We also recognize the potential benefits of dual class shares to newly public companies as they establish themselves; however, these structures should have a specific and limited duration. 0000110450 00000 n When casting their proxy votes, proxy voters should be mindful of some of their basic fiduciary duties, including prudence, loyalty to beneficiaries and reasonable During a CEO transition, companies may elect for the departing CEO to maintain a role in the boardroom. There are two commonly accepted structures for independent leadership to balance the CEO role in the boardroom: 1) an independent Chair; or 2) a Lead Independent director when the roles of Chair and CEO are combined, or when the Chair is otherwise not independent. We depend on companies to provide accessible and clear disclosures so that investors can easily understand how their political activities support their long-term strategy, including on stated public policy priorities. The following issue-specific proxy voting guidelines (the Guidelines) summarize BlackRock Investment Stewardships (BIS) philosophy and approach to engagement and voting, as well as our view of governance best practices and the roles and responsibilities of boards and directors for publicly listed U.S. companies. (See chart above.). document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Posted by Sandy Boss, John Roe and Jessica McDougall, BlackRock, Inc, on, Harvard Law School Forum on Corporate Governance, Do Diverse Directors Influence DEI Outcomes, International Financial Reporting Standards (IFRS) Foundation, International Sustainability Standards Board (ISSB), https://www.blackrock.com/corporate/literature/whitepaper/bii-managing-the-net-zero-transition-february-2022.pdf, Mergers, acquisitions, asset sales, and other special transactions, Material sustainability-related risks and opportunities, Employment as a senior executive by the company or a subsidiary within the past five years, An equity ownership in the company in excess of 20%, Having any other interest, business, or relationship (professional or personal) which could, or could reasonably be perceived to, materially interfere with the directors ability to act in the best interests of the company and its shareholders, Where the board has failed to facilitate quality, independent auditing or accounting practices, we may vote against members of the audit committee, Where the company has failed to provide shareholders with adequate disclosure to conclude that appropriate strategic consideration is given to material risk factors (including, where relevant, sustainability factors), we may vote against members of the responsible committee, or the most relevant director, Where it appears that a director has acted (at the company or at other companies) in a manner that compromises their ability to represent the best long-term economic interests of shareholders, we may vote against that individual, Where a director has a multi-year pattern of poor attendance at combined board and applicable committee meetings, or a director has poor attendance in a single year with no disclosed rationale, we may vote against that individual. Key updates for the 2020 proxy season include: Problematic Governance Structure Newly Public Companies. 0000006004 00000 n However, in these instances, boards should periodically review the rationale for a classified structure and consider when annual elections might be more appropriate. Governance is the core means by which boards can oversee the creation of durable, long-term value. Past performance is no guarantee of future results. For companies facing insolvency or bankruptcy, a premium may not apply, There should be clear strategic, operational, and/or financial rationale for the combination, Unanimous board approval and arms-length negotiations are preferred. Where we determine that a board has failed to do so in a way that may impede a companys long-term value, we may vote against the responsible committees and/or individual directors. Lastly, we look for shareholder approval of poison pill plans within one year of adoption of implementation. A companys board of directors should put in place a compensation structure that balances incentivizing, rewarding, and retaining executives appropriately across a wide range of business outcomes. BIS will generally support annual advisory votes on executive compensation. We are particularly interested in understanding how risk oversight processes evolve in response to changes in corporate strategy and/or shifts in the business and related risk environment. In addition, to the extent that an auditor fails to reasonably identify and address issues that eventually lead to a significant financial restatement, or the audit firm has violated standards of practice, we may also vote against ratification. To this end, performance reviews and skills assessments should be conducted by the nominating/governance committee or the Lead Independent Director. 2036 0 obj <> endobj xref Proposals to change a corporations form, including those to convert to a public benefit corporation (PBC) structure, should clearly articulate the stakeholder groups the company seeks to benefit and provide detail on how the interests of shareholders would be augmented or adversely affected with the change to a PBC. 0000014951 00000 n In general, we support market-standardized proxy access proposals, which allow a shareholder (or group of up to 20 shareholders) holding three percent of a companys outstanding shares for at least three years the right to nominate the greater of up to two directors or 20% of the board. We will evaluate the economic and strategic rationale behind the companys proposal to reincorporate on a case-by-case basis. The views and strategies described may not be suitable for all investors. It is our view that a majority of the directors on the board should be independent to ensure objectivity in the decision-making of the board and its ability to oversee management. If the relevant standards are silent on the issue under consideration, we will use our professional judgment as to what voting outcome would best protect the long-term economic interests of investors. Conversely, we note that some shareholder proposals seek to address topics that are clearly within the purview of certain stakeholders. Web2022 Policy Guidelines United States 2 Table of Contents opinion on our proxy research directly to the voting decision makers at every investor client in time for voting decisions to be made or changed. We may also consider whether executive and/or board members financial interests appear likely to affect their ability to place shareholders interests before their own, as well as measures taken to address conflicts of interest, We prefer transaction proposals that include the fairness opinion of a reputable financial advisor assessing the value of the transaction to shareholders in comparison to recent similar transactions, Whether we determine that the triggering event is in the best interests of shareholders, Whether management attempted to maximize shareholder value in the triggering event, The percentage of total premium or transaction value that will be transferred to the management team, rather than shareholders, as a result of the golden parachute payment, Whether excessively large excise tax gross-up payments are part of the pay-out, Whether the pay package that serves as the basis for calculating the golden parachute payment was reasonable in light of performance and peers, Whether the golden parachute payment will have the effect of rewarding a management team that has failed to effectively manage the company, The company has experienced significant stock price decline as a result of macroeconomic trends, not individual company performance, Directors and executive officers are excluded; the exchange is value neutral or value creative to shareholders; tax, accounting, and other technical considerations have been fully contemplated, There is clear evidence that absent repricing, employee incentives, retention, and/or recruiting may be impacted, Disclose the identification, assessment, management, and oversight of material sustainability related risks and opportunities in accordance with the four pillars of TCFD, Publish material, investor-relevant, industry-specific metrics and rigorous targets, aligned with SASB (ISSB) or comparable sustainability reporting standards. We generally view the boards discretion to establish voting rights on a when-issued basis as a potential anti-takeover device, as it affords the board the ability to place a block of stock with an investor sympathetic to management, thereby foiling a takeover bid without a shareholder vote. Where a company has failed to implement a Say on Pay advisory vote within the frequency period that received the most support from shareholders or a Say on Pay resolution is omitted without explanation, BIS may vote against members of the compensation committee. Excluding exigent circumstances, BIS generally considers attendance at less than 75% of the combined board and applicable committee meetings to be poor attendance. We will also evaluate whether there is general consistency between a companys stated positions on policy matters material to their strategy and the material positions taken by significant industry groups of which they are a member. Goals, and the processes used to set these goals, should be clearly articulated and appropriately rigorous. In our view, director compensation packages that are based on the companys long-term value creation and include some form of long-term equity compensation are more likely to meet this goal. If you have received an invitation, you must first create a login by following the link provided in the email sent to you. We acknowledge that the use of peer group evaluation by compensation committees can help calibrate competitive pay; however, we are concerned when the rationale for increases in total compensation is solely based on peer benchmarking. Introducing the possibility of such reimbursement may incentivize disruptive and unnecessary shareholder campaigns. BIS recognizes the critical importance of financial statements to provide a complete and accurate portrayal of a companys financial condition. In the event that the board chooses to have a combined Chair/CEO or a non-independent Chair, we support the designation of a Lead Independent director, with the ability to: 1) provide formal input into board meeting agendas; 2) call meetings of the independent directors; and 3) preside at meetings of independent directors. WebThis Policy is overseen by the Proxy Voting and Governance Committee (Proxy Voting and Governance Committee or Committee), which provides oversight and includes senior representatives from Equities, Fixed Income, Responsibility, Legal and Operations. As stated above, a majority vote standard is generally in the best long-term interests of shareholders, as it ensures director accountability through the requirement to be elected by more than half of the votes cast. Therefore, we will generally support the reduction or the elimination of supermajority voting requirements to the extent that we determine shareholders ability to protect their economic interests is improved. These activities can also create risks, including: the potential for allegations of corruption; certain reputational risks; and risks that arise from the complex legal, regulatory, and compliance considerations associated with corporate political spending and lobbying activity. A classified board structure may also be justified at non-operating companies, e.g., closed-end funds or business development companies (BDC),[3] in certain circumstances. We oppose voting on matters where we are not given the opportunity to review and understand those measures and carry out an appropriate level of shareholder oversight. Shareholders should have a meaningful opportunity to participate in the meeting and interact with the board and management in these virtual settings; companies should facilitate open dialogue and allow shareholders to voice concerns and provide feedback without undue censorship. Webproxy voting principles and philosophy discussed in the Invesco Global Proxy Policy. Common impediments to independence may include: We may vote against directors who we do not consider to be independent, including at controlled companies, when we believe oversight could be enhanced with greater independent director representation. We typically defer to the board in setting the appropriate size and believe that directors are generally in the best position to assess the optimal board size to ensure effectiveness. Where executive compensation appears excessive relative to the performance of the company and/or compensation paid by peers, or where an equity compensation plan is not aligned with shareholders interests, we may vote against members of the compensation committee. Where we find that shareholder protections are diminished, we may support reincorporation if we determine that the overall benefits outweigh the diminished rights. Proxy Voting Guidelines: TRPA. Clear and consistent disclosures on these matters are critical for investors to make an informed assessment of a companys HCM practices. WebPlease submit your proxy card or voting instruction form as soon as possible. Our publicly available commentary provides more information on our approach. Dodge & Cox investment leadership & Committee updates. Shareholders should have the opportunity to participate in the annual and special meetings for the companies in which they are invested, as these meetings facilitate an opportunity for shareholders to provide feedback and hear from the board and management. We also favor prompt recoupment from any senior executive whose behavior caused material financial harm to shareholders, material reputational risk to the company, or resulted in a criminal proceeding, even if such actions did not ultimately result in a material restatement of past results. The proposal should give unaffiliated shareholders the opportunity to affirm the current structure or establish mechanisms to end or phase out controlling structures at the appropriate time, while minimizing costs to shareholders. Where several measures are grouped into one proposal, BIS may reject certain positive changes when linked with proposals that generally contradict or impede the rights and economic interests of shareholders. If you have not received an invitation, and think you should have, please contact your Renaissance representative. We frequently oppose proposals requesting authorization of a class of preferred stock with unspecified voting, conversion, dividend distribution, and other rights (blank check preferred stock) because they may serve as a transfer of authority from shareholders to the board and as a possible entrenchment device. (go back), 8Including, but not limited to, individuals who identify as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, or Native Hawaiian or Pacific Islander; individuals who identify as LGBTQ+; individuals who identify as underrepresented based on national, Indigenous, religious, or cultural identity; individuals with disabilities; and veterans. Rather, support for such a proposal might arise in the case of overarching and sustained governance concerns such as lack of independence or failure to oversee a material risk over consecutive years(go back), 5This table is for illustrative purposes only. When determining whether to support or oppose an advisory vote on a golden parachute plan, BIS may consider several factors, including: It may be difficult to anticipate the results of a plan until after it has been triggered; as a result, BIS may vote against a golden parachute proposal even if the golden parachute plan under review was approved by shareholders when it was implemented. Join Lisa Edwards, Diligent President and COO, and Fortune Media CEO Alan Murray to discuss how corporations' role in the world has shifted - and how leaders can balance the risks and opportunities of this new paradigm. In the U.S., we believe that boards should aspire to at least 30% diversity of membership, [7] and we encourage large companies, such as those in the S&P 500, to lead in achieving this standard. This includes, but is not limited to, settlement agreements arising from such behavior and paid for directly by the company. (go back), 19BlackRock is subject to certain regulations and laws in the United States that place restrictions and limitations on how BlackRock can interact with the companies in which we invest on behalf of our clients, including our ability to submit shareholder proposals or elect directors to the board. Directors should be re-elected annually; classification of the board generally limits shareholders rights to regularly evaluate a boards performance and select directors. Companies should effectively oversee and mitigate material risks related to stakeholders with appropriate due diligence processes and board oversight. H\n0E The administration of these MFS Proxy Voting Policies and Procedures is overseen by the MFS Proxy Voting Committee, which We ask for disclosures to understand the timeframe and responsibilities of this role. Succession planning should cover scenarios over both the long-term, consistent with the strategic direction of the company and identified leadership needs over time, as well as the short-term, in the event of an unanticipated executive departure. When voting on a management or shareholder proposal to make changes to the charter/articles/bylaws, we will consider in part the companys and/or proponents publicly stated rationale for the changes; the companys governance profile and history; relevant jurisdictional laws; and situational or contextual circumstances which may have motivated the proposed changes, among other factors. 0000050955 00000 n We look for disclosures from companies to help us understand their approach and do not prescribe any particular board composition. 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