The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Act (17 CFR 270.30e-1):
Item 7. Disclosure of Proxy Voting Policies and
Procedures for Closed-End Management Investment Companies.
PROXY
VOTING PROCEDURES AND GUIDELINES
VOYA FUNDS
VOYA INVESTMENTS, LLC
Date Last Revised: January 27, 2022
Introduction
These Proxy Voting Procedures and Guidelines
(the “Procedures”, the “Guidelines”) set forth the procedures and guidelines to be followed by Voya Investments,
LLC (referred to as the “Advisor”) for the voting of proxies of the Voya funds for which the Advisor serves as the investment
manager (the “Funds”). These Procedures and Guidelines have been approved by the Board of Directors/Trustees of the Funds
(the “Board”).
The Board may determine to delegate proxy voting
to a sub-advisor of one or more Funds (rather than to the Advisor), in which case, the sub-advisor’s proxy policies and procedures
for implementation on behalf of such Voya fund (a “Sub-Advisor-Voted Fund”) shall be subject to approval by the Board. A
Sub-Advisor-Voted Fund is not covered under these Procedures and Guidelines, except as described in the Reporting and Record Retention
section below with respect to vote reporting requirements. However, they are covered by those sub-advisor’s proxy policies,
provided that the Board has approved them.
These Procedures and Guidelines incorporate principles
and guidance set forth in relevant pronouncements of the Securities and Exchange Commission (“SEC”) and its staff on the
fiduciary duty of the Board to ensure that proxies are voted in a timely manner and that voting decisions are in the Funds’ beneficial
owners’ best interest.
Pursuant to these Procedures and Guidelines,
the Active Ownership team (the “AO Team”) is hereby delegated the responsibility to vote the Funds’ proxies in accordance
with these Procedures and Guidelines on behalf of the Funds. In addition, the Compliance Committee of the Board is hereby delegated certain
oversight duties regarding the Advisor’s functions that pertain to the voting of the Funds’ proxies.
The engagement of a Proxy Advisory Firm shall
be subject to the initial approval, and to the annual review and approval, of the Board. The AO Team is responsible for overseeing the
Proxy Advisory Firm and shall direct the Proxy Advisory Firm to vote proxies in accordance with the Guidelines.
These Procedures and Guidelines will be reviewed
by the Board’s Compliance Committee annually and will be updated when appropriate. No change to these Procedures and Guidelines
will be made except pursuant to Board approval. Non-material amendments, however, may be approved for immediate implementation by the
Board’s Compliance Committee, subject to ratification by the full Board at its next regularly scheduled meeting.
Advisor’s Roles and Responsibilities
AO Team
The Voya AO Team shall direct the Proxy Advisory
Firm to vote proxies on behalf of the Funds and the Advisor in connection with annual and special meetings of shareholders (except those
regarding bankruptcy matters and/or related plans of reorganization).
The AO Team is responsible for overseeing the
Proxy Advisory Firm (as defined in the Proxy Advisory Firm section below) and voting the Funds’ proxies in accordance with
the Procedures and Guidelines on behalf of the Funds and the Advisor. The AO Team is authorized to direct the Proxy Advisory Firm to
vote a Fund’s proxy in accordance with the Procedures and Guidelines. Responsibilities assigned to the AO Team, or activities that
support it, may be performed by such members of the Proxy Group (as defined in the Proxy Group section below) or employees of
the Advisor’s affiliates as the Proxy Group deems appropriate.
The AO Team is also responsible for identifying
and informing Counsel (as defined in the Counsel section below) of potential conflicts between the proxy issuer and the Proxy
Advisory Firm, the Advisor, the Funds’ principal underwriters, or an affiliated person of the Funds. The AO Team will identify
such potential conflicts of interest based on information the Proxy Advisory Firm periodically provides; client analyses, distributor,
broker-dealer, and vendor lists; and information derived from other sources, including public filings.
Proxy Advisory Firm
The Proxy Advisory Firm is responsible for
coordinating with the Funds’ custodians to ensure that all proxy materials received by the custodians relating to the
portfolio securities are processed in a timely manner. To the extent applicable, the Proxy Advisory Firm is required to provide
research, analysis, and vote recommendations under its Proxy Voting guidelines. Additionally, the Proxy Advisory Firm is required to
produce custom vote recommendations in accordance with the Guidelines and their vote recommendations.
Proxy Group
The members of the Proxy Group, which may include
employees of the Advisor’s affiliates, and may be amended from time to time at the Advisor’s discretion except that the Funds’
Chief Investment Risk Officer, the Funds’ Chief Compliance Officer, and the Funds’ AO Team shall be members unless the Board
determines otherwise.
Investment Professionals
The Funds’ sub-advisors and/or portfolio
managers are each referred to herein as an “Investment Professional” and collectively, “Investment Professionals”.
Investment Professionals are encouraged to submit a recommendation to the AO Team regarding any proxy-voting-related proposal pertaining
to the portfolio securities over which they have day-to-day portfolio management responsibility. Additionally, when requested, Investment
Professionals are responsible for submitting a recommendation to the AO Team regarding proxy voting related proxy contests, proposals
related to companies with dual class shares with superior voting rights, or mergers and acquisitions involving the portfolio securities
over which they have day-to-day portfolio management responsibility.
Counsel
A member of the mutual funds legal practice group
of the Advisor (“Counsel”) is responsible for determining if a potential conflict of interest involving a proxy issuer is
in fact a conflict of interest. If Counsel deems a proxy issuer to be a conflict of interest, the Counsel must notify the AO Team, who
will in turn notify the Chair of the Compliance Committee of such conflict of interest.
Proxy Voting Procedures
Proxy Group Oversight
A minimum of four (4) members of the Proxy Group
(or three (3) if one member of the quorum is the Funds’ Chief Compliance Officer) will constitute a quorum for purposes of taking
action at any meeting of the Group.
The Proxy Group may meet in person or by telephone.
The Proxy Group also may take action via email in lieu of a meeting, provided that the AO Team follows the directions of a majority of
a quorum responding via e-mail.
A Proxy Group meeting will be held whenever:
| ● | The
AO Team receives a recommendation from an Investment Professional to vote a Fund’s
proxy contrary to the Guidelines. |
| ● | The
Proxy Advisory Firm has made no recommendation on a matter and the Procedures do not provide
instruction. |
| ● | The
AO Team requests the Proxy Group’s input and vote recommendation on a matter. |
At its discretion, the Proxy Group may provide
the AO Team with standing instructions to perform responsibilities and related activities assigned to the Proxy Group, on its behalf,
provided that such instructions do not violate any requirements of these Procedures or the Guidelines.
If the Proxy Group has previously provided the
AO Team with standing instructions to vote in accordance with the Proxy Advisory Firm’s recommendation, these recommendations do
not violate any requirements of these Procedures or the Guidelines, and no conflict of interest exists, the AO Team may implement the
instructions without calling a Proxy Group meeting.
For each proposal referred to the Proxy Group,
it will review:
| ● | The
relevant Procedures and Guidelines, |
| ● | The
recommendation of the Proxy Advisory Firm, if any, |
| ● | The
recommendation of the Investment Professional(s), if any, |
| ● | Other
resources that any Proxy Group member deems appropriate to aid in a determination of a recommendation. |
Vote Instruction
While the vote of a simple majority of the voting
members present will determine any matter submitted to a vote, tie votes will be resolved by securing the vote of members not present
at the meeting. The AO Team will ensure compliance with all applicable voting and conflict of interest procedures, and will use best
efforts to secure votes from as many absent members as may reasonably be accomplished, providing such members with a substantially similar
level of relevant information as that provided at the in-person meeting.
In the event a tie vote cannot be resolved, or
in the event that the vote remains a tie, the AO Team will refer the vote to the Compliance Committee Chair for vote determination.
In the event a tie vote cannot be timely resolved
in connection with a voting deadline, the AO Team will abstain from voting on the proposal(s). However, the AO Team will vote in accordance
with the Proxy Advisory Firm’s recommendation if abstaining on the vote is not a valid option; i.e., can only vote For,
Against, or Withhold.
A member of the Proxy Group may abstain from
voting on any given matter, provided that the member does not participate in the Proxy Group discussion(s) in connection with the vote
determination. If abstention results in the loss of quorum, the process for resolving tie votes will be observed.
If the Proxy Group recommends that a Fund vote
contrary to the Guidelines, as might be the case upon review of a recommendation from an Investment Professional, the AO Team will follow
the procedures in the Out-of-Guidelines section below.
Vote Classification
These Procedures and Guidelines specify how the
Funds generally will vote with respect to the proposals indicated. Unless otherwise noted, the Proxy Group instructs the AO Team, on
behalf of the Advisor, to vote in accordance with these Procedures and Guidelines.
Within-Guidelines Votes: Votes in Accordance
with the Guidelines
In the event the Proxy Group and, where applicable,
an Investment Professional participating in the voting process, recommend a vote Within Guidelines, the Proxy Group will instruct the
Proxy Advisory Firm, through the AO Team, to vote in this manner.
Out-of-Guidelines Votes: Votes Contrary to
the Guidelines
A vote would be considered Out-of-Guidelines
if the:
| ● | Vote
is contrary to the Guidelines based on the Compliance Committee or Proxy Group determination
that the application of the Guidelines is inapplicable or inappropriate under the circumstances.
Such votes include, but are not limited to votes cast based on the recommendation of an Investment
Professional. |
| ● | Vote
is contrary to the Guidelines unless the Guidelines stipulate Case-by-Case consideration
or that primary consideration will be given to input from an Investment Professional, notwithstanding
that the vote appears contrary to these Procedures and Guidelines and/or the Proxy Advisory
Firm’s recommendation. |
Routine Matters
Upon instruction from the AO Team, the Proxy
Advisory Firm will submit a vote as described in these Procedures and Guidelines where there is a clear policy (e.g., “For,”
“Against,” “Withhold,” or “Abstain”) on a proposal.
Matters Requiring Case-by-Case Consideration
The Proxy Advisory Firm will refer proxy proposals
to the AO Team when these Procedures and Guidelines indicate “Case-by-Case.” Additionally, the Proxy Advisory Firm will refer
any proxy proposal under circumstances where the application of these Procedures and Guidelines is unclear, appears to involve unusual
or controversial issues, or is silent regarding the proposal.
Upon receipt of a referral from the Proxy Advisory
Firm, the AO Team may solicit additional research or clarification from the Proxy Advisory Firm, Investment Professional(s), or other
sources.
The AO Team will review matters requiring Case-by-Case
consideration to determine if the Proxy Group had previously provided the AO Team with standing vote instructions, or a provision within
the Guidelines is applicable based on prior voting history.
If a matter requires input and a vote determination
from the Proxy Group, the AO Team will forward the Proxy Advisory Firm’s analysis and recommendation, the AO Team’s recommendation
and/or any research obtained from the Investment Professional(s), the Proxy Advisory Firm, or any other source to the Proxy Group. The
Proxy Group may consult with the Proxy Advisory Firm and/or Investment Professional(s) as appropriate.
The AO Team will use best efforts to convene
a Proxy Group meeting with respect to all matters requiring its consideration. In the event quorum requirements cannot be timely met
in connection with a voting deadline, it is the policy of the Funds and Advisor to vote in accordance with the Proxy Advisory Firm’s
recommendation.
Non-Votes: Votes in which No Action is Taken
The AO Team will make reasonable efforts to secure
and vote all proxies for the Funds, including markets where shareholders’ rights are limited. Nevertheless, the Proxy Group may
recommend that a Fund refrain from voting under certain circumstances including:
| ● | The
economic effect on shareholders’ interests or the value of the portfolio holding is
indeterminable or insignificant, e.g., proxies in connection with fractional shares,
securities no longer held in the portfolio of a Voya fund or proxies being considered on
behalf of a Fund that is no longer in existence. |
| ● | The
cost of voting a proxy outweighs the benefits, e.g., certain international proxies,
particularly in cases when share blocking practices may impose trading restrictions on the
relevant portfolio security. |
In such cases, the Proxy Group may instruct the
Proxy Advisory Firm, through the AO Team, not to vote such proxy. The Proxy Group may provide the AO Team with standing instructions
on parameters that would dictate a Non-Vote without the Proxy Group’s review of a specific proxy.
Further, Counsel may require the AO Team to abstain
from voting any proposal that is subject to a material conflict of interest provided that abstaining has no effect on the vote outcome.
Matters Requiring Further Consideration
Referrals to the Compliance Committee
If a vote is deemed Out-of-Guidelines and Counsel
has determined that a material conflict of interest appears to exist with respect to the party or parties (i.e., Proxy Advisory
Firm, the Advisor, underwriters, affiliates, any participating Proxy Group member, or any Investment Professional(s)) participating in
the voting process, the AO Team will refer the vote to the Compliance Committee Chair.
Further, if an Investment Professional discloses
a potential conflict of interest, and Counsel determines that the conflict of interest appears to exist, the proposal will also be referred
to the Compliance Committee for review, regardless of whether the vote is Within- or Out-of-Guidelines.
The Compliance Committee will be provided all
recommendations (including Investment Professional(s)), analyses, research, and Conflicts Reports and any other written materials used
to establish whether a conflict of interest exists and will instruct the AO Team how such referred proposals should be voted.
The AO Team will use best efforts to refer matters
to the Compliance Committee for its consideration in a timely manner. In the event any such matter cannot be referred to or considered
by the Compliance Committee in a timely manner, the Compliance Committee’s standing instruction is to vote Within Guidelines.
The Compliance Committee will receive a report
detailing proposals that were voted Out-of-Guidelines, if the Investment Professional’s recommendation was not acted on, or was
referred to the Compliance Committee.
Consultation with Compliance Committee
The AO Team may consult the Compliance Committee
Chair for guidance on behalf of the Committee if application of these Procedures and Guidelines is unclear, or a recommendation is received
from an Investment Professional in connection with any unusual or controversial issue.
Conflicts of Interest
The Advisor shall act in the Funds’ beneficial
owners’ best interests and strive to avoid conflicts of interest.
Conflicts of interest can arise, for example, in situations where:
| ● | The
issuer is a vendor whose products or services are material to the Voya Funds, the Advisor
or their affiliates; |
| ● | The
issuer is an entity participating to a material extent in the distribution of the Voya Funds; |
| ● | The
issuer is a significant executing broker dealer; |
| ● | Any
individual that participates in the voting process for the Funds including an Investment
Professional, a member of the Proxy Group, an employee of the Advisor, or Director/Trustee
of the Board serves as a director or officer of the issuer; or |
| ● | The
issuer is Voya Financial. |
Potential Conflicts with a Proxy Issuer
The AO Team is responsible for identifying and
informing Counsel of potential conflicts with the proxy issuer. In addition to obtaining potential conflict of interest information described
in the Roles and Responsibilities section above, members of the Proxy Group are required to disclose to the AO Team any potential
conflicts of interests prior to discussing the Proxy Advisory Firms’ recommendation.
The Proxy Group member will advise the AO Team
in the event he/she believes that a potential or perceived conflict of interest exists that may preclude him/her from making a vote determination
in the best interests of the Funds’ beneficial owners. The Proxy Group member may elect to recuse himself/herself from consideration
of the relevant proxy or have Counsel consider the matter, recusing him/herself only in the event Counsel determines that a material
conflict of interest exists. If recusal, whether voluntary or pursuant to Counsel’s findings, does not occur prior to the member’s
participation in any Proxy Group discussion of the relevant proxy, any Out-of-Guidelines Vote determination is subject to the Compliance
Committee referral process. Should members of the Proxy Group verbally disclose a potential conflict of interest, they are required to
complete a Conflict of Interest Report, which will be reviewed by Counsel.
Investment Professionals are also required to
complete a Conflict of Interest Report or confirm that they do not have any potential conflicts of interests when submitting a vote recommendation
to the AO Team.
The AO Team gathers and analyzes the information
provided by the Proxy Advisory Firm, the Advisor, the Funds’ principal underwriters, affiliates of the Funds, Proxy Group members,
Investment Professionals, and the Directors and Officers of the Funds. Counsel will document such potential material conflicts of interest
on a consolidated basis as appropriate.
The AO Team will instruct the Proxy Advisory
Firm to vote the proxy as recommended by the Proxy Group if Counsel determines that a material conflict of interest does not appear to
exist with respect to a proxy issuer, any participating Proxy Group member, or any participating Investment Professional(s).
Compliance Committee Oversight
The AO Team will refer a proposal to the Funds’
Compliance Committee if the Proxy Group recommends an Out-of-Guidelines Vote, and Counsel has determined that a material conflict of
interest appears to exist in order that the conflicted party(ies) have no opportunity to exercise voting discretion over a Fund’s
proxy.
The AO Team will refer the proposal to the Compliance
Committee Chair, forwarding all information relevant to the Compliance Committee’s review, including the following or a summary
of its contents:
| ● | The
applicable Procedures and Guidelines |
| ● | The
Proxy Advisory Firm recommendation |
| ● | The
Investment Professional(s)’s recommendation, if available |
| ● | Any
resources used by the Proxy Group in arriving at its recommendation |
| ● | Conflicts
Report(s) and/or any other written materials establishing whether a conflict of interest
exists. |
In the event a member of the Funds’ Compliance
Committee believes he/she has a conflict of interest that would preclude him/her from making a vote determination in the best interests
of the applicable Fund’s beneficial owners, the Compliance Committee member will advise the Compliance Committee Chair and recuse
himself/herself with respect to the relevant proxy determinations.
Conflicts Reports
Investment Professionals, the Proxy Advisory
Firm, and members of the Compliance Committee, the Proxy Group, and the AO Team are required to disclose any potential conflicts of interest
and/or confirm they do not have a conflict of interest in connection with their participation in the voting process for portfolio securities.
The Conflicts Report should describe any known relationships of either a business or personal nature that Counsel has not previously
assessed, which may include communications with respect to the referral item, but excluding routine communications with or submitted
to the AO Team or Investment Professional(s) on behalf of the subject company or a proponent of a shareholder proposal.
The Conflicts Report should also include written
confirmation that the Investment Professional based the recommendation in connection with an Out-of-Guidelines Vote or under circumstances
where a conflict of interest exists solely on the investment merits of the proposal and without regard to any other consideration.
Completed Conflicts Reports should be provided
to the AO Team as soon as possible and may be submitted to the AO Team verbally, provided the AO Team completes the Conflicts Report,
and the submitter reviews and approves the Conflict Report in writing.
The AO Team will forward all Conflicts Reports
to Counsel for review. Upon review, Counsel will provide the AO Team with a brief statement indicating if a material conflict of interest
is present.
Counsel will document such potential conflicts
of interest on a consolidated basis as appropriate rather than maintain individual Conflicts Reports.
Assessment of the Proxy Advisory Firm
The AO Team, on behalf of the Board and the Advisor,
will assess if the Proxy Advisory Firm:
| ● | Is
independent from the Advisor |
| ● | Has
resources that indicate it can competently provide analysis of proxy issues |
| ● | Can
make recommendations in an impartial manner and in the best interests of the Funds and their
beneficial owners |
| ● | Has
adequate compliance policies and procedures to: |
| o | Ensure
that its proxy voting recommendations are based on current and accurate information |
| o | Identify
and address conflicts of interest. |
The AO Team will utilize, and the Proxy Advisory
Firm will comply with, such methods for completing the assessment as the AO Team may deem reasonably appropriate. The Proxy Advisory
Firm will also promptly notify the AO Team in writing of any material change to information previously provided to the AO Team in connection
with establishing the Proxy Advisory Firm’s independence, competence, or impartiality.
Information provided in connection with the Proxy
Advisory Firm’s potential conflict of interest will be forwarded to Counsel for review. Counsel will review such information and
advise the AO Team as to whether a material concern exists and if so, determine the most appropriate course of action to eliminate such
concern.
Voting Funds of Funds, Investing Funds and
Feeder Funds
Funds that are “Funds-of-Funds” will
“echo” vote their interests in underlying mutual funds, which may include mutual funds other than the Voya funds indicated
on Voya’s website (www.voyainvestments.com). Meaning that, if the Fund-of-Funds must vote on a proposal with respect to
an underlying investment company, the Fund-of-Funds will vote its interest in that underlying fund in the same proportion all other shareholders
in the underlying investment company voted their interests.
However, if the underlying fund has no other
shareholders, the Fund-of-Funds will vote as follows:
| ● | If
the Fund-of-Funds and the underlying fund are being solicited to vote on the same proposal
(e.g., the election of fund directors/trustees), the Fund-of-Funds will vote the shares
it holds in the underlying fund in the same proportion as all votes received from the holders
of the Fund-of-Funds’ shares with respect to that proposal. |
| ● | If
the Fund-of-Funds is being solicited to vote on a proposal for an underlying fund (e.g.,
a new Sub-Advisor to the underlying fund), and there is no corresponding proposal at the
Fund-of-Funds level, the Board will determine the most appropriate method of voting with
respect to the underlying fund proposal. |
An Investing Fund (e.g., any Voya fund),
while not a Fund-of-Funds will have the foregoing Fund-of-Funds procedure applied to any Investing Fund that invests in one or more underlying
funds. Accordingly:
| ● | Each
Investing Fund will “echo” vote its interests in an underlying fund, if the underlying
fund has shareholders other than the Investing Fund. |
| ● | In
the event an underlying fund has no other shareholders, and the Investing Fund and the underlying
fund are being solicited to vote on the same proposal, the Investing Fund will vote its interests
in the underlying fund in the same proportion as all votes received from the holders of its
own shares on that proposal. |
| ● | In
the event an underlying fund has no other shareholders, and there is no corresponding proposal
at the Investing Fund level, the Board will determine the most appropriate method of voting
with respect to the underlying fund proposal. |
A fund that is a “Feeder Fund” in
a master-feeder structure passes votes requested by the underlying master fund to its shareholders. Meaning that, if the master fund
solicits the Feeder Fund, the Feeder Fund will request instructions from its own shareholders, either directly or, in the case of an
insurance-dedicated Fund, through an insurance product or retirement plan, as to how it should vote its interest in an underlying master
fund.
When a Voya fund is a feeder in a master-feeder
structure, proxies for the portfolio securities owned by the master fund will be voted pursuant to the master fund’s proxy voting
policies and procedures. As such, except as described in the Reporting and Record Retention section below, Feeder Funds will not
be subject to these Procedures and Guidelines.
Securities Lending
Many of the Funds participate in securities lending
arrangements to generate additional revenue for the Fund. Accordingly, the Fund will not be able to vote securities that are on loan
under these arrangements. However, under certain circumstances, for voting issues that may have a significant impact on the investment,
the Proxy Group or AO Team may request to recall securities that are on loan if they determine that the benefit of voting outweighs the
costs and lost revenue to the Fund and the administrative burden of retrieving the securities.
Investment Professionals may also deem a vote
is “material” in the context of the portfolio(s) they manage. Therefore, they may request that lending activity on behalf
of their portfolio(s) with respect to the relevant security be reviewed by the Proxy Group and considered for recall and/or restriction.
The Proxy Group will give primary consideration to relevant Investment Professional input in its determination of whether a given proxy
vote is material and the associated security accordingly restricted from lending. The determination that a vote is material in the context
of a Fund’s portfolio will not mean that such vote is considered material across all Funds voting at that meeting. In order to
recall or restrict shares on a timely basis for material voting purposes, the AO Team, on behalf of the Proxy Group, will use best efforts
to consider, and when appropriate, to act upon, such requests on a timely basis. Requests to review lending activity in connection with
a potentially material vote may be initiated by any relevant Investment Professional and submitted for the Proxy Group’s consideration
at any time.
Reporting and Record Retention
Reporting by the Funds
Annually, as required, each Fund and each Sub-Advisor-Voted
Fund will post its proxy voting record, or a link to the prior one-year period ending on June 30th on the Voya Funds’
website. The proxy voting record for each Fund and each Sub-Advisor-Voted Fund will also be available on Form N-PX in the EDGAR database
on the website of the Securities and Exchange Commission (“SEC”). For any Voya fund that is a feeder in a master/feeder structure,
no proxy voting record related to the portfolio securities owned by the master fund will be posted on the Voya funds’ website or
included in the Fund’s Form N-PX; however, a cross-reference to the master fund’s proxy voting record as filed in the SEC’s
EDGAR database will be included in the Fund’s Form N-PX and posted on the Voya funds’ website. If an underlying master fund
solicited any Feeder Fund for a vote during the reporting period, a record of the votes cast by means of the pass-through process described
above will be included on the Voya funds’ website and in the Feeder Fund’s Form N-PX.
Reporting to the Compliance Committee
At each regularly scheduled quarterly Compliance
Committee meeting, the Compliance Committee will receive a report from the AO Team indicating each proxy proposal, or a summary of such
proposals, that was:
| 1. | Voted Out-of-Guidelines, including any proposals
voted Out-of-Guidelines as a result of special circumstances raised by an Investment Professional; |
| 2. | Voted Within-Guidelines in cases when the
Proxy Group did not agree with an Investment Professional’s recommendation; |
| 3. | Referred to the Compliance Committee for determination. |
The report will indicate the name of the company,
the substance of the proposal, a summary of the Investment Professional’s recommendation, where applicable, and the reasons for
voting, or recommending, an Out-of-Guidelines Vote or, in the case of (2) above, a Within-Guidelines Vote.
Reporting by the AO Team on behalf of the Advisor
The Advisor will maintain the records required
by Rule 204-2(c)(2), as may be amended from time to time, including the following:
| ● | A
copy of each proxy statement received regarding a Fund’s portfolio securities. Such
proxy statements the issuers send are available either in the SEC’s EDGAR database
or upon request from the Proxy Advisory Firm. |
| ● | A
record of each vote cast on behalf of a Fund. |
| ● | A
copy of any Advisor-created document that was material to making a proxy vote decision, or
that memorializes the basis for that decision. |
| ● | A
copy of written requests for Fund proxy voting information and any written response thereto
or to any oral request for information on how the Advisor voted proxies on behalf of a Fund. |
| ● | A
record of all recommendations from Investment Professionals to vote contrary to the Guidelines. |
| ● | All
proxy questions/recommendations that have been referred to the Compliance Committee, and
all applicable recommendations, analyses, research, Conflict Reports, and vote determinations. |
All proxy voting materials and supporting documentation
will be retained for a minimum of six years, the first two years in the Advisor’s office.
Records Maintained by the Proxy Advisory Firm
The Proxy Advisory Firm will retain a record
of all proxy votes handled by the Proxy Advisory Firm. Such record must reflect all the information required to be disclosed in a Fund’s
Form N-PX pursuant to Rule 30b1-4 under the Investment Company Act. In addition, the Proxy Advisory Firm is responsible for maintaining
copies of all proxy statements received by issuers and to promptly provide such materials to the Advisor upon request.
PROXY VOTING GUIDELINES
Introduction
Proxies must be voted in the best interest of
the Funds’ beneficial owners. The Guidelines summarize the Funds’ positions on various issues of concern to investors, and
give an indication of how the Funds’ ballots will be voted on proposals dealing with particular issues. Nevertheless, the Guidelines
are not exhaustive, do not include all potential voting issues, and proposals may be addressed, as necessary, on a CASE-BY-CASE
basis rather than according to the Guidelines, factoring in the merits of the rationale and disclosure provided.
These Guidelines apply to securities of publicly
traded companies and to those of privately held companies if publicly available disclosure permits such application. All matters for
which such disclosure is not available will be considered CASE-BY-CASE.
Investment Professionals are encouraged to submit
a recommendation to the AO Team regarding proxy voting related to the portfolio securities over which they have day-to-day portfolio
management responsibility. Recommendations from the Investment Professionals may be submitted or requested in connection with any proposal
and are likely to be requested with respect to proxies for private equity or fixed income securities and/or proposals related to merger
transactions/corporate restructurings, proxy contests, or unusual or controversial issues.
These policies may be overridden in any case
as provided for in the Procedures. Similarly, the Procedures provide that proposals whose Guidelines prescribe a firm voting position
may instead be considered on a CASE-BY-CASE basis when unusual or controversial circumstances so dictate.
Interpretation and application of these Guidelines
is not intended to supersede any law, regulation, binding agreement, or other legal requirement to which an issuer may be or become subject.
No proposal will be supported whose implementation would contravene such requirements.
General Policies
The Funds’ policy is generally to support
the recommendation of the relevant company’s management when the Proxy Advisory Firm’s recommendation also aligns with such
recommendation and to vote in accordance with the Proxy Advisory Firm’s recommendation when management has made no recommendation.
However, this policy will not apply to CASE-BY-CASE proposals for which a contrary recommendation from the relevant Investment
Professional(s) is being utilized.
The rationale and vote recommendation from Investment
Professionals will be given primary consideration with respect to CASE-BY-CASE proposals being considered on behalf of the relevant
Fund.
The Fund’s policy is to not support proposals
that would negatively impact the existing rights of the Funds’ beneficial owners. Further, shareholder proposals will generally
not be supported if they impose excessive costs and/or are overly restrictive or prescriptive. Depending on the relevant market, appropriate
opposition may be expressed as an ABSTAIN, AGAINST, or WITHHOLD vote.
In the event competing shareholder and board
proposals appear on the same agenda at uncontested proxies, the shareholder proposal will generally not by supported and the management
proposal supported when the management proposal meets the factors for support under the relevant topic/policy (e.g., Allocation
of Income and Dividends), otherwise consider the competing proposals on a CASE-BY-CASE basis.
International Policies
Companies incorporated outside the U.S. are subject
to the foregoing U.S. Guidelines if they are listed on a U.S. exchange and treated as a U.S. domestic issuer by the SEC. Where applicable,
certain U.S. guidelines may also be applied to companies incorporated outside the U.S., e.g., companies with a significant base
of U.S. operations and employees.
However, given the differing regulatory and legal
requirements, market practices, and political and economic systems existing in various international markets, the Funds will:
| ● | Vote
AGAINST international proxy proposals when the Proxy Advisory Firm recommends voting
AGAINST such proposal because relevant disclosure by the company, or the time provided
for consideration of such disclosure, is inadequate; |
| ● | Consider
proposals that are associated with a firm AGAINST vote on a CASE-BY-CASE basis
if the Proxy Advisory Firm recommends their support when: |
| | |
| ● | The
company or market transitions to better practices (e.g., having committed to new regulations
or governance codes); |
| ● | The
market standard is stricter than the Fund’s guidelines; or |
| ● | It
is the more favorable choice when shareholders must choose between alternate proposals. |
Proposal Specific Policies
As mentioned above, these policies may be overridden
in any case as provided for in the Procedures. Similarly, the Procedures provide that proposals whose Guidelines prescribe a firm voting
position may instead be considered on a CASE-BY-CASE basis when unusual or controversial circumstances so dictate.
Proxy Contests:
Consider votes in contested elections on a CASE-BY-CASE
basis, with primary consideration given to input from the relevant Investment Professional(s).
Uncontested Proxies:
Overview
The Funds may lodge disagreement with a company’s
policies or practices by withholding support from the relevant proposal rather than from the director nominee(s) to which the Proxy Advisory
Firm assigns a correlation.
In cases where the lodging of disagreement by
the Funds is assigned to the board of directors, support will be withheld from the director(s) deemed responsible. Responsibility may
be attributed to the entire board, a committee, or an individual, and the Funds will apply a vote accountability guideline (“Vote
Accountability Guideline”) specific to the concerns under review. For example:
| ● | Relevant
committee chair |
| ● | Relevant
committee member(s) |
If director(s) to whom responsibility has been
attributed is not standing for election (e.g., the board is classified), support will typically not be withheld from other directors
in their stead. Additionally, the Funds will typically vote FOR a director in connection with issues raised by the Proxy Advisory
Firm if the director did not serve on the board or relevant committee during the majority of the time period relevant to the concerns
cited by the Proxy Advisory Firm.
Vote with the Proxy Advisory Firm’s recommendation
when more candidates are presented than available seats and no other provisions under these Guidelines apply.
In cases where a director holds more than one
board seat and corresponding votes, manifested as one seat as a physical person plus an additional seat as a representative of a legal
entity, generally vote with the Proxy Advisory Firm’s recommendation to withhold support from the legal entity and vote on the
physical person.
Bundled Director Slates
WITHHOLD support from directors or slates
of directors when they are presented in a manner not aligned with market best practice and/or regulation, irrespective of complying with
independence requirements, such as:
| ● | Bundled
slates of directors (e.g., Canada, France, Hong Kong, or Spain); |
| ● | In
markets with term lengths capped by regulation or market practice, directors whose terms
exceed the caps or are not disclosed; or |
| ● | Directors
whose names are not disclosed in advance of the meeting or far enough in advance relative
to voting deadlines to make an informed voting decision. |
For companies with multiple slates in Italy,
follow the Proxy Advisory Firm’s standards for assessing which slate is best suited to represent shareholder interests.
Independence
Director and Board/Committee Independence
The Funds expect boards to have an appropriate
level of independence at both the board and key committee level. Audit, compensation/remuneration, nominating and/or governance committees
are considered key committees. A director would be deemed non-independent if the individual had/has a relationship with the company that
could potentially influence the individual’s objectivity causing the inability to satisfy fiduciary standards on behalf of shareholders.
The Funds will consider the relevant country or market listing exchange, the country’s corporate governance code, the Proxy Advisory
Firm’s standards, and generally accepted best practice (collectively “Independence Expectations”) with respect to determining
director independence and Board/Committee independence levels. Note: Non-voting directors (e.g., director emeritus or advisory
director) shall be excluded from calculations with respect to board independence.
The Funds will consider non-independent directors
standing for election on a Case-by-Case basis when the full board or committee
does not meet Independence Expectations.
| ● | WITHHOLD
support from the non-independent nominating committee chair or non-independent board
chair, and if necessary, fewest non-independent directors including the Founder, Chairman
or CEO if their removal would achieve the independence requirements across the remaining
board or key committee, except that support may be withheld from additional directors whose
relative level of independence cannot be differentiated, or the number required to achieve
the independence requirements is equal to or greater than the number of non-independent directors
standing for election. |
| ● | WITHHOLD
support from slates of directors if the board’s independence cannot be ascertained
due to inadequate disclosure or when the board’s independence does not meet Independence
Expectations. |
| ● | WITHHOLD
support from key committee slates if they contain non-independent directors. |
| ● | WITHHOLD
support from non-independent nominating committee chair, board chair, and/or directors
if the full board serves or appears to serve as a key committee, the board has not established
a key committee, or the board and/or a key committee(s) does not meet the Independence Expectations.
|
Self-Nominated/Shareholder-Nominated Director
Candidates
Consider self-nominated or shareholder-nominated
director candidates on a CASE-BY-CASE basis. WITHHOLD support from the candidate when:
| ● | Adequate
disclosure has not been provided (e.g., rationale for candidacy and candidate’s
qualifications relative to the company); |
| ● | The
candidate’s agenda is not in line with the long-term best interests of the company;
or |
| ● | Multiple
self-nominated candidates are being considered as a proxy contest if similar issues are raised
(e.g., potential change in control). |
Management Proposals Seeking Non-Board Member
Service on Key Committees
Vote AGAINST proposals that permit non-board
members to serve on the audit, remuneration (compensation), nominating and/or governance committee, provided that bundled slates may
be supported if no slate nominee serves on the relevant committee(s) except where best market practice otherwise dictates.
Consider other concerns regarding committee members
on a CASE-BY-CASE basis.
Shareholder Proposals Regarding Board/Key Committee
Independence
Vote AGAINST shareholder proposals asking
that the independence be greater than that required by the country or market listing exchange or asking to redefine director independence.
Board Member Roles and Responsibilities
Attendance
WITHHOLD support from a director who,
during both of the most recent two years, has served on the board during the two-year period but attended less than 75 percent of the
board and committee meetings without a valid reason for the absences or if the two-year attendance record cannot be ascertained from
available disclosure (e.g., the company did not disclose which director(s) attended less than 75 percent of the board and committee
meetings during the director’s period of service without a valid reason for the absences).
WITHHOLD support on nominating committee
members according to the Vote Accountability Guideline if a director has three or more years of poor attendance without a valid reason
for the absences.
The two-year attendance policy shall be applied
to attendance of statutory auditors at Japanese companies.
Over-boarding
Vote AGAINST directors who sit on more
than:
| ● | Two
public boards in addition to their own and are named executives officers at any of the companies,
WITHHOLD support only at their outside boards. |
| ● | Six
public company boards, or |
| ● | Four
public company boards and is the Board Chair at two or more public companies. |
.Vote AGAINST shareholder proposals limiting
the number of public company boards on which a director may serve.
Combined Chairman / CEO Role
Vote FOR directors without regard to recommendations
that the position of chairman should be separate from that of CEO, or should otherwise require to be independent, unless other concerns
requiring Case-by-Case consideration are raised (e.g., former CEOs proposed
as board chairmen in markets, such as the United Kingdom, for which best practice recommends against such practice).
Consider shareholder proposals on a CASE-BY-CASE
basis that require the positions of chairman and CEO be held separately.
Cumulative/Net Voting Markets (e.g., Russia)
When cumulative or net voting applies, generally
follow the Proxy Advisory Firm’s approach to vote FOR nominees, such as when asserted by the issuer to be independent, irrespective
of key committee membership, even if independence disclosure or criteria fall short of the Proxy Advisory Firm’s standards.
Board Accountability
Diversity
Vote AGAINST directors according to the
Vote Accountability Guideline if there is an absence of diversity on the board; consider on a CASE-BY-CASE basis if diversity
was present prior to the most recent annual meeting.
Vote FOR shareholder proposals that request
the company to improve / promote diversity and/or diversity-related disclosure.
Return on Equity
Vote FOR the top executive at companies
in Japan if the only reason the Proxy Advisory Firm’s Withhold recommendation is due to the company underperforming
in terms of capital efficiency or company performance, e.g. net losses or low return on equity (ROE).
Compensation Practices
Support may be withheld from compensation committee
members whose actions or disclosure do not appear to support compensation practices aligned with the best interests of the company and
its shareholders.
Where applicable, votes on compensation committee
members in connection with compensation practices should be considered on a Case-by-Case
basis:
| ● | Say
on Pay responsiveness. Consider compensation committee members on a CASE-BY-CASE
basis for failure to sufficiently address
compensation concerns prompting significant opposition to the most recent say on pay vote or continuing to maintain problematic pay practices,
factoring in considerations such as level of shareholder opposition, subsequent actions taken by the compensation committee, and level
of responsiveness disclosure. |
| ● | Say
on Pay frequency. WITHHOLD support according to the Vote Accountability Guideline
if the Proxy Advisory Firm opposes directors because the company failed to include a Say
on Pay proposal and/or a Frequency of Say on Pay proposal when required under SEC or market
regulatory provisions; or implemented a say on pay schedule that is less frequent than the
frequency most recently preferred by at least a plurality of shareholders; or is an externally-managed
issuer (EMI) or externally-managed REIT (EMR) and has failed to include a Say on Pay proposal
or adequate disclosure of the compensation structure. |
| ● | Commitments.
Vote FOR compensation committee members receiving an adverse recommendation by the
Proxy Advisory Firm due to problematic pay practices or thresholds (e.g. burn rate)
if the company makes a public commitment (e.g., via a Form 8-K filing) to rectify
the practice on a going-forward basis. However, consider on a CASE-BY-CASE basis if
the company does not rectify the practice by the following year’s annual general meeting. |
For markets in which the issuer
has not followed market practice by submitting a resolution on executive compensation, consider remuneration committee members on a CASE-BY-CASE
basis.
Accounting Practices
Consider on a CASE-BY-CASE basis audit
committee members, the company’s CEO or CFO, if nominated as directors, or the board chair or lead director, if poor accounting
practice concerns are raised, factoring in considerations such as if the:
| ● | Audit
committee failed to remediate known on-going material weaknesses in the company’s internal
controls for more than a year. |
| ● | Company
has not yet had a full year to remediate the concerns since the time they were identified. |
| ● | Company
has taken adequate steps to remediate the concerns cited, which would typically include removing
or replacing the responsible executives, and if the concerns are not re-occurring. |
Vote FOR audit committee members, or the
company’s CEO or CFO if nominated as directors, who did not serve on the committee or did not have responsibility over the relevant
financial function, during the majority of the time period relevant to the concerns cited.
WITHHOLD support on audit committee members
according to the Vote Accountability Guideline if the company has failed to disclose auditors’ fees and has not provided an auditor
ratification or remuneration proposal for shareholder vote.
Problematic Actions
Consider directors on a CASE-BY-CASE basis
when the Proxy Advisory Firm cites them for problematic actions including a lack of due diligence in relation to a major transaction
(e.g., a merger or an acquisition), material failures, lack of risk oversight, scandals, malfeasance, or negligent internal controls
at the company or that of an affiliate, factoring in the merits of the director’s performance, rationale, and disclosure when:
| ● | Culpability
can be attributed to the director (e.g., director manages or is responsible for the
relevant function); or |
| ● | The
director has been directly implicated, resulting in arrest, criminal charge, or regulatory
sanction. |
Consider members of the nominating committee
on a CASE-BY-CASE basis when a director with the above concerns is being nominated to serve on the board.
Vote AGAINST applicable directors due
to share pledging concerns, factoring in the pledged amount, unwind time, and any historical concerns being raised. Responsibility
will be assigned to the pledgor, where the pledged amount and unwind time are deemed significant and, therefore, an unnecessary risk
to the company.
WITHHOLD support from (a) all members
of the governance committee, or nominating committee if a formal governance committee has not been established, and (b) directors holding
shares with superior voting rights if the company is controlled by means of a dual class share with superior / exclusive voting rights
and does not have a reasonable sunset provision; i.e., fewer than five years.
WITHHOLD support from incumbent directors
(tenure being greater than one year) if (a) no governance or nominating committee directors are under consideration or the company does
not have governance or nominating committees, and (b) no director holding the shares with superior voting rights is under consideration;
otherwise, consider on a CASE-BY-CASE basis all directors. Investment Professionals that have day-to-day portfolio management
responsibility for such companies may be requested to submit a recommendation to the AO Team.
WITHHOLD support from directors according
to the Vote Accountability Guideline when the Proxy Advisory Firm recommends withholding support due to the board (a) unilaterally adopting
by-law amendments that have a negative impact on existing shareholder rights or functions as a diminution of shareholder rights, and
which are not specifically addressed under the Guidelines, or (b) failing to remove or subject to a reasonable sunset provision such
by-laws.
Anti-Takeover Measures
WITHHOLD support according to the Vote
Accountability Guideline if the company implements excessive anti-takeover measures.
WITHHOLD support according to the Vote
Accountability Guideline if the company fails to remove restrictive poison pill features, ensure a pill’s expiration, or submit
the poison pill in a timely manner to shareholders for vote, unless a company has implemented a policy that should reasonably prevent
abusive use of its poison pill.
Board Responsiveness
Vote FOR if the majority-supported shareholder
proposal has been reasonably addressed.
| o | Proposals
seeking shareholder ratification of a poison pill may be deemed reasonably addressed if the
company has implemented a policy that should reasonably prevent abusive use of the pill. |
WITHHOLD support according to the Vote
Accountability Guideline if a shareholder proposal received majority support and the board has not disclosed a credible rationale for
not implementing the proposal.
WITHHOLD support on a director if the
board has not acted upon the director who did not receive shareholder support representing a majority of the votes cast at the previous
annual meeting; consider such directors on a CASE-BY-CASE basis if the company has a controlling shareholder(s).
Vote FOR when the issue relevant to the
majority negative vote has been adequately addressed or cured, which may include sufficient disclosure of the board’s rationale.
Board–Related Proposals
Classified/Declassified Board Structure
Vote AGAINST proposals to classify the
board unless the proposal represents an increased frequency of a director’s election in the staggered cycle (e.g., seeking
to move from a three-year cycle to a two-year cycle).
Vote FOR proposals to repeal classified
boards and to elect all directors annually.
Board Structure
Vote FOR management proposals to adopt
or amend board structures.
Vote AGAINST if the resulting change(s)
would mean the board would not meet Independence Expectations.
For companies in Japan, generally
vote FOR proposals seeking a board structure that would provide greater independent oversight.
Board Size
Vote FOR proposals seeking a board range
if the range is reasonable in the context of market practice and anti-takeover considerations; however, vote AGAINST if seeking
to remove shareholder approval rights or the board fails to meet market independence requirements.
Director and Officer Indemnification and Liability Protection
Consider on a CASE-BY-CASE basis proposals
on director and officer indemnification and liability protection, using Delaware law as the standard.
Vote against
proposals to limit or eliminate entirely directors’ and officers’ liability in connection with monetary damages
for violating the duty of care.
Vote against
indemnification proposals that would expand coverage beyond legal expenses to acts that are more serious violations of fiduciary
obligation, such as negligence.
Director and Officer Indemnification and Liability Protection
Vote in accordance with the Proxy Advisory Firm’s
standards (e.g. overly broad provisions).
Discharge of Management/Supervisory Board Members
Vote FOR management proposals seeking
the discharge of management and supervisory board members (including when the proposal is bundled), unless concerns are raised about
the past actions of the company’s auditors or directors, or legal or regulatory action is being taken against the board by other
shareholders.
Vote FOR such proposals in connection
with remuneration practices otherwise supported under these Guidelines or as a means of expressing disapproval of broader practices of
the company or its board.
Establish Board Committee
Vote FOR shareholder proposals that seek
creation of a key committee of the board.
Vote AGAINST shareholder proposals requesting
creation of additional board committees or offices, except as otherwise provided for herein.
Filling Board Vacancies / Removal of Directors
Vote AGAINST proposals that allow directors
to be removed only for cause.
Vote FOR proposals to restore shareholder
ability to remove directors with or without cause.
Vote AGAINST proposals that allow only
continuing directors to elect replacements to fill board vacancies.
Vote FOR proposals that permit shareholders
to elect directors to fill board vacancies.
Stock Ownership Requirements
Vote AGAINST such shareholder proposals.
Term Limits / Retirement Age
Vote FOR management proposals and AGAINST
shareholder proposals limiting the tenure of outside directors or imposing a mandatory retirement age for outside directors, unless
the proposal seeks to relax existing standards.
Frequency of Advisory Votes on Executive Compensation
Vote FOR proposals seeking an annual say
on pay, and AGAINST those seeking less frequent.
Proposals to Provide an Advisory Vote on Executive Compensation (Canada)
Vote FOR if it is an ANNUAL vote,
unless the company already provides shareholders with an annual vote.
Executive Pay Evaluation
Advisory Votes on Executive Compensation (Say
on Pay) and Remuneration Reports or Committee Members in Absence of Such Proposals
Vote FOR management proposals seeking
ratification of the company’s executive compensation structure, unless the program includes practices or features not supported
under these Guidelines and the proposal receives a negative recommendation from the Proxy Advisory Firm.
Listed below are examples of compensation practices
and provisions, and respective consideration and treatment under the Guidelines, factoring in whether the company has provided reasonable
rationale/disclosure for such factors or the proposal as a whole.
Consider on a CASE-BY-CASE basis:
| ● | Short-Term
Investment Plans where the board has exercised discretion to exclude extraordinary items. |
| ● | Retesting
in connection with achievement of performance hurdles. |
| ● | Long-Term
Incentive Plans where executives already hold significant equity positions. |
| ● | Long-Term
Incentive Plans where the vesting or performance period is too short or stringency of the
performance criteria is called into question. |
| ● | Pay
Practices (or combination of practices) that appear to have created a misalignment between
CEO pay and performance with regard to shareholder value. |
| ● | Long-Term
Incentive Plans that lack an appropriate equity component (e.g., “cash-based
only”). |
| ● | Excessive
levels of discretionary bonuses, recruitment awards, retention awards, non-compete payments,
severance/termination payments, perquisites (unreasonable levels in context of total compensation
or purpose of the incentive awards or payouts). |
Vote AGAINST:
| ● | Provisions
that permit or give the Board sole discretion for repricing, replacement, buy back, exchange,
or any other form of alternative options. (Note: cancellation of options would not be considered
an exchange unless the cancelled options were re-granted or expressly returned to the plan
reserve for reissuance.) |
| ● | Single
Trigger Severance Provisions in new or materially amended plans, contracts, or payments that
do not require an actual change in control in order to be triggered. |
| ● | Plans
that allow named executive officers to have material input into setting their pay. |
| ● | Short-Term
Incentive Plans where treatment of payout factors has been inconsistent (e.g., exclusion
of losses but not gains). |
| ● | Company
plans in international markets that provide for contract or notice periods or severance/termination
payments that exceed market practices, e.g., relative to multiple of annual compensation. |
| ● | Compensation
structures at externally-managed issuers (EMI) or externally-managed REITs (EMR) that lack
adequate disclosure, based on the Proxy Advisory Firm’s assessment. |
| ● | Legacy
single trigger severance provisions in plans, contracts, or payments that do not require
an actual change in control in order to be triggered. |
Golden Parachutes
Vote to ABSTAIN on golden parachutes if
it is determined that the Funds would not have an economic interest, such as the case in an all-cash transaction, regardless of payout
terms, amounts, thresholds, etc.
However, if an economic interest exists, vote
AGAINST due to:
| ● | Single
or modified-single trigger severance provisions |
| ● | Total
NEO payout as a percentage of the total equity value. |
| ● | Aggregate
of all single-triggered components (cash and equity) as a percentage of the total NEO payout. |
| ● | Recent
material amendments or new agreements that incorporate problematic features. |
Equity-Based and Other Incentive Plans Including OBRA
Equity Compensation
Consider on a CASE-BY-CASE basis compensation
and employee benefit plans, including those in connection with OBRA, or the issuance of shares in connection with such plans. Vote the
plan or issuance based on factors and related vote treatment under the Executive Pay Evaluation section above or based on circumstances
specific to such equity plans as follows:
Vote FOR the plan, if:
| ● | Board
independence is the only concern. |
| ● | Amendment
places a cap on annual grants. |
| ● | Amendment
adopts or changes administrative features to comply with Section 162(m) of OBRA. |
| ● | Amendment
adds performance-based goals to comply with Section 162(m) of OBRA. |
| ● | Cash
or cash-and-stock bonus components are being approved for exemption from taxes under Section
162(m) of OBRA. |
| o | Give primary consideration to
management’s assessment that such plan meets the requirements for exemption of performance-based
compensation. |
Vote AGAINST if the plan:
| ● | Exceeds
recommended costs (U.S. or Canada). |
| ● | Incorporates
share allocation disclosure methods that prevent a cost or dilution assessment. |
| ● | Exceeds
recommended burn rates and/or dilution limits, including cases in which dilution cannot be
fully assessed (e.g., due to inadequate disclosure). |
| ● | Allows
deep or near-term discounts (or the equivalent, such as dividend equivalents on unexercised
options) to executives or directors. |
| ● | Provides
for retirement benefits or equity incentive awards to outside directors if not in line with
market practice. |
| ● | Allows
financial assistance to executives, directors, subsidiaries, affiliates, or related parties
that is not in line with market practice. |
| ● | Allows
plan administrators to benefit from the plan as potential recipients. |
| ● | Allows
for an overly liberal change in control definition. (This refers to plans that would reward
recipients even if the event does not result in an actual change in control or results in
a change in control but does not terminate the employment relationship.) |
| ● | Allows
for post-employment vesting or exercise of options if deemed inappropriate. |
| ● | Allows
plan administrators to make material amendments without shareholder approval. |
| ● | Allows
procedure amendments that do not preserve shareholder approval rights. |
Amendment Procedures for Equity Compensation
Plans and Employee Stock Purchase Plans (ESPPs) (Toronto Stock Exchange Issuers)
Vote AGAINST if the amendment procedures do not preserve shareholder
approval rights.
Stock Option Plans for Independent Internal Statutory Auditors (Japan)
Vote AGAINST.
Matching Share Plans
Vote AGAINST if the matching share plan
does not meet recommended standards, considering holding period, discounts, dilution, participation, purchase price, or performance criteria.
Employee Stock Purchase Plans or Capital Issuance in Support Thereof
Voting decisions are generally based on the Proxy
Advisory Firm’s approach to evaluating such proposals.
Director Compensation
Non-Executive Director Compensation
Vote FOR cash-based proposals.
Vote AGAINST performance-based equity-based
proposals and patterns of excessive pay.
Bonus Payments (Japan)
Vote FOR if all payments are for directors
or auditors who have served as executives of the company, and AGAINST if any payments are for outsiders.
Bonus Payments – Scandals
Vote AGAINST bonus proposals for a retiring
director or continuing director or auditor when culpability can be attributed to the nominee.
Consider on a CASE-BY-CASE basis bundled
bonus proposals for retiring directors or continuing directors or auditors when culpability cannot be attributed to all nominees.
Severance Agreements
Vesting of Equity Awards upon Change in Control
Vote FOR management proposals seeking
a specific treatment (e.g., double trigger or pro-rata) of equity that vests upon change in control, unless evidence exists of
abuse in historical compensation practices.
Vote AGAINST shareholder proposals regarding
the treatment of equity if the change in control severance provisions are double-triggered. Vote FOR the proposal if such provisions
are not double-triggered.
Executive Severance or Termination Arrangements,
including those Related to Executive Recruitment or Retention
Vote FOR such compensation arrangements
if:
| ● | The
primary concerns raised would not result in a negative vote, under these Guidelines, on a
management say on pay proposal, or the relevant board or committee member(s); |
| ● | The
company has provided adequate rationale and/or disclosure; or |
| ● | Support
is recommended as a condition to a major transaction such as a merger. |
Treatment of Severance Provisions
Vote AGAINST new or materially amended
plans, contracts, or payments that include single trigger change in control severance provisions or do not require an actual change in
control in order to be triggered.
Vote FOR shareholder proposals seeking
double triggers on change in control severance provisions.
Compensation-Related Shareholder Proposals
Executive and Director Compensation
Consider on a CASE-BY-CASE basis shareholder
proposals that seek to impose new compensation structures or policies.
Holding Periods
Vote AGAINST shareholder proposals requiring
mandatory periods for officers and directors to hold company stock.
Submit Severance and Termination Payments for Shareholder Ratification
Vote FOR shareholder proposals to submit
executive severance agreements for shareholder ratification, if such proposals specify change in control events, supplemental executive
retirement plans, or deferred executive compensation plans, or if ratification is required by the listing exchange.
Auditor Ratification and/or Remuneration
Vote FOR management proposals except in
such cases as indicated below.
Consider on a CASE-BY-CASE basis if:
| ● | The
Proxy Advisory Firm raises questions of disclosure or auditor independence; or |
| ● | Total
fees for non-audit services exceed 50 percent of the total auditor fees (including audit-related
fees, and tax compliance and preparation fees if applicable). |
| ● | There
is evidence of excessive compensation relative to the size and nature of the company. |
Vote AGAINST if the company has failed
to disclose auditors’ fees.
Vote FOR shareholder proposals asking
the company to present its auditor annually for ratification.
Auditor Independence
Consider on a CASE-BY-CASE basis shareholder
proposals asking companies to prohibit their auditors from engaging in non-audit services (or capping the level of non-audit services).
Audit Firm Rotation
Vote AGAINST shareholder proposals asking for mandatory audit
firm rotation.
Indemnification of Auditors
Vote AGAINST the indemnification of auditors.
Independent Statutory Auditors (Japan)
Vote AGAINST if the candidate is or was
affiliated with the company, its main bank, or one of its top shareholders.
Vote AGAINST incumbent directors at companies
implicated in scandals or exhibiting poor internal controls.
Vote FOR remuneration as long as the amount
is not excessive (e.g., significant increases should be supported by adequate rationale and disclosure), there is no evidence
of abuse, the recipient’s overall compensation appears reasonable, and the board and/or responsible committee meet exchange or
market standards for independence.
| 4- | Shareholder Rights and Defenses |
Advance Notice for Shareholder Proposals
Vote FOR management proposals related
to advance notice period requirements, provided that the period requested is in accordance with applicable law and no material governance
concerns have been identified in connection with the company.
Corporate Documents / Article and Bylaw Amendments or Related
Director Actions
Vote FOR if the change or policy is editorial
in nature or if shareholder rights are protected.
Vote AGAINST if it seeks to impose a negative
impact on shareholder rights or diminishes accountability to shareholders, including where the company failed to opt out of a law that
affects shareholder rights (e.g., staggered board).
With respect to article amendments for Japanese
companies:
| ● | Vote
FOR management proposals to amend a company’s articles to expand its business
lines in line with its current industry. |
| ● | Vote
FOR management proposals to amend a company’s articles to provide for an expansion
or reduction in the size of the board, unless the expansion/reduction is clearly disproportionate
to the growth/decrease in the scale of the business or raises anti-takeover concerns. |
| ● | If
anti-takeover concerns exist, vote AGAINST management proposals, including bundled
proposals, to amend a company’s articles to authorize the Board to vary the annual
meeting record date or to otherwise align them with provisions of a takeover defense. |
| ● | Follow
the Proxy Advisory Firm’s guidelines with respect to management proposals regarding
amendments to authorize share repurchases at the board’s discretion, voting AGAINST
proposals unless there is little to no likelihood of a creeping takeover or constraints
on liquidity (free float of shares is low), and where the company is trading at below book
value or is facing a real likelihood of substantial share sales; or where this amendment
is bundled with other amendments which are clearly in shareholders’ interest. |
Majority Voting Standard
Vote FOR proposals seeking election of
directors by the affirmative vote of the majority of votes cast in connection with a meeting of shareholders, provided they contain a
plurality carve-out for contested elections, and provided such standard does not conflict with applicable law in the country in which
the company is incorporated.
Vote FOR amendments to corporate documents
or other actions promoting a majority standard.
Cumulative Voting
Vote FOR shareholder proposals to restore
or permit cumulative voting.
Vote AGAINST management proposals to eliminate
cumulative voting if the company:
| ● | Maintains
a classified board of directors; or |
| ● | Maintains
a dual class voting structure. |
Proposals may be supported irrespective of classified
board status if a company plans to declassify its board or adopt a majority voting standard.
Confidential Voting
Vote FOR management proposals to adopt
confidential voting.
Vote FOR shareholder proposals that request
companies to adopt confidential voting, use independent tabulators, and use independent inspectors of election as long as the proposals
include clauses for proxy contests as follows:
| ● | In
the case of a contested election, management should be permitted to request that the dissident
group honors its confidential voting policy. |
| ● | If
the dissidents agree, the policy remains in place. |
| ● | If
the dissidents do not agree, the confidential voting policy is waived. |
Fair Price Provisions
Consider on a CASE-BY-CASE basis proposals
to adopt fair price provisions.
Vote AGAINST fair price provisions with
shareholder vote requirements greater than a majority of disinterested shares.
Poison Pills
Vote AGAINST management proposals in connection
with poison pills or anti-takeover activities (e.g., disclosure requirements or issuances, transfers, or repurchases) that can
be reasonably construed as an anti-takeover measure, based on the Proxy Advisory Firm’s approach to evaluating such proposals.
DO NOT VOTE AGAINST director remuneration
in connection with poison pill considerations.
Vote FOR shareholder proposals that ask
a company to submit its poison pill for shareholder ratification, or to redeem its pill in lieu thereof, unless:
| ● | Shareholders
have approved adoption of the plan; |
| ● | A
policy has already been implemented by the company that should reasonably prevent abusive
use of the pill; or |
| ● | The
board had determined that it was in the best interest of shareholders to adopt a pill without
delay, provided that such plan would be put to shareholder vote within twelve months of adoption
or expire, and if not approved by a majority of the votes cast, would immediately terminate. |
Consider on a CASE-BY-CASE basis shareholder
proposals to redeem a company’s poison pill.
Proxy Access
Vote FOR proposals to allow shareholders
to nominate directors and have those nominees listed in the company’s proxy statement and on the company’s proxy card, provided
that the criteria meet the Funds’ internal thresholds, provided such standard does not conflict with applicable law in the country
in which the company is incorporated. However, consider on a CASE-BY-CASE basis shareholder and management proposals that
appear on the same agenda.
Vote FOR management proposals also supported
by the Proxy Advisory Firm.
Quorum Requirements
Consider on a CASE-BY-CASE basis proposals
to lower quorum requirements for shareholder meetings below a majority of the shares outstanding.
Exclusive Forum
Vote FOR management proposals to designate Delaware or New
York as the exclusive forum for certain legal actions as defined by the company (“Exclusive Forum”) if the company’s
state of incorporation is the same as its proposed Exclusive Forum, otherwise consider on a CASE-BY-CASE basis.
Reincorporation Proposals
Consider on a CASE-BY-CASE basis proposals
to change a company’s state of incorporation.
Vote FOR management proposals not assessed
as:
| ● | A
potential takeover defense; or |
| ● | A
significant reduction of minority shareholder rights that outweigh the aggregate positive
impact, but if so assessed, weighing management’s rationale for the change. |
Vote FOR management reincorporation proposals
upon which another key proposal, such as a merger transaction, is contingent if the other key proposal is also supported.
Vote AGAINST shareholder reincorporation
proposals not also supported by the company.
Shareholder Advisory Committees
Consider on a CASE-BY-CASE basis proposals
to establish a shareholder advisory committee.
Right to Call Special Meetings
Vote FOR management proposals to permit
shareholders to call special meetings.
Consider on a CASE-BY-CASE basis management
proposals to adjust the thresholds applicable to call a special meeting.
Vote FOR shareholder proposals that provide
shareholders with the ability to call special meetings when any of the following applies:
| ● | Company
does not currently permit shareholders to do so; |
| ● | Existing
ownership threshold is greater than 25 percent; or |
| ● | Sole
concern relates to a net-long position requirement. |
Written Consent
Vote AGAINST shareholder proposals seeking
the right to act by written consent if the company:
| ● | Permits
shareholders to call special meetings; |
| ● | Does
not impose supermajority vote requirements on business combinations/actions (e.g.,
a merger or acquisition) and on bylaw or charter amendments; and |
| ● | Has
otherwise demonstrated its accountability to shareholders (e.g., the company has reasonably
addressed majority-supported shareholder proposals). |
Vote FOR shareholder proposals seeking
the right to act by written consent if the above conditions are not present.
Vote AGAINST management proposals to eliminate
the right to act by written consent.
State Takeover Statutes
Consider on a CASE-BY-CASE basis proposals
to opt-in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freeze-out
provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, anti-greenmail
provisions, and disgorgement provisions).
Supermajority Shareholder Vote Requirement
Vote AGAINST proposals to require a supermajority
shareholder vote and FOR proposals to lower supermajority shareholder vote requirements; except,
Consider on a CASE-BY-CASE basis if the
company has shareholder(s) with significant ownership levels and the retention of existing supermajority requirements would protect minority
shareholder interests.
Time-Phased Voting
Vote AGAINST proposals to implement, and
FOR proposals to eliminate, time-phased or other forms of voting that do not promote a one share, one vote standard.
| 5- | Capital and Restructuring |
Consider on a CASE-BY-CASE basis management
proposals to make changes to the capital structure not otherwise addressed under these Guidelines, voting with the Proxy Advisory Firm’s
recommendation, unless a contrary recommendation from the relevant Investment Professional(s) is utilized.
Vote AGAINST proposals authorizing excessive
discretion to a board.
Capital
Common Stock Authorization
Consider on a CASE-BY-CASE basis proposals
to increase the number of shares of common stock authorized for issuance. The Proxy Advisory Firm’s proprietary approach of determining
appropriate thresholds will be utilized in evaluating such proposals. In cases where the requests are above the allowable threshold,
a company-specific qualitative review (e.g., considering rationale and prudent historical usage) will be utilized.
Vote FOR proposals within the Proxy Advisory
Firm’s allowable thresholds, or those in excess but meeting Proxy Advisory Firm’s qualitative standards, to authorize capital
increases, unless the company states that the stock may be used as a takeover defense.
Vote FOR proposals to authorize capital
increases exceeding the Proxy Advisory Firm’s thresholds when a company’s shares are in danger of being delisted.
Notwithstanding the above, vote AGAINST:
| ● | Proposals
to increase the number of authorized shares of a class of stock if the issuance which the
increase is intended to service is not supported under these Guidelines (e.g., merger
or acquisition proposals). |
Dual Class Capital Structures
Vote AGAINST:
| ● | Proposals
to create or perpetuate dual class capital structures with unequal voting rights (e.g.,
exchange offers, conversions, and recapitalizations) unless supported by the Proxy Advisory
Firm (e.g., utilize a one share, one vote standard, contains a sunset provision of
five years or fewer, to avert bankruptcy or generate non-dilutive financing, or not designed
to increase the voting power of an insider or significant shareholder). |
| ● | Proposals
to increase the number of authorized shares of the class of stock that has superior voting
rights in companies that have dual class capital structures. |
Vote FOR proposals to eliminate dual class
capital structures.
General Share Issuances / Increases in Authorized Capital
Consider specific issuance requests on a Case-by-Case
basis based on the proposed use and the company’s rationale.
Voting decisions to determine support for requests
for general issuances (with or without preemptive rights), authorized capital increases, convertible bonds issuances, warrants issuances,
or related requests to repurchase and reissue shares, will be based on the Proxy Advisory Firm’s assessment.
Preemptive Rights
Consider on a CASE-BY-CASE basis shareholder
proposals that seek preemptive rights or management proposals that seek to eliminate them. In evaluating proposals on preemptive rights,
consider the size of a company and the characteristics of its shareholder base.
Adjustments to Par Value of Common Stock
Vote FOR management proposals to reduce
the par value of common stock, unless doing so raises other concerns not otherwise supported under these Guidelines.
Preferred Stock
Utilize the Proxy Advisory Firm's approach for
evaluating issuances or authorizations of preferred stock, taking into account the Proxy Advisory Firm's support of special circumstances,
such as mergers or acquisitions, as well as the following criteria:
Consider on a CASE-BY-CASE basis proposals
to increase the number of shares of blank check preferred shares or preferred stock authorized for issuance. This approach incorporates
both qualitative and quantitative measures, including a review of:
| ● | Past
performance (e.g., board governance, shareholder returns, and historical share usage);
and |
| ● | The
current request (e.g., rationale, whether shares are blank check and declawed, and
dilutive impact as determined through the Proxy Advisory Firm’s model for assessing
appropriate thresholds). |
Vote AGAINST proposals authorizing the
issuance of preferred stock or creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution,
and other rights (“blank check” preferred stock).
Vote FOR proposals to issue or create
blank check preferred stock in cases when the company expressly states that the stock will not be used as a takeover defense or not utilize
a disparate voting rights structure.
Vote AGAINST where the company expressly
states that, or fails to disclose whether, the stock may be used as a takeover defense.
Vote FOR proposals to authorize or
issue 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.
Preferred Stock (International)
Voting decisions should generally be based on
the Proxy Advisory Firm’s approach, including:
| ● | Vote
FOR the creation of a new class of preferred stock or issuances of preferred stock
up to 50 percent of issued capital unless the terms of the preferred stock would adversely
affect the rights of existing shareholders. |
| ● | Vote
FOR the creation/issuance of convertible preferred stock as long as the maximum number
of common shares that could be issued upon conversion meets the Proxy Advisory Firm’s
guidelines on equity issuance requests. |
| ● | Vote
AGAINST the creation of: |
(1) A new class of preference shares
that would carry superior voting rights to the common shares, or
(2) Blank check preferred stock, unless
the board states that the authorization will not be used to thwart a takeover bid.
Shareholder Proposals Regarding Blank Check Preferred Stock
Vote FOR shareholder proposals requesting
to have shareholder ratification of blank check preferred stock placements, other than those shares issued for the purpose of raising
capital or making acquisitions in the normal course of business.
Share Repurchase Programs
Vote FOR management proposals to institute
open-market share repurchase plans in which all shareholders may participate on equal terms but vote AGAINST plans with terms
favoring selected parties.
Vote FOR management proposals to cancel
repurchased shares.
Vote AGAINST proposals for share repurchase
methods lacking adequate risk mitigation or exceeding appropriate volume or duration parameters for the market.
Consider on a CASE-BY-CASE basis shareholder
proposals seeking share repurchase programs, giving primary consideration to input from the relevant Investment Professional(s).
Stock Distributions: Splits and Dividends
Vote FOR management proposals to increase
common share authorization for a stock split, provided that the increase in authorized shares falls within the Proxy Advisory Firm’s
allowable thresholds.
Reverse Stock Splits
Consider on a CASE-BY-CASE basis management
proposals to implement a reverse stock split, taking into account management’s rationale and/or disclosure if the split constitutes
a capital increase effectively exceeding the Proxy Advisory Firm’s allowable threshold due to the lack of a proportionate reduction
in the number of shares authorized.
Allocation of Income and Dividends
With respect to Japanese and South
Korean companies, consider management proposals concerning allocation of income and the distribution of dividends, including
adjustments to reserves to make capital available for such purposes, on a CASE-BY-CASE basis, voting with the Proxy Advisory Firm’s
recommendations to oppose such proposals when:
| ● | The
dividend payout ratio has been consistently below 30 percent without adequate explanation;
or |
| ● | The
payout is excessive given the company’s financial position. |
Vote FOR such management proposals by
companies in other markets.
Vote AGAINST proposals where companies
are seeking to establish or maintain disparate dividend distributions between stockholders of the same share class (e.g., long-term
stockholders receiving a higher dividend ratio (“Loyalty Dividends”)).
In any market, in the event multiple
proposals regarding dividends are on the same agenda, vote FOR the management proposal if the proposal meets the support conditions
described above and vote AGAINST the shareholder proposal; otherwise, consider on a CASE-BY-CASE basis.
Stock (Scrip) Dividend Alternatives
Vote FOR most stock (scrip) dividend proposals
but vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful
to shareholder value.
Tracking Stock
Consider the creation of tracking stock on a
CASE-BY-CASE basis, giving primary consideration to the input from the relevant Investment Professional(s).
Capitalization of Reserves
Vote FOR proposals to capitalize the company’s
reserves for bonus issues of shares or to increase the par value of shares, unless concerns not otherwise supported under these Guidelines
are raised by the Proxy Advisory Firm.
Debt Instruments and Issuance Requests (International)
Vote AGAINST proposals authorizing excessive
discretion to a board to issue or set terms for debt instruments (e.g., commercial paper).
Vote FOR debt issuances for companies
when the gearing level (current debt-to-equity ratio) is not excessive as defined by the Proxy Advisory Firm’s thresholds.
Vote AGAINST proposals where the issuance
of debt will result in an excessive gearing level as defined by the Proxy Advisory Firm’s thresholds, or for which inadequate disclosure
precludes calculation of the gearing level, unless the Proxy Advisory Firm’s approach to evaluating such requests results in support
of the proposal.
Acceptance of Deposits (India)
Voting decisions generally are based on the Proxy
Advisory Firm’s approach to evaluating such proposals.
Debt Restructurings
Consider on a CASE-BY-CASE basis proposals
to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan.
Financing Plans
Vote FOR the adoption of financing plans
if they are in the best economic interests of shareholders.
Investment of Company Reserves (International)
Consider proposals on a case-by-case
basis.
Restructuring
Mergers and Acquisitions, Special Purpose Acquisition Corporations
(SPACs) and Corporate Restructurings
Vote FOR a proposal not typically supported
under these Guidelines if a key proposal, such as a merger transaction, is contingent upon its support and a vote FOR is recommended
by the Proxy Advisory Firm or relevant Investment Professional(s).
Consider on a case-by-case
basis based on the Proxy Advisory Firm’s approach to evaluating such proposals if no input is provided by the relevant
Investment Professional(s).
Waiver on Tender-Bid Requirement
Consider proposals on a CASE-BY-CASE basis
if seeking a waiver for a major shareholder or concert party from the requirement to make a buyout offer to minority shareholders, voting
FOR when little concern of a creeping takeover exists and the company has provided a reasonable rationale for the request.
Related Party Transactions
Vote FOR approval of such transactions,
unless the agreement requests a strategic move outside the company’s charter, contains unfavorable or high-risk terms (e.g.,
deposits without security interest or guaranty), or is deemed likely to have a negative impact on director or related party independence.
| 6- | Environmental and Social Issues |
Environmental and Social Proposals
Institutional shareholders are scrutinizing an
increasing number of shareholder proposals regarding environmental and social matters. Accordingly, in addition to the company’s
governance risks and opportunities, companies should also assess their environmental and social risks and opportunities as it pertains
to its stakeholders including its employees, shareholders, communities, suppliers, and customers.
Companies should adequately disclose how they
evaluate and mitigate such material risks in order to allow shareholders to assess how well the companies are mitigating and leveraging
their social and environmental risks and opportunities Ideally, companies should adopt disclosure methodologies taking into account recommendations
from the Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), or Global Reporting
Initiative (GRI) to foster uniform disclosure and to allow shareholders to assess risks across issuers.
Accordingly, vote FOR proposals related
to environmental, sustainability and corporate social responsibility if the company’s disclosure and/or its management of the issue(s)
appears inadequate relative to its peers and if the proposal:
| ● | is
applicable to the company’s business, |
| ● | enhances
long-term shareholder value, |
| ● | requests
more transparency and commitment to improve the company’s environmental and/or social
risks, |
| ● | aims
to benefit the company’s stakeholders, |
| ● | is
reasonable and not unduly onerous or costly, or |
| ● | is
not requesting data that is primarily duplicative to data the company already publicly provides. |
Environmental
Generally, vote FOR proposals relating to environmental impact
that reasonably:
| ● | aim
to reduce negative environmental impact, including the reduction of GHG emissions and other
contributing factors to global climate change, |
| ● | request
disclosure of how the company is addressing its impact on the climate. |
Social
Generally, vote FOR proposals relating to corporate social
responsibility that request disclosure of how the company is managing its:
| ● | employee
and board diversity |
| ● | human
capital management, human rights, and supply chain risks. |
Approval of Donations
Vote FOR proposals if they are for single-
or multi-year authorities and prior disclosure of amounts is provided. Otherwise, vote AGAINST such proposals.
Routine Management Proposals
Consider proposals on a CASE-BY-CASE basis
when the Proxy Advisory Firm recommends voting AGAINST.
Authority to Call Shareholder Meetings on Less than 21 Days’
Notice
For companies in the United Kingdom,
consider on a CASE-BY-CASE basis, factoring in whether the company has provided clear disclosure of its compliance with any hurdle
conditions for the authority imposed by applicable law and has historically limited its use of such authority to time-sensitive matters.
Approval of Financial Statements and Director and Auditor Reports
Vote AGAINST if there are concerns regarding
inadequate disclosure, remuneration arrangements (including severance/termination payments exceeding local standards for multiples of
annual compensation), or consulting agreements with non-executive directors.
Consider on a CASE-BY-CASE basis if there
are other concerns regarding severance/termination payments.
Vote AGAINST if there is concern about
the company’s financial accounts and reporting, including related party transactions.
Vote AGAINST board-issued reports receiving
a negative recommendation from the Proxy Advisory Firm due to concerns regarding independence of the board or the presence of non-independent
directors on the audit committee.
Vote FOR if the only reason for a negative
recommendation by the Proxy Advisory Firm is to express disapproval of broader practices of the company or its board.
Other Business
Vote AGAINST proposals for Other Business.
Adjournment
| ● | Vote
FOR when presented with a primary proposal such as a merger or corporate restructuring
that is also supported. |
| ● | Vote
AGAINST when not presented with a primary proposal, such as a merger, and a proposal
on the ballot is being opposed. |
| ● | Consider
other circumstances on a CASE-BY-CASE basis. |
Changing Corporate Name
Vote FOR management proposals requesting
a change in corporate name.
Multiple Proposals
Multiple proposals of a similar nature presented
as options to the course of action favored by management may all be voted FOR, provided that:
| ● | Support
for a single proposal is not operationally required; |
| ● | No
one proposal is deemed superior in the interest of the Fund(s); and |
| ● | Each
proposal would otherwise be supported under these Guidelines. |
Vote AGAINST any proposals that would
otherwise be opposed under these Guidelines.
Bundled Proposals
Vote FOR if all of the bundled items are
supported by these Guidelines.
Consider on a CASE-BY-CASE basis if one
or more items are not supported by these Guidelines and/or the Proxy Advisory Firm deems the negative impact, on balance, to outweigh
any positive impact.
Moot Proposals
This instruction is in regard to items for which
support has become moot (e.g., a director for whom support has become moot since the time the individual was nominated (e.g.,
due to death, disqualification, or determination not to accept appointment)); WITHHOLD support if recommended by the Proxy Advisory
Firm.
Approving New Classes or Series of Shares
Vote FOR the establishment of new classes
or series of shares.
Hire and Terminate Sub-Advisors
Vote FOR management proposals that authorize
the board to hire and terminate sub-advisors.
Master-Feeder Structure
Vote FOR the establishment of a master-feeder
structure.
Establish Director Ownership Requirement
Vote AGAINST shareholder proposals for
the establishment of a director ownership requirement. All other matters should be examined on a CASE-BY-CASE basis.
Item 8. Portfolio Managers of Closed-End Management
Investment Companies.
(a)(1) Portfolio Management.
The following individuals share responsibility for the day-to-day management
of the Fund’s portfolio:
Vincent Costa is
co-chief investment officer, equities at Voya Investment Management. Vincent is also the head of the global quantitative equities team
and serves as a portfolio manager for the active quantitative and fundamental large cap value strategies. Previously at Voya, he was
head of portfolio management for quantitative equity. Prior to joining Voya, he managed quantitative equity investments at both Merrill
Lynch Investment Management and Bankers Trust Company. Vinnie earned an MBA in finance from New York University's Stern School of Business,
a BS in quantitative business analysis from Pennsylvania State University and is a CFA® Charterholder.
Peg DiOrio is
head of quantitative equity portfolio management and a portfolio manager for the active quantitative strategies at Voya Investment Management.
Prior to joining Voya, she was a quantitative analyst with Alliance Bernstein/Sanford C. Bernstein responsible for multivariate and time
series analysis for low volatility strategies, global equities, REITs, and options. Prior to that, she was a senior investment planning
analyst with Sanford C. Bernstein. Peg formerly served as president of the Society of Quantitative Analysts and continues to serve on
the board of directors. She is on the external advisory board for the Applied Math and Statistics Department of Stony Brook University.
Peg earned a MS in Applied Mathematics, Statistics and Operations Research from the Courant Institute of Mathematical Sciences, NYU and
a BS from SUNY Stony Brook. Peg is a CFA® Charterholder.
Steven Wetter is
a portfolio manager on the global quantitative equity team at Voya Investment Management responsible for the index, research enhanced
index and smart beta strategies. Prior to joining Voya, Steve was co-head of international indexing at BNY Mellon responsible for managing
ETFs, index funds and quantitative portfolios. Prior to that, he held similar positions at Northern Trust and Bankers Trust. Steve earned
an MBA in finance from New York University's Stern School of Business and a BA from the University of California at Berkeley.
Paul Zemsky is the chief
investment officer and founder of the Multi-Asset Strategies and Solutions Team (MASS) at Voya Investment Management. He is responsible
for the firm’s suite of value-added, customized and off-the-shelf products and solutions that are supported by the team’s
asset allocation, manager research, quantitative research, portfolio implementation and multi-manager capabilities. Prior to joining
the firm, he co-founded CaliberOne Private Funds Management, a macro hedge fund. Paul began his career at JPMorgan Investment Management,
where he held a number of key positions, including head of investments for over $300 Billion of Fixed Income assets. Paul is a member
of the firm’s Management Committee and a board member of Pomona Capital. He holds a dual degree in finance and electrical engineering
from the Management and Technology Program at the University of Pennsylvania and holds the Chartered Financial Analyst®
designation.
(a)(2V-iii) Other Accounts Managed
The following table show the number
of accounts and total assets in the accounts managed by the portfolio managers of the Sub-Adviser as of February 28, 2022, unless
otherwise indicated.
Voya Emerging Markets High Dividend Equity Fund (IHD)
| |
Mutual Funds
Registered Investment Companies |
Other Pooled Investment
Vehicles |
Other Accounts |
Portfolio
Managers |
Number of
Accounts |
Total Assets
(rounded to the nearest million) |
Number of
Accounts |
Total Assets
(rounded to the nearest million) |
Number of
Accounts |
Total Assets
(rounded to the nearest million) |
| Paul Zemsky |
52 |
$19,461,358,846 |
13 |
$4,543,972,460 |
0 |
$0 |
| Vincent Costa |
20 |
$9,757,821,104 |
24 |
$747,644,706 |
16 |
$984,564,271 |
| Peg DiOrio |
13 |
$4,210,168,360 |
0 |
$0 |
10 |
$642,886,890 |
| Steven Wetter |
26 |
$26,615,333,084 |
2 |
$447,782,286 |
3 |
$726,157,512 |
(a)(2)(iv) Conflicts of Interest
A portfolio manager may be subject to potential
conflicts of interest because the portfolio manager is responsible for other accounts in addition to the Fund. These other accounts may
include, among others, other mutual funds, separately managed advisory accounts, commingled trust accounts, insurance separate accounts,
wrap fee programs and hedge funds. Potential conflicts may arise out of the implementation of differing investment strategies for the
portfolio manager’s various accounts, the allocation of investment opportunities among those accounts or differences in the advisory
fees paid by the portfolio manager’s accounts.
A potential conflict of interest may arise as
a result of the portfolio manager’s responsibility for multiple accounts with similar investment guidelines. Under these circumstances,
a potential investment may be suitable for more than one of the portfolio manager’s accounts, but the quantity of the investment
available for purchase is less than the aggregate amount the accounts would ideally devote to the opportunity. Similar conflicts may arise
when multiple accounts seek to dispose of the same investment.
A portfolio manager may also manage accounts whose
objectives and policies differ from those of the Fund. These differences may be such that under certain circumstances, trading activity
appropriate for one account managed by the portfolio manager may have adverse consequences for another account managed by the portfolio
manager. For example, if an account were to sell a significant position in a security, which could cause the market price of that security
to decrease, while the Fund maintained its position in that security.
A potential conflict may arise when a portfolio
manager is responsible for accounts that have different advisory fees — the difference in the fees may create an incentive for the
portfolio manager to favor one account over another, for example, in terms of access to particularly appealing investment opportunities.
This conflict may be heightened where an account is subject to a performance-based fee.
As part of its compliance program, VIM has adopted
policies and procedures reasonably designed to address the potential conflicts of interest described above.
Finally, a potential conflict of interest may
arise because the investment mandates for certain other accounts, such as hedge funds, may allow extensive use of short sales which, in
theory, could allow them to enter into short positions in securities where other accounts hold long positions. Voya IM has policies and
procedures reasonably designed to limit and monitor short sales by the other accounts to avoid harm to the Fund.
(a)(3) Compensation
Compensation consists of: (i) a fixed base
salary; (ii) a bonus, which is based on Voya IM performance, one-, three-, and five-year pre-tax performance of the accounts the
portfolio managers are primarily and jointly responsible for relative to account benchmarks, peer universe performance, and revenue growth
and net cash flow growth (changes in the accounts’ net assets not attributable to changes in the value of the accounts’ investments)
of the accounts they are responsible for; and (iii) long-term equity awards tied to the performance of our parent company, Voya Financial, Inc.
and/or a notional investment in a predefined set of Voya IM sub-advised funds.
Portfolio managers are also eligible to receive
an annual cash incentive award delivered in some combination of cash and a deferred award in the form of Voya stock. The overall design
of the annual incentive plan was developed to tie pay to both performance and cash flows, structured in such a way as to drive performance
and promote retention of top talent. As with base salary compensation, individual target awards are determined and set based on external
market data and internal comparators. Investment performance is measured on both relative and absolute performance in all areas.
The measures for each team are outlined on a “scorecard”
that is reviewed on an annual basis. These scorecards measure investment performance versus benchmark and peer groups over one-, three-,
and five-year periods; and year-to-date net cash flow (changes in the accounts’ net assets not attributable to changes in the value
of the accounts’ investments) for all accounts managed by each team. The results for overall Voya IM scorecards are typically calculated
on an asset weighted performance basis of the Investment professionals’ performance measures for bonus determinations are weighted
by 25% being attributable to the overall Voya IM performance and 75% attributable to their specific team results (65% investment performance,
5% net cash flow, and 5% revenue growth).
Voya IM’s long-term incentive plan is designed
to provide ownership-like incentives to reward continued employment and to link long-term compensation to the financial performance of
the business. Based on job function, internal comparators and external market data, employees may be granted long-term awards. All senior
investment professionals participate in the long-term compensation plan. Participants receive annual awards determined by the management
committee based largely on investment performance and contribution to firm performance. Plan awards are based on the current year’s
performance as defined by the Voya IM component of the annual incentive plan. Awards typically include a combination of performance shares,
which vest ratably over a three-year period, and Voya restricted stock and/or a notional investment in a predefined set of Voya IM sub-advised
funds, each subject to a three-year cliff-vesting schedule.
If a portfolio manager’s base salary compensation
exceeds a particular threshold, he or she may participate in Voya’s deferred compensation plan. The plan provides an opportunity
to invest deferred amounts of compensation in mutual funds, Voya stock or at an annual fixed interest rate. Deferral elections are done
on an annual basis and the amount of compensation deferred is irrevocable.
Investment professionals’ performance measures for bonus determinations
are weighted by 25% being attributable to the overall Voya IM performance and 75% attributable to their specific team results (65% investment
performance, 5% net cash flow, and 5% revenue growth).
(a)(4) Ownership of Securities
The following table shows the dollar range of
shares of the Trust owned by each team member as of February 28, 2022, including investments by their immediate family members and
amounts invested through retirement and deferred compensation plans.
Ownership:
| Portfolio
Manager | |
Dollar
Range of Trust Shares Owned |
| Vincent Costa | |
$1-$10,000 |
| Peg DiOrio | |
None |
| Steven Wetter | |
None |
| Paul Zemsky | |
None |
(b) None.
Item 9. Purchases of Equity Securities by Closed-End
Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security
Holders.
Not applicable.