responsibilities in the best long-term interest of the
company and
its
shareholders. An independent and effective board oversees management,
provides
guidance
on strategic matters, selects the CEO and other senior executives, creates
a
succession
plan for the board and management, provides risk oversight, and assesses
the
performance
of the CEO and management. In contrast, management implements the
business
and capital allocation strategies and runs the company's day-to-day
operations.
As
part of our engagement process, we routinely discuss the importance of
these
responsibilities
with the boards of issuers. |
|
We
believe the quality of a board is a measure of director independence,
director
succession
planning, board diversity, evaluations and refreshment, and company
governance
practices. In voting to elect nominees, we consider many factors. We
believe
independent
directors are crucial to good corporate governance; they help management
establish
sound corporate governance policies and practices. A sufficiently
independent
board
will effectively monitor management, maintain appropriate governance
practices,
and
perform oversight functions necessary to protect shareholder interests. We
also
believe
the right mix of skills, independence, diversity, and qualifications among
directors
provides
boards with the knowledge and direct experience to manage risks and
operating
structures
that are often complex and industry-specific. |
|
|
Accounting
and
Audit-Related
Issues |
We
believe audit committees are critical and necessary as part of the board's
risk
oversight
role. The audit committee is responsible for setting out an internal audit
function
that
provides robust audit and internal control systems designed to effectively
manage
potential
and emerging risks to the company's operations and strategy. We believe
audit
committees
should have independent directors as members, and we will hold the members
of
the audit committee responsible for overseeing the management of the audit
function. |
|
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. As a result, board oversight of the internal
controls
and
the independence of the audit process are essential if investors are to
rely upon
financial
statements. It is important for the audit committee to appoint external
auditors
who
are independent from management; we expect auditors to provide assurance
of a
company's
financial condition. |
|
|
Capital
Structure,
Reorganization
and Mergers |
The
ability to raise capital is critical for companies to carry out strategy,
to grow, and to
achieve
returns above their cost of capital. The approval of capital raising
activities is
fundamental
to a shareholder's ability to monitor the amounts of proceeds and to
ensure
capital
is deployed efficiently. Altering the capital structure of a company is a
critical
decision
for boards. When making such a decision, we believe the company should
disclose
a comprehensive business rationale that is consistent with corporate
strategy and
not
overly dilutive to its shareholders. |
|
Mergers
or reorganization of the structure of a company often involve proposals
relating to
reincorporation,
restructurings, liquidations, and other major changes to the
corporation. |
|
Proposals
that are in the best interests of shareholders, demonstrated by enhancing
share
value
or improving the effectiveness of the company's operations, will be
supported. In
evaluating
mergers and acquisitions, we consider the adequacy of the consideration
and
the
impact of the corporate governance provisions to shareholders. In all
cases, we use
our
discretion in order to maximize shareholder
value. |
|
Occasionally,
companies add anti-takeover provisions that reduce the chances of a
potential
acquirer to make an offer, or to reduce the likelihood of a successful
offer. We do
not
support proposals that reduce shareholders' rights, entrench management,
or reduce
the
likelihood of shareholders' right to vote on reasonable
offers. |
|
|
Compensation |
We
consider it the board's responsibility to identify the appropriate level
of executive
compensation.
Despite the differences among the types of plans and the awards possible,
there
is a simple underlying philosophy that guides our analysis of executive
compensation:
we believe that there should be a direct relationship between executive
compensation
and company performance over the long term. |
|
Shareholders
should have the opportunity to assess whether pay structures and levels
are
aligned
with business performance. When assessing remuneration reports, we
consider
factors
such as adequate disclosure of various remuneration elements, absolute and
relative
pay levels, peer selection and benchmarking, the mix of long-term and
short-term
incentives,
alignment of pay structures with shareholder interests, as well as with
corporate
strategy and performance. We may oppose remuneration reports where pay
seems
misaligned with shareholders' interests. We may also consider executive
compensation
practices when re-electing members of the remuneration
committee. |
|
We
recognize that compensation policies and practices are unique from market
to market;
often
there are significant differences between the level of disclosures, the
amount and
forms
of compensation paid, and the ability of shareholders to approve executive
compensation
practices. As a result, our ability to assess the appropriateness of
executive
compensation
is often dependent on market practices and laws. |
|
|
Environmental
and Social
Issues |
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting, and
thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our thematic priorities and build
long-term
relationships
with issuers. When voting, we fundamentally consider whether the adoption
of
a shareholder proposal addressing a material sustainability issue would
promote
long-term
shareholder value in the context of the company's existing practices and
disclosures
as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
our
Frameworks for Voting Environmental and Social Shareholder Proposals, both
available
at
ssga.com/about-us/asset-stewardship.html. |
|
|
General/Routine |
Although
we do not seek involvement in the day-to-day operations of an
organization, we
recognize
the need for conscientious oversight and input into management decisions
that
may
affect a company's value. We support proposals that encourage economically
advantageous
corporate practices and governance, while leaving decisions that are
deemed
to be routine or constitute ordinary business to management and the board
of
directors. |
|
|
Fixed
Income Stewardship |
The
two elements of our fixed income stewardship program
are: |
|
Proxy
Voting: |
|
While
matters that arise for a vote at bondholder meetings vary by jurisdiction,
examples of
common
proxy voting resolutions at bondholder meetings
include: |
|
•Approving
amendments to debt covenants and/or terms of
issuance |
|
•Authorizing
procedural matters, such as filing of required documents/other
formalities |
|
•Approving
debt restructuring plans |
|
•Abstaining
from challenging the bankruptcy trustees |
|
•Authorizing
repurchase of issued debt security |
|
•Approving
the placement of unissued debt securities under the control of
directors |
|
•Approving
spin-off/absorption proposals |
|
Given
the nature of the items that arise for vote at bondholder meetings, we
take a
case-by-case
approach to voting bondholder resolutions. Where necessary, we will engage
with
issuers on voting matters prior to arriving at voting decisions. All
voting decisions will
be
made in the best interest of our clients. |
|
Issuer
Engagement: |
|
We
recognize that debt holders have limited leverage with companies on a
day-to-day
basis.
However, we believe that given the size of our holdings in corporate debt,
we can
meaningfully
influence ESG practices of companies through issuer engagement. Our
guidelines
for engagement with fixed income issuers broadly follow the engagement
guidelines
for our equity holdings as described above. |
|
|
Securities
on Loan |
For
funds in which we act as trustee, we may recall securities in instances
where we
believe
that a particular vote will have a material impact on the fund(s). Several
factors
shape
this process. First, we must receive notice of the vote in sufficient time
to recall the
shares
on or before the record date. In many cases, we do not receive timely
notice, and
we
are unable to recall the shares on or before the record date. Second,
State Street
Global
Advisors may exercise its discretion and recall shares if it believes that
the benefit
of
voting shares will outweigh the foregone lending income. This
determination requires
State
Street Global Advisors, with the information available at the time, to
form judgments
about
events or outcomes that are difficult to quantify. Given our expertise and
vast
experience,
we believe that the recall of securities will rarely provide an economic
benefit
that
outweighs the cost of the foregone lending
income. |
|
|
Reporting |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
Managing
Conflicts of Interest
Arising
From State Street
Global
Advisors' Proxy
Voting
and Engagement
Activity |
|
State
Street Corporation has a comprehensive
standalone
Conflicts of Interest Policy and other policies
that
address a range of conflicts of interests identified.
In
addition, State Street Global Advisors, the asset
management
business of State Street Corporation,
maintains
a conflicts register that identifies key conflicts
and
describes systems in place to mitigate the conflicts.
This
guidancei
is designed to act in conjunction with
related
policies and practices employed by other groups
within
the organization. Further, they complement those
policies
and practices by providing specific guidance on
managing
the conflicts of interests that may arise
through
State Street Global Advisors' proxy voting and
engagement
activities. |
|
|
|
|
|
|
Managing
Conflicts of
Interest
Related to Proxy
Voting |
State
Street Global Advisors has policies and procedures designed to prevent
undue
influence
on State Street Global Advisors' voting activities that may arise from
relationships
between
proxy issuers or companies and State Street Corporation, State Street
Global
Advisors,
State Street Global Advisors affiliates, State Street Global Advisors
Funds or
State
Street Global Advisors Fund affiliates. |
|
Protocols
designed to help mitigate potential conflicts of interest
include: |
|
•Assigning
sole responsibility for the implementation of proxy voting guidelines to
members
of State Street Global Advisors' Asset Stewardship Team. Members of the
Asset
Stewardship team may from time to time discuss views on proxy voting
matters,
company
performance, strategy etc. with other State Street Corporation or State
Street
Global Advisors employees, including portfolio managers, senior executives
and
relationship
managers. However, final voting decisions are made solely by the Asset
Stewardship
team, in a manner that is consistent with the best interests of all
clients,
taking
into account various perspectives on risks and opportunities with a view
of
maximizing
the value of client assets; |
|
•Generally
exercising a singular vote decision for each ballot item regardless of our
investment
strategy;1 |
|
•Prohibiting
members of State Street Global Advisors' Asset Stewardship team from
disclosing
State Street Global Advisors' voting decision to any individual not
affiliated
with
the proxy voting process prior to the meeting or date of written consent,
as the
case
may be; |
|
•Mandatory
disclosure by members of the State Street Global Advisors' Asset
Stewardship
team, ESG Committee and Investment Committee (“IC”)
of any personal
conflict
of interest (e.g., familial relationship with company management, serves
as a
director
on the board of a listed company) to the Global Head of Asset Stewardship,
Voting
& Engagement. Members are required to recuse themselves from any
engagement
or proxy voting activities related to the
conflict; |
|
•In
certain instances, client accounts and/or State Street Global Advisors
pooled funds,
where
State Street Global Advisors acts as trustee, may hold shares in State
Street
Corporation
or other State Street Global Advisors affiliated entities, such as mutual
funds
affiliated with State Street Global Advisors Funds Management, Inc. In
general,
State
Street Global Advisors will outsource any voting decision relating to a
shareholder
meeting of State Street Corporation or other State Street Global Advisors
affiliated
entities to independent outside third parties. Delegated third parties
exercise
vote
decisions based upon State Street Global Advisors's Proxy Voting and
Engagement
Guidelines (“Guidelines”);
and |
|
•Reporting
of overrides of Guidelines, if any, to the ESG Committee on a quarterly
basis. |
|
|
|
In
general, we do not believe matters that fall within proxy voting
guidelines utilized by
State
Street Global Advisors and that are voted consistently with such
guidelines present
any
potential conflicts, since the vote on the matter has effectively been
determined
without
reference to the soliciting entity. However, where matters do not fall
within the
applicable
proxy voting guidelines or where we believe that voting in accordance with
such
guidelines
is unwarranted, we conduct an additional review to determine whether there
is a
conflict
of interest. In circumstances where a conflict has been identified and
either: (i) the
matter
does not fall clearly within the applicable guidelines; or (ii) State
Street Global
Advisors
determines that voting in accordance with such guidance is not in the best
interests
of its clients, the Head of the Asset Stewardship team will determine
whether a
material
relationship exists. If so, the matter is referred to the ESG Committee.
The ESG
Committee
then reviews the matter and determines whether a conflict of interest
exists,
and
if so, how to best resolve such conflict. For example, the ESG Committee
may (i)
determine
that the proxy vote does not give rise to a conflict due to the issues
presented or
(ii)
retain an independent fiduciary to determine the appropriate
vote. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
Global
Proxy Voting and
Engagement
Guidelines for
Environmental
and Social
Issues |
|
|
|
|
Overview |
Our
primary fiduciary obligation to our clients is to maximize the long-term
returns of their
investments.
It is our view that material environmental and social (sustainability)
issues can
present
risks and/or opportunities that impact long-term value creation. This
philosophy
provides
the foundation for our value-based approach to Asset
Stewardship. |
|
We
use our voice and our vote through engagement, proxy voting, and thought
leadership
in
order to communicate with issuers and educate market participants about
our
perspective
on important sustainability topics. |
|
Our
stewardship efforts are rooted in the three pillars of ESG and their
intersections. We
regularly
identify E, S, and G focus areas that guide our proxy voting and
engagement
efforts.
Within these focus areas, we elevate outcome-oriented stewardship
priorities each
year
based on factors including client demand, stakeholder interest, market
trends,
financial
materiality, and portfolio impact. |
|
In
limited circumstances, State Street Global Advisors may act as investment
manager to
pooled
investment vehicles that, pursuant to their governing documents, utilize
guidelines
developed
by a third-party advisor. With respect to such funds utilizing third-party
guidelines,
the voting practices described in the applicable third-party guidelines
will apply
in
place of the voting practices described herein. |
|
|
Our
Approach to
Assessing
Materiality and
Relevance
of Sustain-
ability
Issues |
While
we believe that sustainability-related factors can expose potential
investment risks
as
well as drive long-term value creation, the materiality of specific
sustainability issues
varies
from industry to industry and company by company. With this in mind, we
leverage
several
distinct frameworks as well as additional resources to inform our views on
the
materiality
of a sustainability issue at a given company,
including: |
|
•The
Sustainability Accounting Standards Board's (SASB) Industry
Standards |
|
•The
Task Force on Climate-related Financial Disclosures (TCFD)
Framework |
|
•Disclosure
expectations in a company's given regulatory
environment |
|
•Market
expectations for the sector and industry |
|
•Other
existing third party frameworks, such as the CDP (formally the Carbon
Disclosure
Project) or the Global Reporting Initiative |
|
•Our
proprietary R-FactorTM1
score |
|
We
expect companies to disclose information regarding their approach to
identifying
material
sustainability-related risks and the management policies and practices in
place to
address
such issues. We support efforts by companies to demonstrate the ways in
which
sustainability
is incorporated into operations, business activities, and most
importantly,
long-term
business
strategy. |
|
|
Our
Approach to Sustain-
ability
Through
Engagements |
Our
Asset Stewardship program prioritization process allows us to proactively
identify
companies
for engagement and voting in order to mitigate sustainability risks in our
portfolio.
Our approach is driven by: |
|
1.Proprietary
Screens |
|
We
have developed proprietary in-house sustainability screens to help
identify companies
for
proactive engagement. These screens leverage our proprietary
R-FactorTM
score to
identify
sector and industry outliers for engagement and voting on sustainability
issues. |
|
2.Thematic
Prioritization |
|
As
part of our annual stewardship planning process we identify thematic
sustainability
priorities
that will be addressed during most engagement meetings. We develop our
priorities
based upon several factors, including client feedback, emerging
sustainability
trends,
developing macroeconomic conditions, and evolving regulations. These
engagements
not only inform our voting decisions but also allow us to monitor
improvement
over time and to contribute to our evolving perspectives on priority
areas. |
|
During
the ‘voting season,' we prioritize conversations with companies that have
triggered
our
E&S director voting policies or have received an E&S shareholder
proposal on their
proxy.
In the ‘off-season,' we discuss our thematic focus areas and stewardship
priorities
with
companies for which these topics are most
material. |
|
Through
engagement, we address a broad range of topics that align with our
thematic
priorities
and seek to build long-term relationships with issuers. We view
engagements as
part
of an ongoing dialogue, versus a series of one-off conversations. During
conversations
with issuers, we share expectations and perspectives on of key dimensions
of
E&S, and seek to understand how companies and their boards manage and
oversee
related
risks. |
|
We
also pursue proactive, targeted engagement campaigns with companies for
which our
focus
areas are most material, and/or where improvement is most needed. Through
these
campaigns,
we might make specific asks of companies and measure their progress
against
our expectations. If we feel a company is making insufficient progress on
effective
E&S
risk management, we will consider taking voting action through relevant
shareholder
proposals
or by targeting directors responsible for
oversight. |
|
|
Analyzing
Sustainability
Proposals |
We
take a case-by-case approach to analyzing shareholder proposals related to
sustain-
ability
topics and consider the following factors: |
|
•The
materiality of the sustainability topic in the proposal to the company's
business
and
sector (see “Our
Approach to Assessing Materiality and Relevance of Sustain-
ability
Issues”
above) |
|
•The
content and intent of the proposal |
|
•Whether
the adoption of such a proposal would promote long-term shareholder value
in
the context of the company's disclosure and
practices |
|
•The
strength of board oversight of the company's relevant sustainability
practices |
|
•Quality
of public disclosures on the
topic |
|
•Quality
of engagement and responsiveness to our feedback |
|
•Binding
nature of proposal or prescriptiveness of
proposal |
|
We
also leverage frameworks to analyze certain E&S shareholder proposals.
These
frameworks,
which are not considered formal voting guidelines, can be found on our
website. |
|
|
Vote
Options for Sustain-
ability
Proposals |
•For
(support for proposal) if the issue is material and the company has poor
disclosure
and/or
practices relative to our expectations |
|
•Abstain
(some reservations) if the issue is material and the company's disclosure
and/or
practices could be improved relative to our
expectations. |
|
•Against
(no support for proposal) if the issue is non-material and/or the
company's
disclosure
and/or practices meet our expectations. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
Australia
and New Zealand |
|
Proxy
Voting and
Engagement
Guidelines |
|
State
Street Global Advisors' Australia and New Zealand
Proxy
Voting and Engagement Guidelinesi
outline our
expectations
of companies listed on stock exchanges in
Australia
and New Zealand. These Guidelines
complement
and should be read in conjunction with
State
Street Global Advisors' Global Proxy Voting and
Engagement
Principles, which provide a detailed
explanation
of our approach to voting and engaging with
companies,
and State Street Global Advisors' Conflict
Mitigation
Guidelines. |
|
|
|
|
|
|
|
State
Street Global Advisors' Australia and New Zealand Proxy Voting and
Engagement
Guidelines
address areas including board structure, audit related issues, capital
structure,
remuneration,
environmental, social, and other governance related
issues. |
|
When
voting and engaging with companies in global markets, we consider market
specific
nuances
in the manner that we believe will best protect and promote the long-term
economic
value of client investments. We expect companies to observe the relevant
laws
and
regulations of their respective markets as well as country specific best
practice
guidelines,
and corporate governance codes. We may hold companies in such markets to
our
global standards when we feel that a country's regulatory requirements do
not address
some
of the key philosophical principles that we believe are fundamental to our
global
voting
guidelines. |
|
In
our analysis and research into corporate governance issues in Australia
and New
Zealand,
we expect all companies at a minimum to comply with the ASX Corporate
Governance
Principles and proactively monitor companies' adherence to the principles.
Consistent
with the ‘comply or explain' expectations established by the Principles,
we
encourage
companies to proactively disclose their level of compliance with the
Principles.
In
instances of non-compliance when companies cannot explain the nuances of
their
governance
structure effectively, either publicly or through engagement, we may vote
against
the independent board leader. |
|
|
State
Street Global
Advisors'
Proxy Voting
and
Engagement
Philosophy |
In
our view, corporate governance and sustainability issues are an integral
part of the
investment
process. The Asset Stewardship Team consists of investment professionals
with
expertise in corporate governance and company law, remuneration,
accounting, and
environmental
and social issues. We have established robust corporate governance
principles
and practices that are backed with extensive analytical expertise in order
to
understand
the complexities of the corporate governance landscape. We engage with
companies
to provide insight on the principles and practices that drive our voting
decisions.
We
also conduct proactive engagement to address significant shareholder
concerns and
environmental,
social and governance (“ESG”)
issues in a manner consistent with
maximizing
shareholder value. |
|
The
team works alongside members of State Street Global Advisors' Active
Fundamental
and
Asia-Pacific (“APAC”)
investment teams, collaborating on issuer engagement and
providing
input on company specific fundamentals. We are also a member of various
investor
associations that seek to address broader corporate governance related
policy
issues
in the region. |
|
State
Street Global Advisors is a signatory to the United Nations Principles of
Responsible
Investment
(“UNPRI”).
We are committed to sustainable investing and are working to
further
integrate ESG principles into investment and corporate governance
practices where
applicable
and consistent with our fiduciary
duty. |
|
|
Directors
and Boards |
Principally
we believe the primary responsibility of the board of directors is to
preserve and
enhance
shareholder value and protect shareholder interests. In order to carry out
their
primary
responsibilities, directors have to undertake activities that range from
setting
strategy
and overseeing executive management to monitoring the risks that arise
from a
company's
business, including risks related to sustainability issues. Further, good
corporate
governance necessitates the existence of effective internal controls and
risk
management
systems, which should be governed by the board. |
|
State
Street Global Advisors believes that a well constituted board of directors
with a good
balance
of skills, expertise, and independence provides the foundations for a well
governed
company. We view board quality as a measure of director independence,
director
succession
planning, board diversity, evaluations and refreshment, and company
governance
practices. We vote for the (re-)election of directors on a case-by-case
basis
after
considering various factors including board quality, general market
practice, and
availability
of information on director skills and expertise.
In
our analysis of boards, we consider whether board members have adequate
skills to
provide
effective oversight of corporate strategy, operations, and risks,
including
environmental
and social issues. Boards should also have a regular evaluation process in
place
to assess the effectiveness of the board and the skills of board members
to address
issues,
such as emerging risks, changes to corporate strategy, and diversification
of
operations
and geographic footprint.
We
may also consider board performance and directors who appear to be remiss
in the
performance
of their oversight responsibilities when analyzing their suitability for
reappointment
(e.g. fraud, criminal wrongdoing and breach of fiduciary
responsibilities). |
|
Board
Independence |
|
In
principle, we believe independent directors are crucial to corporate
governance and help
management
establish sound ESG policies and practices. A sufficiently independent
board
will
most effectively monitor management and perform oversight functions
necessary to
protect
shareholder interests. We expect boards of ASX 300 and New Zealand listed
companies
to be comprised of at least a majority of independent directors. At all
other
Australian
listed companies, we expect boards to be comprised of at least one-third
independent
directors. |
|
Our
broad criteria for director independence in Australia and New Zealand
include factors
such
as: |
|
•Participation
in related-party transactions and other business relations with the
company |
|
•Employment
history with company |
|
•Relations
with controlling shareholders |
|
Family
ties with any of the company's advisers, directors, or senior
employees |
|
While
we are generally supportive of having the roles of chairman and CEO
separated in
the
Australian and New Zealand markets, we assess the division of
responsibilities
between
chairman and CEO on a case-by-case basis, giving consideration to factors
such
as
company-specific circumstances, overall level of independence on the board
and
general
corporate governance standards in the company. Similarly, we will monitor
for
circumstances
in which a combined chairman/CEO is appointed or where a former CEO
becomes
chairman. |
|
Director
Time Commitments |
|
When
voting on the election or re-election of a director, we also consider the
number of
outside
board directorships that a non-executive and an executive may undertake.
Thus,
State
Street Global Advisors may take voting action against a director who
exceeds the
number
of board mandates listed below: |
|
•Named
Executive Officers (NEOs) of a public company who sit on more than two
public
company boards |
|
•Non-executive
board chairs or lead independent directors who sit on more than three
public
company boards |
|
•Director
nominees who sit on more than four public company
boards |
|
For
non-executive board chairs/lead independent directors and director
nominees who hold
excessive
commitments, as defined above, we may consider waiving our policy and vote
in
support
of a director if a company discloses its director commitment policy in a
publicly
available
manner (e.g., corporate governance guidelines, proxy statement, company
website).
This policy or associated disclosure must
include: |
|
•A
numerical limit on public company board seats a director can serve
on |
|
•This
limit cannot exceed our policy by more than one
seat |
|
•Consideration
of public company board leadership positions (e.g., Committee
Chair) |
|
•Affirmation
that all directors are currently compliant with the company
policy |
|
•Description
of an annual policy review process undertaken by the Nominating
Committee
to evaluate outside director time commitments |
|
If
a director is imminently leaving a board and this departure is disclosed
in a written,
time-bound
and publicly-available manner, we may consider waiving our withhold vote
when
evaluating the director for excessive time
commitments. |
|
Service
on a mutual fund board, the board of a UK investment trust or a Special
Purpose
Acquisition
Company (SPAC) board is not considered when evaluating directors for
excessive
commitments. However, we do expect these roles to be considered by
nominating
committees when evaluating director time
commitments. |
|
Director
Attendance at Board Meetings |
|
We
also consider attendance at board meetings and may withhold votes from
directors
who
attend less than 75 percent of board meetings without appropriate
explanation or
providing
reason for their failure to meet the attendance threshold. In addition, we
monitor
other
factors that may influence the independence of a non-executive director,
such as
performance-related
pay, cross-directorships, significant shareholdings, and tenure. We
support
the annual election of directors and encourage Australian and New Zealand
companies
to adopt this
practice. |
|
Board
Committees |
|
We
believe companies should have committees for audit, remuneration, and
nomination
oversight.
The audit committee is responsible for monitoring the integrity of the
financial
statements
of the company, appointing external auditors, monitoring their
qualifications
and
independence, and their effectiveness and resource levels. ASX Corporate
Governance
Principles requires listed companies to have an audit committee of at
least
three
members all of whom are non-executive directors and a majority of whom are
independent
directors. It also requires that the committee be chaired by an
independent
director
who is not the chair of the board. We hold Australian and New Zealand
companies
to
our global standards for developed financial markets by requiring that all
members of
the
audit committee be independent directors. |
|
The
nomination committee is responsible for evaluating and reviewing the
balance of
skills,
knowledge, and experience of the board. It also ensures that adequate
succession
plans
are in place for directors and the CEO. We may vote against the
re-election of
members
of the nomination committee if the board has failed to address concerns
over
board
structure or succession. |
|
Board
Gender Diversity |
|
We
expect boards of all listed companies to have at least one female board
member. If a
company
fails to meet this expectation, State Street Global Advisors may vote
against the
Chair
of the board's nominating committee or the board leader in the absence of
a
nominating
committee, if necessary. Additionally, if a company fails to meet this
expectation
for three consecutive years, State Street Global Advisors may vote against
all
incumbent
members of the nominating committee. |
|
Board
Responsiveness to High Dissent against Pay |
|
Proposals |
|
Executive
pay is another important aspect of corporate governance. We believe that
executive
pay should be determined by the board of directors. We expect companies to
have
in place remuneration committees to provide independent oversight over
executive
pay.
ASX Corporate Governance Principles require listed companies to have a
remuneration
committee of at least three members all of whom are non-executive
directors
and a majority of whom are independent directors. Since Australia has a
non-binding
vote on pay with a two-strike rule requiring a board spill vote in the
event of a
second
strike, we believe that the vote provides investors a mechanism to address
concerns
they may have on the quality of oversight provided by the board on
remuneration
issues.
Accordingly, our voting guidelines accommodate local market
practice. |
|
Poorly
structured executive compensation plans pose increasing reputational risk
to
companies.
Ongoing high level of dissent against a company's compensation proposals
may
indicate that the company is not receptive to investor concerns. If the
level of dissent
against
a company's remuneration report and/or remuneration policy is consistently
high,
and
we have determined that a vote against a pay-related proposal is warranted
in the
third
consecutive year, we will vote against the Chair of the remuneration
committee. |
|
Incorporating
R-Factor™ into Director Votes |
|
R-Factor™
is a scoring system created by State Street Global Advisors that measures
the
performance
of a company's business operations and governance as it relates to
financially
material ESG factors facing the company's industry. R-Factor™ encourages
companies
to manage and disclose material, industry-specific ESG risks and
opportunities,
thereby reducing investment risk across our own portfolio and the broader
market.
State Street Global Advisors may take voting action against the
independent board
leader
at companies on the ASX 100 that are R-Factor™ laggards1 and momentum
underperformers2
and cannot articulate how they plan to improve their
score. |
|
Climate-related
Disclosure |
|
We
believe climate change poses a systemic risk to all companies in our
portfolio. |
|
State
Street Global Advisors has publicly supported the global regulatory
efforts to
establish
a mandatory baseline of climate risk disclosures for all companies. Until
these
consistent
disclosure standards are established, we find that the recommendations of
the
Taskforce
on Climate-related Financial Disclosures (TCFD) provide the most effective
framework
by which companies can develop strategies to plan for climate-related
risks and
make
their businesses more resilient to the impacts of climate
change. |
|
As
such, we may vote against the independent board leader at companies in the
ASX 100
that
fail to provide sufficient disclosure in accordance with the TCFD
framework, including: |
|
•Board
oversight of climate-related risks and
opportunities |
|
•Total
Scope 1 and Scope 2 greenhouse gas emissions |
|
•Targets
for reducing greenhouse gas emissions |
|
Indemnification
and Limitations on Liability |
|
Generally,
State Street Global Advisors supports proposals to limit directors'
liability and/or
expand
indemnification and liability protection up to the limit provided by law,
if he or she
has
not acted in bad faith, gross negligence, or reckless disregard of the
duties involved in
the
conduct of his or her office. |
|
|
Audit-Related
Issues |
Companies
should have robust internal audit and internal control systems designed
for
effective
management of any potential and emerging risks to company operations and
strategy.
The responsibility of setting out an internal audit function lies with the
audit
committee,
which should have independent non-executive directors designated as
members. |
|
Appointment
of External Auditors |
|
State
Street Global Advisors believes that a company's auditor is an essential
feature of
an
effective and transparent system of external supervision. Shareholders
should be given
the
opportunity to vote on their appointment or to re-appoint at the annual
meeting. When
appointing
external auditors and approving audit fees, we will take into
consideration the
level
of detail in company disclosures. We will generally not support
resolutions if
adequate
breakdown is not provided and if non-audit fees are more than 50 percent
of
audit
fees. In addition, we may vote against members of the audit committee if
we have
concerns
with audit-related issues or if the level of non-audit fees to audit fees
is
significant.
In certain circumstances, we may consider auditor tenure when evaluating
the
audit
process. |
|
Approval
of Financial Statements |
|
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. We expect external auditors to provide
assurance of
a
company's financial condition. Hence, we will vote against the approval of
financial
statements
if i) they have not been disclosed or audited; ii) the auditor opinion is
qualified/
adverse,
or the auditor has issued a disclaimer of opinion; or iii) the auditor
opinion is not
disclosed. |
|
|
Shareholder
Rights and
Capital-Related
Issues |
Share
Issuances |
|
The
ability to raise capital is critical for companies to carry out strategy,
to grow, and to
achieve
returns above their cost of capital. The approval of capital raising
activities is
fundamental
to shareholders' ability to monitor the returns and to ensure capital is
deployed
efficiently. State Street Global Advisors supports capital increases that
have
sound
business reasons and are not excessive relative to a company's existing
capital
base. |
|
Pre-emption
rights are a fundamental right for shareholders to protect their
investment in a
company.
Where companies seek to issue new shares without pre-emption rights, we
may
vote
against if such authorities are greater than 20 percent of the issued
share capital. We
may
also vote against resolutions seeking authority to issue capital with
pre-emption rights
if
the aggregate amount allowed seems excessive and is not justified by the
board.
Generally,
we are against capital issuance proposals greater than 100 percent of the
issued
share capital when the proceeds are not intended for specific
purpose. |
|
Share
Repurchase Programs |
|
We
generally support proposals to repurchase shares, unless the issuer does
not clearly
state
the business purpose for the program, a definitive number of shares to be
repurchased,
and the timeframe for the repurchase. We may vote against share
repurchase
requests that allow share repurchases during a takeover
period. |
|
Dividends |
|
We
generally support dividend payouts that constitute 30 percent or more of
net income.
We
may vote against the dividend payouts if the dividend payout ratio has
been
consistently
below 30 percent without adequate explanation. We may also vote against if
the
payout is excessive given the company's financial position. Particular
attention will be
warranted
when the payment may damage the company's long-term financial
health. |
|
Mergers
and Acquisitions |
|
Mergers
or reorganization of the company structure often involve proposals
relating to
reincorporation,
restructurings, liquidations, and other major changes to the corporation.
Proposals
that are in the best interests of shareholders, demonstrated by enhancing
share
value
or improving the effectiveness of the company's operations, will be
supported. In
general,
provisions that are not viewed as financially sound or are thought to be
destructive
to
shareholders' rights are not supported. We will generally support
transactions that
maximize
shareholder value. Some of the considerations
include: |
|
•Offer
premium |
|
•Strategic
rationale |
|
•Board
oversight of the process for the recommended transaction, including,
director
and/
or management conflicts of interest |
|
•Offers
made at a premium and where there are no other higher
bidders |
|
•Offers
in which the secondary market price is substantially lower than the net
asset
value |
|
We
may vote against a transaction considering the
following: |
|
•Offers
with potentially damaging consequences for minority shareholders because
of
illiquid
stock |
|
•Offers
where we believe there is a reasonable prospect for an enhanced bid or
other
bidders |
|
•The
current market price of the security exceeds the bid price at the time of
voting |
|
Anti-Takeover
Measures |
|
We
oppose anti-takeover defenses, such as authorities for the board to issue
warrants
convertible
into shares to existing shareholders during a hostile
takeover. |
|
|
Remuneration |
Executive
Pay |
|
There
is a simple underlying philosophy that guides State Street Global
Advisors' analysis
of
executive pay; there should be a direct relationship between remuneration
and company
performance
over the long term. Shareholders should have the opportunity to assess
whether
pay structures and levels are aligned with business performance. When
assessing
remuneration
reports, we consider various factors, such as adequate disclosure of
different
remuneration elements, absolute and relative pay levels, peer selection
and
benchmarking,
the mix of long-term and short-term incentives, alignment of pay
structures
with
shareholder interests as well as with corporate strategy and performance.
SSGA may
oppose
remuneration reports in which there seems to be a misalignment between pay
and
shareholders'
interests and where incentive policies and schemes have a re-test option
or
feature.
We may also vote against the re-election of members of the remuneration
committee
if we have serious concerns about remuneration practices and if the
company
has
not been responsive to shareholder pressure to review its
approach. |
|
Equity
Incentive Plans |
|
We
may not support proposals on equity-based incentive plans where
insufficient
information
is provided on matters, such as grant limits, performance metrics,
performance,
and vesting periods and overall dilution. Generally, we do not support
options
under
such plans being issued at a discount to market price nor plans that allow
for
re-testing
of performance metrics. |
|
Non-Executive
Director Pay |
|
Authorities
that seek shareholder approval for non-executive directors' fees generally
are
not
controversial. We generally support resolutions regarding directors' fees
unless
disclosure
is poor and we are unable to determine whether the fees are excessive
relative
to
fees paid by other comparable companies. We will evaluate any non-cash or
performance-related
pay to non-executive directors on a company-by-company
basis. |
|
|
Risk
Management |
State
Street Global Advisors believes that risk management is a key function of
the board,
which
is responsible for setting the overall risk appetite of a company and for
providing
oversight
on the risk management process established by senior executives at a
company.
We
allow boards to have discretion over the ways in which they provide
oversight in this
area.
However, we expect companies to disclose ways in which the board provides
oversight
on its risk management system and to identify key risks facing the
company.
Boards
should also review existing and emerging risks that evolve in tandem with
the
political
and economic landscape or as companies diversify or expand their
operations into
new
areas. |
|
Environmental
and Social Issues |
|
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting, and
thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our stewardship priorities and
build
long-term
relationships with issuers. When voting, we fundamentally consider whether
the
adoption
of a shareholder proposal addressing a material sustainability issue would
promote
long-term shareholder value in the context of the company's existing
practices
and
disclosures as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
our
Frameworks for Voting Environmental and Social Shareholder Proposals
available at
ssga.com/about-us/asset-stewardship.html. |
|
|
More
Information |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
Europe |
|
Proxy
Voting and
Engagement
Guidelines |
|
State
Street Global Advisors' European Proxy Voting
and
Engagement Guidelinesi
cover different corporate
governance
frameworks and practices in European
markets,
excluding the United Kingdom and Ireland.
These
guidelines complement and should be read in
conjunction
with State Street Global Advisors' Global
Proxy
Voting and Engagement Principles, which provide
a
detailed explanation of our approach to voting and
engaging
with companies, and State Street Global
Advisors'
Conflict Mitigation Guidelines. |
|
|
|
|
|
|
|
State
Street Global Advisors' Proxy Voting and Engagement Guidelines in European
markets
address areas such as board structure, audit-related issues, capital
structure,
remuneration,
as well as environmental, social and other governance-related
issues. |
|
When
voting and engaging with companies in European markets, we consider
market-specific
nuances in the manner that we believe will most likely protect and promote
the
long-term financial value of client investments. We expect companies to
observe the
relevant
laws and regulations of their respective markets, as well as
country-specific best
practice
guidelines and corporate governance codes. We may hold companies in some
markets
to our global standards when we feel that a country's regulatory
requirements do
not
address some of the key philosophical principles that we believe are
fundamental to
our
global voting guidelines. |
|
In
our analysis and research into corporate governance issues in European
companies, we
also
consider guidance issued by the European Commission and country-specific
governance
codes. We proactively monitor companies' adherence to applicable guidance
and
requirements. Consistent with the diverse “comply-or-explain”
expectations
established
by guidance and codes, we encourage companies to proactively disclose
their
level
of compliance with applicable provisions and requirements. In cases of
non-compliance,
when companies cannot explain the nuances of their governance
structures
effectively, either publicly or through engagement, we may vote against
the
independent
board leader. |
|
|
State
Street Global
Advisors'
Proxy Voting
and
Engagement
Philosophy |
Corporate
governance and sustainability issues are an integral part of the
investment
process.
The Asset Stewardship Team consists of investment professionals with
expertise
in
corporate governance and company law, remuneration, accounting, and
environmental
and
social issues. We have established robust corporate governance principles
and
practices
that are backed with extensive analytical expertise in order to understand
the
complexities
of the corporate governance landscape. We engage with companies to
provide
insight on the principles and practices that drive our voting decisions.
We also
conduct
proactive engagements to address significant shareholder concerns and
environmental,
social, and governance (“ESG”)
issues in a manner consistent with
maximizing
shareholder value. |
|
The
team works alongside members of State Street Global Advisors' Active
Fundamental
and
Europe, Middle East and Africa (“EMEA”)
investment teams, collaborating on issuer
engagements
and providing input on company-specific
fundamentals. |
|
State
Street Global Advisors is a signatory to the United Nations Principles for
Responsible
Investment (“UNPRI”).
We are committed to sustainable investing, and are
working
to further integrate ESG principles into investment and corporate
governance
practices
where applicable and consistent with our fiduciary
duty. |
|
|
Directors
and Boards |
Principally,
we believe the primary responsibility of the board of directors is to
preserve
and
enhance shareholder value, and to protect shareholder interests. In order
to carry out
their
primary responsibilities, directors have to undertake activities that
range from setting
strategy
and overseeing executive management, to monitoring the risks that arise
from a
company's
business, including risks related to sustainability issues. Further, good
corporate
governance necessitates the existence of effective internal controls and
risk
management
systems, which should be governed by the board. |
|
We
believe that a well-constituted board of directors with a balance of
skills, expertise and
independence,
provides the foundations for a well governed company. We view board
quality
as a measure of director independence, director succession planning, board
diversity,
evaluations and refreshment, and company governance practices. We vote for
the
(re-)election
of directors on a case-by-case basis after considering various factors,
including
board quality, general market practice, and availability of information on
director
skills
and expertise. |
|
In
our analysis of boards, we consider whether board members have adequate
skills to
provide
effective oversight of corporate strategy, operations, and risks,
including
environmental
and social issues. Boards should also have a regular evaluation process in
place
to assess the effectiveness of the board and the skills of board members
to address
issues
such as emerging risks, changes to corporate strategy, and diversification
of
operations
and geographic footprint. |
|
We
may also consider factors such as board performance and directors who
appear to be
remiss
in the performance of their oversight responsibilities (e.g. fraud,
criminal
wrongdoing
and/or breach of fiduciary responsibilities). |
|
|
Board
Independence |
In
principle, we believe independent directors are crucial to good corporate
governance
and
help management establish sound corporate governance policies and
practices. A
sufficiently
independent board will most effectively monitor management and perform
oversight
functions necessary to protect shareholder
interests. |
|
Our
broad criteria for director independence in European companies include
factors such
as: |
|
•Participation
in related–party transactions and other business relations with the
company |
|
•Employment
history with the company |
|
•Relations
with controlling shareholders |
|
•Family
ties with any of the company's advisers, directors or senior
employees |
|
•Serving
as an employee or government representative |
|
•Overall
average board tenure and individual director tenure at issuers with
classified
and
de-classified boards, respectively, and |
|
•Company
classification of a director as
non-independent |
|
While
overall board independence requirements and board structures differ from
market to
market,
we consider voting against directors we deem non-independent if overall
board
independence
is below 33 percent or if overall independence level is below 50 percent
after
excluding employee representatives and/or directors elected in accordance
with local
laws
who are not elected by shareholders. We may withhold support for a
proposal to
discharge
the board if a company fails to meet adequate governance standards or
board
level
independence. |
|
We
also assess the division of responsibilities between chair and CEO on a
case-by-case
basis,
giving consideration to factors such as overall level of independence on
the board
and
general corporate governance standards in the company. However, we may
take voting
action
against the chair or members of the nominating committee at the STOXX
Europe
600
companies that have combined the roles of chair and CEO and have not
appointed an
independent
deputy chair or a lead independent director. |
|
|
Director
Time Commitments |
When
voting on the election or re-election of a director, we also consider the
number of
outside
board directorships a non-executive and an executive may undertake. Thus,
State
Street
Global Advisors may take voting action against a director who exceeds the
number
of
board mandates listed below: |
|
•Named
Executive Officers (NEOs) of a public company who sit on more than two
public
company boards |
|
•Non-executive
board chairs or lead independent directors who sit on more than three
public
company boards |
|
•Director
nominees who sit on more than four public company
boards |
|
For
non-executive board chairs/lead independent directors and director
nominees who hold
excessive
commitments, as defined above, we may consider waiving our policy and vote
in
support
of a director if a company discloses its director commitment policy in a
publicly
available
manner (e.g., corporate governance guidelines, proxy statement, company
website).
This policy or associated disclosure must
include: |
|
•A
numerical limit on public company board seats a director can serve
on |
|
•This
limit cannot exceed our policy by more than one
seat |
|
•Consideration
of public company board leadership positions (e.g., Committee
Chair) |
|
•Affirmation
that all directors are currently compliant with the company
policy |
|
•Description
of an annual policy review process undertaken by the Nominating
Committee
to evaluate outside director time commitments |
|
If
a director is imminently leaving a board and this departure is disclosed
in a written,
time-bound
and publicly-available manner, we may consider waiving our withhold vote
when
evaluating the director for excessive time
commitments. |
|
Service
on a mutual fund board, the board of a UK investment trust or a Special
Purpose
Acquisition
Company (SPAC) board is not considered when evaluating directors for
excessive
commitments. However, we do expect these roles to be considered by
nominating
committees when evaluating director time
commitments. |
|
|
Director
Attendance at
Board
Meetings |
We
also consider attendance at board meetings and may withhold votes from
directors
who
attend less than 75 percent of board meetings without appropriate
explanation or
providing
reason for their failure to meet the attendance threshold. In addition, we
monitor
other
factors that may influence the independence of a non-executive director,
such as
performance-related
pay, cross-directorships and significant shareholdings. Moreover, we
may
vote against the election of a director whose biographical disclosures are
insufficient
to
assess his or her role on the board and/or
independence. |
|
|
Board
Gender Diversity |
We
expect boards of all listed companies to have at least one female board
member. If a
company
fails to meet this expectation, State Street Global Advisors may vote
against the
Chair
of the board's nominating committee or the board leader in the absence of
a
nominating
committee, if necessary. Additionally, if a company fails to meet this
expectation
for three consecutive years, State Street Global Advisors may vote against
all
incumbent
members of the nominating committee. |
|
|
Length
of Board Terms |
Although
we generally are in favour of the annual election of directors, we
recognise that
director
terms vary considerably in different European markets. We may vote against
article/bylaw
changes that seek to extend director terms. In addition, we may vote
against
directors
in certain markets if their terms extend beyond four
years. |
|
|
Board
Committees |
We
believe companies should have relevant board level committees for audit,
remuneration
and nomination oversight. The audit committee is responsible for
monitoring
the
integrity of the financial statements of the company, appointing external
auditors,
monitoring
their qualifications and independence, and assessing effectiveness and
resource
levels. Similarly, executive pay is an important aspect of corporate
governance,
and
it should be determined by the board of directors. We expect companies to
have
remuneration
committees to provide independent oversight of executive pay. We may vote
against
nominees who are executive members of audit or remuneration
committees. |
|
In
certain European markets, it is not uncommon for the election of directors
to be
presented
in a single slate. In these cases, where executives serve on the audit or
the
remuneration
committees, we may vote against the entire slate. |
|
|
Board
Responsiveness to
High
Dissent Against Pay
Proposals |
Poorly-structured
executive remuneration plans pose increasing reputational risk to
companies.
Ongoing high levels of dissent against a company's remuneration proposals
may
indicate that the company is not receptive to investor concerns. If the
level of dissent
against
a company's remuneration report and/or remuneration policy is consistently
high,
and
we have determined that a vote against a remuneration-related proposal is
warranted
in
the third consecutive year, we will vote against the Chair of the
remuneration
committee. |
|
|
Incorporating
R-FactorTM
into
Director Votes |
R-FactorTM
is a scoring system created by State Street Global Advisors that measures
the
performance
of a company's business operations and governance as it relates to
financially
material ESG factors facing the company's industry. R-FactorTM
encourages
companies
to manage and disclose material, industry-specific ESG risks and
opportunities,
thereby reducing investment risk across our own portfolio and the broader
market.
State Street Global Advisors may take voting action against the
independent board
leader
at companies on the STOXX 600 that are R-FactorTM
laggards1
and momentum
underperformers2
and cannot articulate how they plan to improve their
score. |
|
|
|
|
Climate-related
Disclosure |
We
believe climate change poses a systemic risk to all companies in our
portfolio. |
|
State
Street Global Advisors has publicly supported the global regulatory
efforts to
establish
a mandatory baseline of climate risk disclosures for all companies. Until
these
consistent
disclosure standards are established, we find that the recommendations of
the
Task
Force on Climate-related Financial Disclosures (TCFD) provide the most
effective
framework
(with?) which companies can develop strategies to plan for climate-related
risks
and
make their businesses more resilient to the impacts of climate
change. |
|
As
such, we may vote against the independent board leader at companies in the
STOXX
600
that fail to provide sufficient disclosure in accordance with the TCFD
framework,
including: |
|
•Board
oversight of climate-related risks and
opportunities |
|
•Total
Scope 1 and Scope 2 greenhouse gas emissions |
|
•Targets
for reducing greenhouse gas emissions |
|
|
Indemnification
and
Limitations
on Liability |
Generally,
we support proposals to limit directors' liability and/or expand
indemnification
and
liability protection up to the limit provided by law if a director has not
acted in bad faith,
with
gross negligence, or with reckless disregard of the duties involved in the
conduct of
his
or her office. |
|
|
Audit-Related
Issues |
Companies
should have robust internal audit and internal control systems designed
for
effective
management of any potential and emerging risks to company operations and
strategy.
The responsibility of setting up an internal audit function lies with the
audit
committee,
which should have as members independent non-executive
directors. |
|
|
Appointment
of External
Auditors |
We
believe that a company's auditor is an essential feature of an effective
and transparent
system
of external supervision. Shareholders should be given the opportunity to
vote on
their
appointment or re-appoint them at the annual meeting. When appointing
external
auditors
and approving audit fees, we consider the level of detail in company
disclosures;
we
will generally not support such resolutions if adequate breakdown is not
provided and if
non-audit
fees are more than 50 percent of audit fees. In addition, we may vote
against
members
of the audit committee if we have concerns with audit-related issues or if
the
level
of non-audit fees to audit fees is significant. We may consider auditor
tenure when
evaluating
the audit process in certain circumstances. |
|
|
Limit
Legal Liability of
External
Auditors |
We
generally oppose limiting the legal liability of audit firms as we believe
this could create
a
negative impact on the quality of the audit
function. |
|
Approval
of Financial Statements |
|
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. We expect external auditors to provide
assurance of
a
company's financial condition. Hence, we will vote against the approval of
financial
statements
if i) they have not been disclosed or audited; ii) the auditor opinion is
qualified/
adverse,
or the auditor has issued a disclaimer of opinion; or iii) the auditor
opinion is not
disclosed. |
|
|
Shareholder
Rights and
Capital-Related
Issues |
In
some European markets, differential voting rights continue to exist. State
Street Global
Advisors
supports the one-share, one-vote policy and favors a share structure where
all
shares
have equal voting rights. We believe pre-emption rights should be
introduced for
shareholders
in order to provide adequate protection from excessive dilution from the
issuance
of new shares or convertible securities to third parties or a small number
of
select
shareholders. |
|
|
Unequal
Voting Rights |
We
generally oppose proposals authorizing the creation of new classes of
common stock
with
superior voting rights. We will generally oppose the creation of new
classes of
preferred
stock with unspecified voting, conversion, dividend distribution and other
rights.
In
addition, we will not support capitalization changes that add classes of
stock with
undefined
voting rights or classes that may dilute the voting interests of existing
shareholders.
We support proposals to abolish voting caps and capitalization changes
that
eliminate
other classes of stock and/or unequal voting
rights. |
|
|
Increase
in Authorized
Capital |
The
ability to raise capital is critical for companies to carry out strategy,
to grow, and to
achieve
returns above their cost of capital. The approval of capital raising
activities is
fundamental
to shareholders' ability to monitor returns and to ensure capital is
deployed
efficiently.
We support capital increases that have sound business reasons and are not
excessive
relative to a company's existing capital
base. |
|
Pre-emption
rights are a fundamental right for shareholders to protect their
investment in a
company.
Where companies seek to issue new shares whilst disapplying pre-emption
rights,
we may vote against if such authorities are greater than 20 percent of the
issued
share
capital. We may also vote against resolutions that seek authority to issue
capital with
pre-emption
rights if the aggregate amount allowed seems excessive and is not
justified by
the
board. Generally, we oppose capital issuance proposals greater than 100
percent of
the
issued share capital when the proceeds are not intended for a specific
purpose. |
|
|
Share
Repurchase
Programs |
We
typically support proposals to repurchase shares; however, there are
exceptions in
some
cases. We do not support repurchases if the issuer does not clearly state
the
business
purpose for the program, a definitive number of shares to be repurchased,
the
range
of premium/discount to market price at which the company can repurchase
shares,
and
the timeframe for the repurchase. We may vote against share repurchase
requests
that
allow share repurchases during a takeover period. |
|
|
Dividends |
We
generally support dividend payouts that constitute 30 percent or more of
net income.
We
may vote against the dividend payouts if the dividend payout ratio has
been
consistently
below 30 percent without adequate explanation or the payout is excessive
given
the company's financial position. Particular attention will be paid to
cases in which
the
payment may damage the company's long-term financial
health. |
|
|
Related-Party
Transactions |
Some
companies in European markets have a controlled ownership structure and
complex
cross-shareholdings
between subsidiaries and parent companies (“related
companies”).
Such
structures may result in the prevalence of related-party transactions
between the
company
and its various stakeholders, such as directors and management,
subsidiaries
and
shareholders. In markets where shareholders are required to approve such
transactions,
we expect companies to provide details of the transaction, such as the
nature,
the value and the purpose of such a transaction. We also encourage
independent
directors
to ratify such transactions. Further, we encourage companies to describe
the level
of
independent board oversight and the approval process, including details of
any
independent
valuations provided by financial advisors on related-party
transactions. |
|
|
Mergers
and Acquisitions |
Mergers
or restructurings often involve proposals relating to reincorporation,
restructurings,
mergers,
liquidation and other major changes to the corporation. Proposals will be
supported
if they are in the best interest of the shareholders, which is
demonstrated by
enhancing
share value or improving the effectiveness of the company's operations. In
general,
provisions that are not viewed as financially sound or are thought to be
destructive
to
shareholders' rights are not supported. |
|
We
will generally support transactions that maximize shareholder value. Some
of the
considerations
include: |
|
•Offer
premium |
|
•Strategic
rationale |
|
•Board
oversight of the process for the recommended transaction, including
director
and/
or management conflicts of interest |
|
•Offers
made at a premium and where there are no other higher
bidders |
|
•Offers
in which the secondary market price is substantially lower than the net
asset
value |
|
We
may vote against a transaction considering the
following: |
|
•Offers
with potentially damaging consequences for minority shareholders because
of
illiquid
stock |
|
•Offers
where we believe there is a reasonable prospect for an enhanced bid or
other
bidders |
|
•The
current market price of the security exceeds the bid price at the time of
voting |
|
|
Anti–Takeover
Measures |
European
markets have diverse regulations concerning the use of share issuances as
takeover
defenses, with legal restrictions lacking in some markets. We support the
one-share,
one-vote policy. For example, dual-class capital structures entrench
certain
shareholders
and management, insulating them from possible takeovers. We oppose
unlimited
share issuance authorizations because they can be used as anti-takeover
devices.
They have the potential for substantial voting and earnings dilution. We
also
monitor
the duration of time for authorities to issue shares, as well as whether
there are
restrictions
and caps on multiple issuance authorities during the specified time
periods. We
oppose
antitakeover defenses, such as authorities for the board when subject to a
hostile
takeover
to issue warrants convertible into shares to existing
shareholders. |
|
|
Remuneration |
|
|
|
Executive
Pay |
Despite
the differences among the various types of plans and awards, there is a
simple
underlying
philosophy that guides our analysis of executive pay: there should be a
direct
relationship
between remuneration and company performance over the long
term. |
|
Shareholders
should have the opportunity to assess whether pay structures and levels
are
aligned
with business performance. When assessing remuneration reports, we
consider
factors
such as adequate disclosure of remuneration elements, absolute and
relative pay
levels,
peer selection and benchmarking, the mix of long-term and short-term
incentives,
alignment
of pay structures with shareholder interests, corporate strategy and
performance.
We may oppose remuneration reports where pay seems misaligned with
shareholders'
interests. We may also vote against the re-election of members of the
remuneration
committee if we have serious concerns about remuneration practices and if
the
company has not been responsive to shareholder pressure to review its
approach. |
|
|
Equity
Incentives Plans |
We
may not support proposals regarding equity-based incentive plans where
insufficient
information
is provided on matters, including grant limits, performance metrics,
performance
and vesting periods, and overall dilution. Generally, we do not support
options
under
such plans being issued at a discount to market price or plans that allow
for
retesting
of performance metrics. |
|
|
Non–Executive
Director Pay |
In
European markets, proposals seeking shareholder approval for non-executive
directors'
fees
are generally not controversial. We typically support resolutions
regarding directors'
fees
unless disclosure is poor and we are unable to determine whether the fees
are
excessive
relative to fees paid by comparable companies. We will evaluate any
non-cash
or
performance-related pay to non-executive directors on a company-by-company
basis. |
|
|
Risk
Management |
We
believe that risk management is a key function of the board, which is
responsible for
setting
the overall risk appetite of a company and for providing oversight on the
risk
management
process established by senior executives at a company. We allow boards to
have
discretion regarding the ways in which they provide oversight in this
area. However,
we
expect companies to disclose how the board provides oversight on its risk
management
system
and risk identification. Boards should also review existing and emerging
risks, as
they
can change with a changing political and economic landscape or as
companies
diversify
or expand their operations into new areas. |
|
|
Environmental
and Social
Issues |
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting and thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our stewardship priorities and
build
long-term
relationships with issuers. When voting, we fundamentally consider whether
the
adoption
of a shareholder proposal addressing a material sustainability issue would
promote
long-term shareholder value in the context of the company's existing
practices
and
disclosures as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
our
Frameworks for Voting Environmental and Social Shareholder Proposals, both
available
at ssga.com/about-us/asset-stewardship.html. |
|
|
More
Information |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
Japan |
|
Proxy
Voting and
Engagement
Guidelines |
|
State
Street Global Advisors' Japan Proxy Voting and
Engagement
Guidelinesi
outline our expectations of
companies
listed on stock exchanges in Japan. These
Guidelines
complement and should be read in
conjunction
with State Street Global Advisors'
overarching
Global Proxy Voting and Engagement
Guidelines,
which provide a detailed explanation of our
approach
to voting and engaging with companies, and
State
Street Global Advisors' Conflict Mitigation
Guidelines. |
|
|
|
|
|
|
|
State
Street Global Advisors' Proxy Voting and Engagement Guidelines in Japan
address
areas
including: board structure, audit related issues, capital structure,
remuneration,
environmental,
social, and other governance-related issues. |
|
When
voting and engaging with companies in Japan, State Street Global Advisors
takes
into
consideration the unique aspects of Japanese corporate governance
structures. We
recognize
that under Japanese corporate law, companies may choose between two
structures
of corporate governance: the statutory auditor system or the committee
structure.
Most Japanese boards predominantly consist of executives and
non-independent
outsiders affiliated through commercial relationships or
cross-shareholdings.
Nonetheless, when evaluating companies, State Street Global
Advisors
expects Japanese companies to address conflicts of interest and risk
management
and to demonstrate an effective process for monitoring management. In our
analysis
and research regarding corporate governance issues in Japan, we expect all
companies
at a minimum to comply with Japan's Corporate Governance Principles and
proactively
monitor companies' adherence to the principles. Consistent with the
‘comply or
explain'
expectations established by the Principles, we encourage companies to
proactively
disclose
their level of compliance with the Principles. In instances of
non-compliance when
companies
cannot explain the nuances of their governance structure effectively,
either
publicly
or through engagement, we may vote against the board
leader. |
|
|
State
Street Global
Advisors'
Proxy Voting
and
Engagement
Philosophy |
In
our view, corporate governance and sustainability issues are an integral
part of the
investment
process. The Asset Stewardship Team consists of investment professionals
with
expertise in corporate governance and company law, remuneration,
accounting, and
environmental
and social issues. We have established robust corporate governance
principles
and practices that are backed with extensive analytical expertise to
understand
the
complexities of the corporate governance landscape. We engage with
companies to
provide
insight on the principles and practices that drive our voting decisions.
We also
conduct
proactive engagement to address significant shareholder concerns and
environmental,
social, and governance (“ESG”)
issues in a manner consistent with
maximizing
shareholder value. |
|
The
team works alongside members of State Street Global Advisors' Active
Fundamental
and
Asia-Pacific (“APAC”)
Investment Teams; the teams collaborate on issuer engagement
and
provide input on company specific fundamentals. We are also a member of
various
investor
associations that seek to address broader corporate governance related
policy
issues
in Japan. |
|
State
Street Global Advisors is a signatory to the United Nations Principles of
Responsible
Investment
(“UNPRI”)
and is compliant with Japan's Stewardship Code and Corporate
Governance
Code. We are committed to sustainable investing and are working to further
integrate
ESG principles into investment and corporate governance practices where
applicable
and consistent with our fiduciary
duty. |
|
|
Directors
and Boards |
Principally,
we believe the primary responsibility of the board of directors is to
preserve
and
enhance shareholder value and protect shareholder interests. In order to
carry out
their
primary responsibilities, directors have to undertake activities that
range from setting
strategy
and overseeing executive management to monitoring the risks that arise
from a
company's
business, including risks related to sustainability issues. Further, good
corporate
governance necessitates the existence of effective internal controls and
risk
management
systems, which should be governed by the board. |
|
State
Street Global Advisors believes that a well constituted board of directors
with a
balance
of skills, expertise, and independence, provides the foundation for a well
governed
company.
We view board quality as a measure of director independence, director
succession
planning, board diversity, evaluations and refreshment, and company
governance
practices. We vote for the (re-)election of directors on a case-by-case
basis
after
considering various factors, including board quality, general market
practice, and
availability
of information on director skills and expertise. In principle, we believe
independent
directors are crucial to robust corporate governance and help management
establish
sound corporate governance policies and practices. A sufficiently
independent
board
will most effectively monitor management and perform oversight functions
that are
necessary
to protect shareholder interests. |
|
Japanese
companies have the option of having a traditional board of directors with
statutory
auditors, a board with a committee structure, or a hybrid board with a
board level
audit
committee. We will generally support companies that seek shareholder
approval to
adopt
a committee or hybrid board structure. |
|
Most
Japanese issuers prefer the traditional statutory auditor structure.
Statutory auditors
act
in a quasi-compliance role, as they are not involved in strategic
decision-making nor
are
they part of the formal management decision process. Statutory auditors
attend board
meetings
but do not have voting rights at the board; however, they have the right
to seek an
injunction
and conduct broad investigations of unlawful behavior in the company's
operations. |
|
State
Street Global Advisors will support the election of statutory auditors,
unless the
outside
statutory auditor nominee is regarded as non-independent based on our
criteria,
the
outside statutory auditor has attended less than 75 percent of meetings of
the board of
directors
or board of statutory auditors during the year under review, or the
statutory
auditor
has been remiss in the performance of their oversight responsibilities
(fraud,
criminal
wrong doing, and breach of fiduciary
responsibilities). |
|
For
companies with a statutory auditor structure there is no legal requirement
that boards
have
outside directors; however, we believe there should be a transparent
process of
independent
and external monitoring of management on behalf of
shareholders. |
|
•We
believe that boards of TOPIX 500 companies should have at least three
independent
directors or be at least one-third independent, whichever requires fewer
independent
directors. Otherwise, we may oppose the board leader who is responsible
for
the director nomination process. |
|
•For
controlled, non-TOPIX 500 companies with a statutory auditor structure or
hybrid
structure,
we may oppose the board leader if the board does not have at least two
independent
directors. |
|
•For
non-controlled, non-TOPIX 500 companies with a statutory auditor structure
or
hybrid
structure, State Street Global Advisors may oppose the board leader if the
board
does not have at least two independent directors. |
|
For
companies with a committee structure or a hybrid board structure, we also
take into
consideration
the overall independence level of the committees. In determining director
independence,
we consider the following factors: |
|
•Participation
in related-party transactions and other business relations with the
company |
|
•Past
employment with the company |
|
•Professional
services provided to the company |
|
•Family
ties with the company |
|
Regardless
of board structure, we may oppose the election of a director for the
following
reasons: |
|
•Failure
to attend board meetings |
|
•In
instances of egregious actions related to a director's service on the
board |
|
Board
Gender Diversity |
|
We
expect boards of all listed companies to have at least one female board
member. If a
company
fails to meet this expectation, State Street Global Advisors may vote
against the
Chair
of the board's nominating committee or the board leader in the absence of
a
nominating
committee, if necessary. Additionally, if a company fails to meet this
expectation
for three consecutive years, State Street Global Advisors may vote against
all
incumbent
members of the nominating committee or those persons deemed responsible
for
the nomination process. |
|
Incorporating
R-Factor™ into Director Votes |
|
R-Factor™
is a scoring system created by State Street Global Advisors that measures
the
performance
of a company's business operations and governance as it relates to
financially
material ESG factors facing the company's industry. R-Factor™ encourages
companies
to manage and disclose material, industry-specific ESG risks and
opportunities,
thereby reducing investment risk across our own portfolio and the broader
market.
State Street Global Advisors may take voting action against board members
at
companies
on the TOPIX 100 that are R-Factor™ laggards1
and momentum underper-
formers2
and cannot articulate how they plan to improve their
score. |
|
Indemnification
and Limitations on Liability |
|
Generally,
State Street Global Advisors supports proposals to limit directors' and
statutory
auditors'
liability and/or expand indemnification and liability protection up to the
limit
provided
by law, if he or she has not acted in bad faith, gross negligence, or
reckless
disregard
of the duties involved in the conduct of his or her office. We believe
limitations
and
indemnification are necessary to attract and retain qualified
directors. |
|
|
Audit-Related
Items |
State
Street Global Advisors believes that a company's auditor is an essential
feature of
an
effective and transparent system of external supervision. Shareholders
should have the
opportunity
to vote on the appointment of the auditor at the annual
meeting. |
|
Ratifying
External Auditors |
|
We
generally support the appointment of external auditors unless the external
auditor is
perceived
as being non-independent and there are concerns about the accounts
presented
and
the audit procedures followed. |
|
Approval
of Financial Statements |
|
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. We expect external auditors to provide
assurance of
a
company's financial condition. Hence, we will vote against the approval of
financial
statements
if i) they have not been disclosed or audited; ii) the auditor opinion is
qualified/
adverse,
or the auditor has issued a disclaimer of opinion; or iii) the auditor
opinion is not
disclosed. |
|
Limiting
Legal Liability of External Auditors |
|
We
generally oppose limiting the legal liability of audit firms as we believe
this could create
a
negative impact on the quality of the audit
function. |
|
|
Capital
Structure,
Reorganization,
and
Mergers |
State
Street Global Advisors supports the “one
share one vote”
policy and favors a share
structure
where all shares have equal voting rights. We support proposals to abolish
voting
caps
or multiple voting rights and will oppose measures to introduce these
types of
restrictions
on shareholder rights. |
|
We
believe pre-emption rights should be introduced for shareholders. This can
provide
adequate
protection from excessive dilution due to the issuance of new shares or
convertible
securities to third parties or a small number of select
shareholders. |
|
Unequal
Voting Rights |
|
We
generally oppose proposals authorizing the creation of new classes of
common stock
with
superior voting rights. We will generally oppose new classes of preferred
stock with
unspecified
voting, conversion, dividend distribution, and other rights. In addition,
we will
not
support capitalization changes that add classes of stock with undefined
voting rights or
classes
that may dilute the voting interests of existing
shareholders. |
|
However,
we will support capitalization changes that eliminate other classes of
stock and/
or
unequal voting rights. |
|
Increase
in Authorized Capital |
|
We
generally support increases in authorized capital where the company
provides an
adequate
explanation for the use of shares. In the absence of an adequate
explanation,
we
may oppose the request if the increase in authorized capital exceeds 100
percent of
the
currently authorized capital. Where share issuance requests exceed our
standard
threshold,
we will consider the nature of the specific need, such as mergers,
acquisitions
and
stock splits. |
|
Dividends |
|
We
generally support dividend payouts that constitute 30 percent or more of
net income.
We
may vote against the dividend payouts if the dividend payout ratio has
been
consistently
below 30 percent without adequate explanation; or, the payout is excessive
given
the company's financial position. Particular attention will be paid where
the payment
may
damage the company's long-term financial health. |
|
Share
Repurchase Programs |
|
Companies
are allowed under Japan Corporate Law to amend their articles to authorize
the
repurchase of shares at the board's discretion. We will oppose an
amendment to
articles
allowing the repurchase of shares at the board's discretion. We believe
the
company
should seek shareholder approval for a share repurchase program at each
year's
AGM,
providing shareholders the right to evaluate the purpose of the
repurchase. |
|
We
generally support proposals to repurchase shares, unless the issuer does
not clearly
state
the business purpose for the program, a definitive number of shares to be
repurchased,
and the timeframe for the repurchase. We may vote against share
repurchase
requests that allow share repurchases during a takeover
period. |
|
Mergers
and Acquisitions |
|
Mergers
or reorganizing the structure of a company often involve proposals
relating to
reincorporation,
restructurings, mergers, liquidations, and other major changes to the
corporation.
We will support proposals that are in the best interests of the
shareholders,
demonstrated
by enhancing share value or improving the effectiveness of the company's
operations.
In general, provisions that are deemed to be destructive to shareholders'
rights
or
financially detrimental are not supported. |
|
We
evaluate mergers and structural reorganizations on a case-by-case basis.
We will
generally
support transactions that maximize shareholder value. Some of the
considerations
include, but are not limited to the following: |
|
•Offer
premium |
|
•Strategic
rationale |
|
•Board
oversight of the process for the recommended transaction, including
director
and/or
management conflicts of interest |
|
•Offers
made at a premium and where there are no other higher
bidders |
|
•Offers
in which the secondary market price is substantially lower than the net
asset
value |
|
We
may vote against a transaction considering the
following: |
|
•Offers
with potentially damaging consequences for minority shareholders because
of
illiquid
stock |
|
•Offers
where we believe there is a reasonable prospect for an enhanced bid or
other
bidders |
|
•Offers
in which the current market price of the security exceeds the bid price at
the
time
of voting |
|
Anti-Takeover
Measures |
|
In
general, State Street Global Advisors believes that adoption of poison
pills that have
been
structured to protect management and to prevent takeover bids from
succeeding is
not
in shareholders' interest. A shareholder rights plan may lead to
management
entrenchment.
It may also discourage legitimate tender offers and acquisitions. Even if
the
premium
paid to companies with a shareholder rights plan is higher than that
offered to
unprotected
firms, a company's chances of receiving a takeover offer in the first
place may
be
reduced by the presence of a shareholder rights
plan. |
|
Proposals
that reduce shareholders' rights or have the effect of entrenching
incumbent
management
will not be supported. |
|
Proposals
that enhance the right of shareholders to make their own choices as to the
desirability
of a merger or other proposal are supported. |
|
Shareholder
Rights Plans |
|
In
evaluating the adoption or renewal of a Japanese issuer's shareholder
rights plans
(“poison
pill”),
we consider the following conditions: (i) release of proxy circular with
details
of
the proposal with adequate notice in advance of meeting, (ii) minimum
trigger of over 20
percent,
(iii) maximum term of three years, (iv) sufficient number of independent
directors,
(v)
presence of an independent committee, (vi) annual election of directors,
and (vii) lack
of
protective or entrenchment features. Additionally, we consider the length
of time that a
shareholder
rights plan has been in effect. |
|
In
evaluating an amendment to a shareholder rights plan (“poison
pill”),
in addition to the
conditions
above, we will also evaluate and consider supporting proposals where the
terms
of
the new plans are more favorable to shareholders' ability to accept
unsolicited offers. |
|
|
Compensation |
In
Japan, excessive compensation is rarely an issue. Rather, the problem is
the lack of
connection
between pay and performance. Fixed salaries and cash retirement bonuses
tend
to comprise a significant portion of the compensation structure while
performance-based
pay is generally a small portion of the total pay. State Street Global
Advisors,
where possible, seeks to encourage the use of performance-based
compensation
in Japan as an incentive for executives and as a way to align interests
with
shareholders. |
|
Adjustments
to Aggregate Compensation Ceiling for Directors |
|
Remuneration
for directors is generally reasonable. Typically, each company sets the
director
compensation parameters as an aggregate thereby limiting the total pay to
all
directors.
When requesting a change, a company must disclose the last time the
ceiling
was
adjusted, and management provides the rationale for the ceiling increase.
We will
generally
support proposed increases to the ceiling if the company discloses the
rationale
for
the increase. We may oppose proposals to increase the ceiling if there has
been
corporate
malfeasance or sustained poor performance. |
|
Annual
Bonuses for Directors/Statutory Auditors |
|
In
Japan, since there are no legal requirements that mandate companies to
seek
shareholder
approval before awarding a bonus, we believe that existing shareholder
approval
of the bonus should be considered best practice. As a result, we support
management
proposals on executive compensation where there is a strong relationship
between
executive pay and performance over a five-year
period. |
|
Retirement
Bonuses for Directors/Statutory Auditors |
|
Retirement
bonuses make up a sizeable portion of directors' and auditors' lifetime
compensation
and are based upon board tenure. While many companies in Japan have
abolished
this practice, there remain many proposals seeking shareholder approval
for the
total
amounts paid to directors and statutory auditors as a whole. In general,
we support
these
payments unless the recipient is an outsider or in instances where the
amount is not
disclosed. |
|
Stock
Plans |
|
Most
option plans in Japan are conservative, particularly at large companies.
Japanese
corporate
law requires companies to disclose the monetary value of the stock options
for
directors
and/or statutory auditors. Some companies do not disclose the maximum
number
of
options that can be issued per year and shareholders are unable to
evaluate the dilution
impact.
In this case, we cannot calculate the dilution level and, therefore, we
may oppose
such
plans for poor disclosure. We also oppose plans that allow for the
repricing of the
exercise
price. |
|
Deep
Discount Options |
|
As
Japanese companies move away from the retirement bonus system, deep
discount
options
plans have become more popular. Typically, the exercise price is set at
JPY 1 per
share.
We evaluate deep discount options using the same criteria used to evaluate
stock
options
as well as considering the vesting period. |
|
|
Environmental
and Social
Issues |
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting, and
thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our stewardship priorities and
build
long-term
relationships with issuers. When voting, we fundamentally consider whether
the
adoption
of a shareholder proposal addressing a material sustainability issue would
promote
long-term shareholder value in the context of the company's existing
practices
and
disclosures as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
our
Frameworks for Voting Environmental and Social Shareholder Proposals, both
available
at ssga.com/about-us/asset-stewardship.html. |
|
|
Miscellaneous/
Routine
Items |
Expansion
of Business Activities |
|
Japanese
companies' articles of incorporation strictly define the types of
businesses in
which
a company is permitted to engage. In general, State Street Global Advisors
views
proposals
that expand and diversify the company's business activities as routine and
non-contentious.
We will monitor instances in which there has been an inappropriate
acquisition
and diversification away from the company's main area of competence that
resulted
in a decrease of shareholder
value. |
|
|
More
Information |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
North
America (United States & Canada) |
|
Proxy
Voting and
Engagement
Guidelines |
|
State
Street Global Advisors' North America Proxy
Voting
and Engagement Guidelinesi
outline our
expectations
of companies listed on stock exchanges in
the
US and Canada. These Guidelines complement and
should
be read in conjunction with State Street Global
Advisors'
Global Proxy Voting and Engagement
Principles,
which provide a detailed explanation of our
approach
to voting and engaging with companies, and
State
Street Global Advisors' Conflict Mitigation
Guidance. |
|
|
|
|
|
|
|
State
Street Global Advisors' North America Proxy Voting and Engagement
Guidelines
address
areas, including board structure, director tenure, audit related issues,
capital
structure,
executive compensation, as well as environmental, social, and other
governance-related
issues of companies listed on stock exchanges in the US and Canada
(“North
America”). |
|
When
voting and engaging with companies in global markets, we consider market
specific
nuances
in the manner that we believe will most likely protect and promote the
long-term
economic
value of client investments. We expect companies to observe the relevant
laws
and
regulations of their respective markets, as well as country specific best
practice
guidelines
and corporate governance codes. When we feel that a country's regulatory
requirements
do not address some of the key philosophical principles that we believe
are
fundamental
to its global voting guidelines, we may hold companies in such markets to
our
global
standards. |
|
In
its analysis and research about corporate governance issues in North
America, we
expect
all companies to act in a transparent manner and to provide detailed
disclosure on
board
profiles, related-party transactions, executive compensation, and other
governance
issues
that impact shareholders' long-term interests. Further, as a founding
member of the
Investor
Stewardship Group (“ISG”),
we proactively monitor companies' adherence to the
Corporate
Governance Principles for US listed companies. Consistent with the
“comply-or-
explain”
expectations established by the principles, we encourage companies to
proactively
disclose
their level of compliance with the principles. In instances of
non-compliance when
companies
cannot explain the nuances of their governance structure effectively,
either
publicly
or through engagement, we may vote against the independent board
leader. |
|
|
State
Street Global
Advisors'
Proxy Voting
and
Engagement
Philosophy |
Corporate
governance and sustainability issues are an integral part of the
investment
process.
The Asset Stewardship Team consists of investment professionals with
expertise
in
corporate governance and company law, remuneration, accounting, and
environmental
and
social issues. We have established robust corporate governance principles
and
practices
that are backed with extensive analytical expertise to understand the
complexities
of the corporate governance landscape. We engage with companies to
provide
insight on the principles and practices that drive our voting decisions.
We also
conduct
proactive engagements to address significant shareholder concerns and
environmental,
social, and governance (“ESG”)
issues in a manner consistent with
maximizing
shareholder value. |
|
The
team works alongside members of State Street Global Advisors' Active
Fundamental
and
various other investment teams, collaborating on issuer engagements and
providing
input
on company specific fundamentals. We are also a member of various investor
associations
that seek to address broader corporate governance related policy issues in
North
America. |
|
State
Street Global Advisors is a signatory to the United Nations Principles of
Responsible
Investment
(“UNPRI”)
and is compliant with the US Investor Stewardship Group Principles.
We
are committed to sustainable investing and are working to further
integrate ESG
principles
into investment and corporate governance practices, where applicable and
consistent
with our fiduciary
duty. |
|
|
Directors
and Boards |
Principally,
we believe the primary responsibility of the board of directors is to
preserve
and
enhance shareholder value and protect shareholder interests. In order to
carry out
their
primary responsibilities, directors have to undertake activities that
range from setting
strategy
and overseeing executive management to monitoring the risks that arise
from a
company's
business, including risks related to sustainability issues. Further, good
corporate
governance necessitates the existence of effective internal controls and
risk
management
systems, which should be governed by the board. |
|
State
Street Global Advisors believes that a well constituted board of
directors, with a
balance
of skills, expertise, and independence, provides the foundations for a
well
governed
company. We view board quality as a measure of director independence,
director
succession
planning, board diversity, evaluations and refreshment, and company
governance
practices. We vote for the election/re-election of directors on a
case-by-case
basis
after considering various factors, including board quality, general market
practice,
and
availability of information on director skills and expertise. In
principle, we believe
independent
directors are crucial to robust corporate governance and help management
establish
sound corporate governance policies and practices. A sufficiently
independent
board
will most effectively monitor management and perform oversight functions
necessary
to protect shareholder interests. |
|
Director-related
proposals include issues submitted to shareholders that deal with the
composition
of the board or with members of a corporation's board of directors. In
deciding
the director nominee to support, we consider numerous
factors. |
|
Director
Elections |
|
Our
director election guideline focuses on companies' governance profile to
identify if a
company
demonstrates appropriate governance practices or if it exhibits negative
governance
practices. Factors we consider when evaluating governance practices
include,
but
are not limited to the following: |
|
•Shareholder
rights |
|
•Board
independence |
|
•Board
structure |
|
If
a company demonstrates appropriate governance practices, we believe a
director should
be
classified as independent based upon the relevant listing standards or
local market
practice
standards. In such cases, the composition of the key oversight committees
of a
board
should meet the minimum standards of independence. Accordingly, we will
vote
against
a nominee at a company with appropriate governance practices if the
director is
classified
as non-independent under relevant listing standards or local market
practice and
serves
on a key committee of the board (compensation, audit, nominating, or
committees
required
to be fully independent by local market
standards). |
|
Conversely,
if a company demonstrates negative governance practices, State Street
Global
Advisors believes the classification standards for director independence
should be
elevated.
In such circumstances, we will evaluate all director nominees based upon
the
following
classification standards: |
|
•Is
the nominee an employee of or related to an employee of the issuer or its
auditor? |
|
•Does
the nominee provide professional services to the
issuer |
|
•Has
the nominee attended an appropriate number of board
meetings? |
|
•Has
the nominee received non-board related compensation from the
issuer? |
|
In
the US market where companies demonstrate negative governance practices,
these
stricter
standards will apply not only to directors who are a member of a key
committee but
to
all directors on the board as market practice permits. Accordingly, we
will vote against a
nominee
(with the exception of the CEO) where the board has inappropriate
governance
practices
and is considered not independent based on the above independence
criteria. |
|
Additionally,
we may withhold votes from directors based on the
following: |
|
•Overall
average board tenure is excessive. In assessing excessive tenure, we
consider
factors
such as the preponderance of long tenured directors, board refreshment
practices,
and classified board structures |
|
•Directors
attend less than 75 percent of board meetings without appropriate
explanation
or providing reason for their failure to meet the attendance
threshold |
|
•Directors
of companies that have not been responsive to a shareholder proposal that
received
a majority shareholder support at the last annual or special
meeting |
|
•Consideration
can be warranted if management submits the proposal(s) on the ballot
as
a binding management proposal, recommending shareholders vote for the
particular
proposal(s) |
|
•Directors
of companies have unilaterally adopted/ amended company bylaws that
negatively
impact our shareholder rights (such as fee-shifting, forum selection, and
exclusion
service bylaws) without putting such amendments to a shareholder
vote |
|
•Compensation
committee members where there is a weak relationship between
executive
pay and performance over a five-year period |
|
•Audit
committee members if non-audit fees exceed 50 percent of total fees paid
to the
auditors |
|
•Directors
who appear to have been remiss in their duties |
|
Board
Gender Diversity |
|
We
expect boards of all listed companies to have at least one female board
member. If a
company
fails to meet this expectation, State Street Global Advisors may vote
against the
Chair
of the board's nominating committee or the board leader in the absence of
a
nominating
committee, if necessary. Additionally, if a company fails to meet this
expectation
for three consecutive years, State Street Global Advisors may vote against
all
incumbent
members of the nominating committee. |
|
Board
Racial/Ethnic Diversity |
|
We
believe that companies have a responsibility to effectively manage and
disclose risks
and
opportunities related to racial and ethnic diversity. If a company in the
S&P 500 does
not
disclose, at minimum, the gender, racial and ethnic composition of its
board, we may
vote
against the Chair of the nominating committee. We may withhold support
from the
Chair
of the nominating committee also when a company in the S&P 500 does
not have at
least
one director from an underrepresented community on its
board. |
|
Workforce
Diversity |
|
We
may vote against the Chair of the compensation committee at companies in
the S&P
500
that do not disclose their EEO-1 reports. Acceptable disclosures
include: |
|
•The
original EEO-1 report response |
|
•The
exact content of the report translated into custom
graphics |
|
Director
Time Commitments |
|
When
voting on the election or re-election of a director, we also consider the
number of
outside
board directorships a non-executive and an executive may undertake. Thus,
State
Street
Global Advisors may take voting action against a director who exceeds the
number
of
board mandates listed below: |
|
•Named
Executive Officers (NEOs) of a public company who sit on more than two
public
company boards |
|
•Non-executive
board chairs or lead independent directors who sit on more than three
public
company boards |
|
•Director
nominees who sit on more than four public company
boards |
|
For
non-executive board chairs/lead independent directors and director
nominees who hold
excessive
commitments, as defined above, we may consider waiving our policy and vote
in
support
of a director if a company discloses its director commitment policy in a
publicly
available
manner (e.g., corporate governance guidelines, proxy statement, company
website).
This policy or associated disclosure must
include: |
|
•A
numerical limit on public company board seats a director can serve
on |
|
•This
limit cannot exceed our policy by more than one
seat |
|
•Consideration
of public company board leadership positions (e.g., Committee
Chair) |
|
•Affirmation
that all directors are currently compliant with the company
policy |
|
•Description
of an annual policy review process undertaken by the Nominating
Committee
to evaluate outside director time commitments |
|
If
a director is imminently leaving a board and this departure is disclosed
in a written,
time-bound
and publicly-available manner, we may consider waiving our withhold vote
when
evaluating the director for excessive time
commitments. |
|
Service
on a mutual fund board, the board of a UK investment trust or a Special
Purpose
Acquisition
Company (SPAC) board is not considered when evaluating directors for
excessive
commitments. However, we do expect these roles to be considered by
nominating
committees when evaluating director time
commitments. |
|
Incorporating
R-Factor™ into Director Votes |
|
R-Factor™
is a scoring system created by State Street Global Advisors that measures
the
performance
of a company's business operations and governance as it relates to
financially
material ESG factors facing the company's industry. R-Factor™ encourages
companies
to manage and disclose material, industry-specific ESG risks and
opportunities,
thereby reducing investment risk across our own portfolio and the broader
market.
State Street Global Advisors may take voting action against the senior
independent
board leader at companies on the S&P 500 that are R-Factor™
laggards1
and
momentum
underperformers2
and cannot articulate how they plan to improve their
score. |
|
Climate-related
Disclosure |
|
We
believe climate change poses a systemic risk to all companies in our
portfolio. |
|
State
Street Global Advisors has publicly supported the global regulatory
efforts to
establish
a mandatory baseline of climate risk disclosures for all companies. Until
these
consistent
disclosure standards are established, we find that the recommendations of
the
Taskforce
on Climate-related Financial Disclosures (TCFD) provide the most effective
framework
by which companies can develop strategies to plan for climate-related
risks and
make
their businesses more resilient to the impacts of climate
change. |
|
As
such, we may vote against the independent board leader at companies in the
S&P 500
and
S&P/TSX Composite that fail to provide sufficient disclosure in
accordance with the
TCFD
framework, including: |
|
•Board
oversight of climate-related risks and
opportunities |
|
•Total
Scope 1 and Scope 2 greenhouse gas emissions |
|
•Targets
for reducing greenhouse gas emissions |
|
Director-Related
Proposals |
|
We
generally vote for the following director-related
proposals: |
|
•Discharge
of board members' duties, in the absence of pending litigation, regulatory
investigation,
charges of fraud, or other indications of significant
concern |
|
•Proposals
to restore shareholders' ability in order to remove directors with or
without
cause |
|
•Proposals
that permit shareholders to elect directors to fill board
vacancies |
|
•Shareholder
proposals seeking disclosure regarding the company, board, or
compensation
committee's use of compensation consultants, such as company name,
business
relationship(s), and fees paid |
|
We
generally vote against the following director-related
proposals: |
|
•Requirements
that candidates for directorships own large amounts of stock before
being
eligible to be elected |
|
•Proposals
that relate to the “transaction
of other business as properly comes before
the
meeting,”
which extend “blank
check”
powers to those acting as
proxy |
|
•Proposals
requiring two candidates per board seat |
|
Majority
Voting |
|
We
will generally support a majority vote standard based on votes cast for
the election of
directors. |
|
We
will generally vote to support amendments to bylaws that would require
simple majority
of
voting shares (i.e. shares cast) to pass or to repeal certain
provisions. |
|
Annual
Elections |
|
We
generally support the establishment of annual elections of the board of
directors.
Consideration
is given to the overall level of board independence and the independence
of
the
key committees, as well as the existence of a shareholder rights
plan. |
|
Cumulative
Voting |
|
We
do not support cumulative voting structures for the election of
directors. |
|
Separation
Chair/CEO |
|
We
analyze proposals for the separation of Chair/CEO on a case-by-case basis
taking into
consideration
numerous factors, including the appointment of and role played by a lead
director,
a company's performance, and the overall governance structure of the
company. |
|
However,
we may take voting action against the chair or members of the nominating
committee
at S&P 500 companies that have combined the roles of chair and CEO and
have
not appointed a lead independent director. |
|
Proxy
Access |
|
In
general, we believe that proxy access is a fundamental right and an
accountability
mechanism
for all long-term shareholders. We will consider proposals relating to
proxy
access
on a case-by-case basis. We will support shareholder proposals that set
parameters
to empower long-term shareholders while providing management the
flexibility
to
design a process that is appropriate for the company's
circumstances. |
|
We
will review the terms of all other proposals and will support those
proposals that have
been
introduced in the spirit of enhancing shareholder
rights. |
|
Considerations
include the following: |
|
•The
ownership thresholds and holding duration proposed in the
resolution |
|
•The
binding nature of the proposal |
|
•The
number of directors that shareholders may be able to nominate each
year |
|
•Company
governance structure |
|
•Shareholder
rights |
|
•Board
performance |
|
Age/Term
Limits |
|
Generally,
we will vote against age and term limits unless the company is found to
have
poor
board refreshment and director succession practices, and has a
preponderance of
non-executive
directors with excessively long tenures serving on the
board. |
|
Approve
Remuneration of Directors |
|
Generally,
we will support directors' compensation, provided the amounts are not
excessive
relative to other issuers in the market or industry. In making our
determination,
we
review whether the compensation is overly dilutive to existing
shareholders. |
|
Indemnification |
|
Generally,
we support proposals to limit directors' liability and/or expand
indemnification
and
liability protection if he or she has not acted in bad faith, gross
negligence, or reckless
disregard
of the duties involved in the conduct of his or her
office. |
|
Classified
Boards |
|
We
generally support annual elections for the board of
directors. |
|
Confidential
Voting |
|
We
will support confidential voting. |
|
Board
Size |
|
We
will support proposals seeking to fix the board size or designate a range
for the board
size
and will vote against proposals that give management the ability to alter
the size of the
board
outside of a specified range without shareholder
approval. |
|
Board
Responsiveness |
|
We
may vote against the re-election of members of the compensation committee
if we
have
serious concerns about remuneration practices and if the company has not
been
responsive
to shareholder pressure to review its approach. In addition, if the level
of
dissent
against a management proposal on executive pay is consistently high, and
we
have
determined that a vote against a pay-related proposal is warranted in the
third
consecutive
year, we may vote against the Chair of the compensation
committee. |
|
|
Audit-Related
Issues |
Ratifying
Auditors and Approving Auditor Compensation |
|
We
support the approval of auditors and auditor compensation provided that
the issuer
has
properly disclosed audit and non-audit fees relative to market practice
and the audit
fees
are not deemed excessive. We deem audit fees to be excessive if the
non-audit fees
for
the prior year constituted 50 percent or more of the total fees paid to
the auditor. We will
also
support the disclosure of auditor and consulting relationships when the
same or
related
entities are conducting both activities and will support the establishment
of a
selection
committee responsible for the final approval of significant management
consultant
contract awards where existing firms are already acting in an auditing
function. |
|
In
circumstances where “other”
fees include fees related to initial public offerings,
bankruptcy
emergence, and spin-offs, and the company makes public disclosure of the
amount
and nature of those fees which are determined to be an exception to the
standard
“non-audit
fee”
category, then such fees may be excluded from the non-audit fees
considered
in determining the ratio of non-audit to audit/audit-related fees/tax
compliance
and
preparation for purposes of determining whether non-audit fees are
excessive. |
|
We
will support the discharge of auditors and requirements that auditors
attend the annual
meeting
of shareholders.3
|
|
Approval
of Financial Statements |
|
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. We expect external auditors to provide
assurance of
a
company's financial condition. Hence, we will vote against the approval of
financial
statements
if i) they have not been disclosed or audited; ii) the auditor opinion is
qualified/
adverse,
or the auditor has issued a disclaimer of opinion; or iii) the auditor
opinion is not
disclosed. |
|
|
Capital-Related
Issues |
Capital
structure proposals include requests by management for approval of
amendments
to
the certificate of incorporation that will alter the capital structure of
the company. |
|
The
most common request is for an increase in the number of authorized shares
of
common
stock, usually in conjunction with a stock split or dividend. Typically,
we support
requests
that are not unreasonably dilutive or enhance the rights of common
shareholders.
In
considering authorized share proposals, the typical threshold for approval
is 100 percent
over
current authorized shares. However, the threshold may be increased if the
company
offers
a specific need or purpose (merger, stock splits, growth purposes, etc.).
All
proposals
are evaluated on a case-by-case basis taking into account the company's
specific
financial situation. |
|
Increase
in Authorized Common Shares |
|
In
general, we support share increases for general corporate purposes up to
100 percent
of
current authorized stock. |
|
We
support increases for specific corporate purposes up to 100 percent of the
specific
need
plus 50 percent of current authorized common stock for US and Canadian
firms. |
|
When
applying the thresholds, we will also consider the nature of the specific
need, such
as
mergers and acquisitions and stock splits. |
|
Increase
in Authorized Preferred Shares |
|
We
vote on a case-by-case basis on proposals to increase the number of
preferred
shares. |
|
Generally,
we will vote for the authorization of preferred stock in cases where the
company
specifies
the voting, dividend, conversion, and other rights of such stock and the
terms of
the
preferred stock appear reasonable. |
|
We
will support proposals to create “declawed”
blank check preferred stock (stock that
cannot
be used as a takeover defense). However, we will vote against proposals to
increase
the number of blank check preferred stock authorized for issuance when no
shares
have been issued or reserved for a specific
purpose. |
|
Unequal
Voting Rights |
|
We
will not support proposals authorizing the creation of new classes of
common stock
with
superior voting rights and will vote against new classes of preferred
stock with
unspecified
voting, conversion, dividend distribution, and other rights. In addition,
we will
not
support capitalization changes that add “blank
check”
classes of stock (i.e. classes of
stock
with undefined voting rights) or classes that dilute the voting interests
of existing
shareholders. |
|
However,
we will support capitalization changes that eliminate other classes of
stock and/
or
unequal voting rights. |
|
|
Mergers
and Acquisitions |
Mergers
or the reorganization of the structure of a company often involve
proposals
relating
to reincorporation, restructurings, liquidations, and other major changes
to the
corporation. |
|
Proposals
that are in the best interests of the shareholders, demonstrated by
enhancing
share
value or improving the effectiveness of the company's operations, will be
supported. |
|
In
general, provisions that are not viewed as economically sound or are
thought to be
destructive
to shareholders' rights are not supported. |
|
We
will generally support transactions that maximize shareholder value. Some
of the
considerations
include the following: |
|
•Offer
premium |
|
•Strategic
rationale |
|
•Board
oversight of the process for the recommended transaction, including,
director
and/or
management conflicts of interest |
|
•Offers
made at a premium and where there are no other higher
bidders |
|
•Offers
in which the secondary market price is substantially lower than the net
asset
value |
|
We
may vote against a transaction considering the
following: |
|
•Offers
with potentially damaging consequences for minority shareholders because
of
illiquid
stock, especially in some non-US markets |
|
•Offers
where we believe there is a reasonable prospect for an enhanced bid or
other
bidders |
|
•The
current market price of the security exceeds the bid price at the time of
voting |
|
|
Anti–Takeover
Issues |
Typically,
these are proposals relating to requests by management to amend the
certificate
of
incorporation or bylaws to add or to delete a provision that is deemed to
have an
anti-takeover
effect. The majority of these proposals deal with management's attempt to
add
some provision that makes a hostile takeover more difficult or will
protect incumbent
management
in the event of a change in control of the
company. |
|
Proposals
that reduce shareholders' rights or have the effect of entrenching
incumbent
management
will not be supported. |
|
Proposals
that enhance the right of shareholders to make their own choices as to the
desirability
of a merger or other proposal are supported. |
|
Shareholder
Rights Plans |
|
US
We will support mandates requiring shareholder approval of a shareholder
rights plans
(“poison
pill”)
and repeals of various anti-takeover related
provisions. |
|
In
general, we will vote against the adoption or renewal of a US issuer's
shareholder rights
plan
(“poison
pill”). |
|
We
will vote for an amendment to a shareholder rights plan (“poison
pill”)
where the terms
of
the new plans are more favorable to shareholders' ability to accept
unsolicited offers
(i.e.
if one of the following conditions are met: (i) minimum trigger, flip-in
or flip-over of 20
percent,
(ii) maximum term of three years, (iii) no “dead
hand,”
“slow
hand,”
“no
hand”
nor
similar feature that limits the ability of a future board to redeem the
pill, and (iv)
inclusion
of a shareholder redemption feature (qualifying offer clause), permitting
ten
percent
of the shares to call a special meeting or seek a written consent to vote
on
rescinding
the pill if the board refuses to redeem the pill 90 days after a
qualifying offer is
announced). |
|
Canada
We analyze proposals for shareholder approval of a shareholder rights plan
(“poison
pill”)
on a case-by-case basis taking into consideration numerous factors,
including
but not limited to, whether it conforms to ‘new generation' rights plans
and the
scope
of the plan. |
|
Special
Meetings |
|
We
will vote for shareholder proposals related to special meetings at
companies that do
not
provide shareholders the right to call for a special meeting in their
bylaws if: |
|
•The
company also does not allow shareholders to act by written
consent |
|
•The
company allows shareholders to act by written consent but the ownership
threshold
for acting by written consent is set above 25 percent of outstanding
shares |
|
We
will vote for shareholder proposals related to special meetings at
companies that give
shareholders
(with a minimum 10 percent ownership threshold) the right to call for a
special
meeting in their bylaws if: |
|
•The
current ownership threshold to call for a special meeting is above 25
percent of
outstanding
shares |
|
We
will vote for management proposals related to special
meetings. |
|
Written
Consent |
|
We
will vote for shareholder proposals on written consent at companies
if: |
|
•The
company does not have provisions in their bylaws giving shareholders the
right to
call
for a special meeting |
|
•The
company allows shareholders the right to call for a special meeting, but
the
current
ownership threshold to call for a special meeting is above 25 percent of
outstanding
shares |
|
•The
company has a poor governance profile |
|
We
will vote management proposals on written consent on a case-by-case
basis. |
|
Super–Majority |
|
We
will generally vote against amendments to bylaws requiring super-majority
shareholder
votes
to pass or repeal certain provisions. We will vote for the reduction or
elimination of
super-majority
vote requirements, unless management of the issuer was concurrently
seeking
to or had previously made such a reduction or
elimination. |
|
|
Remuneration
Issues |
Despite
the differences among the types of plans and the awards possible there is
a
simple
underlying philosophy that guides the analysis of all compensation plans;
namely,
the
terms of the plan should be designed to provide an incentive for
executives and/or
employees
to align their interests with those of the shareholders and thus work
toward
enhancing
shareholder value. Plans that benefit participants only when the
shareholders
also
benefit are those most likely to be supported. |
|
Advisory
Vote on Executive Compensation and Frequency |
|
State
Street Global Advisors believes executive compensation plays a critical
role in
aligning
executives' interest with shareholders', attracting, retaining and
incentivizing key
talent,
and ensuring positive correlation between the performance achieved by
management
and the benefits derived by shareholders. We support management
proposals
on executive compensation where there is a strong relationship between
executive
pay and performance over a five-year period. We seek adequate disclosure
of
various
compensation elements, absolute and relative pay levels, peer selection
and
benchmarking,
the mix of long-term and short-term incentives, alignment of pay
structures
with
shareholder interests as well as with corporate strategy, and performance.
Further
shareholders
should have the opportunity to assess whether pay structures and levels
are
aligned
with business performance on an annual basis. |
|
In
Canada, where advisory votes on executive compensation are not
commonplace, we will
rely
primarily upon engagement to evaluate compensation
plans. |
|
Employee
Equity Award Plans |
|
We
consider numerous criteria when examining equity award proposals.
Generally we do
not
vote against plans for lack of performance or vesting criteria. Rather the
main criteria
that
will result in a vote against an equity award plan
are: |
|
Excessive
voting power dilution
To assess the dilutive effect, we divide the number of
shares
required to fully fund the proposed plan, the number of authorized but
unissued
shares
and the issued but unexercised shares by the fully diluted share count. We
review
that
number in light of certain factors, such as the industry of the
issuer. |
|
Historical
option grants
Excessive historical option grants over the past three years.
Plans
that provide for historical grant patterns of greater than five to eight
percent are
generally
not supported. |
|
Repricing
We
will vote against any plan where repricing is expressly permitted. If a
company
has a history of repricing underwater options, the plan will not be
supported. |
|
Other
criteria include the following: |
|
•Number
of participants or eligible employees |
|
•The
variety of awards possible |
|
•The
period of time covered by the
plan |
|
There
are numerous factors that we view as negative. If combined they may result
in a
vote
against a proposal. Factors include: |
|
•Grants
to individuals or very small groups of
participants |
|
•“Gun-jumping”
grants which anticipate shareholder approval of a plan or
amendment |
|
•The
power of the board to exchange “underwater”
options without shareholder
approval.
This pertains to the ability of a company to reprice options, not the
actual act
of
repricing described above |
|
•Below
market rate loans to officers to exercise their
options |
|
•The
ability to grant options at less than fair market
value; |
|
•Acceleration
of vesting automatically upon a change in control |
|
•Excessive
compensation (i.e. compensation plans which we deem to be overly
dilutive) |
|
Share
Repurchases
If a company makes a clear connection between a share repurchase
program
and its intent to offset dilution created from option plans and the
company fully
discloses
the amount of shares being repurchased, the voting dilution calculation
may be
adjusted
to account for the impact of the buy back. |
|
Companies
will not have any such repurchase plan factored into the dilution
calculation if
they
do not (i) clearly state the intentions of any proposed share buy-back
plan, (ii)
disclose
a definitive number of the shares to be bought back, (iii) specify the
range of
premium/discount
to market price at which a company can repurchase shares, and (iv)
disclose
the time frame during which the shares will be bought
back. |
|
162(m)
Plan Amendments
If a plan would not normally meet our criteria described above,
but
was primarily amended to add specific performance criteria to be used with
awards
that
were designed to qualify for performance-based exception from the tax
deductibility
limitations
of Section 162(m) of the Internal Revenue Code, then we will support the
proposal
to amend the plan. |
|
Employee
Stock Option Plans |
|
We
generally vote for stock purchase plans with an exercise price of not less
than 85
percent
of fair market value. However, we take market practice into
consideration. |
|
Compensation-Related
Items |
|
We
generally support the following proposals: |
|
•Expansions
to reporting of financial or compensation-related information within
reason |
|
•Proposals
requiring the disclosure of executive retirement benefits if the issuer
does
not
have an independent compensation committee |
|
We
generally vote against the following proposal: |
|
•Retirement
bonuses for non-executive directors and auditors |
|
|
Miscellaneous/Routine
Items |
We
generally support the following miscellaneous/routine governance
items: |
|
•Reimbursement
of all appropriate proxy solicitation expenses associated with the
election
when voting in conjunction with support of a dissident
slate |
|
•Opting-out
of business combination provision |
|
•Proposals
that remove restrictions on the right of shareholders to act independently
of
management |
|
•Liquidation
of the company if the company will file for bankruptcy if the proposal is
not
approved |
|
•Shareholder
proposals to put option repricings to a shareholder
vote |
|
•General
updating of, or corrective amendments to, charter and bylaws not otherwise
specifically
addressed herein, unless such amendments would reasonably be
expected
to diminish shareholder rights (e.g. extension of directors' term limits,
amending
shareholder vote requirement to amend the charter documents, insufficient
information
provided as to the reason behind the amendment) |
|
•Change
in corporation name |
|
•Mandates
that amendments to bylaws or charters have shareholder
approval |
|
•Management
proposals to change the date, time, and/or location of the annual
meeting
unless the proposed change is unreasonable |
|
•Repeals,
prohibitions or adoption of anti-greenmail
provisions |
|
•Management
proposals to implement a reverse stock split when the number of
authorized
shares will be proportionately reduced and proposals to implement a
reverse
stock split to avoid delisting |
|
•Exclusive
forum provisions |
|
State
Street Global Advisors generally does not support the following
miscellaneous/
routine
governance items: |
|
•Proposals
requesting companies to adopt full tenure holding periods for their
executives |
|
•Reincorporation
to a location that we believe has more negative attributes than its
current
location of incorporation |
|
•Shareholder
proposals to change the date, time, and/or location of the annual meeting
unless
the current scheduling or location is
unreasonable |
|
•Proposals
to approve other business when it appears as a voting
item |
|
•Proposals
giving the board exclusive authority to amend the
bylaws |
|
•Proposals
to reduce quorum requirements for shareholder meetings below a majority
of
the shares outstanding unless there are compelling reasons to support the
proposal |
|
|
Environmental
and Social
Issues |
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting, and
thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our stewardship priorities and
build
long-term
relationships with issuers. When voting, we fundamentally consider whether
the
adoption
of a shareholder proposal addressing a material sustainability issue would
promote
long-term shareholder value in the context of the company's existing
practices
and
disclosures as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
our
Frameworks for Voting Environmental and Social Shareholder Proposals, both
available
at ssga.com/about-us/asset-stewardship.html. |
|
|
More
Information |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
|
|
|
March
2022 |
|
United
Kingdom and Ireland |
|
Proxy
Voting and
Engagement
Guidelines |
|
State
Street Global Advisors' United Kingdom and
Ireland
Proxy Voting and Engagement Guidelinesi
outline
our expectations of companies listed on stock
exchanges
in the United Kingdom and Ireland. These
Guidelines
complement and should be read in
conjunction
with State Street Global Advisors' Global
Proxy
Voting and Engagement Principles, which provide
a
detailed explanation of our approach to voting and
engaging
with companies, and State Street Global
Advisors'
Conflict Mitigation Guidelines. |
|
|
|
|
|
|
|
State
Street Global Advisors' United Kingdom (“UK”)
and Ireland Proxy Voting and
Engagement
Guidelines address areas including board structure, audit-related issues,
capital
structure, remuneration, environmental, social and other
governance-related issues. |
|
When
voting and engaging with companies in global markets, we consider market
specific
nuances
in the manner that we believe will most likely protect and promote the
long-term
economic
value of client investments. We expect companies to observe the relevant
laws
and
regulations of their respective markets, as well as country-specific best
practice
guidelines
and corporate governance codes. When we identify that a country's
regulatory
requirements
do not address some of the key philosophical principles that we believe
are
fundamental
to our global voting guidelines, we may hold companies in such markets to
our
global standards. |
|
In
our analysis and research into corporate governance issues in the UK and
Ireland, we
expect
all companies that obtain a primary listing on the London Stock Exchange
or the
Irish
Stock Exchange, regardless of domicile, to comply with the UK Corporate
Governance
Code, and proactively monitor companies' adherence to the Code. Consistent
with
the ‘comply or explain' expectations established by the Code, we encourage
companies
to proactively disclose their level of compliance with the Code. In
instances of
non-compliance
in which companies cannot explain the nuances of their governance
structure
effectively, either publicly or through engagement, we may vote against
the
independent
board leader. |
|
|
State
Street Global
Advisors'
Proxy Voting
and
Engagement
Philosophy |
In
our view, corporate governance and sustainability issues are an integral
part of the
investment
process. The Asset Stewardship Team consists of investment professionals
with
expertise in corporate governance and company law, remuneration,
accounting, and
environmental
and social issues. We have established robust corporate governance
principles
and practices that are backed with extensive analytical expertise to
understand
the
complexities of the corporate governance landscape. We engage with
companies to
provide
insight on the principles and practices that drive our voting decisions.
We also
conduct
proactive engagement to address significant shareholder concerns and
environmental,
social and governance (“ESG”)
issues in a manner consistent with
maximizing
shareholder value. |
|
The
team works alongside members of State Street Global Advisors' Active
Fundamental
and
Europe, Middle East and Africa (“EMEA”)
Investment teams. We collaborate on issuer
engagements
and provide input on company specific fundamentals. We are also a member
of
various investor associations that seek to address broader corporate
governance
related
policy issues in the UK and European markets. |
|
State
Street Global Advisors is a signatory to the United Nations Principles for
Responsible
Investment (“UNPRI”)
and is compliant with the UK Stewardship Code. We
are
committed to sustainable investing, and are working to further integrate
ESG principles
into
investment and corporate governance practice where applicable and
consistent with
our
fiduciary duty. |
|
|
Directors
and Boards |
Principally,
we believe the primary responsibility of a board of directors is to
preserve and
enhance
shareholder value and to protect shareholder interests. In order to carry
out their
primary
responsibilities, directors have to undertake activities that range from
setting
strategy,
overseeing executive management, and monitoring the risks that arise from
a
company's
business, including risks related to sustainability issues. Further, good
corporate
governance necessitates the existence of effective internal controls and
risk
management
systems, which should be governed by the board. |
|
We
believe that a well constituted board of directors, with a balance of
skills, expertise and
independence,
provides the foundations for a well governed company. We view board
quality
as a measure of director independence, director succession planning, board
diversity,
evaluations and refreshment, and company governance practices. We vote for
the
(re-)election
of directors on a case-by-case basis after considering various factors,
including
board quality, general market practice, and availability of information on
director
skills
and expertise. In principle, we believe independent directors are crucial
to robust
corporate
governance and help management establish sound corporate governance
policies
and practices. A sufficiently independent board will most effectively
monitor
management
and perform oversight functions necessary to protect shareholder
interests. |
|
Our
broad criteria for director independence for UK companies include factors
such as: |
|
•Participation
in related-party transactions and other business relations with the
company |
|
•Employment
history with company |
|
•Excessive
tenure and a preponderance of long-tenured
directors |
|
•Relations
with controlling shareholders |
|
•Family
ties with any of the company's advisers, directors or senior
employees |
|
•Company
classification of a director as non-independent |
|
When
voting on the election or re-election of a director, we also consider the
number of
outside
board directorships a non-executive and an executive may undertake. Thus,
we
may
withhold votes from board chairs and lead independent directors who sit on
more than
three
public company boards, and from non-executive directors who hold more than
four
public
company board mandates. We may also take voting action against Named
Executive
Officers who undertake more than two public board memberships. Service on
a
mutual
fund board or a UK investment trust is not considered when evaluating
directors for
excessive
commitments. |
|
We
also consider attendance at board meetings and may withhold votes from
directors
who
attend less than 75 percent of board meetings in a given year without
appropriate
explanation
or providing reason for their failure to meet the attendance threshold. In
addition,
we monitor other factors that may influence the independence of a
non-executive
director,
such as performance-related pay, cross-directorships and significant
shareholdings. |
|
We
support the annual election of
directors. |
|
While
we are generally supportive of having the roles of chair and CEO separated
in the
UK
market, we assess the division of responsibilities between chair and CEO
on a
case-by-case
basis, giving consideration to factors such as the company's specific
circumstances,
overall level of independence on the board and general corporate
governance
standards in the company. Similarly, we monitor for circumstances in which
a
combined
chair/CEO is appointed or a former CEO becomes
chair. |
|
We
may also consider factors such as board performance and directors who
appear to be
remiss
in the performance of their oversight responsibilities when considering
their
suitability
for reappointment (e.g. fraud, criminal wrongdoing and breach of fiduciary
responsibilities). |
|
We
believe companies should have committees for audit, remuneration and
nomination
oversight.
The audit committee is responsible for monitoring the integrity of the
financial
statements
of the company, the appointment of external auditors, auditor
qualifications
and
independence, and effectiveness and resource levels. Similarly, executive
pay is an
important
aspect of corporate governance, and it should be determined by the board
of
directors.
We expect companies to have remuneration committees to provide independent
oversight
over executive pay. We will vote against nominees who are executive
members of
audit
or remuneration committees. |
|
We
consider whether board members have adequate skills to provide effective
oversight of
corporate
strategy, operations and risks, including environmental and social issues.
Boards
should
also have a regular evaluation process in place to assess the
effectiveness of the
board
and the skills of board members to address issues such as emerging risks,
changes
to
corporate strategy, and diversification of operations and geographic
footprint. The
nomination
committee is responsible for evaluating and reviewing the balance of
skills,
knowledge,
and experience of the board. It also ensures that adequate succession
plans
are
in place for directors and the CEO. We may vote against the re-election of
members of
the
nomination committee if, over time, the board has failed to address
concerns over
board
structure or succession. |
|
Poorly
structured executive compensation plans pose increasing reputational risk
to
companies.
Ongoing high level of dissent against a company's compensation proposals
may
indicate that the company is not receptive to investor concerns. If the
level of dissent
against
a company's remuneration report and/or remuneration policy is consistently
high,
and
we have determined that a vote against a pay-related proposal is warranted
in the
third
consecutive year, we will vote against the Chair of the remuneration
committee. |
|
Board
Gender Diversity |
|
We
expect boards of all listed companies to have at least one female board
member. If a
company
fails to meet this expectation, State Street Global Advisors may vote
against the
chair
of the board's nominating committee or the board leader in the absence of
a
nominating
committee, if necessary. Additionally, if a company fails to meet this
expectation
for three consecutive years, State Street Global Advisors may vote against
all
incumbent
members of the nominating
committee. |
|
Board
Racial/Ethnic Diversity |
|
We
believe that companies have a responsibility to effectively manage and
disclose risks
and
opportunities related to racial and ethnic diversity. If a company in the
FTSE 100 does
not
disclose, at minimum, the gender, racial and ethnic composition of its
board, we will
vote
against the Chair of the nominating committee. We may withhold support
from the
Chair
of the nominating committee also when a company in the FTSE 100 does not
have
at
least one director from an underrepresented community on its
board. |
|
Director
Time Commitments |
|
When
voting on the election or re-election of a director, we also consider the
number of
outside
board directorships a non-executive and an executive may undertake. Thus,
State
Street
Global Advisors may take voting action against a director who exceeds the
number
of
board mandates listed below: |
|
•Named
Executive Officers (NEOs) of a public company who sit on more than two
public
company boards |
|
•Non-executive
board chairs or lead independent directors who sit on more than three
public
company boards |
|
•Director
nominees who sit on more than four public company
boards |
|
For
non-executive board chairs/lead independent directors and director
nominees who hold
excessive
commitments, as defined above, we may consider waiving our policy and vote
in
support
of a director if a company discloses its director commitment policy in a
publicly
available
manner (e.g., corporate governance guidelines, proxy statement, company
website).
This policy or associated disclosure must
include: |
|
•A
numerical limit on public company board seats a director can serve
on |
|
•This
limit cannot exceed our policy by more than one
seat |
|
•Consideration
of public company board leadership positions (e.g., Committee
Chair) |
|
•Affirmation
that all directors are currently compliant with the company
policy |
|
•Description
of an annual policy review process undertaken by the Nominating
Committee
to evaluate outside director time commitments |
|
If
a director is imminently leaving a board and this departure is disclosed
in a written,
time-bound
and publicly-available manner, we may consider waiving our withhold vote
when
evaluating the director for excessive time
commitments. |
|
Service
on a mutual fund board, the board of a UK investment trust or a Special
Purpose
Acquisition
Company (SPAC) board is not considered when evaluating directors for
excessive
commitments. However, we do expect these roles to be considered by
nominating
committees when evaluating director time
commitments. |
|
Incorporating
R-FactorTM
into Director Votes |
|
R-FactorTM
is a scoring system created by State Street Global Advisors that measures
the
performance
of a company's business operations and governance as it relates to
financially
material ESG factors facing the company's industry. R-FactorTM
encourages
companies
to manage and disclose material, industry-specific ESG risks and
opportunities,
thereby reducing investment risk across our own portfolio and the broader
market.
State Street Global Advisors may take voting action against the
independent board
leader
at companies listed on the FTSE 350 that are R-FactorTM
laggards1
and momentum
underperformers2
and cannot articulate how they plan to improve their
score. |
|
Climate-related
Disclosure |
|
We
believe climate change poses a systemic risk to all companies in our
portfolio. |
|
State
Street Global Advisors has publicly supported the global regulatory
efforts to
establish
a mandatory baseline of climate risk disclosures for all companies. Until
these
consistent
disclosure standards are established, we find that the recommendations of
the
Taskforce
on Climate-related Financial Disclosures (TCFD) provide the most effective
framework
by which companies can develop strategies to plan for climate-related
risks and
make
their businesses more resilient to the impacts of climate
change. |
|
As
such, we may vote against the independent board leader at companies in the
FTSE
350
that fail to provide sufficient disclosure in accordance with the TCFD
framework,
including: |
|
•Board
oversight of climate-related risks and
opportunities |
|
•Total
Scope 1 and Scope 2 greenhouse gas emissions |
|
•Targets
for reducing greenhouse gas emissions |
|
Indemnification
and Limitations on Liability |
|
Generally,
we support proposals to limit directors' liability and/or expand
indemnification
and
liability protection up to the limit provided by law. This holds if a
director has not acted
in
bad faith, gross negligence, nor reckless disregard of the duties involved
in the conduct
of
his or her office. |
|
|
Audit-Related
Issues |
Companies
should have robust internal audit and internal control systems designed
for
effective
management of any potential and emerging risks to company operations and
strategy.
The responsibility of setting out an internal audit function lies with the
audit
committee,
which should have as members independent non-executive
directors. |
|
Appointment
of External Auditors |
|
State
Street Global Advisors believes that a company's auditor is an essential
feature of
an
effective and transparent system of external supervision. Shareholders
should be given
the
opportunity to vote on their appointment or re-appoint at the annual
meeting. When
appointing
external auditors and approving audit fees, we take into consideration the
level
of
detail in company disclosures and will generally not support such
resolutions if an
adequate
breakdown is not provided and if non-audit fees are more than 50% of audit
fees.
In addition, we may vote against members of the audit committee if we have
concerns
with audit-related issues or if the level of non-audit fees to audit fees
is
significant.
In certain circumstances, we may consider auditor tenure when evaluating
the
audit
process. |
|
Limit
Legal Liability of External Auditors |
|
We
generally oppose limiting the legal liability of audit firms because we
believe this could
create
a negative impact on the quality of the audit
function. |
|
Approval
of Financial Statements |
|
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. We expect external auditors to provide
assurance of
a
company's financial condition. Hence, we will vote against the approval of
financial
statements
if i) they have not been disclosed or audited; ii) the auditor opinion is
qualified/
adverse,
or the auditor has issued a disclaimer of opinion; or iii) the auditor
opinion is not
disclosed. |
|
|
Shareholder
Rights and
Capital-Related
Issues |
Share
Issuances |
|
The
ability to raise capital is critical for companies to carry out strategy,
to grow, and to
achieve
returns above their cost of capital. The approval of capital raising
activities is
essential
to shareholders' ability to monitor returns and to ensure capital is
deployed
efficiently.
We support capital increases that have sound business reasons and are not
excessive
relative to a company's existing capital base. |
|
Pre-emption
rights are a fundamental right for shareholders to protect their
investment in a
company.
Where companies seek to issue new shares without pre-emption rights, we
may
vote
against if such authorities are greater than 20% of the issued share
capital. We may
also
vote against resolutions that seek authority to issue capital with
pre-emption rights if
the
aggregate amount allowed seems excessive and is not justified by the
board.
Generally,
we are against capital issuance proposals greater than 100% of the issued
share
capital when the proceeds are not intended for a specific
purpose. |
|
Share
Repurchase Programs |
|
We
generally support a proposal to repurchase shares. However, this is not
the case if the
issuer
does not clearly state the business purpose for the program, a definitive
number of
shares
to be repurchased, the range of premium/discount to market price at which
a
company
can repurchase shares, and the timeframe for the repurchase. We may vote
against
share repurchase requests that allow share repurchases during a takeover
period. |
|
Dividends |
|
We
generally support dividend payouts that constitute 30% or more of net
income. We may
vote
against the dividend payouts if the dividend payout ratio has been
consistently below
30%
without adequate explanation or the payout is excessive given the
company's
financial
position. Particular attention will be paid where the payment may damage
the
company's
long term financial health. |
|
Mergers
and Acquisitions |
|
Mergers
or reorganizing the structure of a company often involve proposals
relating to
reincorporation,
restructurings, mergers, liquidations, and other major changes to the
corporation.
Proposals that are in the best interests of the shareholders, demonstrated
by
enhancing
share value or improving the effectiveness of the company's operations,
will be
supported.
In general, provisions that are not viewed as financially sound or are
thought to
be
destructive to shareholders' rights and are not
supported. |
|
We
will generally support transactions that maximize shareholder value. Some
of the
considerations
include the following: |
|
•Offer
premium |
|
•Strategic
rationale |
|
•Board
oversight of the process for the recommended transaction, including,
director
and/
or management conflicts of interest |
|
•Offers
made at a premium and where there are no other higher
bidders |
|
•Offers
in which the secondary market price is substantially lower than the net
asset
value |
|
We
may vote against a transaction considering the
following: |
|
•Offers
with potentially damaging consequences for minority shareholders because
of
illiquid
stock |
|
•Offers
in which we believe there is a reasonable prospect for an enhanced bid or
other
bidders |
|
•The
current market price of the security exceeds the bid price at the time of
voting |
|
Anti-Takeover
Measures |
|
We
oppose anti-takeover defenses such as authorities for the board when
subject to a
hostile
takeover to issue warrants convertible into shares to existing
shareholders. |
|
Notice
Period to Convene a General Meeting |
|
We
expect companies to give as much notice as is practicable when calling a
general
meeting.
Generally, we are not supportive of authorizations seeking to reduce the
notice
period
to 14 days. |
|
|
Remuneration |
Executive
Pay |
|
Despite
the differences among the types of plans and awards possible, there is a
simple
underlying
philosophy that guides our analysis of executive pay: there should be a
direct
relationship
between remuneration and company performance over the long
term. |
|
Shareholders
should have the opportunity to assess whether pay structures and levels
are
aligned
with business performance. When assessing remuneration policies and
reports,
we
consider adequate disclosure of various remuneration elements, absolute
and relative
pay
levels, peer selection and benchmarking, the mix of long-term and short-
term
incentives,
alignment of pay structures with shareholder interests as well as with
corporate
strategy
and performance. We may oppose remuneration reports where pay seems
misaligned
with shareholders' interests. We may also vote against the re-election of
members
of the remuneration committee if we have serious concerns about
remuneration
practices
or if the company has not been responsive to shareholder
concerns. |
|
Equity
Incentive Plans |
|
We
may not support proposals on equity-based incentive plans where
insufficient
information
is provided on matters such as grant limits, performance metrics,
performance,
vesting
periods, and overall dilution. Generally we do not support options under
such plans
being
issued at a discount to market price or plans that allow for re-testing of
performance
metrics. |
|
Non-Executive
Director Pay |
|
Authorities
that seek shareholder approval for non-executive directors' fees are
generally
not
controversial. We typically support resolutions regarding directors' fees
unless
disclosure
is poor and we are unable to determine whether they are excessive relative
to
fees
paid by comparable companies. We will evaluate any non-cash or performance
related
pay to non-executive directors on a company- by-company
basis. |
|
|
Risk
Management |
State
Street Global Advisors believes that risk management is a key function of
the board,
which
is responsible for setting the overall risk appetite of a company and for
providing
oversight
of the risk management process established by senior executives at a
company.
We
allow boards to have discretion over how they provide oversight in this
area. We expect
companies
to disclose how the board provides oversight on its risk management system
and
risk identification. Boards should also review existing and emerging risks
as they can
evolve
with a changing political and economic landscape or as companies diversify
their
operations
into new areas. |
|
|
Environmental
and Social
Issues |
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting, and
thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our stewardship priorities and
build
long-term
relationships with issuers. When voting, we fundamentally consider whether
the
adoption
of a shareholder proposal addressing a material sustainability issue would
promote
long-term shareholder value in the context of the company's existing
practices
and
disclosures as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
Frameworks
for Voting Environmental and Social Shareholder Proposals, both available
at
ssga.com/about-us/asset-stewardship.html. |
|
|
More
Information |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |
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March
2022 |
|
Rest
of the World |
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Proxy
Voting and
Engagement
Guidelines |
|
State
Street Global Advisors' Rest of the World Proxy
Voting
and Engagement Guidelinesi
cover different
corporate
governance frameworks and practices in
international
markets not covered under specific country/
regional
guidelines. These Guidelines complement and
should
be read in conjunction with State Street Global
Advisors'
overarching Global Proxy Voting and
Engagement
Principles, which provide a detailed
explanation
of our approach to voting and engaging with
companies,
and State Street Global Advisors' Conflict
Mitigation
Guidelines. |
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At
State Street Global Advisors, we recognize that markets not covered under
specific
country/regional
guidelines, specifically emerging markets, are disparate in their
corporate
governance
frameworks and practices. While they tend to pose broad common
governance
issues across all markets, such as concentrated ownership, poor disclosure
of
financial
and related-party transactions, and weak enforcement of rules and
regulation, our
proxy
voting Guidelines are designed to identify and to address specific
governance
concerns
in each market. We also evaluate the various factors that contribute to
the
corporate
governance framework of a country. These factors include, but are not
limited to:
(i)
the macroeconomic conditions and broader political system in a country;
(ii) quality of
regulatory
oversight, enforcement of property and shareholder rights; and (iii) the
independence
of judiciary. |
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State
Street Global
Advisors'
Proxy Voting
and
Engagement
Philosophy
in Emerging
Markets |
State
Street Global Advisors' approach to proxy voting and issuer engagement in
emerging
markets
is designed to increase the value of our investments through the
mitigation of
governance
risks. The overall quality of the corporate governance framework in an
emerging
market country drives the level of governance risks investors assign to a
country.
Thus,
improving the macro governance framework in a country may help to reduce
governance
risks and to increase the overall value of our holdings over time. In
order to
improve
the overall governance framework and practices in a country, members of
our
Asset
Stewardship Team endeavor to engage with representatives from regulatory
agencies
and stock markets to highlight potential concerns with the macro
governance
framework
of a country. We are also a member of various investor associations that
seek
to
address broader corporate governance-related policy issues in emerging
markets. To
help
mitigate company-specific risk, the State Street Global Advisors Asset
Stewardship
Team
works alongside members of the Active Fundamental and emerging market
specialists
to engage with emerging market companies on governance issues and address
any
specific concerns, or to get more information regarding shareholder items
that are to
be
voted on at upcoming shareholder meetings. This integrated approach to
engagement
drives
our proxy voting and engagement philosophy in emerging
markets. |
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Our
proxy voting Guidelines in emerging markets address six broad
areas: |
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•Directors
and Boards |
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•Accounting
and Audit-Related Issues |
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•Shareholder
Rights and Capital-Related Issues |
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•Remuneration |
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•Environmental
and Social Issues |
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•General/Routine
Issues |
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Directors
and Boards |
We
believe that a well constituted board of directors, with a balance of
skills, expertise and
independence,
provides the foundation for a well governed company. However, several
factors,
such as low overall independence level requirements by market regulators,
poor
biographical
disclosure of director profiles, prevalence of related-party transactions,
and
the
general resistance from controlling shareholders to increase board
independence,
render
the election of directors as one of the most important fiduciary duties we
perform in
emerging
market companies. |
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We
vote for the election/re-election of directors on a case-by-case basis
after considering
various
factors, including general market practice and availability of information
on director
skills
and expertise. We expect companies to meet minimum overall board
independence
standards,
as defined in a local corporate governance code or market practice.
Therefore,
in
several countries, we will vote against certain non-independent directors
if overall board
independence
levels do not meet market standards. |
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Our
broad criteria for director independence in emerging market companies
include factors
such
as: |
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•Participation
in related-party transactions |
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•Employment
history with company |
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•Relations
with controlling shareholders and employees |
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•Company
classification of a director as non-independent |
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In
some countries, market practice calls for the establishment of a board
level audit
committee.
We believe an audit committee should be responsible for monitoring the
integrity
of the financial statements of a company and appointing external auditors.
It
should
also monitor their qualifications, independence, effectiveness and
resource levels.
Based
upon our desire to enhance the quality of financial and accounting
oversight
provided
by independent directors, we expect that listed companies have an audit
committee
constituted of a majority of independent
directors. |
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Further,
we expect boards of listed companies in all markets and indices to have at
least
one
female board member. If a company fails to meet this expectation, State
Street Global
Advisors
may vote against the Chair of the board's nominating committee or the
board
leader
in the absence of a nominating committee, if necessary. Additionally, if a
company
fails
to meet this expectation for three consecutive years, State Street Global
Advisors may
vote
against all incumbent members of the nominating committee or those persons
deemed
responsible for the nomination process. We may waive the policy if a
company
engages
with State Street Global Advisors and provides a specific, timebound plan
for
adding
at least one woman to its board. |
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Poorly
structured executive compensation plans pose increasing reputational risk
to
companies.
Ongoing high level of dissent against a company's compensation proposals
may
indicate that the company is not receptive to investor concerns. If the
level of dissent
against
a company's remuneration report and/or remuneration policy is consistently
high,
and
we have determined that a vote against a pay-related proposal is warranted
in the
third
consecutive year, we will vote against the Chair of the remuneration
committee. |
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Audit-Related
Issues |
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. As a result, board oversight of internal
controls and
the
independence of the audit process are essential if investors are to rely
upon financial
statements.
We believe that audit committees provide the necessary oversight for the
selection
and appointment of auditors, the company's internal controls and the
accounting
policies,
and the overall audit process. |
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Appointment
of External Auditors |
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We
believe that a company's auditor is an essential feature of an effective
and transparent
system
of external supervision. Shareholders should be given the opportunity to
vote on
their
appointment or re-appointment at the annual meeting. We believe that it is
imperative
for
audit committees to select outside auditors who are independent from
management. |
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Approval
of Financial
Statements |
The
disclosure and availability of reliable financial statements in a timely
manner is
imperative
for the investment process. We expect external auditors to provide
assurance of
a
company's financial condition. Hence, we will vote against the approval of
financial
statements
if i) they have not been disclosed or audited; ii) the auditor opinion is
qualified/
adverse,
or the auditor has issued a disclaimer of opinion; or iii) the auditor
opinion is not
disclosed. |
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Shareholder
Rights and
Capital-Related
Issues |
State
Street Global Advisors believes that changes to a company's capital
structure, such
as
changes in authorized share capital, share repurchase and debt issuances,
are critical
decisions
made by the board. We believe the company should have a business rationale
that
is consistent with corporate strategy and should not overly dilute its
shareholders. |
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Related-Party
Transactions |
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Most
companies in emerging markets have a controlled ownership structure that
often
includes
complex cross-shareholdings between subsidiaries and parent companies
(“related
companies”).
As a result, there is a high prevalence of related-party transactions
between
the company and its various stakeholders, such as directors and
management. In
addition,
inter-group loan and loan guarantees provided to related companies are
some of
the
other related-party transactions that increase the risk profile of
companies. In markets
where
shareholders are required to approve such transactions, we expect
companies to
provide
details about the transaction, such as its nature, value and purpose. This
also
encourages
independent directors to ratify such transactions. Further, we encourage
companies
to describe the level of independent board oversight and the approval
process,
including
details of any independent valuations provided by financial advisors on
related-party
transactions. |
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Share
Repurchase Programs |
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With
regard to share repurchase programs, we expect companies to clearly state
the
business
purpose for the program and a definitive number of shares to be
repurchased. |
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Mergers
and Acquisitions |
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Mergers
or reorganization of the structure of a company often involve proposals
relating to
reincorporation,
restructurings, liquidations and other major changes to the corporation.
Proposals
that are in the best interest of the shareholders, demonstrated by
enhancing
share
value or improving the effectiveness of the company's operations, will be
supported.
In
general, provisions that are not viewed as financially sound or are
thought to be
destructive
to shareholders' rights are not supported. |
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We
evaluate mergers and structural reorganizations on a case-by-case basis.
We
generally
support transactions that maximize shareholder value. Some of the
considerations
include, but are not limited to, the following: |
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•Offer
premium |
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•Strategic
rationale |
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•Board
oversight of the process for the recommended transaction, including
director
and/
or management conflicts of interest |
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•Offers
made at a premium and where there are no other higher
bidders |
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•Offers
in which the secondary market price is substantially lower than the net
asset
value |
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We
may vote against a transaction considering the
following: |
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•Offers
with potentially damaging consequences for minority shareholders because
of
illiquid
stock |
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•Offers
where we believe there is a reasonable prospect for an enhanced bid or
other
bidders |
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•The
current market price of the security exceeds the bid price at the time of
voting |
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We
will actively seek direct dialogue with the board and management of
companies that
we
have identified through our screening processes. Such engagements may lead
to
further
monitoring to ensure the company improves its governance or sustainability
practices.
In these cases, the engagement process represents the most meaningful
opportunity
for State Street Global Advisors to protect long-term shareholder value
from
excessive
risk due to poor governance and sustainability
practices. |
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Remuneration |
We
consider it to be the board's responsibility to set appropriate levels of
executive
remuneration.
Despite the differences among the types of plans and the potential awards,
there
is a simple underlying philosophy that guides our analysis of executive
remuneration:
there
should be a direct relationship between executive compensation and company
performance
over the long term. In emerging markets, we encourage companies to
disclose
information on senior executive
remuneration. |
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Shareholders
should have the opportunity to assess whether pay structures and levels
are
aligned
with business performance. When assessing remuneration reports, we
consider
factors
such as adequate disclosure of remuneration elements, absolute and
relative pay
levels,
peer selection and benchmarking, the mix of long-term and short-term
incentives,
alignment
of pay structures with shareholder interests, corporate strategy and
performance.
We may oppose remuneration reports where pay seems misaligned with
shareholders'
interests. We may also vote against the re-election of members of the
remuneration
committee if we have serious concerns about remuneration practices and if
the
company has not been responsive to shareholder pressure to review its
approach.
With
regard to director remuneration, we support director pay provided the
amounts are
not
excessive relative to other issuers in the market or industry, and are not
overly dilutive
to
existing shareholders. |
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Environmental
and Social
Issues |
As
a fiduciary, State Street Global Advisors takes a comprehensive approach
to engaging
with
our portfolio companies about material environmental and social
(sustainability)
issues.
We use our voice and our vote through engagement, proxy voting and thought
leadership
in order to communicate with issuers and educate market participants about
our
perspective on important sustainability topics. Our Asset Stewardship
program
prioritization
process allows us to proactively identify companies for engagement and
voting
in order to mitigate sustainability risks in our portfolio. Through
engagement, we
address
a broad range of topics that align with our stewardship priorities and
build
long-term
relationships with issuers. When voting, we fundamentally consider whether
the
adoption
of a shareholder proposal addressing a material sustainability issue would
promote
long-term shareholder value in the context of the company's existing
practices
and
disclosures as well as existing market practice. |
|
For
more information on our approach to environmental and social issues,
please see our
Global
Proxy Voting and Engagement Guidelines for Environmental and Social Issues
and
our
Frameworks for Voting Environmental and Social Shareholder Proposals, both
available
at ssga.com/about-us/asset-stewardship.html. |
|
|
General/Routine
Issues |
Some
of the other issues that are routinely voted on in emerging markets
include
approving
the allocation of income and accepting financial statements and statutory
reports.
For these voting items, our guidelines consider several factors, such as
historical
dividend
payouts, pending litigation, governmental investigations, charges of
fraud, or
other
indication of significant concerns. |
|
|
More
Information |
Any
client who wishes to receive information on how its proxies were voted
should contact
its
State Street Global Advisors relationship
manager. |
|
|
About
State Street Global
Advisors |
For
four decades, State Street Global Advisors has served the world's
governments,
institutions
and financial advisors. With a rigorous, risk-aware approach built on
research,
analysis
and market-tested experience, we build from a breadth of active and index
strategies
to create cost-effective solutions. As stewards, we help portfolio
companies see
that
what is fair for people and sustainable for the planet can deliver
long-term
performance.
And, as pioneers in index, ETF, and ESG investing, we are always inventing
new
ways to invest. As a result, we have become the world's fourth-largest
asset manager*
with
US $4.14 trillion† under our
care. |