# EDGAR Filing Document

**Accession Number:** 0000826686
**File Stem:** 0001193125-25-324887
**Filing Date:** 2025-12
**Character Count:** 2946803
**Document Hash:** 30169b9f0ad87a151313fabd84c36c59
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-25-324887.hdr.sgml**: 20251218

**ACCESSION NUMBER**: 0001193125-25-324887

**CONFORMED SUBMISSION TYPE**: 485BPOS

**PUBLIC DOCUMENT COUNT**: 69

**FILED AS OF DATE**: 20251218

**DATE AS OF CHANGE**: 20251218

**EFFECTIVENESS DATE**: 20251230

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SSGA FUNDS
- **CENTRAL INDEX KEY:** 0000826686

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** WA
- **FISCAL YEAR END:** 0831

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-05430
- **FILM NUMBER:** 251583426

**BUSINESS ADDRESS:**
- **STREET 1:** ONE CONGRESS STREET
- **CITY:** BOSTON
- **STATE:** MA
- **ZIP:** 02114
- **BUSINESS PHONE:** 6176643920

**MAIL ADDRESS:**
- **STREET 1:** ONE CONGRESS STREET
- **CITY:** BOSTON
- **STATE:** MA
- **ZIP:** 02114

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SEVEN SEAS SERIES FUND
- **DATE OF NAME CHANGE:** 19920703
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SSGA FUNDS
- **CENTRAL INDEX KEY:** 0000826686

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** WA
- **FISCAL YEAR END:** 0831

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 033-19229
- **FILM NUMBER:** 251583425

**BUSINESS ADDRESS:**
- **STREET 1:** ONE CONGRESS STREET
- **CITY:** BOSTON
- **STATE:** MA
- **ZIP:** 02114
- **BUSINESS PHONE:** 6176643920

**MAIL ADDRESS:**
- **STREET 1:** ONE CONGRESS STREET
- **CITY:** BOSTON
- **STATE:** MA
- **ZIP:** 02114

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SEVEN SEAS SERIES FUND
- **DATE OF NAME CHANGE:** 19920703

## Series and Classes Contracts Data

### State Street International Stock Selection Fund (Series ID: S000005168)

| Class ID   | Class Name   | Ticker Symbol   |
|:---|:---|:---|
| C000014139 | Class N      | SSAIX           |
| C000143790 | Class A      | SSILX           |
| C000143792 | Class I      | SSIPX           |
| C000143793 | Class K      | SSIQX           |

### State Street S&P 500 Index Fund (Series ID: S000005183)

| Class ID   | Class Name   | Ticker Symbol   |
|:---|:---|:---|
| C000014159 | Class N      | SVSPX           |

?xml version='1.0' encoding='ASCII'? SSGA FUNDS

**As filed with the U.S. Securities and Exchange Commission on December 18, 2025**

**Securities Act of 1933 File No. 33-19229**

**Investment Company Act of 1940 File No. 811-05430**

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM N-1A**

**REGISTRATION STATEMENT** 

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; ***UNDER*** <br> ***THE SECURITIES ACT OF 1933***<br>| **☒**  |
| **Post-Effective Amendment No. 167** | **☒**  |

---

**and/or**

**REGISTRATION STATEMENT** 

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; ***UNDER*** <br> ***THE INVESTMENT COMPANY ACT OF 1940***<br>| **☒**  |
| **Amendment No. 165** | **☒**  |

---

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**SSGA FUNDS**

**(Exact Name of Registrant as Specified in Charter)**

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**One Congress Street**

**Boston, Massachusetts 02114**

**(Address of Principal Executive Offices)**

**(617) 664-3920**

**(Registrant's Telephone Number)**

**Andrew J. DeLorme, Esq.**

**Chief Legal Officer**

**c/o SSGA Funds Management, Inc.**

**One Congress Street**

**Boston, Massachusetts 02114**

**(Name and Address of Agent for Service)**

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***Copies to:***

**Adam M. Schlichtmann, Esq.**

**Ropes & Gray LLP**

**Prudential Tower, 800 Boylston Street**

**Boston, Massachusetts 02199-3600**

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It is proposed that this filing will become effective:

☐ immediately upon filing pursuant to Rule 485, paragraph (b)

☒ on December 30, 2025 pursuant to Rule 485, paragraph (b) 

☐ 60 days after filing pursuant to Rule 485, paragraph (a)(1)

☐ on _________________ pursuant to Rule 485, paragraph (a)(1) 

☐ 75 days after filing pursuant to Rule 485, paragraph (a)(2) 

☐ on _________________ pursuant to Rule 485, paragraph (a)(2)

If appropriate, check the following box:

☐ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

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**Prospectus** 

December 30, 2025

**SSGA Funds** 

**SSGA Domestic Equity Funds** 

State Street S&P 500 Index Fund: Class N (SVSPX)

**SSGA International Equity Funds** 

State Street International Stock Selection Fund: Class A (SSILX) Class I (SSIPX) Class K (SSIQX) Class N (SSAIX)

The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

An investment in any of the Funds offered by this Prospectus is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

![](g79608ssim.gif)

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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**TABLE OF CONTENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **[Fund Summaries](#xx_8d9da92c-c5ac-472f-a0b7-04ab13894e51_1)** | 1 |
| [State Street S&P 500 Index Fund](#xx_8d9da92c-c5ac-472f-a0b7-04ab13894e51_1) | 1 |
| [State Street International Stock Selection Fund](#xx_d216c3b5-77e3-44de-ba1f-3f551d434197_1) | 7 |
| **[Fund Objectives, Strategies and Risks](#xx_16a81b4c-62aa-4db1-8906-659a852be3a5_1)** | 15 |
| [State Street S&P 500 Index Fund](#xx_16a81b4c-62aa-4db1-8906-659a852be3a5_1) | 15 |
| [State Street International Stock Selection Fund](#xx_16a81b4c-62aa-4db1-8906-659a852be3a5_2) | 16 |
| [Additional Information About Risks](#xx_16a81b4c-62aa-4db1-8906-659a852be3a5_3) | 17 |
| [Additional Information About the Funds' Non-Principal Risks](#xx_16a81b4c-62aa-4db1-8906-659a852be3a5_12) | 26 |
| [Portfolio Holdings](#xx_16a81b4c-62aa-4db1-8906-659a852be3a5_14) | 28 |
| **[Management and organization](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_1)** | 29 |
| [Investment Adviser](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_1) | 29 |
| [Portfolio Management](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_1) | 29 |
| [Other Fund Services](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_3) | 31 |
| **[Shareholder Information](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_3)** | 31 |
| [Determination of Net Asset Value](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_3) | 31 |
| [Investing in State Street Funds Shares](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_4) | 32 |
| [Dividends and Distributions](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_18) | 46 |
| [Tax Considerations](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_19) | 47 |
| **[Financial Intermediary Arrangements](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_20)** | 48 |
| [Distribution Arrangements and Rule 12b-1 Fees](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_20) | 48 |
| [Other Payments to Financial Intermediaries](#xx_533f4e25-28ac-421e-9509-d0483d8b1888_20) | 48 |
| **[Financial Highlights](#xx_b993be72-e76f-4395-8842-82d9da6ddd9a_1)** | 51 |

---

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

------

**SSGA Funds**

**State Street S&P 500**

**Index Fund**

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<sup>Fund Summary</sup>

**Investment Objective**

State Street S&P 500 Index Fund (the "Fund") seeks to replicate as closely as possible, before expenses, the performance of the S&P 500<sup>®</sup> Index.

**Fees and Expenses of the Fund**

The tables below describe the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund ("Fund Shares"). **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries which are not reflected in the tables and examples below.**

**Shareholder Fees** (fees paid directly from your investment)

---

| |
|:---|
| Maximum Sales Charge (Load) Imposed On Purchases (as a percentage of offering price) |
| Maximum Deferred Sales Charge (Load) (as a percentage of the net asset value) |

---

**Annual Fund Operating Expenses** (expenses that you pay each year as a percentage of the value of your investment)

---

| | |
|:---|:---|
| Management Fees | 0.030% |
| Distribution and Shareholder Service (12b-1) Fees<sup>1</sup> <br>| 0.061% |
| Other Expenses | 0.081% |
| Total Annual Fund Operating Expenses | 0.172% |
| Less Fee Waivers and/or Expense Reimbursements<sup>2</sup> | (0.015%) |
| Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements | 0.157% |

---

<sup>1</sup>

The Fund has adopted a distribution plan under Rule 12b-1 pursuant to which payments of up to 0.25% of average daily net assets may be made; however, the Fund's Board of Trustees has determined that payments will not exceed 0.062% of average daily net assets.

<sup>2</sup>

The Fund's investment adviser, SSGA Funds Management, Inc. (the "Adviser" or "SSGA FM"), is contractually obligated until December 31, 2026 (i) to waive up to the full amount of the advisory fee payable by the Fund, and/or (ii) to reimburse the Fund to the extent that Total Annual Fund Operating Expenses exceed 0.157% of average daily net assets on an annual basis. This waiver and/or reimbursement may not be terminated prior to December 31, 2026 except with the approval of the Fund's Board of Trustees. SSGA FM has contractually agreed to waive 0.01% of its administration fee. This waiver may not be terminated or modified except with the approval of the Fund's Board of Trustees and shall continue until at least December 31, 2026.

**Example**

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated, and then sell or hold all of your Fund Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The calculation of costs for the one-year period takes into account the effect of any current contractual fee waivers and/or reimbursements; and the calculation of costs for the remaining periods takes such fee waivers and/or reimbursements into account only for the first year of each such period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | |
|:---|:---|:---|:---|
| **1 year** | **3 years** | **5 years** | **10 years** |
| $16 | $54 | $95 | $218 |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 2% of the average value of its portfolio.

------

**SSGA Funds**

**State Street S&P 500**

**Index Fund**

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<sup>Fund Summary</sup>

**Principal Investment Strategies**

The Fund uses an index tracking management strategy designed to track the performance of the S&P 500<sup>®</sup> Index ("S&P 500" or "Index"). The Index is a well-known stock market index that includes common stocks of 500 companies from a number of sectors and that measures the performance of the large-cap sector of the U.S. equities market. As of October 31, 2025, a significant portion of the Fund comprised companies in the information technology sector, although this may change from time to time.

The Fund is not managed according to traditional methods of "active" investment management, which involve the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Instead, the Fund, using an "indexing" investment approach, attempts to replicate, before expenses, the performance of the S&P 500.

Under normal market conditions, the Fund will not invest less than 80% of its total assets in stocks in the Index. The notional value of the Fund's investments in derivatives or other synthetic instruments that provide exposure comparable, in the judgment of the Adviser, to the foregoing types of investments may be counted toward satisfaction of this 80% policy. The Fund attempts to replicate the investment performance of the S&P 500 and generally intends to invest in all stocks comprising the S&P 500 in approximate proportion to their weightings in the Index. However, it may not be possible or practicable to purchase all stocks of the S&P 500 in those weightings. When it is not possible or practicable to purchase all stocks of the S&P 500 in those weightings, the Fund may purchase a sample of the stocks listed in the S&P 500 in proportions expected by the Adviser to match generally the performance of the Index as a whole. In addition, from time to time stocks are added to or removed from the Index. The Fund may sell securities that are represented in the Index, or purchase securities that are not yet represented in the Index, in anticipation of their removal from or addition to the Index. Shareholders will receive sixty (60) days' notice prior to a change in the 80% investment policy.

In addition to common stocks in the S&P 500, the Fund may at times purchase or sell futures contracts on the Index, or options on those futures, in lieu of investing directly in the stocks making up the Index. The Fund might do so, for example, in order to increase its investment exposure pending investment of cash in the stocks comprising the Index. Alternatively, the Fund might use futures or options on futures to reduce its investment exposure in situations where it intends to sell a portion of the stocks in its portfolio but the sale has not yet been completed. The Fund may also enter into other derivatives transactions, including the use of options or swap transactions, to assist in attempting to replicate the performance of the Index. The Fund may also, to the extent permitted by applicable law, invest in shares of mutual funds (including those advised by the Adviser) whose investment objectives and policies are similar to those of the Fund.

**Principal Risks**

The Fund is subject to the following principal risks. You could lose money by investing in the Fund. Certain risks relating to instruments and strategies used in the management of the Fund are placed first. The significance of any specific risk to an investment in the Fund will vary over time, depending on the composition of the Fund's portfolio, market conditions, and other factors. You should read all of the risk information presented below carefully, because any one or more of these risks may result in losses to the Fund. **An investment in the Fund is subject to investment risks, including possible loss of principal, is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC") or any other government agency.** The Fund may not achieve its investment objective. The Fund is not intended to be a complete investment program, but rather is intended for investment as part of a diversified investment portfolio. Investors should consult their own advisers as to the role of the Fund in their overall investment programs.

**Market Risk:** The Fund's investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, inflation, changes in the actual or perceived creditworthiness of issuers, and general market liquidity. The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Local, regional or global events such as war, military conflicts, acts of terrorism, trade policy changes or disputes, the threat or actual imposition of tariffs, natural disasters, the spread of infectious illness or other public health issues, or other events could have a significant impact on the Fund and its investments.

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**SSGA Funds**

**State Street S&P 500**

**Index Fund**

------

<sup>Fund Summary</sup>

**Equity Investing Risk:** The market prices of equity securities owned by the Fund may go up or down, sometimes rapidly or unpredictably. The value of a security may decline for a number of reasons that may directly relate to the issuer and also may decline due to general industry or market conditions that are not specifically related to a particular company. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.

**Indexing Strategy/Index Tracking Risk:** The Fund is managed with an indexing investment strategy, attempting to track the performance of an unmanaged index of securities, regardless of the current or projected performance of the Index or of the actual securities comprising the Index. This differs from an actively-managed fund, which typically seeks to outperform a benchmark index. As a result, the Fund's performance may be less favorable than that of a portfolio managed using an active investment strategy. The structure and composition of the Index will affect the performance, volatility, and risk of the Index and, consequently, the performance, volatility, and risk of the Fund. While the Adviser seeks to track the performance of the Index (*i.e.*, achieve a high degree of correlation with the Index), the Fund's return may not match the return of the Index. The Fund incurs a number of operating expenses not applicable to the Index, and may incur costs in buying and selling securities. In addition, the Fund may not be fully invested at times, generally as a result of cash flows into or out of the Fund or reserves of cash held by the Fund to meet redemptions. The Adviser may attempt to replicate the Index return by investing in fewer than all of the securities in the Index, or in some securities not included in the Index, potentially increasing the risk of divergence between the Fund's return and that of the Index.

**Counterparty Risk:** The Fund will be subject to credit risk with respect to the counterparties with which the Fund enters into derivatives contracts, repurchase agreements, reverse repurchase agreements, and other transactions. If a counterparty fails to meet its contractual obligations, the Fund may be unable to terminate or realize any gain on the investment or transaction, or to recover collateral posted to the counterparty, resulting in a loss to the Fund. If the Fund holds collateral posted by its counterparty, it may be delayed or prevented from realizing on the collateral in the event of a bankruptcy or insolvency proceeding relating to the counterparty.

**Derivatives Risk:** Derivative transactions can create investment leverage and may have significant volatility. It is possible that a derivative transaction will result in a much greater loss than the principal amount invested, that changes in the value of a derivative transaction may not correlate perfectly with the underlying asset, and that the Fund may not be able to close out a derivative transaction at a favorable time or price. The counterparty to a derivatives contract may be unable or unwilling to make timely settlement payments, return the Fund's margin, or otherwise honor its obligations. A derivatives transaction may not behave in the manner anticipated by the Adviser or may not have the effect on the Fund anticipated by the Adviser.

**Large-Capitalization Securities Risk:** Returns on investments in securities of large companies could trail the returns on investments in securities of smaller and mid-sized companies. Larger companies may be unable to respond as quickly as smaller and mid-sized companies to competitive challenges or to changes in business, product, financial, or other market conditions. Larger companies may not be able to maintain growth at the high rates that may be achieved by well-managed smaller and mid-sized companies.

**Risk of Investment in Other Pools:** If the Fund invests in another pooled investment vehicle (e.g., a mutual fund or exchange-traded fund), it is exposed to the risk that the other pool will not perform as expected and is exposed indirectly to all of the risks applicable to an investment in such other pool. The investment policies of the other pool may not be the same as those of the Fund; as a result, an investment in the other pool may be subject to additional or different risks than those to which the Fund is typically subject. The Fund bears its proportionate share of the fees and expenses of any pool in which it invests. The Adviser or an affiliate may serve as investment adviser to a pool in which the Fund may invest, leading to potential conflicts of interest. It is possible that other clients of the Adviser or its affiliates will purchase or sell interests in a pool sponsored or managed by the Adviser or its affiliates at prices and at times more favorable than those at which the Fund does so.

**Information Technology Sector Risk:** Market or economic factors impacting information technology companies could have a major effect on the value of the Fund's investments. The value of stocks of information technology companies is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition, both domestically and internationally, including competition from foreign

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**SSGA Funds**

**State Street S&P 500**

**Index Fund**

------

<sup>Fund Summary</sup>

competitors with lower production costs. Like other technology companies, information technology companies may have limited product lines, markets, financial resources or personnel. Stocks of technology companies and companies that rely heavily on technology, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall market. Information technology companies are heavily dependent on patent and intellectual property rights, the loss or impairment of which may adversely affect profitability. Additionally, companies in the information technology sector may face dramatic and often unpredictable changes in growth rates and competition for the services of qualified personnel.

**Unconstrained Sector Risk:** The Fund may invest a substantial portion of its assets within one or more economic sectors or industries, which may change from time to time. Greater investment focus on one or more sectors or industries increases the potential for volatility and the risk that events negatively affecting such sectors or industries could reduce returns, potentially causing the value of the Fund's Shares to decrease, perhaps significantly.

**Performance**

The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns from year-to-year and by showing how the Fund's average annual returns for the periods ended December 31, 2024 compared with those of the Index. The Fund's past performance does not necessarily indicate how the Fund will perform in the future. Current performance information for the Fund is available toll free by calling (800) 647-7327 or by visiting our website at www.statestreet.com/im.

**Annual Total Returns** (years ended 12/31)

![](g79608img088dd46a1.jpg)

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| | | |
|:---|:---|:---|
|  | **Returns** | **Quarter/Year** |
| **Highest Quarterly Return** | 20.58% | Q2 2020 |
| **Lowest Quarterly Return** | -19.44% | Q1 2020 |
| **Year-to-Date** | 14.67% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9/30/2025 |

---

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**SSGA Funds**

**State Street S&P 500**

**Index Fund**

------

<sup>Fund Summary</sup>

**Average Annual Total Returns** (for periods ended 12/31/24)

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| | | | |
|:---|:---|:---|:---|
|  | **One**<br> **Year**<br>| **Five**<br> **Years**<br>| **Ten**<br> **Years**<br>|
| Class N |  |  |  |
| Return Before Taxes | &nbsp;&nbsp;&nbsp;&nbsp; 24.82<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 14.43<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 12.96<br> %<br>|
| Return After Taxes on Distributions | &nbsp;&nbsp;&nbsp;&nbsp; 22.27<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 11.39<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 10.51<br> %<br>|
| Return After Taxes on Distributions and Sale of Fund Shares | &nbsp;&nbsp;&nbsp;&nbsp; 16.54<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 10.92<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 10.02<br> %<br>|
| S&P 500 Index (reflects no deduction for fees, expenses or taxes) | &nbsp;&nbsp;&nbsp;&nbsp; 25.02<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 14.53<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 13.10<br> %<br>|

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The returns for certain periods would have been lower without the effect of a contractual fee waiver and/or reimbursement.

Fund returns after taxes on distributions and sale of Fund Shares may be higher than returns before taxes and/or returns after taxes on distributions for certain periods because they reflect the tax benefit an investor may receive as a result of the capital losses that would have been incurred on the sale of Fund Shares.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor's tax situation and may differ from those shown above, and after-tax returns are not relevant to investors who hold their shares through tax-advantaged arrangements, such as 401(k) plans or individual retirement accounts ("IRAs").

**Investment Adviser** 

SSGA FM serves as the investment adviser to the Fund.

Karl Schneider, Amy Scofield and Emiliano Rabinovich serve as portfolio managers of the Fund. They have served on the Fund since 2004, 2012 and 2022, respectively.

Karl Schneider, CAIA, is a Managing Director of the Adviser and Co-Head of the Systematic Equity Team in the Americas. He joined the Adviser in 1997.

Amy Scofield is a Vice President of the Adviser and a Portfolio Manager in the Systematic Equity Team. She joined the Adviser in 2010.

Emiliano Rabinovich, CFA, is a Managing Director of the Adviser and Co-Head of the Systematic Equity Team in the Americas. He joined the Adviser in 2006.

**Purchase and Sale of Fund Shares**

<u>Purchase Minimums</u> 

The Fund's initial and subsequent investment minimums generally are as follows, although the Fund may reduce or waive the minimums in some cases.

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| | |
|:---|:---|
| **To establish an account** |  |
| &nbsp;&nbsp; All accounts (other than individual<br> retirements accounts (IRAs))<br>| $10000 |
| Individual retirement accounts (IRAs) | $250 |
| **To add to an existing account (all accounts)** | $100 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

You may purchase or redeem Fund Shares on any day the Fund is open for business.

Shareholder accounts held through brokers, banks and other financial intermediaries that maintain one or more accounts with the Fund (including fee-based wrap accounts, individual retirement accounts (IRAs) or retirement plan accounts) will not be subject to the initial or subsequent minimum investment amount requirement.

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**SSGA Funds**

**State Street S&P 500**

**Index Fund**

------

<sup>Fund Summary</sup>

*Written Requests and Wire Transfers*. You may purchase or redeem Fund Shares by written request or wire transfer.

Written requests should be sent to:

<u>By Mail:</u> 

SSGA Funds

P.O. Box 219737

Kansas City, MO 64121-9737

<u>By Overnight/Registered, Express, Certified Mail:</u> 

SSGA Funds

801 Pennsylvania Avenue, Suite 219737

Kansas City, MO 64105-1307

For wire transfer instructions, please call (800) 647-7327 between 8 a.m. and 6 p.m. Eastern time. Redemptions by telephone are permitted only if you previously have been authorized for these transactions.

<u>By Intermediary:</u> 

If you wish to purchase or redeem Fund Shares through a broker, bank or other financial intermediary ("Financial Intermediary"), please contact that Financial Intermediary directly. Your Financial Intermediary may have different or additional requirements for opening an account and/or for the processing of purchase and redemption orders, or may be closed at times when the Fund is open. Financial Intermediaries may contact SS&C GIDS, Inc. at (877) 332-6207 or via email at nsccresearch@dstsystems.com with questions.

**Tax Information**

The Fund's distributions are expected to be taxed as ordinary income, qualified dividend income and/or capital gains, unless you are investing through a tax-advantaged arrangement, such as a 401(k) plan or IRA. Any withdrawals made from such tax-advantaged arrangement may be taxable to you.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase Fund Shares through a broker-dealer or other Financial Intermediary (such as a bank), the Fund, the Adviser or its affiliates may pay the Financial Intermediary for certain activities related to the Fund, including educational training programs, conferences, the development of technology platforms and reporting systems, or other services related to the sale or promotion of the Fund. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's website for more information.

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

**Investment Objective**

State Street International Stock Selection Fund (the "Fund") seeks to provide long-term capital growth by investing primarily in securities of foreign issuers.

**Fees and Expenses of the Fund**

The tables below describe the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund ("Fund Shares"). **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries which are not reflected in the tables and examples below.** You may qualify for sales charge discounts on purchases of Class A shares if you agree to invest in the future, or if you and your family currently invest, at least $50,000 in State Street Funds that offer Class A shares. More information about these and other discounts is available from your financial intermediary ("Financial Intermediary") and in the "Investing in State Street Funds Shares" section on page 32 of the Fund's Prospectus.

**Shareholder Fees** (fees paid directly from your investment)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class A** | **Class I** | **Class K** | **Class N** |
| Maximum Sales Charge (Load) Imposed On Purchases (as a percentage of offering price) | 5.25% |  |  |  |
| Maximum Deferred Sales Charge (Load) (as a percentage of the net asset value)<sup>1</sup> <br>|  |  |  |  |

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**Annual Fund Operating Expenses** (expenses that you pay each year as a percentage of the value of your investment)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class A** | **Class I** | **Class K** | **Class N** |
| Management Fees | 0.75% | 0.75% | 0.75% | 0.75% |
| Distribution and Shareholder Service (12b-1) Fees | 0.25% | 0.00% | 0.00% | 0.25% |
| Other Expenses | 0.44% | 0.44% | 0.24% | 0.24% |
| Total Annual Fund Operating Expenses | 1.44% | 1.19% | 0.99% | 1.24% |
| Less Fee Waivers and/or Expense Reimbursements<sup>2</sup> | (0.24%) | (0.24%) | (0.24%) | (0.24%) |
| Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements | 1.20% | 0.95% | 0.75% | 1.00% |

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<sup>1</sup>

A contingent deferred sales charge ("CDSC") of 1.00% may be assessed on redemptions of Class A shares made within 18 months after purchase where no initial sales charge was paid at the time of purchase as part of an investment of $1,000,000 or more.

<sup>2</sup>

The Fund's investment adviser, SSGA Funds Management, Inc. (the "Adviser" or "SSGA FM"), is contractually obligated until December 31, 2026 (i) to waive up to the full amount of the advisory fee payable by the Fund, and/or (ii) to reimburse the Fund to the extent that Total Annual Fund Operating Expenses (exclusive of non-recurring account fees, extraordinary expenses, acquired fund fees and expenses, and distribution, shareholder servicing and sub-transfer agency fees) exceed 0.75% of average daily net assets on an annual basis. This waiver and/or reimbursement may not be terminated prior to December 31, 2026 except with the approval of the Fund's Board of Trustees. SSGA FM has contractually agreed to waive 0.01% of its administration fee. This waiver may not be terminated or modified except with the approval of the Fund's Board of Trustees and shall continue until at least December 31, 2026.

**Example**

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated, and then sell or hold all of your Fund Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The calculation of costs for the one-year period takes into account the effect of any current contractual fee waivers and/or reimbursements; and the calculation of costs for the remaining periods takes such fee waivers and/or reimbursements into account only for the first year of each such period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 year** | **3 years** | **5 years** | **10 years** |
| Class A | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $641 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $934 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $1249 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $2139 |
| Class I | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $97 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $354 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $631 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $1422 |
| Class K | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $77 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $291 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $524 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $1191  |

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 year** | **3 years** | **5 years** | **10 years** |
| Class N | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $102 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $370 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $658 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $1479 |

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**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 131% of the average value of its portfolio.

**Principal Investment Strategies**

The Fund will invest at least 80% of its net assets (plus borrowings, if any) in equity securities of foreign issuers, such as common stocks issued by companies in the countries and industries represented in the MSCI<sup>®</sup> EAFE<sup>®</sup> Index, the Fund's benchmark. The Fund may invest in small capitalization companies. The Fund will provide shareholders with at least sixty (60) days' notice prior to any change in its 80% investment policy.

The Adviser employs a proprietary quantitative multi-factor stock-selection model to select securities while controlling risk exposure of the Fund relative to the Fund's benchmark. This model evaluates the relative attractiveness of securities from a specified investment universe based on the correlation of certain historical economic and financial factors applicable to issuers and/or countries and/or sectors (such as measures of valuation, quality and investor sentiment) and based on other historical quantitative metrics to past performance. Additionally, the model typically incorporates an element to evaluate the macroeconomic environment for a portion of the model determined by prevailing market conditions. This element allows a disciplined approach to seek to be adaptive to the macroeconomic environment and respond to changing conditions. The quantitative model allows the Adviser to evaluate each eligible security and then rank eligible securities in the Fund's investment universe in the order of their attractiveness as Fund investments.

The model generates a portfolio that is drawn primarily from securities included in the Fund's benchmark index. The remaining securities are drawn from the Fund's investment universe and are determined by the model in order to overweight or underweight certain countries, securities, industries and/or sectors represented in the benchmark. The Fund's investment universe is the securities in the MSCI<sup>®</sup> EAFE<sup>®</sup> Investable Market Index, which is designed to capture large, mid and small capitalization representation across developed market countries including: Australia, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

The Adviser may make updates and adjustments to the economic and financial conditions and other quantitative metrics considered, and to the weightings among them. From time to time, the Adviser may make a qualitative judgment not to implement fully the results of the quantitative investment process if it believes that the process did not take into account all of the information relevant to the Fund's portfolio, or that a different evaluation or weighting of the information relating to the Fund's portfolio might be more appropriate.

The Fund expects to invest primarily in common stocks. The Fund may invest in other investment companies, including exchange-traded funds, to the extent permitted by applicable law (including those advised by the Adviser). The Fund may hold a portion of its assets in cash and cash instruments. The Fund also may lend its securities and engage in active trading.

The Fund may invest in derivatives, such as futures contracts and total return swaps, in order to gain broad equity market exposures pending investments of cash, or to reduce market exposures pending the sales of securities. The Fund may enter into foreign currency futures, forward contracts, and options to hedge currency risk, although the Adviser does not currently anticipate that such transactions will play any significant role in the investment process.

**Principal Risks**

The Fund is subject to the following principal risks. You could lose money by investing in the Fund. Certain risks relating to instruments and strategies used in the management of the Fund are placed first. The significance of any specific risk to an investment in the Fund will vary over time, depending on the composition of the Fund's portfolio, market conditions,

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

and other factors. You should read all of the risk information presented below carefully, because any one or more of these risks may result in losses to the Fund. **An investment in the Fund is subject to investment risks, including possible loss of principal, is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC") or any other government agency.** The Fund may not achieve its investment objective. The Fund is not intended to be a complete investment program, but rather is intended for investment as part of a diversified investment portfolio. Investors should consult their own advisers as to the role of the Fund in their overall investment programs.

**Market Risk:** The Fund's investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, inflation, changes in the actual or perceived creditworthiness of issuers, and general market liquidity. The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Local, regional or global events such as war, military conflicts, acts of terrorism, trade policy changes or disputes, the threat or actual imposition of tariffs, natural disasters, the spread of infectious illness or other public health issues, or other events could have a significant impact on the Fund and its investments.

**Equity Investing Risk:** The market prices of equity securities owned by the Fund may go up or down, sometimes rapidly or unpredictably. The value of a security may decline for a number of reasons that may directly relate to the issuer and also may decline due to general industry or market conditions that are not specifically related to a particular company. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.

**Non-U.S. Securities Risk:** Non-U.S. securities (including depositary receipts) are subject to political, regulatory, and economic risks not present in domestic investments. There may be less information publicly available about a non-U.S. entity than about a U.S. entity, and many non-U.S. entities are not subject to accounting, auditing, legal and financial report standards comparable to those in the United States. Further, such entities and/or their securities may be subject to risks associated with currency controls; expropriation; changes in tax policy; greater market volatility; differing securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. Securities traded on foreign markets may be less liquid (harder to sell) than securities traded domestically. Foreign governments may impose restrictions on the repatriation of capital to the U.S. In addition, to the extent that the Fund buys securities denominated in a foreign currency, there are special risks such as changes in currency exchange rates and the risk that a foreign government could regulate foreign exchange transactions. In addition, to the extent investments are made in a limited number of countries, events in those countries will have a more significant impact on the Fund. Investments in depositary receipts may be less liquid and more volatile than the underlying shares in their primary trading market.

**Geographic Focus Risk:** The performance of a fund that invests significantly in one or more countries or geographic regions will be closely tied to market, currency, economic, political, environmental, or regulatory conditions and developments in the countries or regions in which the fund invests, and may be more volatile than the performance of a fund that does not invest significantly in such countries or regions.

**Japan:** The growth of Japan's economy has historically lagged that of its Asian neighbors and other major developed economies. The Japanese economy is heavily dependent on international trade and has been adversely affected by trade tariffs, other protectionist measures, competition from emerging economies and the economic conditions of its trading partners. Japan also remains heavily dependent on oil imports, and higher commodity prices could therefore have a negative impact on the economy. The Japanese yen has fluctuated widely at times and any increase in its value may cause a decline in exports that could weaken the Japanese economy. Japan has, in the past, intervened in the currency markets to attempt to maintain or reduce the value of the yen. Japanese intervention in the currency markets could cause the value of the yen to fluctuate sharply and unpredictably and could cause losses to investors. Japan has an aging workforce and has experienced a significant population decline in recent years. Japan's labor market appears to be undergoing fundamental structural changes, as a labor market traditionally accustomed to lifetime employment

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

adjusts to meet the need for increased labor mobility, which may adversely affect Japan's economic competitiveness. Natural disasters, such as earthquakes, volcanoes, typhoons or tsunamis, could occur in Japan or surrounding areas and could negatively affect the Japanese economy and, in turn, the Fund.

**United Kingdom:** The United Kingdom has one of the largest economies in Europe, and the United States and other European countries are substantial trading partners of the United Kingdom. As a result, the British economy may be impacted by changes to the economic condition of the United States and other European countries. The British economy relies heavily on the export of financial services to the United States and other European countries and, therefore, a prolonged slowdown in the financial services sector may have a negative impact on the British economy. Continued governmental involvement or control in certain sectors may stifle competition in certain sectors or cause adverse effects on economic growth. In the past, the UK has been a target of terrorism. Acts of terrorism in the UK or against British interests abroad may cause uncertainty in the British financial markets and adversely affect the performance of the issuers to which the Fund has exposure.

**Counterparty Risk:** The Fund will be subject to credit risk with respect to the counterparties with which the Fund enters into derivatives contracts, repurchase agreements, reverse repurchase agreements, and other transactions. If a counterparty fails to meet its contractual obligations, the Fund may be unable to terminate or realize any gain on the investment or transaction, or to recover collateral posted to the counterparty, resulting in a loss to the Fund. If the Fund holds collateral posted by its counterparty, it may be delayed or prevented from realizing on the collateral in the event of a bankruptcy or insolvency proceeding relating to the counterparty.

**Currency Risk:** The value of the Fund's assets may be affected favorably or unfavorably by currency exchange rates, currency exchange control regulations, and delays, restrictions or prohibitions on the repatriation of foreign currencies. Foreign currency exchange rates may have significant volatility, and changes in the values of foreign currencies against the U.S. dollar may result in substantial declines in the values of the Fund's assets denominated in foreign currencies.

**Derivatives Risk:** Derivative transactions can create investment leverage and may have significant volatility. It is possible that a derivative transaction will result in a much greater loss than the principal amount invested, that changes in the value of a derivative transaction may not correlate perfectly with the underlying asset, and that the Fund may not be able to close out a derivative transaction at a favorable time or price. The counterparty to a derivatives contract may be unable or unwilling to make timely settlement payments, return the Fund's margin, or otherwise honor its obligations. A derivatives transaction may not behave in the manner anticipated by the Adviser or may not have the effect on the Fund anticipated by the Adviser.

**Futures Contract Risks; Other Exchange-Traded Derivatives:** The risk of loss relating to the use of futures contracts and other exchange-traded derivatives is potentially unlimited. There is no assurance that a liquid secondary market on an exchange will exist for any particular futures contract or other exchange-traded derivative or at any particular time. In the event no such market exists for a particular derivative, it might not be possible to effect closing transactions, and the Fund will be unable to terminate its exposure to the derivative. If the Fund uses futures contracts or other exchange-traded derivatives for hedging purposes, there is a risk of imperfect correlation between movements in the prices of the derivatives and movements in the securities or index underlying the derivatives or movements in the prices of the Fund's investments that are the subject of such hedge. Certain foreign futures contracts and other exchange-traded derivatives may be less liquid and more volatile than U.S. contracts. The Fund may be delayed or prevented from recovering margin or other amounts deposited with a futures commission merchant or futures clearinghouse.

**Large-Capitalization Securities Risk:** Returns on investments in securities of large companies could trail the returns on investments in securities of smaller and mid-sized companies. Larger companies may be unable to respond as quickly as smaller and mid-sized companies to competitive challenges or to changes in business, product, financial, or other market conditions. Larger companies may not be able to maintain growth at the high rates that may be achieved by well-managed smaller and mid-sized companies.

**Liquidity Risk:** Lack of a ready market, stressed market conditions, or restrictions on resale may limit the ability of the Fund to sell a security at an advantageous time or price or at all. Illiquid investments may trade at a discount from comparable, more liquid investments and may be subject to wide fluctuations in market value. Illiquidity of the Fund's

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

holdings may also limit the ability of the Fund to obtain cash to meet redemptions on a timely basis. In addition, the Fund, due to limitations on investments in any illiquid investments and/or the difficulty in purchasing and selling such investments, may be unable to achieve its desired level of exposure to a certain market or sector.

**Management Risk:** The Fund is actively managed. The Adviser's judgments about the attractiveness, relative value, or potential appreciation of a particular sector, security, commodity or investment strategy or as to a hedging strategy may prove to be incorrect, and may cause the Fund to incur losses. There can be no assurance that the Adviser's investment techniques and decisions will produce the desired results.

**Mid-Capitalization Securities Risk:** The securities of mid-capitalization companies may be more volatile and may involve more risk than the securities of larger companies. These companies may have limited product lines, markets or financial resources, may lack the competitive strength of larger companies, and may depend on a few key employees. In addition, these companies may have been recently organized and may have little or no track record of success. The securities of mid-sized companies may trade less frequently and in smaller volumes than more widely held securities. Some securities of mid-sized issuers may be illiquid or may be restricted as to resale, and their values may be volatile.

**Modeling Risk:** The Adviser uses quantitative models in an effort to enhance returns and manage risk. Any imperfections, errors or limitations in these models could limit any benefit to the Fund from the use of the models, or could result in incorrect outputs or in investment outcomes different from or opposite to those expected or desired by the Adviser. There can be no assurance that the models will behave as expected in all market conditions. In addition, computer programming used to create quantitative models, or the data on which such models operate, might contain one or more errors.

**Portfolio Turnover Risk:** Frequent purchases and sales of portfolio securities may result in higher Fund expenses and may result in more significant distributions of short-term capital gains to investors, which are taxed to individuals as ordinary income.

**Risk of Investment in Other Pools:** If the Fund invests in another pooled investment vehicle (e.g., a mutual fund or exchange-traded fund), it is exposed to the risk that the other pool will not perform as expected and is exposed indirectly to all of the risks applicable to an investment in such other pool. The investment policies of the other pool may not be the same as those of the Fund; as a result, an investment in the other pool may be subject to additional or different risks than those to which the Fund is typically subject. The Fund bears its proportionate share of the fees and expenses of any pool in which it invests. The Adviser or an affiliate may serve as investment adviser to a pool in which the Fund may invest, leading to potential conflicts of interest. It is possible that other clients of the Adviser or its affiliates will purchase or sell interests in a pool sponsored or managed by the Adviser or its affiliates at prices and at times more favorable than those at which the Fund does so.

**Small-Capitalization Securities Risk:** The securities of small-capitalization companies may be more volatile and may involve more risk than the securities of larger companies. These companies may have limited product lines, markets or financial resources, may lack the competitive strength of larger companies, and may depend on a few key employees. In addition, these companies may have been recently organized and may have little or no track record of success. The securities of smaller companies may trade less frequently and in smaller volumes than more widely held securities. Some securities of smaller issuers may be illiquid or may be restricted as to resale, and their values may have significant volatility. The Fund may be unable to liquidate its positions in such securities at any time, or at a favorable price, in order to meet the Fund's obligations. Returns on investments in securities of small-capitalization companies could trail the returns on investments in securities of larger companies.

**Unconstrained Sector Risk:** The Fund may invest a substantial portion of its assets within one or more economic sectors or industries, which may change from time to time. Greater investment focus on one or more sectors or industries increases the potential for volatility and the risk that events negatively affecting such sectors or industries could reduce returns, potentially causing the value of the Fund's Shares to decrease, perhaps significantly.

**Valuation Risk:** Some portfolio holdings, potentially a large portion of the Fund's investment portfolio, may be valued on the basis of factors other than market quotations. This may occur more often in times of market turmoil or reduced liquidity. There are multiple methods that can be used to value a portfolio holding when market quotations

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

are not readily available. The value established for any portfolio holding at a point in time might differ from what would be produced using a different methodology or if it had been priced using market quotations. Portfolio holdings that are valued using techniques other than market quotations, including "fair valued" securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. In addition, there is no assurance that the Fund could sell or close out a portfolio position for the value established for it at any time, and it is possible that the Fund would incur a loss because a portfolio position is sold or closed out at a discount to the valuation established by the Fund at that time. Investors who purchase or redeem Fund Shares on days when the Fund is holding fair-valued investments may receive fewer or more shares or lower or higher redemption proceeds than they would have received if the Fund had not fair-valued the holding(s) or had used a different valuation methodology.

**Performance**

The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns from year-to-year and by showing how the Fund's average annual returns for the periods ended December 31, 2024 compared with (i) the average annual returns of the Index and (ii) a relevant broad-based securities index. The bar chart shows how the Class N shares' returns have varied for each full calendar year shown. Except for differences in returns resulting from differences in fees and expenses, all share classes would have substantially similar returns because all share classes invest in the same portfolio of securities. Returns would differ only to the extent that the Class A, Class I and Class K share classes do not have the same expenses as Class N shares. Class A shares are expected to incur higher expenses, and Class I and K shares are expected to incur lower expenses, than Class N shares. The Fund's past performance does not necessarily indicate how the Fund will perform in the future. Current performance information for the Fund is available toll free by calling (800) 647-7327 or by visiting our website at www.statestreet.com/im.

**Annual Total Returns** (years ended 12/31)

![](g79608imgb8a5de312.jpg)

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| | | |
|:---|:---|:---|
|  | **Returns** | **Quarter/Year** |
| **Highest Quarterly Return** | 18.45% | Q4 2022 |
| **Lowest Quarterly Return** | -25.31% | Q1 2020 |
| **Year-to-Date** | 32.60% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9/30/2025 |

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**Average Annual Total Returns** (for periods ended 12/31/24)

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| | | | |
|:---|:---|:---|:---|
|  | **One**<br> **Year**<br>| **Five**<br> **Years**<br>| **Ten**<br> **Years**<br>|
| Class N |  |  |  |
| Return Before Taxes | &nbsp;&nbsp;&nbsp;&nbsp; 7.89<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.90<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.20<br> %<br>|
| Return After Taxes on Distributions | &nbsp;&nbsp;&nbsp;&nbsp; 7.06<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.96<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.33<br> %<br>|
| Return After Taxes on Distributions and Sale of Fund Shares | &nbsp;&nbsp;&nbsp;&nbsp; 5.38<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.73<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.23<br> %<br>|
| Class A Returns Before Taxes | &nbsp;&nbsp;&nbsp;&nbsp; 1.90<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.05<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.16<br> %<br>|
| Class I Returns Before Taxes | &nbsp;&nbsp;&nbsp;&nbsp; 8.01<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 5.05<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.36<br> %<br>|
| Class K Returns Before Taxes | &nbsp;&nbsp;&nbsp;&nbsp; 8.10<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 5.15<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.45<br> %<br>|
| MSCI EAFE Net Dividend Index (reflects no deduction for fees, expenses or taxes other than <br> withholding taxes on reinvested dividends)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.82<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.73<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 5.20<br> %<br>|
| MSCI ACWI ex USA Index (reflects no deduction for fees, expenses or taxes other than <br> withholding taxes on reinvested dividends)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 5.53<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.10<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4.80<br> %<br>|

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

The returns for certain periods would have been lower without the effect of a contractual fee waiver and/or reimbursement.

Fund returns after taxes on distributions and sale of Fund Shares may be higher than returns before taxes and/or returns after taxes on distributions for certain periods because they reflect the tax benefit an investor may receive as a result of the capital losses that would have been incurred on the sale of Fund Shares or due to the effect of foreign tax credits.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor's tax situation and may differ from those shown above, and after-tax returns are not relevant to investors who hold their shares through tax-advantaged arrangements, such as 401(k) plans or individual retirement accounts ("IRAs").After-tax returns are shown for Class N only and after-tax returns for other share classes will vary. Except for differences in returns resulting from differences in fees, expenses, and sales charges (as applicable), all share classes would have substantially similar returns because all share classes invest in the same portfolio of securities.

**Investment Adviser** 

SSGA FM serves as the investment adviser to the Fund.

Adel Daghmouri is primarily responsible for the day-to-day management of the Fund. He has served on the Fund since 2013. Mr. Daghmouri is a Vice President of the Adviser and a Senior Portfolio Manager in the Systematic Equity Active Team. He joined the Adviser in 1998.

**Purchase and Sale of Fund Shares**

<u>Purchase Minimums</u> 

The Fund's initial and subsequent investment minimums generally are as follows, although the Fund may reduce or waive the minimums in some cases.

Class N Shares of the Fund are closed to purchases (including exchanges from other SSGA Funds) by new investors.

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| | |
|:---|:---|
| **Class A** |  |
| To establish an account | $2000 |
| To add to an existing account |  |
| **Class I** |  |
| To establish an account |  |
| To add to an existing account |  |
| **Class K** |  |
| To establish an account |  |
| To add to an existing account |  |
| **Class N** |  |
| &nbsp;&nbsp; To establish an account (other than individual<br> retirements accounts (IRAs)<br>| $1000 |
| To establish Individual retirement accounts (IRAs) | $250 |
| To add to an existing account | $100 |

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You may purchase or redeem Fund Shares on any day the Fund is open for business.

Shareholder accounts held through brokers, banks and other financial intermediaries that maintain one or more accounts with the Fund (including fee-based wrap accounts, individual retirement accounts (IRAs) or retirement plan accounts) will not be subject to the initial or subsequent minimum investment amount requirement.

*Written Requests and Wire Transfers*. You may purchase or redeem Fund Shares by written request or wire transfer.

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**SSGA Funds**

**State Street International**

**Stock Selection Fund**

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<sup>Fund Summary</sup>

Written requests should be sent to:

<u>By Mail:</u> 

SSGA Funds

P.O. Box 219737

Kansas City, MO 64121-9737

<u>By Overnight/Registered, Express, Certified Mail:</u> 

SSGA Funds

801 Pennsylvania Avenue, Suite 219737

Kansas City, MO 64105-1307

For wire transfer instructions, please call (800) 647-7327 between 8 a.m. and 6 p.m. Eastern time. Redemptions by telephone are permitted only if you previously have been authorized for these transactions.

<u>By Intermediary:</u> 

If you wish to purchase or redeem Fund Shares through a broker, bank or other financial intermediary ("Financial Intermediary"), please contact that Financial Intermediary directly. Your Financial Intermediary may have different or additional requirements for opening an account and/or for the processing of purchase and redemption orders, or may be closed at times when the Fund is open. Financial Intermediaries may contact SS&C GIDS, Inc. at (877) 332-6207 or via email at nsccresearch@dstsystems.com with questions.

**Tax Information**

The Fund's distributions are expected to be taxed as ordinary income, qualified dividend income and/or capital gains, unless you are investing through a tax-advantaged arrangement, such as a 401(k) plan or IRA. Any withdrawals made from such tax-advantaged arrangement may be taxable to you.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase Fund Shares through a broker-dealer or other Financial Intermediary (such as a bank), the Fund, the Adviser or its affiliates may pay the Financial Intermediary for certain activities related to the Fund, including educational training programs, conferences, the development of technology platforms and reporting systems, or other services related to the sale or promotion of the Fund. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's website for more information.

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**Fund Objectives, Strategies and Risks**

**State Street S&P 500 Index Fund**

**Investment Objective**

State Street S&P 500 Index Fund (the "Fund") seeks to replicate as closely as possible, before expenses, the performance of the S&P 500<sup>®</sup> Index.

There is no guarantee that the Fund will achieve its objective. The Fund's objective may be changed without shareholder approval.

**Principal Investment Strategies**

The Fund uses an index tracking management strategy designed to track the performance of the S&P 500<sup>®</sup> Index ("S&P 500" or "Index"). The Index is a well-known stock market index that includes common stocks of 500 companies from a number of sectors and that measures the performance of the large-cap sector of the U.S. equities market. As of October 31, 2025, a significant portion of the Fund comprised companies in the information technology sector, although this may change from time to time.

The Fund is not managed according to traditional methods of "active" investment management, which involve the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Instead, the Fund, using an "indexing" investment approach, attempts to replicate, before expenses, the performance of the S&P 500.

Under normal market conditions, the Fund will not invest less than 80% of its total assets in stocks in the Index. The notional value of the Fund's investments in derivatives or other synthetic instruments that provide exposure comparable, in the judgment of the Adviser, to the foregoing types of investments may be counted toward satisfaction of this 80% policy. The Fund attempts to replicate the investment performance of the S&P 500 and generally intends to invest in all stocks comprising the S&P 500 in approximate proportion to their weightings in the Index. However, it may not be possible or practicable to purchase all stocks of the S&P 500 in those weightings. When it is not possible or practicable to purchase all stocks of the S&P 500 in those weightings, the Fund may purchase a sample of the stocks listed in the S&P 500 in proportions expected by the Adviser to match generally the performance of the Index as a whole. In addition, from time to time stocks are added to or removed from the Index. The Fund may sell securities that are represented in the Index, or purchase securities that are not yet represented in the Index, in anticipation of their removal from or addition to the Index. Shareholders will receive sixty (60) days' notice prior to a change in the 80% investment policy.

In addition to common stocks in the S&P 500, the Fund may at times purchase or sell futures contracts on the Index, or options on those futures, in lieu of investing directly in the stocks making up the Index. The Fund might do so, for example, in order to increase its investment exposure pending investment of cash in the stocks comprising the Index. Alternatively, the Fund might use futures or options on futures to reduce its investment exposure in situations where it intends to sell a portion of the stocks in its portfolio but the sale has not yet been completed. The Fund may also enter into other derivatives transactions, including the use of options or swap transactions, to assist in attempting to replicate the performance of the Index. The Fund may also, to the extent permitted by applicable law, invest in shares of mutual funds (including those advised by the Adviser) whose investment objectives and policies are similar to those of the Fund.

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<u>Other Investment Considerations and Risks</u>

*The S&P 500*<sup>®</sup> *Index.* The S&P 500 measures the performance of the large-cap segment of the market, is comprised of the stocks of 500 industry-leading companies and is considered to be a proxy of the U.S. equity stock market in general. The S&P 500 is unmanaged and does not reflect the actual cost of investing in the instruments that compose the Index. Additionally, the returns of the S&P 500 do not reflect the effect of fees, expenses and taxes. Index constituents are added and removed on an as-needed basis. The Index is rebalanced quarterly.

Stocks in the S&P 500 are weighted according to their float adjusted market capitalizations (*i.e*., the number of float shares outstanding multiplied by the stock's current price). The companies selected for inclusion in the S&P 500 are those of large publicly held companies which generally have large market values within their respective industries. The composition of the S&P 500 is determined by S&P Dow Jones Indices and is based on such factors as the domicile,

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exchange listing, organizational structure and share type, market capitalization, liquidity, financial viability, tracking stocks, multiple share classes and investable weight factor of each stock and its adequacy as a representation of stocks in a particular industry group, and may be changed from time to time.

*Index Futures Contracts and Related Options*. The Fund may buy and sell futures contracts and options on those futures contracts. An "index futures" contract is a contract to buy or sell units of an index at an agreed price on a specified future date. Depending on the change in value of the Index between the time when the Fund enters into and closes out an index future or option transaction, the Fund realizes a gain or loss. Options and futures transactions involve risks. For example, it is possible that changes in the prices of futures contracts will not correlate precisely with changes in the value of the Index. In those cases, use of futures contracts and related options might decrease the correlation between the return of the Fund and the return of the Index. In addition, the Fund incurs transaction costs in entering into, and closing out, positions in futures contracts and related options. Funds that enter into contracts with counterparties run the risk that the counterparty will be unwilling or unable to make timely settlement payments or otherwise honor its obligations. This risk is typically less for exchange-traded derivatives, such as those the Fund may invest in.

These costs typically have the effect of reducing the correlation between the return of the Fund and the return of the Index. Because the market for futures contracts and options may be illiquid, the Fund may have to hold a contract or option when the Adviser would otherwise have closed out the position, or it may only be able to close out at a price lower than what the Adviser believes is the fair value of the contract or option, thereby potentially reducing the return of the Fund.

*Other Derivative Transactions*. The Fund may enter into derivatives transactions involving options and swaps. These transactions involve many of the same risks as those described above under "Index Futures Contracts and Related Options." In addition, since many of such transactions are conducted directly with counterparties, and not on an exchange or board of trade, the Fund's ability to realize any investment return on such transactions is generally subject to greater risk that the counterparty will be unable or unwilling to meet its obligations.

**State Street International Stock Selection Fund**

**Investment Objective**

State Street International Stock Selection Fund (the "Fund") seeks to provide long-term capital growth by investing primarily in securities of foreign issuers.

There is no guarantee that the Fund will achieve its objective. The Fund's objective may be changed without shareholder approval.

**Principal Investment Strategies**

The Fund will invest at least 80% of its net assets (plus borrowings, if any) in equity securities of foreign issuers, such as common stocks issued by companies in the countries and industries represented in the MSCI<sup>®</sup> EAFE<sup>®</sup> Index, the Fund's benchmark. The notional value of the Fund's investments in derivatives or other synthetic instruments that provide exposure comparable, in the judgment of the Adviser, to the foregoing types of investments may be counted toward satisfaction of this 80% policy. The Fund may invest in small capitalization companies. The Fund will provide shareholders with at least sixty (60) days' notice prior to any change in its 80% investment policy.

The Adviser employs a proprietary quantitative multi-factor stock-selection model to select securities while controlling risk exposure of the Fund relative to the Fund's benchmark. This model evaluates the relative attractiveness of securities from a specified investment universe based on the correlation of certain historical economic and financial factors applicable to issuers and/or countries and/or sectors (such as measures of valuation, quality and investor sentiment) and based on other historical quantitative metrics to past performance. Additionally, the model typically incorporates an element to evaluate the macroeconomic environment for a portion of the model determined by prevailing market conditions. This element allows a disciplined approach to seek to be adaptive to the macroeconomic environment and respond to changing conditions. The quantitative model allows the Adviser to evaluate each eligible security and then rank eligible securities in the Fund's investment universe in the order of their attractiveness as Fund investments.

The model generates a portfolio that is drawn primarily from securities included in the Fund's benchmark index. The remaining securities are drawn from the Fund's investment universe and are determined by the model in order to overweight or underweight certain countries, securities, industries and/or sectors represented in the benchmark. The Fund's investment universe is the securities in the MSCI<sup>®</sup> EAFE<sup>®</sup> Investable Market Index, which is designed to capture large,

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mid and small capitalization representation across developed market countries including: Australia, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

The Adviser may make updates and adjustments to the economic and financial conditions and other quantitative metrics considered, and to the weightings among them. From time to time, the Adviser may make a qualitative judgment not to implement fully the results of the quantitative investment process if it believes that the process did not take into account all of the information relevant to the Fund's portfolio, or that a different evaluation or weighting of the information relating to the Fund's portfolio might be more appropriate.

The Fund expects to invest primarily in common stocks. The Fund may also invest in other equity securities including depositary receipts having characteristics similar to common stocks, preferred stocks, convertible securities, and rights or warrants to buy common stocks. The Fund may invest in other investment companies, including exchange-traded funds, to the extent permitted by applicable law (including those advised by the Adviser). The Fund may hold a portion of its assets in cash and cash instruments. The Fund also may lend its securities and engage in active trading.

The Fund may invest in derivatives, such as futures contracts and total return swaps, in order to gain broad equity market exposures pending investments of cash, or to reduce market exposures pending the sales of securities. The Fund may enter into foreign currency futures, forward contracts, and options to hedge currency risk, although the Adviser does not currently anticipate that such transactions will play any significant role in the investment process.

**Additional Information About Risks**

The Funds are subject to the following principal risks. The risks are described in alphabetical order and not in the order of importance or potential exposure. Each principal risk without a parenthetical indicating one or more Fund's name is applicable to each Fund.

*Convertible Securities Risk*. Convertible securities are bonds, debentures, notes, preferred stocks or other securities that may be converted or exchanged (by the holder or by the issuer, depending on the terms of the securities) into shares of the underlying common stock (or cash or securities of equivalent value) at a stated exchange ratio. Convertible securities may be subordinate to other debt securities issued by the same issuer. Issuers of convertible securities are often not as strong financially as issuers with higher credit ratings. Convertible securities typically provide yields lower than comparable non-convertible securities. Their values may be more volatile than those of non-convertible securities, reflecting changes in the values of the securities into which they are convertible.

*Counterparty Risk*. A Fund will be subject to credit risk with respect to the counterparties with which the Fund enters into derivatives contracts and other transactions such as repurchase agreements or reverse repurchase agreements. A Fund's ability to profit from these types of investments and transactions will depend on the willingness and ability of its counterparty to perform its obligations. If a counterparty fails to meet its contractual obligations, a Fund may be unable to terminate or realize any gain on the investment or transaction, resulting in a loss to the Fund. A Fund may experience significant delays in obtaining any recovery in an insolvency, bankruptcy, or other reorganization proceeding involving its counterparty (including recovery of any collateral posted by it) and may obtain only a limited recovery or may obtain no recovery in such circumstances. If a Fund holds collateral posted by its counterparty, it may be delayed or prevented from realizing on the collateral in the event of a bankruptcy or insolvency proceeding relating to the counterparty. Under applicable law or contractual provisions, including if a Fund enters into an investment or transaction with a financial institution and such financial institution (or an affiliate of the financial institution) experiences financial difficulties, then the Fund may in certain situations be prevented or delayed from exercising its rights to terminate the investment or transaction, or to realize on any collateral and may result in the suspension of payment and delivery obligations of the parties under such investment or transactions or in another institution being substituted for that financial institution without the consent of the Fund. Further, a Fund may be subject to "bail-in" risk under applicable law whereby, if required by the financial institution's authority, the financial institution's liabilities could be written down, eliminated or converted into equity or an alternative instrument of ownership. A bail-in of a financial institution may result in a reduction in value of some or all of its securities and, if a Fund holds such securities or has entered into a transaction with such a financial security when a bail-in occurs, such Fund may also be similarly impacted.

*Currency Risk (principal risk for State Street International Stock Selection Fund).* Investments in issuers in different countries are often denominated in currencies other than the U.S. dollar. Changes in the values of those currencies relative to the U.S. dollar may have a positive or negative effect on the values of a Fund's investments denominated in those

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currencies. The values of other currencies relative to the U.S. dollar may fluctuate in response to, among other factors, interest rate changes, intervention (or failure to intervene) by national governments, central banks, or supranational entities such as the International Monetary Fund, the imposition of currency controls, and other political or regulatory developments. Currency values can decrease significantly both in the short term and over the long term in response to these and other developments. Continuing uncertainty as to the status of the Euro and the Economic and Monetary Union of the European Union (the "EMU") has created significant volatility in currency and financial markets generally. Any partial or complete dissolution of the EMU, or any continued uncertainty as to its status, could have significant adverse effects on currency and financial markets, and on the values of a Fund's portfolio investments.

*Depositary Receipts Risk (principal risk for State Street International Stock Selection Fund)*. American Depositary Receipts ("ADRs") are typically trust receipts issued by a U.S. bank or trust company that evidence an indirect interest in underlying securities issued by a foreign entity. Global Depositary Receipts ("GDRs"), European Depositary Receipts ("EDRs"), and other types of depositary receipts are typically issued by non-U.S. banks or financial institutions to evidence an interest in underlying securities issued by either a U.S. or a non-U.S. entity. Investments in non-U.S. issuers through ADRs, GDRs, EDRs, and other types of depositary receipts generally involve risks applicable to other types of investments in non-U.S. issuers. Investments in depositary receipts may be less liquid and more volatile than the underlying securities in their primary trading market. If a depositary receipt is denominated in a different currency than its underlying securities, a Fund will be subject to the currency risk of both the investment in the depositary receipt and the underlying security. There may be less publicly available information regarding the issuer of the securities underlying a depositary receipt than if those securities were traded directly in U.S. securities markets. Depositary receipts may or may not be sponsored by the issuers of the underlying securities, and information regarding issuers of securities underlying unsponsored depositary receipts may be more limited than for sponsored depositary receipts. The values of depositary receipts may decline for a number of reasons relating to the issuers or sponsors of the depositary receipts, including, but not limited to, insolvency of the issuer or sponsor. Holders of depositary receipts may have limited or no rights to take action with respect to the underlying securities or to compel the issuer of the receipts to take action. The prices of depositary receipts may differ from the prices of securities upon which they are based. To the extent a Fund invests in depositary receipts based on securities included in its Index, such differences in prices may increase index tracking risk.

*Derivatives Risk.* A derivative is a financial contract the value of which depends on, or is derived from, the value of an underlying asset, interest rate, or index. Derivative transactions typically involve leverage and may have significant volatility. It is possible that a derivative transaction will result in a loss greater than the principal amount invested, that changes in the value of a derivative transaction may not correlate perfectly with the underlying asset, and that a Fund may not be able to close out a derivative transaction at a favorable time or price. Risks associated with derivative instruments include potential changes in value in response to interest rate changes or other market developments or as a result of the counterparty's credit quality; the potential for the derivative transaction not to have the effect the Adviser anticipated or a different or less favorable effect than the Adviser anticipated; the failure of the counterparty to the derivative transaction to perform its obligations under the transaction or to settle a trade; possible mispricing or improper valuation of the derivative instrument; imperfect correlation in the value of a derivative with the asset, rate, or index underlying the derivative; the risk that a Fund may be required to post collateral or margin with its counterparty, and will not be able to recover the collateral or margin in the event of the counterparty's insolvency or bankruptcy; the risk that a Fund will experience losses on its derivatives investments and on its other portfolio investments, even when the derivatives investments may be intended in part or entirely to hedge those portfolio investments; the risks specific to the asset underlying the derivative instrument; lack of liquidity for the derivative instrument, including, without limitation, absence of a secondary trading market; the potential for reduced returns to a Fund due to losses on the transaction and an increase in volatility; the potential for the derivative transaction to have the effect of accelerating the recognition of gain; and legal risks arising from the documentation relating to the derivative transaction.

*Equity Investing Risk*. The market prices of equity securities owned by a Fund may go up or down, sometimes rapidly or unpredictably. The value of a security may decline for a number of reasons that may directly relate to the issuer, such as management performance, financial leverage, non-compliance with regulatory requirements, and reduced demand for the issuer's goods or services. The values of equity securities also may decline due to general industry or market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates, or adverse investor sentiment generally. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.

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*Futures Contract Risk; Other Exchange-Traded Derivatives Risk (principal risk for State Street International Stock Selection Fund)*. The risk of loss relating to the use of futures contracts and other exchange-traded derivatives is potentially unlimited. The ability to establish and close out positions in futures contracts and other exchange-traded derivatives will be subject to the development and maintenance of a liquid market. There is no assurance that a liquid market on an exchange will exist for any particular futures contract or other exchange-traded derivative or at any particular time. In the event no such market exists for a particular derivative, it might not be possible to effect closing transactions, and the Fund will be unable to terminate the derivative. Certain futures exchanges do not permit trading in particular futures contracts at prices that represent a fluctuation in price during a single day's trading beyond certain set limits. If prices fluctuate during a single day's trading beyond those limits, the Fund could be prevented from promptly liquidating unfavorable positions and thus be subjected to substantial losses. In using futures contracts and other exchange-traded derivatives, the Fund will be reliant on the ability of the Adviser to predict market and price movements correctly; the skills needed to use such derivatives successfully are different from those needed for traditional portfolio management. If the Fund uses futures contracts or other exchange-traded derivatives for hedging purposes, there is a risk of imperfect correlation between movements in the prices of the derivatives and movements in the securities or index underlying the derivatives or movements in the prices of the Fund's investments that are the subject of such hedge. The prices of futures and other exchange-traded derivatives, for a number of reasons, may not correlate perfectly with movements in the securities or index underlying them. For example, participants in the futures markets and in markets for other exchange-traded derivatives are subject to margin deposit requirements. Such requirements may cause investors to take actions with respect to their derivatives positions that they would not otherwise take. The margin requirements in the derivatives markets may be less onerous than margin requirements in the securities markets in general, and as a result those markets may attract more speculators than the securities markets do. Increased participation by speculators in those markets may cause temporary price distortions. Due to the possibility of price distortion, even a correct forecast of general market trends by the Adviser still may not result in a successful derivatives activity over a very short time period. The risk of a position in a futures contract or other exchange-traded derivative may be very large compared to the relatively low level of margin the Fund is required to deposit. In many cases, a relatively small price movement in a futures contract may result in immediate and substantial loss or gain to the investor relative to the size of a required margin deposit. The Fund will incur brokerage fees in connection with its exchange-traded derivatives transactions. The Fund will typically be required to post margin with its futures commission merchant in connection with its transactions in futures contracts and other exchange-traded derivatives. In the event of an insolvency of the futures commission merchant or a clearing house, the Fund may not be able to recover all (or any) of the margin it has posted with the futures commission merchant, or to realize the value of any increase in the price of its positions, or it may experience a significant delay in doing so. The Fund also may be delayed or prevented from recovering margin or other amounts deposited with a futures commission merchant or futures clearinghouse. The Commodity Futures Trading Commission ("CFTC"), certain foreign regulators and many futures exchanges have established (and continue to evaluate and revise) speculative position limits, referred to as "position limits," on the maximum net long or net short positions which any person or entity may hold or control in particular options and futures contracts. In addition, U.S. federal position limits apply to swaps that are economically equivalent to futures contracts on certain agricultural, metals and energy commodities. All positions owned or controlled by the same person or entity, even if in different accounts, must be aggregated for purposes of determining whether applicable position limits have been exceeded, unless an exemption applies. It is possible that positions of different clients managed by the Investment Manager and its affiliates may be aggregated for this purpose. Therefore, trading decisions of the Investment Manager may have to be modified and positions held by the Fund may have to be liquidated in order to avoid exceeding such limits. The modification of investment decisions or the elimination of open positions, if it occurs, may adversely affect the performance of the Fund. A violation of position limits could also lead to regulatory action materially adverse to the Fund's investment strategy. The Fund may also be affected by other regimes, including those of the European Union and United Kingdom, and trading venues that impose position limits on commodity derivative contracts.

Futures contracts and other exchange-traded derivatives traded on markets outside the U.S. are not generally subject to the same level of regulation by the CFTC or other U.S. regulatory entities as contracts traded in the U.S., including without limitation as to the execution, delivery, and clearing of transactions. U.S. regulators neither regulate the activities of a foreign exchange, nor have the power to compel enforcement of the rules of the foreign exchange or the laws of the foreign country in question. Margin and other payments made by the Fund may not be afforded the same protections as are afforded those payments in the U.S., including in connection with the insolvency of an executing or clearing broker or a clearinghouse or exchange. Certain foreign futures contracts and other exchange-traded derivatives may be less liquid and more volatile than U.S. contracts.

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*Geographic Focus Risk (principal risk for State Street International Stock Selection Fund)*. The performance of a fund that invests significantly in one or more countries or geographic regions will be closely tied to market, currency, economic, political, environmental, or regulatory conditions and developments in the countries or regions in which the fund invests, and may be more volatile than the performance of a fund that does not invest significantly in such countries or regions.

*Japan.* The growth of Japan's economy has historically lagged that of its Asian neighbors and other major developed economies. The Japanese economy is heavily dependent on international trade and has been adversely affected by trade tariffs, other protectionist measures, competition from emerging economies and the economic conditions of its trading partners. Japan also remains heavily dependent on oil imports, and higher commodity prices could therefore have a negative impact on the economy. The Japanese economy faces several other concerns, including a financial system with large levels of nonperforming loans, over-leveraged corporate balance sheets, extensive cross-ownership by major corporations, a changing corporate governance structure, and large government deficits. These issues may cause a slowdown of the Japanese economy. The Japanese yen has fluctuated widely at times and any increase in its value may cause a decline in exports that could weaken the Japanese economy. Japan has, in the past, intervened in the currency markets to attempt to maintain or reduce the value of the yen. Japanese intervention in the currency markets could cause the value of the yen to fluctuate sharply and unpredictably and could cause losses to investors. Japan has an aging workforce and has experienced a significant population decline in recent years. Japan's labor market appears to be undergoing fundamental structural changes, as a labor market traditionally accustomed to lifetime employment adjusts to meet the need for increased labor mobility, which may adversely affect Japan's economic competitiveness. Natural disasters, such as earthquakes, volcanoes, typhoons or tsunamis, could occur in Japan or surrounding areas and could negatively affect the Japanese economy and, in turn, a Fund.

*United Kingdom.* The UK has one of the largest economies in Europe, and the United States and other European countries are substantial trading partners of the UK. As a result, the British economy may be impacted by changes to the economic condition of the United States and other European countries. The British economy relies heavily on the export of financial services to the United States and other European countries and, therefore, a prolonged slowdown in the financial services sector may have a negative impact on the British economy. Continued governmental involvement or control in certain sectors may stifle competition in certain sectors or cause adverse effects on economic growth. In the past, the UK has been a target of terrorism. Acts of terrorism in the UK or against British interests abroad may cause uncertainty in the British financial markets and adversely affect the performance of the issuers to which a Fund has exposure.

*European Markets Risk.* Recent security concerns related to immigration, war and geopolitical risk, and terrorism could have a negative impact on the EU and investments within EU countries. The global economic crisis of the past several years has caused severe financial difficulties for many EU countries, pushing some to the brink of insolvency and causing others to experience recession, large public debt, restructuring of government debt, credit rating downgrades and an overall weakening of banking and financial sectors. The European financial markets including certain commodities markets, have recently experienced volatility and adverse trends. This may be due, in part, to concerns about economic downturns in, or rising government debt levels of, several European countries as well as acts of war in the region. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Fund's investments. Some of those countries have depended on, and may continue to be dependent on, the assistance from others such as the European Central Bank, the International Monetary Fund, or other governments and institutions to address those issues. Failure by one or more EU countries to implement reforms or attain a certain performance level imposed as a condition of assistance, or an insufficient level of assistance, could deepen or prolong the economic downturn which could have a significant adverse effect on the value of investments in those and other European countries. By adopting the euro as its currency, members of the EMU are subject to fiscal and monetary controls that could limit to some degree the ability to implement their own economic policies. Additionally, EMU member countries could voluntarily abandon the euro or involuntarily be forced out of the euro, including by way of a partial or complete dissolution of the monetary union. The effects of such outcomes on the rest of the Eurozone and global markets as a whole are unpredictable, but are likely to be negative, including adversely impacted market values of Eurozone and various other securities and currencies, redenomination of certain securities into less valuable local currencies, and more volatile and illiquid markets. Under such circumstances, investments denominated in euros or replacement currencies may be difficult to value, the ability to operate an investment strategy in connection with euro-denominated securities may be significantly impaired and the value of euro-denominated invest

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ments may decline significantly and unpredictably. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world.

*Indexing Strategy/Index Tracking Risk (principal risk for State Street S&P 500 Index Fund)*. The Fund is managed with an indexing investment strategy, attempting to track the performance of an unmanaged index of securities. The Fund will seek to replicate Index returns, regardless of the current or projected performance of the Index or of the actual securities comprising the Index. This differs from an actively-managed fund, which typically seeks to outperform a benchmark index. The Fund generally will buy and will not sell a security included in the Index as long as the security is part of the Index regardless of any sudden or material decline in value or foreseeable material decline in value of the security, even though the Adviser may make a different investment decision for other actively managed accounts or portfolios that hold the security. As a result, a Fund's performance may be less favorable than that of a portfolio managed using an active investment strategy. The structure and composition of the Index will affect the performance, volatility, and risk of the Index (in absolute terms and by comparison with other indices) and, consequently, the performance, volatility, and risk of a Fund. Errors in index data, index computations or the construction of the Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on a Fund and its shareholders. While the Adviser seeks to track the performance of the Index (*i.e.*, achieve a high degree of correlation with the Index), a Fund's return may not match the return of the Index for a number of reasons. For example, the return on the sample of securities purchased by a Fund (or the return on securities not included in the Index) to replicate the performance of the Index may not correlate precisely with the return of the Index. The Fund incurs a number of operating expenses not applicable to the Index, and may incur costs in buying and selling securities. In addition, a Fund may not be fully invested at times, either as a result of cash flows into or out of the Fund or reserves of cash held by the Fund to meet redemptions. The Adviser may attempt to track the Index return by investing in fewer than all of the securities in the Index, or in some securities not included in the Index, potentially increasing the risk of divergence between a Fund's return and that of the Index. Changes in the composition of the Index and regulatory requirements also may impact a Fund's ability to match the return of the Index. The Adviser may apply one or more "screens" or investment techniques to refine or limit the number or types of issuers included in the Index in which a Fund may invest. Application of such screens or techniques may result in investment performance below that of the Index and may not produce results expected by the Adviser. Index tracking risk may be heightened during times of increased market volatility or other unusual market conditions.

*Information Technology Sector Risk (principal risk for State Street S&P 500 Index Fund).* Market or economic factors impacting information technology companies could have a major effect on the value of the Fund's investments. The value of stocks of information technology companies is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition, both domestically and internationally, including competition from foreign competitors with lower production costs. Like other technology companies, information technology companies may have limited product lines, markets, financial resources or personnel. Stocks of technology companies and companies that rely heavily on technology, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall market. Information technology companies are heavily dependent on patent and intellectual property rights, the loss or impairment of which may adversely affect profitability. Additionally, companies in the information technology sector may face dramatic and often unpredictable changes in growth rates and competition for the services of qualified personnel.

*Large-Capitalization Securities Risk.* Securities issued by large-capitalization companies may present risks not present in smaller companies. For example, larger companies may be unable to respond as quickly as smaller and mid-sized companies to competitive challenges or to changes in business, product, financial, or other market conditions. Larger companies may not be able to maintain growth at the high rates that may be achieved by well-managed smaller and mid-sized companies, especially during strong economic periods. Returns on investments in securities of large companies could trail the returns on investments in securities of smaller and mid-sized companies.

*Leveraging Risk*. Borrowing transactions, reverse repurchase agreements, certain derivatives transactions, securities lending transactions and other investment transactions such as when-issued, delayed-delivery, or forward commitment transactions may create investment leverage. If a Fund engages in transactions that have a leveraging effect on the Fund's investment portfolio, the value of the Fund will be potentially more volatile and all other risks will tend to be compounded. This is because leverage generally creates investment risk with respect to a larger base of assets than a Fund would otherwise have and so magnifies the effect of any increase or decrease in the value of the Fund's underlying

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assets. The use of leverage is considered to be a speculative investment practice and may result in losses to a Fund. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. The use of leverage may cause a Fund to liquidate positions when it may not be advantageous to do so to satisfy repayment, interest payment, or margin obligations.

*Liquidity Risk (principal risk for State Street International Stock Selection Fund)*. Liquidity risk is the risk that a Fund may not be able to dispose of investments readily at a favorable time or prices (or at all) or at prices approximating those at which a Fund currently values them. For example, certain investments may be subject to restrictions on resale, may trade in the over-the-counter market or in limited volume, or may not have an active trading market. Illiquid investments may trade at a discount from comparable, more liquid investments and may be subject to wide fluctuations in market value. It may be difficult for a Fund to value illiquid investments accurately. The market for certain investments may become illiquid under adverse market or economic conditions independent of any specific adverse changes in the conditions of a particular issuer. Disposal of illiquid investments may entail registration expenses and other transaction costs that are higher than those for liquid investments. A Fund may seek to borrow money to meet its obligations (including among other things redemption obligations) if it is unable to dispose of illiquid investments, resulting in borrowing expenses and possible leveraging of the Fund. In some cases, due to unanticipated levels of illiquidity a Fund may choose to meet its redemption obligations wholly or in part by distributions of assets in-kind.

The term "illiquid investments" for this purpose means investments that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investments. If any Fund determines at any time that it owns illiquid investments in excess of 15% of its net assets, it will cease to undertake new commitments to acquire illiquid investments until its holdings are no longer in excess of 15% of its net asset value ("NAV"), report the occurrence in compliance with Rule 30b1-10 under the Investment Company Act of 1940, as amended (the "1940 Act") and, depending on circumstances, may take additional steps to reduce its holdings of illiquid investments. The SEC has recently proposed rule amendments that, if adopted as proposed, could result in a larger percentage of a Fund's investments being classified as illiquid investments.

*Management Risk (principal risk for State Street International Stock Selection Fund)*. The Fund is actively managed. The Adviser's judgments about the attractiveness, relative value, or potential appreciation of a particular sector, security, commodity or investment strategy may prove to be incorrect, and may cause a Fund to incur losses. There can be no assurance that the Adviser's investment techniques and decisions will produce the desired results.

*Market Disruption and Geopolitical Risk.* A Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. War, terrorism, and related geopolitical events have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Likewise, trade policy changes or disputes, the threat of or actual imposition of tariffs, natural and environmental disasters, pandemics and epidemics, and systemic market dislocations may be highly disruptive to economies and markets. Those events, as well as other changes in foreign and domestic economic and political conditions, also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment, and other factors affecting the value of a Fund's investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region might adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any partial or complete dissolution of the EMU, or any increased uncertainty as to its status, could have significant adverse effects on currency and financial markets, and on the values of a Fund's investments. On January 31, 2020, the United Kingdom ("UK") formally withdrew from the European Union ("EU") (commonly known as "Brexit"). An agreement between the UK and the EU governing their future trade relationship became effective January 1, 2021, but that agreement does not include an agreement on financial services, and it is unlikely that such agreement will be concluded. Moreover, the UK government has started a program of financial serlaw reform with the ultimate aim of repealing many EU financial services laws that were assimilated into UK law from January 1, 2021, and replacing them with legislation or rules made by the UK government or financial services regulators. Accordingly, uncertainty remains in certain areas as to the future relationship between the UK and the EU. Brexit has already had a significant impact on the UK, Europe, and global economies, and could continue to result in volatility and illiquidity, legal, political, economic and regulatory uncertainties and lower economic growth for these economies that could in turn have an adverse effect on the value of the Funds' investments. Any further exits from the EU, or the possibility of such exits, or the abandonment of the euro, may cause additional market disruption globally and introduce new legal and regulatory uncertainties.

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Securities and financial markets may be susceptible to market manipulation or other fraudulent trade practices, which could disrupt the orderly functioning of these markets or adversely affect the values of investments traded in these markets, including investments held by a Fund. To the extent a Fund has focused its investments in the market or index of a particular region, adverse geopolitical and other events could have a disproportionate impact on the Fund.

*Market Risk*. Market prices of investments held by a Fund will go up or down, sometimes rapidly or unpredictably. A Fund's investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile, and prices of investments can change substantially due to various factors, including, but not limited to, economic growth or recession, changes in interest rates, inflation, changes in actual or perceived creditworthiness of issuers and general market liquidity. Even if general economic conditions do not change, the value of an investment in a Fund could decline if the particular industries, sectors or companies in which the Fund invests do not perform well or are adversely affected by events. Further, legal, political, regulatory and tax changes also may cause fluctuations in markets and securities prices. Local, regional or global events such as war, military conflicts, acts of terrorism, trade policy changes or disputes, the threat or actual imposition of tariffs, natural disasters, public health issues, or other events could have a significant impact on a Fund and its investments. Due to the interconnectedness of economies and financial markets throughout the world, if a Fund invests in securities of issuers located in or with significant exposure to countries experiencing economic and financial difficulties, the value and liquidity of the Fund's investments may be negatively affected. A widespread outbreak of an infectious illness and efforts to contain its spread, may result in market volatility, inflation, reduced liquidity of certain instruments, disruption in the trading of certain instruments, and systemic economic weakness. The foregoing could impact a Fund and its investments and result in disruptions to the services provided to a Fund by its service providers.

*Market Volatility; Government Intervention Risk.* Market dislocations and other external events, such as the failures or near failures of significant financial institutions, dislocations in investment or currency markets, corporate or governmental defaults or credit downgrades, or poor collateral performance, may subject a Fund to significant risk of substantial volatility and loss. Governmental and regulatory authorities have taken, and may in the future take, actions to provide or arrange credit supports to financial institutions whose operations have been compromised by credit market dislocations and to restore liquidity and stability to financial systems in their jurisdictions; the implementation of such governmental interventions and their impact on both the markets generally and a Fund's investment program in particular can be uncertain. Governmental and non-governmental issuers may default on, or be forced to restructure, their debts, and other issuers may face difficulties obtaining credit. Raising the U.S. Government debt ceiling has become increasingly politicized. Any failure to increase the total amount that the U.S. Government is authorized to borrow could lead to a default on U.S. Government obligations. A default or a threat of default by the U.S. Government would be highly disruptive to the U.S. and global securities markets and could significantly reduce the value of the Fund's investments. Defaults or restructurings by governments or others of their debts could have substantial adverse effects on economies, financial markets, and asset valuations around the world. Federal Reserve or other U.S. or non-U.S. governmental or central bank actions, including interest rate increases or contrary actions by different governments, or investor perception that these efforts are not succeeding, could negatively affect financial markets generally as well as the values and liquidity of certain securities.

*Mid-Capitalization Securities Risk (principal risk for State Street International Stock Selection Fund)*. The securities of mid-capitalization companies may be more volatile and may involve more risk than the securities of larger companies. These companies may have limited product lines, markets or financial resources, may lack the competitive strength of larger companies, and may depend on a few key employees. In addition, these companies may have been recently organized and may have little or no track record of success. The securities of mid-sized companies may trade less frequently and in smaller volumes than more widely held securities. The prices of these securities may fluctuate more sharply than those of other securities, and a Fund may experience some difficulty in establishing or closing out positions in these securities at prevailing market prices. There may be less publicly available information about the issuers of these securities or less market interest in these securities than in the case of larger companies, both of which can cause significant price volatility. Some securities of mid-sized issuers may be illiquid or may be restricted as to resale. Returns on investments in securities of mid-capitalization companies could trail the returns on investments in securities of larger or smaller companies.

*Modeling Risk (principal risk for State Street International Stock Selection Fund)*. The Adviser uses quantitative models in an effort to enhance returns and manage risk. Any imperfections, errors or limitations in these models could limit any benefit to a Fund from the use of the models, or could result in incorrect outputs or in investment outcomes different from

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or opposite to those expected or desired by the Adviser. These models may make simplifying assumptions that limit their effectiveness and may draw from historical data that does not adequately identify or reflect factors necessary to an appropriate or useful output. There can be no assurance that the models will behave as expected in all market conditions. In addition, computer programming used to create quantitative models, or the data on which such models operate, might contain one or more errors. Such errors might never be detected, or might be detected only after a Fund has sustained a loss (or reduced performance) related to such errors.

*Money Market Fund Investment Risk*. An investment in a money market fund is not a deposit of any bank and is not insured or guaranteed by the FDIC or any other government agency. Certain money market funds seek to preserve the value of their shares at $1.00 per share, although there can be no assurance that they will do so, and it is possible to lose money by investing in such a money market fund. A major or unexpected change in interest rates or a decline in the credit quality of an issuer or entity providing credit support, an inactive trading market for money market instruments, or adverse market, economic, industry, political, regulatory, geopolitical, and other conditions could cause the share price of such a money market fund to fall below $1.00. It is possible that such a money market fund will issue and redeem shares at $1.00 per share at times when the fair value of the money market fund's portfolio per share is more or less than $1.00. The SEC has adopted amendments to money market fund regulation that, among other things, increase the daily and weekly liquid asset requirements. Such amendments may limit the Funds' investment flexibility and reduce its ability to generate returns. A money market fund may be permitted to impose redemption fees during periods of high illiquidity in the markets for the investments held by it. None of State Street Corporation, State Street Bank and Trust Company ("State Street"), SSGA FM or their affiliates (collectively, the "State Street Entities") guarantee the value of an investment in a money market fund at $1.00 per share. Investors should have no expectation of capital support to a money market fund from the State Street Entities. Other money market funds price and transact at a "floating" NAV that will fluctuate along with changes in the market-based value of fund assets. Shares sold utilizing a floating NAV may be worth more or less than their original purchase price. Recent changes in the regulation of money market funds may affect the operations and structures of money market funds. A money market fund may be permitted or required to impose redemption fees during times of market stress.

*Non-U.S. Securities Risk (principal risk for State Street International Stock Selection Fund)*. Investments in securities of non-U.S. issuers (including depositary receipts) entail risks not typically associated with investing in securities of U.S. issuers. Similar risks may apply to securities traded on a U.S. securities exchange that are issued by entities with significant exposure to non-U.S. countries. In certain countries, legal remedies available to investors may be more limited than those available with regard to U.S. investments. Because non-U.S. securities are typically denominated and traded in currencies other than the U.S. dollar, the value of the Fund's assets, to the extent they are non-U.S. dollar denominated, may be affected favorably or unfavorably by currency exchange rates, exchange control regulations, and restrictions or prohibitions on the repatriation of non-U.S. currencies. Income and gains with respect to investments in certain countries may be subject to withholding and other taxes. There may be less information publicly available about a non-U.S. entity than about a U.S. entity, and many non-U.S. entities are not subject to accounting, auditing, and financial reporting standards, regulatory framework and practices comparable to those in the United States. The securities of some non-U.S. entities are less liquid and at times more volatile than securities of comparable U.S. entities, and could become subject to sanctions or embargoes that adversely affect a Fund's investment. Non-U.S. transaction costs, such as brokerage commissions and custody costs may be higher than in the U.S. In addition, there may be a possibility of nationalization or expropriation of assets, imposition of currency exchange controls, confiscatory taxation, and diplomatic developments that could adversely affect the values of a Fund's investments in certain non-U.S. countries. Investments in securities of non-U.S. issuers also are subject to foreign political and economic risk not associated with U.S. investments, meaning that political events (civil unrest, national elections, changes in political conditions and foreign relations, imposition of exchange controls and repatriation restrictions), social and economic events (labor strikes, rising inflation) and natural disasters occurring in a country where a Fund invests could cause the Fund's investments to experience gains or losses. In addition, the threat of or actual imposition of tariffs may adversely impact the price of non-U.S. securities.

*Portfolio Turnover Risk (principal risk for State Street International Stock Selection Fund)*. A Fund may engage in frequent trading of its portfolio securities. Fund turnover generally involves a number of direct and indirect costs and expenses to a Fund, including, for example, brokerage commissions, dealer mark-ups and bid/asked spreads, and transaction costs on the sale of securities and reinvestment in other securities. The costs related to increased portfolio turnover have the effect of reducing a Fund's investment return, and the sale of securities by the Fund may result in the realization of taxable capital gains, including short-term capital gains, which are taxed to individuals as ordinary income.

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*Preferred Securities Risk (principal risk for State Street International Stock Selection Fund)*. Generally, preferred security holders have no or limited voting rights with respect to the issuing company. In addition, preferred securities are subordinated to bonds and other debt instruments in a company's capital structure and therefore will be subject to greater credit risk than those debt instruments. Unlike debt securities, dividend payments on a preferred security typically must be declared by the issuer's board of directors. An issuer's board of directors is generally not under any obligation to pay a dividend (even if such dividends have accrued), and may suspend payment of dividends on preferred securities at any time. Therefore, in the event an issuer of preferred securities experiences economic difficulties, the issuer's preferred securities may lose substantial value due to the reduced likelihood that the issuer's board of directors will declare a dividend and the fact that the preferred security may be subordinated to other securities of the same issuer. Further, because many preferred securities pay dividends at a fixed rate, their market price can be sensitive to changes in interest rates in a manner similar to bonds - that is, as interest rates rise, the value of the preferred securities held by a Fund are likely to decline. Therefore, to the extent that a Fund invests a substantial portion of its assets in fixed rate preferred securities, rising interest rates may cause the value of the Fund's investments to decline significantly. In addition, because many preferred securities allow holders to convert the preferred securities into common stock of the issuer, their market price can be sensitive to changes in the value of the issuer's common stock and, therefore, declining common stock values may also cause the value of a Fund's investments to decline. Preferred securities often have call features, which allow the issuer to redeem the security at its discretion. The redemption of a preferred security having a higher than average yield may cause a decrease in a Fund's yield.

*Rights or Warrants Risk (principal risk for State Street International Stock Selection Fund)*. A warrant gives the holder a right to purchase, at any time during a specified period, a predetermined number of shares of common stock at a fixed price. Rights are similar to warrants but typically have a shorter duration and are issued by a company to existing stockholders to provide those holders the right to purchase additional shares of stock at a later date. Unlike a convertible debt security or preferred stock, a warrant or right does not pay fixed dividends. Warrants and rights may lack a liquid secondary market for resale. The prices of warrants and rights may fluctuate as a result of changes in the value of the underlying security or obligation or due to speculation in the market for the warrants or rights or other factors. Prices of warrants and rights do not necessarily move in tandem with the prices of their underlying securities; their prices may have significant volatility and it is possible that a Fund will lose its entire investment in a warrant or right. A Fund's failure to exercise a warrant or subscription right to purchase common shares in an issuer might result in the dilution of the Fund's interest in the issuing company.

*Risk of Investment in Other Pools*. If a Fund invests in another pooled investment vehicle (e.g., a mutual fund or exchange-traded fund), it is exposed to the risk that the other pool will not perform as expected. A Fund is exposed indirectly to all of the risks applicable to an investment in such other pool. In addition, lack of liquidity in the underlying pool could result in its value being more volatile than the underlying portfolio of securities, and may limit the ability of a Fund to sell or redeem its interest in the pool at a time or at a price it might consider desirable. The investment policies and limitations of the other pool may not be the same as those of the Fund; as a result, the Fund may be subject to additional or different risks, or may achieve a reduced investment return, as a result of its investment in another pool. If a pool is an exchange-traded fund or other product traded on a securities exchange or otherwise actively traded, its shares may trade at a premium or discount to their NAV, an effect that might be more pronounced in less liquid markets. A Fund bears its proportionate share of the fees and expenses of any pool in which it invests. The Adviser or an affiliate may serve as investment adviser to a pool in which the Fund may invest, leading to potential conflicts of interest. For example, the Adviser or its affiliates may receive fees based on the amount of assets invested in the pool. Investment by a Fund in the pool may be beneficial to the Adviser or an affiliate in the management of the pool, by helping to achieve economies of scale or enhancing cash flows. Due to this and other factors, the Adviser may have an incentive to invest a Fund's assets in a pool sponsored or managed by the Adviser or its affiliates in lieu of investments by the Fund directly in portfolio securities, or may have an incentive to invest in the pool over a pool sponsored or managed by others. Similarly, the Adviser may have an incentive to delay or decide against the sale of interests held by a Fund in a pool sponsored or managed by the Adviser or its affiliates. It is possible that other clients of the Adviser or its affiliates will purchase or sell interests in a pool sponsored or managed by the Adviser or its affiliates at prices and at times more favorable than those at which a Fund does so.

*Settlement Risk (principal risk for State Street International Stock Selection Fund)*. Markets in different countries have different clearance and settlement procedures and in certain markets there have been times when settlements have been unable to keep pace with the volume of transactions. Delays in settlement may increase credit risk to a Fund, limit

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the ability of a Fund to reinvest the proceeds of a sale of securities, hinder the ability of a Fund to lend its portfolio securities, and potentially subject a Fund to penalties for its failure to deliver to on-purchasers of securities whose delivery to a Fund was delayed. Delays in the settlement of securities purchased by a Fund may limit the ability of a Fund to sell those securities at times and prices it considers desirable, and may subject a Fund to losses and costs due to its own inability to settle with subsequent purchasers of the securities from it. A Fund may be required to borrow monies it had otherwise expected to receive in connection with the settlement of securities sold by it, in order to meet its obligations to others. Limits on the ability of a Fund to purchase or sell securities due to settlement delays could increase any variance between a Fund's performance and that of its benchmark index.

*Small-Capitalization Securities Risk (principal risk for State Street International Stock Selection Fund)*. The securities of small-capitalization companies may be more volatile and may involve more risk than the securities of larger companies. These companies may have limited product lines, markets or financial resources, may lack the competitive strength of larger companies, and may depend on a few key employees. In addition, these companies may have been recently organized and may have little or no track record of success. The securities of smaller companies may trade less frequently and in smaller volumes than more widely held securities. The prices of these securities may fluctuate more sharply than those of other securities, and a Fund may experience some difficulty in establishing or closing out positions in these securities at prevailing market prices. There may be less publicly available information about the issuers of these securities or less market interest in these securities than in the case of larger companies, both of which can cause significant price volatility. Some securities of smaller issuers may be illiquid or may be restricted as to resale. A Fund may be unable to liquidate its positions in such securities at any time, or at a favorable price, in order to meet a Fund's obligations. Returns on investments in securities of small-capitalization companies could trail the returns on investments in securities of larger companies.

*Unconstrained Sector Risk*. A Fund may invest a substantial portion of its assets within one or more economic sectors or industries, which may change from time to time. When a Fund focuses its investments in a particular industry or sector, financial, economic, business, and other developments affecting issuers in that industry, market, or economic sector will have a greater effect on the Fund than if it had not focused its assets in that industry, market, or economic sector, which may increase the volatility of the Fund. Any such investment focus may also potentially limit the liquidity of the Fund. In addition, investors may buy or sell substantial amounts of the Fund's shares in response to factors affecting or expected to affect an industry, market, or economic sector in which the Fund focuses its investments, resulting in extreme inflows or outflows of cash into and out of the Fund. Such extreme cash inflows or outflows might affect management of the Fund adversely.

*Valuation Risk (principal risk for State Street International Stock Selection Fund)*. Certain portfolio holdings may be valued on the basis of factors other than market quotations. This may occur more often in times of market turmoil or reduced liquidity. There are multiple methods that can be used to value a portfolio holding when market quotations are not readily available. The value established for any portfolio holding at a point in time might differ from what would be produced using a different methodology or if it had been priced using market quotations. Portfolio holdings that are valued using techniques other than market quotations, including "fair valued" securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. Technological issues or other service disruption issues involving third-party service providers may cause a Fund to value its investments incorrectly. In addition, there is no assurance that a Fund could sell or close out a portfolio position for the value established for it at any time, and it is possible that a Fund would incur a loss because a portfolio position is sold or closed out at a discount to the valuation established by a Fund at that time. Investors who purchase or redeem Fund Shares on days when the Fund is holding fair-valued investments may receive fewer or more shares or lower or higher redemption proceeds than they would have received if the Fund had not fair-valued the holding(s) or had used a different valuation methodology.

**Additional Information About the Funds' Non-Principal Risks**

*Conflicts of Interest Risk.* An investment in a Fund will be subject to a number of actual or potential conflicts of interest. For example, the Adviser or its affiliates may provide services to a Fund, such as securities lending agency services, custodial, administrative, bookkeeping, and accounting services, transfer agency and shareholder servicing, securities brokerage services, and other services for which the Fund would compensate the Adviser and/or such affiliates. The Funds may invest in other pooled investment vehicles sponsored, managed, or otherwise affiliated with the Adviser. There is no assurance that the rates at which a Fund pays fees or expenses to the Adviser or its affiliates, or the terms on which it enters into transactions with the Adviser or its affiliates will be the most favorable available in the market gen

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erally or as favorable as the rates the Adviser or its affiliates make available to other clients. Because of its financial interest, the Adviser will have an incentive to enter into transactions or arrangements on behalf of a Fund with itself or its affiliates in circumstances where it might not have done so in the absence of that interest, provided that the Adviser will comply with applicable regulatory requirements.

The Adviser and its affiliates serve as investment adviser to other clients and may make investment decisions that may be different from those that will be made by the Adviser on behalf of the Funds. For example, the Adviser may provide asset allocation advice to some clients that may include a recommendation to invest in or redeem from particular issuers while not providing that same recommendation to all clients invested in the same or similar issuers. The Adviser may (subject to applicable law) be simultaneously seeking to purchase (or sell) investments for a Fund and to sell (or purchase) the same investment for accounts, funds, or structured products for which it serves as asset manager, or for other clients or affiliates. The Adviser and its affiliates may invest for clients in various securities that are senior, *pari passu* or junior to, or have interests different from or adverse to, the securities that are owned by a Fund. The Adviser or its affiliates, in connection with its other business activities, may acquire material nonpublic confidential information that may restrict the Adviser from purchasing securities or selling securities for itself or its clients (including the Funds) or otherwise using such information for the benefit of its clients or itself.

The foregoing does not purport to be a comprehensive list or complete explanation of all potential conflicts of interests which may affect a Fund. A Fund may encounter circumstances, or enter into transactions, in which conflicts of interest that are not listed or discussed above may arise.

*Cybersecurity Risk*. With the increased use of technologies such as the Internet and the dependence on computer systems to perform business and operational functions, funds (such as the Funds) and their service providers (including the Adviser) may be prone to operational and information security risks resulting from cyber-attacks and/or technological malfunctions. Furthermore, geopolitical tensions may have increased the scale and sophistication of deliberate cybersecurity attacks, particularly those from nation-states or from entities with nation-state backing. In general, cyber-attacks are deliberate, but unintentional events may have similar effects. Cyber-attacks include, among others, stealing or corrupting data maintained online or digitally, preventing legitimate users from accessing information or services on a website, releasing confidential information without authorization, and causing operational disruption. Successful cyber-attacks against, or security breakdowns of, a Fund, the Adviser, a custodian, the transfer agent, or other affiliated or third-party service provider may adversely affect a Fund or its shareholders. For instance, cyber-attacks or technical malfunctions may interfere with the processing of shareholder or other transactions, affect a Fund's ability to calculate its NAV, cause the release of private shareholder information or confidential Fund information, impede trading, cause reputational damage, and subject a Fund to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and additional compliance costs. Cyber-attacks or technical malfunctions may render records of Fund assets and transactions, shareholder ownership of Fund Shares, and other data integral to the functioning of a Fund inaccessible or inaccurate or incomplete. A Fund may also incur substantial costs for cybersecurity risk management in order to prevent cyber incidents in the future. A Fund and its shareholders could be negatively impacted as a result. While the Adviser has established business continuity plans and systems designed to minimize the risk of cyber-attacks through the use of technology, processes and controls, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified, given the evolving nature of this threat. The use of artificial intelligence and machine learning could exacerbate these risks or result in cyber security incidents that implicate personal data. Each Fund relies on third-party service providers for many of its day-to-day operations, and will be subject to the risk that the protections and protocols implemented by those service providers will be ineffective to protect the Fund from cyber-attack. The Adviser does not control the cybersecurity plans and systems put in place by third-party service providers, and such third-party service providers may have limited indemnification obligations to the Adviser or the Funds. Similar types of cybersecurity risks or technical malfunctions also are present for issuers of securities in which each Fund invests, which could result in material adverse consequences for such issuers, and may cause a Fund's investment in such securities to lose value.

*Index Licensing Risk (State Street S&P 500 Index Fund)*. It is possible that the license under which the Adviser or a Fund is permitted to replicate or otherwise use the Index will be terminated or may be disputed, impaired or cease to remain in effect. In such a case, the Adviser may be required to replace the Index with another index which it considers to be appropriate in light of the investment strategy of a Fund. The use of any such substitute index may have an adverse impact on a Fund's performance. In the event that the Adviser is unable to identify a suitable replacement for the Index, it may determine to terminate a Fund.

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*Large Transactions Risk*. To the extent a large proportion of the shares of a Fund are highly concentrated or held by a small number of shareholders (or a single shareholder), including funds or accounts over which the Adviser has investment discretion, the Fund is subject to the risk that these shareholders will purchase or redeem Fund Shares in large amounts rapidly or unexpectedly, including as a result of an asset allocation decision made by the Adviser. In addition, a large number of shareholders collectively may purchase or redeem Fund Shares in large amounts rapidly or unexpectedly (collectively, such transactions are referred to as "large shareholder transactions"). Large shareholder transactions could adversely affect the ability of the Fund to conduct its investment program. For example, they could require a Fund to sell portfolio securities or purchase portfolio securities unexpectedly and incur substantial transaction costs and/or accelerate the realization of taxable income and/or gains to shareholders. The effects of taxable income and/or gains resulting from large shareholder transactions would particularly impact non-redeeming shareholders who do not hold their Fund Shares in an IRA, 401(k) plan or other tax-advantaged plan. To the extent that such transactions result in short-term capital gains, such gains will generally be taxed at the ordinary income tax rate for shareholders who hold Fund Shares in a taxable account. In addition, a Fund may be required to sell its more liquid portfolio investments to meet a large redemption, in which case the Fund's remaining assets may be less liquid, more volatile, and more difficult to price. A Fund may hold a relatively large proportion of its assets in cash in anticipation of large redemptions, diluting its investment returns. A number of circumstances may cause a Fund to experience large redemptions, such as changes in investors' circumstances; changes in the eligibility criteria for a Fund or share class of the Fund; liquidations, reorganizations, repositionings, or other announced Fund events; or changes in investment objectives, strategies, policies, risks, or investment personnel.

*Securities Lending Risk*. Each Fund may lend portfolio securities in an amount not to exceed 40% of the value of its net assets. For these purposes, net assets shall exclude the value of all assets received as collateral for the loan. Such loans may be terminated at any time. Any such loans must be continuously secured by collateral (either cash or other obligations as may be permitted under the Funds' securities lending program) maintained on a current basis in an amount at least equal to the market value of the securities loaned by a Fund, marked to market each trading day. A Fund will receive the amount of all dividends, interest and other distributions on the loaned securities; however, the borrower has the right to vote the loaned securities. A Fund will call loans to vote proxies if a material issue affecting the investment is to be voted upon. Efforts to recall such securities promptly may be unsuccessful, especially for foreign securities or thinly traded securities. Securities lending involves the risk that the Fund may lose money because the borrower of the loaned securities fails to return the securities in a timely manner or at all. Should the borrower of the securities fail financially, a Fund may experience delays in recovering the securities or exercising its rights in the collateral. Loans are made only to borrowers that are deemed by the securities lending agent to be of good financial standing. In a loan transaction, a Fund will also bear the risk of any decline in value of securities acquired with cash collateral. Each Fund expects to invest cash collateral in a pooled investment vehicle advised by the Adviser (e.g., a mutual fund or exchange-traded fund). With respect to index funds, to the extent the collateral provided or investments made with cash collateral differ from securities included in the relevant Index, such collateral or investments may have a greater risk of loss than the securities included in the Index. In addition, a Fund will be subject to the risk that any income generated by reinvesting cash collateral is lower than any fees the Fund has agreed to pay a borrower.

*Temporary Defensive Positions (risk for State Street International Stock Selection Fund)*. In response to actual or perceived adverse market, economic, political, or other conditions, a Fund may (but will not necessarily), without notice, depart from its principal investment strategies by temporarily investing for defensive purposes. Temporary defensive positions may include, but are not limited to, cash, cash equivalents, U.S. government securities, repurchase agreements collateralized by such securities, money market funds, and high-quality debt investments. While investing defensively, a Fund may maintain a substantial portion of its assets in cash, on which a Fund may earn little if any income. If a Fund invests for defensive purposes, it may not achieve its investment objective. In addition, the defensive strategy may not work as intended.

**Portfolio Holdings**

The Funds' portfolio holdings disclosure policy is described in the Statement of Additional Information ("SAI").

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**Management and organization**

Each Fund is a separate, diversified series of the SSGA Funds (the "Trust"), which is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts.

**Investment Adviser**

SSGA FM serves as the investment adviser to each Fund pursuant to an investment advisory agreement ("Investment Advisory Agreement") between the Trust and the Adviser, and, subject to the oversight of the Board, is responsible for the investment management of each Fund. The Adviser provides an investment management program for each Fund and manages the investment of each Fund's assets. In addition, the Adviser provides administrative, compliance and general management services to each Fund. The Adviser is a wholly-owned subsidiary of State Street Global Advisors, Inc., which itself is a wholly-owned subsidiary of State Street Corporation. The Adviser is registered with the SEC under the Investment Advisers Act of 1940, as amended. The Adviser and certain other affiliates of State Street Corporation make up State Street Investment Management, the investment management arm of State Street Corporation. As of September 30, 2025, the Adviser managed approximately $1.27 trillion in assets and State Street Investment Management managed approximately $5.45 trillion in assets. The Adviser's principal business address is One Congress Street, Boston, Massachusetts 02114.

The total management fee paid by each Fund, as a percentage of its average net assets, for the previous fiscal year ended August 31, 2025 appears in the "Annual Fund Operating Expenses" table included in the "Fees and Expenses of the Fund" section for that Fund. The management fee rates shown do not reflect the effects of any waivers or reimbursements by the Adviser.

A discussion regarding the Board's consideration of the Funds' Investment Advisory Agreement is provided in the Funds' Form N-CSR filing with the SEC for the period ended August 31, 2025.

For its services, each Fund pays the Adviser an annual management fee, calculated daily and paid monthly, that is equal to a certain percentage of its average daily net assets. The management fee is shown in the table below for each Fund. For the year ended August 31, 2025, the aggregate management fee paid as a percentage of average net assets, after certain fee waivers and/or expense reimbursements, is shown below for each Fund.

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| | | |
|:---|:---|:---|
|  | **Annual Management Fees**<br> **(% of Average Daily Net Assets)** | **Annual Management Fees**<br> **(% of Average Daily Net Assets)** |
| **SSGA Fund** | **Management Fee**<br> **Before Waivers or**<br> **Reimbursements**<br>| **Management Fee**<br> **After Waivers or**<br> **Reimbursements**<br>|
| State Street International Stock Selection Fund | 0.75% | 0.51% |
| State Street S&P 500 Index Fund | 0.03% | 0.02% |

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*Total Annual Fund Operating Expense Waivers*. With respect State Street International Stock Selection Fund, SSGA FM is contractually obligated until December 31, 2026 (i) to waive up to the full amount of the advisory fee payable by the Fund, and/or (ii) to reimburse the Fund to the extent that total expenses (exclusive of non-recurring account fees, extraordinary expenses, acquired fund fees and expenses, and distribution, shareholder servicing and sub-transfer agency fees) exceed 0.75% of average daily net assets on an annual basis.

With respect State Street S&P 500 Index Fund, SSGA FM is contractually obligated until December 31, 2026 (i) to waive up to the full amount of the advisory fee payable by the Fund, and/or (ii) to reimburse the Fund to the extent that total expenses exceed 0.157% of average daily net assets on an annual basis.

These waivers and/or reimbursements may not be terminated prior to December 31, 2026 except with the approval of each Fund's Board of Trustees. SSGA FM has contractually agreed to waive 0.01% of its administration fee. This waiver may not be terminated or modified except with the approval of each Fund's Board of Trustees and shall continue until at least December 31, 2026.

**Portfolio Management**

The Adviser manages the Funds using a team of investment professionals. The team approach is used to create an environment that encourages the flow of investment ideas. The portfolio managers within each team work together in a cohesive manner to develop and enhance techniques that drive the investment process for the respective investment

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strategy. This approach requires portfolio managers to share a variety of responsibilities, including investment strategy and analysis, while retaining responsibility for the implementation of the strategy within any particular portfolio. The approach also enables the team to draw upon the resources of other groups within State Street Investment Management. Each portfolio management team is overseen by State Street Investment Management's internal governance.

Key professionals involved in the day-to-day portfolio management of the State Street S&P 500 Index Fund include the following:

Emiliano Rabinovich, CFA, is a Managing Director of State Street Investment Management and Co-Head of the Systematic Equity Team in the Americas. Within this Team, he is the strategy leader for their Tax Aware, Smart Beta and ESG products. Mr. Rabinovich manages a varied mix of portfolios that include both traditional indexing as well as a variety of alternative beta mandates. He also manages local and global strategies and fund structures, which include separately managed accounts, commingled funds, mutual funds and ETFs. Mr. Rabinovich joined State Street Investment Management in Montreal in 2006, where he served as the Head of the Indexing team in Canada. He has been working in the investment management field since 2003. Mr. Rabinovich holds a Bachelor of Arts in Economics from the University of Buenos Aires and a Master of Arts in Economics from the University of CEMA. He has also earned the Chartered Financial Analyst (CFA) designation and is a member of CFA Society Boston, Inc.

Karl Schneider, CAIA, is a Managing Director of State Street Investment Management and Co-Head of the Systematic Equity Team in the Americas. He also serves as a Senior Portfolio Manager for a number of the Systematic Equity Team's index equity portfolios. Previously within the Systematic Equity Team, he was the Deputy Head of the Americas, and prior to that served as a portfolio manager and product specialist for U.S. equity strategies and synthetic beta strategies, including commodities, buy/write, and hedge fund replication. He is a member of the S&P Dow Jones U.S. Equities Index Advisory Panel. Prior to joining the Systematic Equity Team, Mr. Schneider worked as a portfolio manager in State Street Investment Management's Currency Management Group, managing both active currency selection and traditional passive hedging overlay portfolios. He joined State Street Investment Management in 1997. Mr. Schneider holds a Bachelor of Science in Finance and Investments from Babson College and a Master of Science in Finance from the Carroll School of Management at Boston College. He has earned the Chartered Alternative Investment Analyst (CAIA) designation and is a member of the CAIA Association.

Amy Scofield is a Vice President of State Street Investment Management and a Portfolio Manager in the Systematic Equity Team. She is responsible for the management of various equity index funds, with domestic and international strategies. Ms. Scofield rejoined State Street Investment Management in November of 2010, after spending two years at Atlantic Trust Company, a private wealth management firm. In her role at Atlantic Trust Company, she specialized in asset allocation and performance analysis for high net worth clients. Prior to Atlantic Trust Company, Ms. Scofield was a compliance officer at State Street Investment Management, where she was responsible for ensuring equity portfolios met specified guidelines. She also worked as an operations associate in State Street Investment Management's International Structured Products Group. Ms. Scofield holds a Bachelor of Arts in Economics from Boston College.

The key professional involved in the day-to-day portfolio management of the State Street International Stock Selection Fund is the following:

Adel Daghmouri is a Vice President of State Street Investment Management and a Senior Portfolio Manager in the Systematic Equity Active Team. He focuses on managing global investment strategies, product development and quantitative research within developed markets. Prior to joining the Systematic Equity Active Team in 2008, he was a founding member of the Quantitative Canadian Active Equity Team responsible for portfolio management across active, enhanced and market-neutral strategies. Since joining State Street Investment Management in 1998, Mr. Daghmouri has also worked as a portfolio manager in the Global Structured Products Group focusing on a broad range of international and domestic strategies. Mr. Daghmouri holds a Bachelor of Business Administration from Laval University and a Master of Science degree in Finance from HEC Montreal.

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**Other Fund Services**

<u>The Administrator, Sub-Administrator and Custodian</u>

The Adviser serves as administrator of each Fund. The amount of the fee paid to the Adviser for administrative services may vary by share class. Each Fund currently pays the Adviser an administrative fee at the annual rate of 0.05% with respect to each of its share classes. State Street, a subsidiary of State Street Corporation, serves as sub-administrator and custodian for the Funds. The Adviser and the Funds each bear a portion of the fee paid to State Street for providing sub-administration and custodian services with respect to the Funds.

<u>The Transfer Agent and Dividend Disbursing Agent</u>

SS&C GIDS, Inc. is the Funds' transfer agent and dividend disbursing agent (the "Transfer Agent").

<u>The Distributor</u>

State Street Global Advisors Funds Distributors, LLC serves as the Funds' distributor ("SSGA FD") pursuant to the Distribution Agreement between SSGA FD and the Trust.

<u>Additional Information</u>

The Trustees of the Trust oversee generally the operations of the Funds and the Trust. The Trust enters into contractual arrangements with various parties, including, among others, the Funds' investment adviser, custodian, transfer agent, and accountants, who provide services to the Funds. Shareholders are not parties to any such contractual arrangements or intended beneficiaries of those contractual arrangements, and those contractual arrangements are not intended to create in any shareholder any right to enforce them directly against the service providers or to seek any remedy under them directly against the service providers.

This Prospectus provides information concerning the Trust and the Funds that you should consider in determining whether to purchase shares of the Funds. Neither this Prospectus, nor the related SAI, is intended, or should be read, to be or to give rise to an agreement or contract between the Trust or the Funds and any investor, or to give rise to any rights in any shareholder or other person other than any rights under federal or state law that may not be waived.

**Shareholder Information**

**Determination of Net Asset Value**

Each Fund determines its NAV per share once each business day as of the scheduled close of regular trading on the New York Stock Exchange (the "NYSE"). Pricing does not occur on NYSE holidays. A business day is one on which the NYSE is open for regular trading. The Federal Reserve is closed on certain holidays on which the NYSE is open. These holidays are Columbus Day and Veterans Day. On these holidays, you will not be able to purchase shares by wiring Federal Funds because Federal Funds wiring does not occur on days when the Federal Reserve is closed. In unusual circumstances, such as an emergency or an unscheduled close or halt of trading on the NYSE, the time at which share prices are determined may be changed. The NAV per share is based on the market value of the investments held in a Fund. The NAV of each class of a Fund's Shares is calculated by dividing the value of the assets of the Fund attributable to that class less the liabilities of the Fund attributable to that class by the number of shares in the class outstanding. As noted in this Prospectus, each Fund may invest in securities listed on foreign exchanges, or otherwise traded in a foreign market, and those securities may trade on weekends or other days when each Fund does not price its shares. Consequently, the NAV of each Fund's Shares may change on days when shareholders are not able to purchase or redeem the Fund's Shares. Purchase and redemption orders for Fund Shares are processed, respectively, at the NAV next determined after the Fund accepts a purchase order or receives a redemption request in good form. Each Fund values each security or other investment pursuant to guidelines adopted by the Board. The Board has appointed the Adviser as the valuation designee to fair value securities or other investments pursuant to procedures approved by the Funds' Board, under certain limited circumstances. For example, fair value pricing may be used when market quotations are not readily available or reliable, such as when (i) trading for a security is restricted; or (ii) a significant event, as determined by the Adviser, that may affect the value of one or more securities or other investments held by a Fund occurs after the close of a related exchange but before the determination of a Fund's NAV. Attempts to determine the fair value of securities or other investments introduce an element of subjectivity to the pricing of securities or other investments. As a result, the price of a security or other investment determined through fair valuation techniques may differ from the

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price quoted or published by other sources and may not accurately reflect the price a Fund would have received had it sold the investment. To the extent that a Fund invests in the shares of other registered open-end investment companies that are not traded on an exchange (mutual funds), such shares are valued at their published NAVs per share as reported by the funds. The prospectuses of these funds explain the circumstances under which the funds will use fair value pricing and the effects of using fair value pricing.

**Investing in State Street Funds Shares** 

Mutual funds advised by SSGA FM (the "State Street Funds") and their service providers have a legal obligation to collect from you certain personal information about you at the time you open an account in order to verify your identity and the source of your payment. If you do not provide this information, you may not be able to open an account with the State Street Funds. If the State Street Funds believe that they have uncovered unlawful activity, the State Street Funds and their service providers may close your account and take any action they deem reasonable or required by law. The State Street Funds reserve the right to reject any purchase order.

This section of the Prospectus explains the basics of doing business with the State Street Funds. Carefully read each topic. The policies set forth below regarding the purchase, redemption and exchange of State Street Fund shares are in addition to the "Purchase and Sale of Fund Shares" section contained in the "Fund Summary" portion of this Prospectus. The State Street Funds reserve the right to change the following policies, without notice to shareholders; except that any modification or termination of the exchange privileges described in this Prospectus will be preceded by 60 days' advance notice to shareholders. Please call or check online for current information. Requests for transactions in the State Street Funds will be processed when they are received in "good order." "Good order" means that the request is in an accurate and complete form, and all applicable documents have been received in such accurate and complete form (including, typically, a signed application and medallion-guaranteed documents), and, for a purchase request, the check or wired funds have cleared.

**Purchasing Shares**

The State Street Funds reserve the right, without notice, to increase or decrease the minimum amount required to open or maintain a Fund account, or to add to an existing Fund account. Investment minimums may differ for certain categories of investors.

<u>Choosing a Share Class</u> 

The State Street S&P 500 Index Fund offers one class of shares through this Prospectus: Class N shares and the State Street International Stock Selection Fund offers four classes of shares through this Prospectus: Class A, Class I, Class K and Class N shares, available to you subject to the eligibility requirements set forth below.

All classes of a Fund share the same investment objective and investments, but the different share classes of the State Street International Stock Selection Fund have different expense structures and eligibility requirements. The availability of shares of a particular class through a given Financial Intermediary will depend on the policies and procedures of the Financial Intermediary. The Fund, the Distributor, the Adviser and the Transfer Agent do not provide advice or make recommendations regarding Fund share classes and do not verify that you have invested in the share class most appropriate for your investment needs. You should choose the class with the expense structure that best meets your needs and for which you are eligible. Some factors to consider are the amount you plan to invest, the time period before you expect to sell your shares, whether you might invest more money in the Fund in the future, and the nature of your arrangement with a Financial Intermediary. Your investment professional can help you choose a share class that is appropriate for your investment needs.

When you buy Class A shares of the State Street International Stock Selection Fund, the initial sales charge is deducted from the amount you invest, unless you qualify for an initial sales load waiver. This means that less money will be invested in the Fund immediately. Class A shares have a Rule 12b-1 fee of 0.25% per year. A contingent deferred sales charge ("CDSC") of 1.00% may be assessed on redemptions of Class A shares made within 18 months after purchase where no initial sales charge was paid at the time of purchase as part of an investment of $1,000,000 or more.

The chart below summarizes the features of the different share classes. This chart is only a general summary, and you should read the description of each Fund's expenses in each Fund Summary in this Prospectus.

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Any applicable minimum purchase amount may be waived for specific investors or types of investors, including, without limitation, retirement plans, employees of State Street Corporation and its affiliates and their families. In the case of shareholders purchasing shares through a Financial Intermediary, the minimum purchase amount may be applied at the level of the Financial Intermediary. Class N Shares of the State Street International Stock Selection Fund are closed to purchases (including exchanges from other State Street Funds) by new investors.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp; **Class A (State Street** <br> **International Stock** <br> **Selection Fund only)**<br>| &nbsp;&nbsp;&nbsp; **Class I (State Street** <br> **International Stock** <br> **Selection Fund only)**<br>| &nbsp;&nbsp;&nbsp; **Class K (State Street** <br> **International Stock** <br> **Selection Fund only)**<br>| **Class N** |
| Availability | &nbsp;&nbsp;&nbsp; Available to the <br> general public <br> through certain <br> Financial Interme-<br> diaries.<br>| &nbsp;&nbsp;&nbsp; Limited to certain <br> investors serviced <br> through a Financial <br> Intermediary <br> receiving a fee from <br> the applicable Fund <br> for shareholder <br> servicing or similar <br> services.<br>| &nbsp;&nbsp;&nbsp; Limited to certain <br> investors, including <br> certain qualified <br> recordkeepers, <br> financial institutions <br> and employer-<br> sponsored <br> retirement plans.<br>| &nbsp;&nbsp;&nbsp; Available to the <br> general public <br> through certain <br> Financial Interme-<br> diaries.<br>|
| &nbsp;&nbsp; Minimum Initial <br> Investment<br>| &nbsp;&nbsp;&nbsp; $2,000. The <br> investment <br> minimum may be <br> modified, waived or <br> reduced for certain <br> types of investors <br> (*e.g*., 401(k) or <br> 403(b) plans) and <br> investments as well <br> as for certain <br> fee-based <br> programs where an <br> agreement is in <br> place.<br>| &nbsp;&nbsp;&nbsp; There is no <br> minimum <br> investment for <br> Class I shares.<br>| &nbsp;&nbsp;&nbsp; There is no <br> minimum <br> investment for <br> Class K shares.<br>| &nbsp;&nbsp;&nbsp; $10,000 for State <br> Street S&P 500 <br> Index Fund; $1,000 <br> for State Street <br> International Stock <br> Selection Fund\*. <br> The investment <br> minimum may be <br> modified, waived or <br> reduced for certain <br> types of investors <br> (*e.g*., 401(k) or <br> 403(b) plans) and <br> investments as well <br> as for certain <br> fee-based <br> programs where an <br> agreement is in <br> place.<br>|
| &nbsp;&nbsp; Maximum <br> Investment<br>| None. | None. | None. | None. |
| &nbsp;&nbsp; Initial (Front-End) <br> Sales Charge<br>| &nbsp;&nbsp;&nbsp; Yes. 5.25% payable <br> at time of <br> purchase. Lower <br> sales charges are <br> available for larger <br> investments. See <br> the chart under <br> "Class A" section of <br> this Prospectus.<br>| &nbsp;&nbsp;&nbsp; None. Entire <br> purchase price is <br> invested in shares <br> of a Fund.<br>| &nbsp;&nbsp;&nbsp; None. Entire <br> purchase price is <br> invested in shares <br> of a Fund.<br>| &nbsp;&nbsp;&nbsp; None. Entire <br> purchase price is <br> invested in shares <br> of a Fund. <br>|

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| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp; **Class A (State Street** <br> **International Stock** <br> **Selection Fund only)**<br>| &nbsp;&nbsp;&nbsp; **Class I (State Street** <br> **International Stock** <br> **Selection Fund only)**<br>| &nbsp;&nbsp;&nbsp; **Class K (State Street** <br> **International Stock** <br> **Selection Fund only)**<br>| **Class N** |
| &nbsp;&nbsp; Deferred (CDSC) <br> Sales Charge<br>| &nbsp;&nbsp;&nbsp; None, except for <br> purchases of <br> $1,000,000 or more <br> that are redeemed <br> within 18 months <br> after purchase.<br>| None. | None. | None. |
| &nbsp;&nbsp; Distribution and <br> Service (Rule <br> 12b-1) Fees<br>| 0.25% annual fee. | None. | None. | 0.25% annual fee. |
| Redemption Fees | None. | None. | None. | None. |

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\*Class N Shares of the State Street International Stock Selection Fund are closed to purchases by new investors.

The following pages cover additional details about each share class, including information about share class eligibility, initial and deferred sales charges, and sales charge reductions and waivers. Information about sales charges and sales charge reductions and waivers is also available free of charge on the Funds' website at www.statestreet.com/im.

**<u>State Street International Stock Selection Fund only</u>:** 

**Class A** 

Class A shares are available to the general public for investment through qualified recordkeepers with a distribution and/or fund servicing agreement maintained with SSGA FD.

When you buy Class A shares, you pay an initial (or front-end) sales charge at the time of your investment, which is included in the offering price, unless you qualify for a sales charge reduction or waiver. This fee is deducted from the amount you invest, and the remainder of your money is used to buy shares in the Fund. The table below shows the amount of sales charge you would pay at different levels of investment and the commissions paid to Financial Intermediaries at each level of investment. The actual sales charge you pay may vary slightly from the rates disclosed due to rounding.

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| | | | |
|:---|:---|:---|:---|
| **Amount of Purchase Payment** | **Sales Charge as a % of**<br> **Offering Price**<br>| **Sales Charge as a % of**<br> **Net Amount Invested**<br>| **Financial Intermediary**<br> **Compensation as a % of**<br> **Offering Price**<br>|
| Less than $50,000 | 5.25% | 5.54% | 4.75% |
| $50000-$99999 | 4.50% | 4.71% | 4.00% |
| $100000-$249999 | 3.50% | 3.63% | 3.25% |
| $250000-$499999 | 2.50% | 2.56% | 2.25% |
| $500000-$999999 | 2.00% | 2.04% | 1.75% |
| $1,000,000 or more |  |  | Advanced Commission<sup>1, 2</sup> <br>|

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<sup>1</sup>

Class A advanced commission for purchases over $1 million:

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| | |
|:---|:---|
| 1.00% | First $3 million |
| Plus 0.50% | Next $12 million |
| Plus 0.25% | Over $15 million |

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<sup>2</sup>

If you purchase $1,000,000 or more of Class A shares of the Fund, you will not be assessed a sales charge at the time of purchase. SSGA FD pays broker-dealers advanced commissions that are calculated on a year-by-year basis based on the amounts invested during that year. Accordingly, with respect to additional purchase amounts, the advanced commission breakpoint resets annually to the first breakpoint on the anniversary of the first purchase. You may be charged a deferred sales charge of 1.00% of the lesser of the original cost of the shares being redeemed or your redemption proceeds if you redeem your shares within 18 months after purchase.

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<u>Reducing Your Class A Sales Charge</u> 

The Fund offers two principal ways for you to qualify for discounts on initial sales charges on Class A share purchases, often referred to as "breakpoint discounts": Right of Accumulation or a Letter of Intent. Each of these methods is described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link purchases of shares of all of the State Street Funds that offer Class A shares in which you invest (as described below) even if such State Street Funds are held in accounts with different Financial Intermediaries, as well as purchases of Class I and Class N shares of all State Street Funds (other than shares of money market funds) to be held in accounts owned by your spouse or domestic partner and children under the age of 21 who share your residential address. **It is your responsibility when investing to inform your Financial Intermediary or the State Street Funds that you would like to have one or more of the State Street Funds linked together for purposes of reducing the initial sales charge**.

*Right of Accumulation.* You may qualify for a reduction in the sales charge you pay for purchases of Class A shares through Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment calculated as the higher of (a) the current value of your existing holdings or (b) the amount you invested (excluding capital appreciation) less any withdrawals of any Class A, Class I, and Class N shares of a State Street Fund (other than shares of money market funds) held in:

1. Your account(s);

2. Account(s) of your spouse or domestic partner;

3. Account(s) of children under the age of 21 who share your residential address;

4. Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of the trust;

5. Solely controlled business accounts; and

6. Single-participant retirement plans of any of the individuals in items (1) through (3) above.

In order to obtain any breakpoint reduction in the initial sales charge, you must, before purchasing Class A shares, inform your Financial Intermediary or the State Street Funds if you have any of the above types of accounts that can be aggregated with your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social security or tax identification number on an account, so that the State Street Funds may verify (1) the number of shares of the State Street Funds held in your account(s) with State Street Funds, (2) the number of shares of the State Street Funds held in your account(s) with a Financial Intermediary, and (3) the number of shares of the State Street Funds held in an account with a Financial Intermediary owned by your spouse or domestic partner and by children under the age of 21 who share your residential address.

*Gifting of Shares*. If you make a gift of shares, upon your request, you may combine purchases, if made at the same time, under right of accumulation of Class A, Class I and Class N shares of a State Street Fund (other than any shares of money market funds) at the sales charge discount allowed for the combined purchase. The receiver of the gift may also be entitled to a prospective reduction in sales charges in accordance with the Fund's right of accumulation or other provisions. You or the receiver of the gift must provide certain account information to State Street or their agents at the time of purchase to exercise this right.

*Letter of Intent.* In order to immediately reduce your Class A sales charge, you may sign a Letter of Intent stating your intention to buy a specified amount of Class A shares of one or more State Street Funds within a 13-month period at the reduced sales charge rates applicable to the aggregate amount of the intended purchases stated in the Letter. Purchases of Class A shares of one or more State Street Funds you make over the 13- month period will be combined and you will pay the same sales charge on the new Class A shares that you would have paid if all shares were purchased at once. The 13-month Letter of Intent period commences on the day that the Letter of Intent is received by the Fund or your Financial Intermediary. Purchases submitted not more than three months prior to the date the Letter of Intent is received are considered in determining the level of sales charge that will be paid pursuant to the Letter of Intent; however, the Letter of Intent will not result in any reduction in the amount of any previously paid sales charge. In addition, investors do not receive credit for shares purchased by the reinvestment of distributions.

The Letter of Intent is a non-binding commitment upon the investor to purchase the full amount indicated. Shares worth 5% of the amount of each purchase will be held in escrow (while remaining in your name) until the full amount covered by the Letter of Intent has been invested. If the terms of the Letter of Intent are not fulfilled by the end of the 13th month, you must pay SSGA FD the difference between the sales charges applicable to the purchases at the time they were

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made and the reduced sales charges previously paid or SSGA FD will liquidate sufficient escrowed shares to obtain the difference. Calculations made to determine whether a Letter of Intent commitment has been fulfilled will be made on the basis of the amount invested prior to the deduction of the applicable sales charge.

To take advantage of the Right of Accumulation and/or a Letter of Intent, complete the appropriate section of your Account Application or contact your Financial Intermediary. To determine if you are eligible for these programs, call (800) 647-7327. These programs may be terminated or amended at any time.

<u>Waiver Of The Class A Sales Charge</u> 

A sales charge ("load") may not be imposed on Class A shares of the Fund if the shares were:

1. Acquired through the reinvestment of dividends and capital gain distributions.

2. Acquired in exchange for shares of another Class A State Street Fund that were previously assessed a sales charge. However, if your shares are subject to CDSC, the CDSC will continue to apply to your new shares at the same CDSC rate.

3. Bought in State Street Funds that do not offer Class N (no load) shares<sup>1</sup> by officers, directors or trustees, retirees and employees and their immediate family members (i.e., spouses, domestic partners, children, grandchildren, parents, grandparents, and any dependent of the person, as defined in Section 152 of the Internal Revenue Code of 1986 (the "Code")) of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The State Street Funds

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• State Street Corporation and its subsidiaries and affiliates

4. Bought by employees of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• SS&C GIDS, Inc. and its subsidiaries and affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Financial Intermediaries of financial institutions that have entered into selling agreements with the Funds or SSGA FD and their subsidiaries and affiliates (or otherwise have an arrangement with a Financial Intermediary or financial institution with respect to sales of Fund Shares). This waiver includes the employees' immediate family members (i.e., spouses, domestic partners, children, grandchildren, parents, grandparents and any dependent of the employee, as defined in Section 152 of the Code).

5. Bought by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Authorized retirement plans serviced or sponsored by a Financial Intermediary, provided that such Financial Intermediary has entered into an agreement with SSGA FD or with the Fund with respect to such purchases at NAV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Investors who are directly rolling over or transferring shares from an established State Street Fund or State Street qualified retirement plan. Rolling over or transferring shares involves the transferring of shares (in-kind); there is no cash movement associated with the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Clients of Financial Intermediaries that (i) charge an ongoing fee for advisory, management, consulting or similar services, or (ii) have entered into an agreement with SSGA FD to offer Class A shares through a no-load network or platform, or self-directed brokerage accounts that may or may not charge transaction fees to customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Insurance company separate accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Tuition Programs that qualify under Section 529 of the Code.

6. Bought with proceeds from the sale of Class A shares of a State Street Fund, but only if the purchase is made within 90 days of the sale or distribution. Appropriate documentation may be required. Please refer to Class A Account Reinstatement Privileges below.

7. Bought in connection with plans of reorganization of a State Street Fund, such as mergers, asset acquisitions and exchange offers to which a Fund is a party. However, you may pay a CDSC when you sell the Fund Shares you received in connection with the plan of reorganization.

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<sup>1</sup>

State Street Funds that offer Class N Shares include: State Street International Stock Selection Fund (SSAIX) and State Street S&P 500 Index Fund (SVSPX).

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<u>Additional Sales Charge Waiver Disclosure</u> 

Sales charge waivers are available for eligible purchases of shares made directly though the State Street Funds advised by SSGA FM, and may be available for eligible purchases made through Financial Intermediaries that offer Class A shares on a load-waived basis to you and all similarly situated customers in accordance with the Financial Intermediary's policies and procedures.

Some Financial Intermediaries do not provide all of the sales charge waivers that are available when you purchase shares of the State Street Funds, including sales charge waivers for certain types of accounts, investors, relationships or transactions. Consult your financial advisor to determine which sales charge waivers, if any, you are entitled to receive when purchasing through your Financial Intermediary. You may need to invest directly through another Financial Intermediary in order to take advantage of a specific sales charge waiver offered by the Fund.

Similarly, when purchasing through a Financial Intermediary, your eligibility to receive sales charge waivers and reductions through reinstatement, rights of accumulation and letters of intent depends on the policies and procedures of the Financial Intermediary.

In all instances, it is the purchaser's responsibility to notify State Street Investment Management at (800) 647-7327 or the purchaser's Financial Intermediary of any relationship or other facts qualifying the purchaser for sales charge reduction or waivers. Waivers or reductions may be eliminated, modified, and added at any time without providing advance notice to shareholders.

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<u>How the CDSC is Calculated</u> 

The State Street Funds calculate the CDSC by treating all purchases made in a given month as though they were made on the first day of the month.

The CDSC will be multiplied by then current market value or the original cost of shares being redeemed, whichever is less. To minimize the CDSC, shares not subject to any charge, including share appreciation, or acquired through reinvestment of dividends or capital gain distributions, are redeemed first followed by shares held the longest time.

You should retain any records necessary to substantiate historical costs because SSGA FD, the Fund, the Transfer Agent and your Financial Intermediary may not maintain such information.

<u>Waiver of the CDSC</u> 

In the following situations, no CDSC is imposed on redemptions of Class A shares of the Fund:

1. If you participate in the Automatic Withdrawal Plan. Redemptions made on a regular periodic basis (*e.g*. monthly) will not be subject to any applicable CDSC if they are, in the aggregate, less than or equal to 10% annually of the current market value of the account balance. Redemptions made as part of a required minimum distribution are also included in calculating amounts eligible for this waiver. For information on the Automatic Withdrawal Plan, please see *Service Options.* 

2. If you are a registered participant or beneficial owner of an account and you die or become disabled (as defined in Section 72(m)(7) of the Code). This waiver is only available for accounts open prior to the shareholder's or beneficiary's death or disability, and the redemption must be made within one year of such event. Subsequent purchases into such account are not eligible for the CDSC waiver. In order to qualify for this waiver, SSGA FD must be notified of such death or disability at the time of the redemption order and be provided with satisfactory evidence of such death or disability.

3. Redemptions that represent a required minimum distribution from your IRA Account or other qualifying retirement plan but only if you are at least age 73 or age 72 if you reached age 72 prior to January 1, 2023, or age 75 beginning January 1, 2033. If you maintain more than one IRA, only the assets credited to the IRA that is invested in one or more of the State Street Funds are considered when calculating that portion of your minimum required distribution that qualifies for the waiver.

4. A distribution from a qualified retirement plan by reason of the participant's retirement.

5. Redemptions that are involuntary and result from a failure to maintain the required minimum balance in an account.

6. Exchanges in connection with plans of reorganization of a State Street Fund, such as mergers, asset acquisitions and exchange offers to which a Fund is a party. However, you may pay a sales charge when you redeem the Fund Shares you receive in connection with the plan of reorganization.

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7. Exchanges for shares of the same class of another State Street Fund. However, if your shares are subject to CDSC, the CDSC will continue to apply to your new shares. For purposes of the CDSC, shares will continue to age from the date of the original purchase of the Fund Shares.

8. Redemption of shares purchased through employer sponsored retirement plans and deferred compensation plans. The CDSC, however, will not be waived if the plan redeems all of the shares that it owns on behalf of participants prior to the applicable CDSC period, as defined above.

9. Redemptions as part of annual IRA custodial fees.

10. Acquired through the reinvestment of dividends and capital gains distributions.

Appropriate documentation may be required. Please refer to Class A Account Reinstatement Privileges below.

<u>Class A Account Reinstatement Privileges</u> 

You may purchase Class A shares at NAV within 90 days of the sale with no sales charge by reinstating all or part of your proceeds into the same account that the sale or distribution occurred. Any applicable CDSC in connection with the redemption in Class A shares will be credited and aging will begin at original purchase date. Please note that a redemption and reinstatement are considered to be a sale and purchase for tax-reporting purposes.

**Class I** 

Class I shares are not subject to any sales charge. Only certain investors are eligible to buy Class I shares. Your Financial Intermediary can help you determine whether you are eligible to purchase Class I shares.

Class I shares are available to the following categories of investors serviced through a Financial Intermediary receiving a fee from the Fund for shareholder servicing or similar services:

1. Banks, broker-dealers and other financial institutions (including registered investment advisers and financial planners) that have entered into agreements with the Fund to purchase Class I shares on behalf of their clients in:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Discretionary and non-discretionary advisory programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fund "supermarkets";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Asset allocation programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund Shares or for otherwise participating in the program; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain other investment programs that do not charge an asset-based fee;

2. Defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or not qualified under the Code.

There is no minimum investment for Class I shares.

**Class K** 

Class K shares are not subject to any sales charge. Only certain investors are eligible to buy Class K shares. Your Financial Intermediary can help you determine whether you are eligible to purchase Class K shares.

Class K shares are available to the following categories of investors:

1. Banks, broker-dealers and other financial institutions (including registered investment advisers and financial planners) purchasing Fund Shares on behalf of their clients in:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Discretionary and non-discretionary advisory programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fund "supermarkets";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Asset allocation programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund Shares or for otherwise participating in the program; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain other investment programs that do not charge an asset-based fee;

2. Qualified recordkeepers with an applicable agreement maintained with SSGA FD;

3. Endowments and foundations, and defined contribution, defined benefit, and other employer-sponsored employee benefit plans, whether or not qualified under the Code;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4. Certain other registered open-end investment companies whose shares are distributed by SSGA FD;

5. Current or retired Directors or Trustees of the State Street Funds, officers and employees of SSGA, and any of its subsidiaries, such persons' spouses, and children under the age of 21, and trust accounts for which any of such person is a beneficiary;

6. Qualified state tuition plans described in Section 529 of the Code and donor-advised charitable gift funds (subject to all applicable terms and conditions);

7. Health Savings Accounts under Section 223 of the Code if such accounts are maintained by the Fund at an omnibus level;

8. Collective investment trusts.

There is no minimum investment for Class K shares.

**All Funds:** 

**Class N** 

<u>Minimum Purchase Amounts</u> 

*Minimum and Initial Investments*. Please see "Fund Summaries-Purchase and Sale of Fund Shares" for the relevant minimum amount of your initial or additional investment in a specific State Street Fund.

*Holdings in Related Accounts*. Holdings of related customer accounts may be aggregated for purposes of determining the minimum investment amount. Related customer accounts are accounts registered in the same name and include accounts held by the same investment or retirement plan, financial institution, broker, dealer or intermediary.

<u>How to Initiate a Purchase Request</u> 

Class N shares of the State Street International Stock Selection Fund are closed to purchases (including exchanges from other State Street Funds) by new investors. The closing does not affect the availability of other share classes of the SSGA Funds.

Existing account holders of Class N shares of the State Street International Stock Selection Fund may continue to contribute to their accounts. With respect to Fund holdings through financial intermediary omnibus account arrangements, the following will apply:

<u>Employee Benefit Plans</u> *(i.e*., 401(k), 403(b) plans): If Class N shares of the State Street International Stock Selection Fund was an investment option prior to the closing date, such plan participants may invest in Class N shares of the State Street International Stock Selection Fund at any time.

• Plan record keepers will not be allowed to direct new plans to invest in Class N shares of the State Street International Stock Selection Fund.

• Plan participants invested in Class N shares of the State Street International Stock Selection Fund through their employer's plan who receive a distribution from such plan may open an IRA rollover account in Class N shares of the State Street International Stock Selection Fund, but no other type of account involving Class N shares of the State Street International Stock Selection Fund.

<u>Brokerage Accounts</u>: Broker-dealers that have existing selling and/or service agreements with the Distributor with respect to Class N shares may allow accounts invested in Class N shares of the State Street International Stock Selection Fund to continue to contribute to their accounts.

• No new broker-dealers will be allowed to enter into selling and/or service agreements for Class N shares of the State Street International Stock Selection Fund with the Distributor.

• Clearing service providers have been notified that they may allow broker-dealer correspondents with existing positions in Class N shares of the State Street International Stock Selection Fund to continue to invest in Class N shares of the State Street International Stock Selection Fund (via such clearing firm); however, no new broker-dealer correspondents may invest in Class N shares of the State Street International Stock Selection Fund.

<u>Registered Investment Advisor (</u><u>"RIAs") Accounts / Platform Arrangements</u>: RIAs that have positions in Class N shares of the State Street International Stock Selection Fund on behalf of clients may continue to contribute to the Class N share accounts of such clients.

• No new RIAs will be allowed to open accounts through a platform arrangement.

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<u>Charitable Foundations / Endowments</u>: Charitable foundations, endowments and other tax exempt institutions that have accounts in Class N shares of the State Street International Stock Selection Fund may continue to contribute to such accounts.

<u>Financial Intermediary Omnibus Account Arrangements</u>: Financial intermediaries responsible for omnibus account arrangements may continue to open new accounts in Class N shares of the State Street International Stock Selection Fund.

Officers, directors or trustees and employees, and their immediate family members may open new accounts in Class N shares of the State Street International Stock Selection Fund.

**How to Initiate a Purchase Request**

<u>Investing in the State Street Funds Through a Financial Intermediary</u>

If you currently do not have an account with State Street Funds, you may establish a new account and purchase shares through a Financial Intermediary, such as a bank, broker, or investment adviser (subject to the closure of Class N described above). Please consult your Financial Intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. You may also submit a New Account Application. To open certain types of accounts, such as IRAs, you will be required to submit an account-specific application. If you intend to add certain investor services offered by the State Street Funds, such as Automatic Investment and Withdrawals Plans, you also will be required to submit a Service Option Form. See *Service Options*. If you are opening an account through a Financial Intermediary, such as a bank or broker, the Financial Intermediary should have the documents that you will need.

*Account Applications and Other Documents*. You may find many of the forms necessary to open an account online or by calling or writing to the State Street Funds. See *Contacting the State Street Funds*.

*Opening Accounts and Purchasing By Telephone*. You may call the State Street Funds to request that the account-opening forms be sent to you or for assistance in completing the necessary paperwork. Once an account has been established, you may also call the State Street Funds to request a purchase of shares. See *Contacting the State Street Funds*.

*Opening Accounts and Purchasing By Mail*. You may send the State Street Funds your account registration form and check to open a new account. To add to an existing account, you may send your check with a written request. You also may send a written request to the State Street Funds to make an exchange. For the State Street Funds' addresses, see *Contacting the State Street Funds*.

Please be sure to check *Exchanging Shares* and *Frequent-Trading Limits* below.

<u>How to Pay for a Purchase</u> 

*By Wire*. Please call the State Street Funds for instructions and policies on purchasing shares by wire. See *Contacting the State Street Funds*. All wires should be in U.S. dollars and immediately available funds.

*By Check*. You may send a check to make initial or additional purchases to your fund account. Make your check payable to "State Street Funds" and include the appropriate fund name and account number (*e.g*., "State Street International Stock Selection Fund—a/c #xxx") in the memo section of the check.

*By Exchange*. You may purchase shares of a State Street Fund, provided the Funds' minimum investment is met, using the proceeds from the simultaneous redemption of shares of another State Street Fund of the same class. You may initiate an exchange by telephone, or by mail. See *Exchanging Shares* below.

*In-Kind Purchase of State Street Fund Shares*. The State Street Funds, in their sole discretion, may permit you to purchase shares of a State Street Fund ("State Street Fund Shares") through the exchange of other securities that you own. The market value of any securities exchanged, plus any cash, must be at least $25 million. Please consult your tax adviser regarding in-kind transactions. Please contact the State Street Funds for more information, including additional restrictions. See *Contacting the State Street Funds*.

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<u>Trade Dates-Purchases</u> 

The trade date for any purchase request received in good order will depend on the day and time the State Street Funds receive your request, the manner in which you are paying, and the type of fund you are purchasing. Each State Street Fund's NAV is calculated only on business days, that is, those days that the NYSE is open for regular trading. Purchase orders are processed at the NAV next determined after the Fund accepts a purchase order.

*For Purchases by Check, Exchange or Wire into all Funds*: If the purchase request is received in good order by the State Street Funds on a business day before the close of regular trading on the NYSE (ordinarily 4 p.m., Eastern time), the trade date will be the same day. If the purchase request is received in good order on a business day after the close of regular trading on the NYSE, or on a non-business day, the trade date will be the next business day.

If your purchase request is not in good order, it may be rejected.

For further information about purchase transactions, consult our website at www.statestreet.com/im or see *Contacting the State Street Funds.* 

<u>Other Purchase Policies You Should Know</u> 

*Check Purchases.* All checks used to purchase State Street Fund Shares must be drawn on a U.S. bank and in U.S. dollars. The State Street Funds will not accept any third-party check used for an initial purchase of Fund Shares, or any check drawn on a credit card account for any purpose.

*New Accounts.* We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify your identity, the State Street Funds reserve the right, without notice, to close your account or take such other steps as we deem reasonable.

*Refused or Rejected Purchase Requests.* The State Street Funds reserve the right to stop selling Fund Shares or to reject any purchase request at any time and without notice, including purchases requested by exchange from another State Street Fund. This right also includes the right to reject any purchase request because of a history of frequent trading by the investor or because the purchase may negatively affect a Fund's operation or performance.

*Purchases Through Pension Plans*. If you are purchasing State Street Fund Shares through a pension or other participation plan, you should contact your plan administrator for further information on purchases.

**Redeeming Shares** 

*By Telephone.* You may call the State Street Funds to request a redemption of shares. See *Contacting the State Street Funds*.

*By Mail.* You may send a written request to the State Street Funds to redeem from a Fund account or to make an exchange. See *Contacting the State Street Funds*.

If you wish to redeem Fund Shares through a Financial Intermediary, please contact that Financial Intermediary directly. Your Financial Intermediary may have different or additional requirements for the processing of redemption orders, or may be closed at times when the Fund is open. Financial Intermediaries may contact SS&C GIDS, Inc. at (877) 332-6207 or via email at nsccresearch@dstsystems.com with questions.

Please be sure to check *Exchanging Shares* and *Frequent-Trading Limits* below.

<u>Trade Date-Redemptions</u> 

The trade date for any redemption request received in good order will depend on the day and time the State Street Funds receive your request in good order and the manner in which you are redeeming.

Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for regular trading (a business day). If the redemption request is received in good order by the State Street Funds on a business day before the close of regular trading on the NYSE (ordinarily 4 p.m., Eastern time), the request will be processed the same day using that day's NAV. If the redemption request is received in good order on a business day after the close of regular trading on the NYSE, or on a non-business day, the request will be processed the next business day.

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<u>How to Receive Redemption Proceeds</u> 

Regardless of the method the Funds use to make a redemption payment, the Funds typically expect to pay out redemption proceeds on the next business day after a redemption request is received in good order. If you purchased State Street Fund Shares by check or an automatic investment program and you elect to redeem shares within 15 days of the purchase, you may experience delays in receiving redemption proceeds. In this case, the State Street Funds generally will postpone sending redemption proceeds until it can verify that the check or automatic investment program investment has been collected, but in no event will this delay exceed 15 days. There will be no such delay for redemptions following purchases paid by federal funds wire or by bank cashier's check, certified check or treasurer's check. The State Street Funds reserve the right to pay for redeemed shares within seven days after receiving a redemption order if, in the judgment of the Adviser, an earlier payment could adversely affect a Fund. The State Street Funds reserve the right to suspend the right of shareholder redemption or postpone the date of payment for more than seven days to the extent permitted by the 1940 Act.

The Transfer Agent may temporarily delay for more than seven days the disbursement of redemption proceeds from the Fund account of a "Specified Adult" (as defined in Financial Industry Regulatory Authority, Inc. ("FINRA") Rule 2165) based on a reasonable belief that financial exploitation of the Specified Adult has occurred, is occurring, has been attempted, or will be attempted, subject to certain conditions.

Under normal circumstances, each Fund expects to meet redemption requests by using cash or cash equivalents in its portfolio and/or selling portfolio assets to generate cash. The Funds also may pay redemption proceeds using cash obtained through borrowing arrangements (including under the Funds' line of credit, which is shared across all registered funds advised by SSGA FM (other than money market funds)) that may be available from time to time.

The right of any investor to receive payment with respect to any redemption may be suspended or the payment of the redemption proceeds postponed beyond 7 days in accordance with Section 22(e) of the 1940 Act and the rules thereunder, including during any period in which the NYSE is closed (other than weekends or holidays) or trading on the NYSE is restricted or if an emergency exists as a result of which disposal by a Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for a Fund fairly to determine the value of its net assets. In addition, the SEC may by order permit suspension of redemptions for the protection of shareholders of a Fund.

A Fund may pay all or a portion of your redemption proceeds by giving you securities (for example, if the Fund reasonably believes that a cash redemption may have a substantial impact on the Fund and its remaining shareholders). A redemption is generally a taxable event for shareholders, regardless of whether the redemption is satisfied in cash or in kind. You may pay transaction costs and/or taxes (including through the realization of taxable gain) to dispose of the securities, and you may receive less for them than the price at which they were valued for purposes of the redemption. In addition, you will be subject to the market risks associated with such securities until such time as you choose to dispose of the security.

During periods of deteriorating or stressed market conditions, when an increased portion of a Fund's portfolio may be comprised of less liquid investments, or during extraordinary or emergency circumstances, a Fund may be more likely to pay redemption proceeds with cash obtained through short-term borrowing arrangements (if available) or by giving you securities.

*By Electronic Bank Transfer*. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer option on an account, you must designate a bank account by completing a special form or filling out the appropriate section of your account registration form. After the option is set up on your account, you can redeem shares by electronic bank transfer on a regular schedule (Automatic Withdrawal Plan) or from time to time. Your redemption request can be initiated by telephone, or by mail.

*By Wire*. When redeeming shares of a State Street Fund, you may instruct the State Street Funds to wire your redemption proceeds ($1,000 minimum) to a previously designated bank account. Shares will be redeemed from the account on the day that the redemption instructions are received in good order. The wire redemption option is not automatic; you must designate a bank account by completing a special form or filling out the appropriate section of your account registration form. The State Street Funds typically do not charge you a fee for wiring redemption proceeds, although it reserves the right to do so. Your bank may charge a fee for receiving a wire. You are encouraged to check with your bank before initiating any transaction.

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*By Exchange*. You may have the proceeds of a State Street Fund redemption invested directly into shares of another State Street Fund of the same class. You may initiate an exchange by telephone, or by mail.

*By Check*. You may have the proceeds of a State Street Funds redemption paid by check and sent to the address shown on the State Street Funds registration record, provided that the address on the registration record has not changed within thirty (30) days of the redemption request. The State Street Funds will mail you a redemption check, generally payable to all registered account owners.

<u>Other Redemption Policies that You Should Know</u> 

*Address Changes.* If your address of record has been changed within thirty (30) days of the redemption request, the request must be in writing and bear a medallion guarantee.

*Significant/Unusual Economic or Market Activity.* During periods of significant or unusual economic or market activity, you may encounter delays attempting to give instructions by phone.

*Minimum Account Size*. If, due to your redemptions or exchanges, your account balance for a Fund falls below a minimum amount set by the Fund (presently, the minimum initial investment of your selected share class), the Fund may choose to redeem the shares in the account and mail you the proceeds. You will receive 60 days' notice that your account will be closed unless an investment is made to increase the account balance to the required minimum. Failure to bring your account balance to the required minimum within the prescribed period may result in a Fund closing your account at the NAV next determined on the day the account is closed, and mailing the proceeds to you at the address shown on the Fund's records.

**Exchanging Shares** 

An exchange occurs when you use the proceeds from the redemption of shares of one State Street Fund to simultaneously purchase shares of a different State Street Fund. Exchanges may be made within the same class (*i.e.* Class N shares for Class N shares). Class N shares are also exchangeable for other share classes of State Street Funds and would be subject to the conditions for investing in the other class of shares described in the applicable prospectus. The account holding the original shares must be registered in the same name as the account holding the new shares received in the exchange. You may make exchange requests by telephone, or by mail. See *Purchasing Shares* and *Redeeming Shares* above.

Exchanges are subject to the terms applicable to the purchases of the Fund into which you are exchanging. Exchange privileges may not be available for all State Street Funds and may be suspended or rejected. Exchanging shares of a State Street Fund for shares of another fund is a taxable event and may result in capital gain or loss. See *Tax Considerations* below.

If the NYSE is open for regular trading (generally until 4 p.m. Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. Please note that the State Street Funds reserve the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason; provided, that shareholders will be provided 60 days' advance notice of any modification or termination of the exchange privilege.

**Share Class Conversions** 

You may be able to convert your shares to a different share class of the same Fund that has a lower expense ratio provided that you are eligible to buy that share class and that certain conditions are met. This conversion feature is intended for shares held through a Financial Intermediary offering a fee-based or wrap fee program that has an agreement with SSGA FD specific for this purpose. In such instance, your shares may be automatically converted under certain circumstances. Class N shares of a State Street Fund may be converted to Class I shares of the same State Street Fund. Not all share classes are available through all Financial Intermediaries. If your shares of a Fund are converted to a different share class of the same Fund, the transaction will be based on the respective NAV of each class as of the trade date of the conversion. Consequently, you may receive fewer shares or more shares than originally owned, depending on that day's NAVs. The total value of the initially held shares, however, will equal the total value of the converted shares at the

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time of conversion. The conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported on the transaction. See the applicable prospectus for share class information. Please contact your Financial Intermediary regarding the tax consequences of any conversion and for additional information.

**Frequent-Trading Limits** 

Frequent, short-term trading, abusive trading practices and market timing (together, "Excessive Trading"), often in response to short-term fluctuations in the market, are not knowingly permitted by the State Street Funds. The State Street Funds do not accommodate frequent purchases and redemptions of Fund Shares by Fund shareholders. Excessive Trading into and out of a State Street Fund may harm a Fund's performance by disrupting portfolio management strategies and by increasing expenses. These expenses are borne by all Fund shareholders, including long-term investors who do not generate such costs.

Excessive Trading activity is generally evaluated based on roundtrip transactions in an account. A "roundtrip" transaction is defined generally as a purchase or exchange into a Fund followed, or preceded, by a redemption or exchange out of the same Fund within 30 days. A State Street Fund may, in its discretion, determine to apply a time period other than 30 days in connection with identifying roundtrip transactions. Shareholders with one or more roundtrip transactions may, in the discretion of a State Street Fund, be blocked from making additional purchases or exchanges in any State Street Fund for a period of time. A State Street Fund has discretion to determine that action is not necessary if it determines that a pattern of trading is not abusive or harmful to the affected Fund in a material way. Fund size and/or transaction size may be considered in evaluating any roundtrip transaction.

The Board of Trustees of the State Street Funds has adopted a "Market Timing/Excessive Trading Policy" (the "Policy") to discourage Excessive Trading. Under the Policy, the State Street Funds reserve the right to reject any exchanges or purchase orders by any shareholder engaging in Excessive Trading activities.

As a means to protect each State Street Fund and its shareholders from Excessive Trading:

• The State Street Funds' transfer agent compiles, monitors and reports account-level information on omnibus and underlying shareholder/participant activity. Depending on the account type, monitoring will be performed on a daily, monthly, quarterly and/or annual basis;

• The State Street Funds' distributor has obtained information from each Financial Intermediary holding shares in an omnibus account with the State Street Funds regarding whether the Financial Intermediary has adopted and maintains procedures that are reasonably designed to protect the Funds against harmful short-term trading; and

• With respect to State Street Funds that invest in securities that trade on foreign markets, pursuant to the State Street Funds' fair valuation procedures, pricing adjustments may be made based on information received from a third-party, multi-factor fair valuation pricing service.

The State Street Funds' distributor has detailed procedures that document the transparency oversight and monitoring processes performed by the State Street Funds' transfer agent.

While the State Street Funds attempt to discourage Excessive Trading, there can be no guarantee that it will be able to identify investors who are engaging in Excessive Trading or limit their trading practices. Additionally, frequent trades of small amounts may not be detected. The State Street Funds recognize that it may not always be able to detect or prevent Excessive Trading or other activity that may disadvantage the Funds or their shareholders.

A State Street Fund shareholder's right to purchase shares through an automatic investment plan or redeem shares in full (or in part through a systematic withdrawal plan) are unaffected by Excessive Trading restrictions.

**Service Options** 

<u>Dividend and Capital Gain Distribution Option</u> 

You may set up your State Street Fund account to reinvest any dividend or capital gains distribution that you receive as a Fund shareholder into the same or a different State Street Fund, or have any dividend or capital gain distribution paid by check, by wire or by check to a special payee. No interest will accrue on the amounts represented by the uncashed distribution checks. If you have elected to receive distributions by check, and the postal or other delivery service is unable to deliver the checks because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the uncashed distribution and all future distributions will be reinvested at the then-current NAV of the Fund.

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Please refer to *Dividends and Distributions* below for additional information.

<u>Automatic Withdrawal Plan</u> 

If your account balance is over $10,000, you may request periodic (monthly, quarterly, semi-annually, or annually) automatic cash withdrawals of $100 or more which can be mailed to you or any person you designate, or sent through ACH to your bank (at your selection). Proceeds from such withdrawals will be transmitted to the bank account you designate two business days after the trade is placed or executed automatically. No interest will accrue on the amounts represented by the uncashed redemption check(s). Ask your financial adviser or Financial Intermediary for details.

<u>Telephone Redemptions and Exchanges</u> 

You may set up your State Street Fund account so that if you request over the telephone to redeem State Street Fund Shares, the redemption proceeds will automatically be wired to a designated bank account. You also may set up your account to permit the State Street Funds to act on your telephonic instructions to exchange State Street Funds shares or to establish a systematic exchange plan. You may choose the date, the frequency (monthly, quarterly or annually) of systematic exchanges of your shares in one State Street Fund to another State Street Fund of the same share class.

<u>Automatic Investment Plan</u> 

Once the initial investment has been accepted, you may make subsequent investments of $100 or more monthly, quarterly or annually by direct deposit by debiting your bank checking or savings account. Once this option has been established, you may call the State Street Funds to make additional automatic purchases, to change the amount of the existing automatic purchase, or to stop it. Each State Street Fund reserves the right to cancel your automatic investment plan if any correspondence sent by the Fund is returned by the postal or other delivery service as "undeliverable."

**Additional Shareholder Information** 

<u>Account Transfers</u> 

To effect a change in account registration (for example, to add a new joint owner), a shareholder of a State Street Fund may request to open a new account in the same State Street Fund (referred to as a "transfer"). To effect a transfer, the State Street Funds require a completed and signed new account application, including all necessary additional documents required by the form, and a letter of instruction. The letter of instruction must include the name of the State Street Fund and the original account number, and must be signed by all registered owners of the original account and include a medallion guarantee.

<u>Responsibility for Fraud</u> 

The State Street Funds will not be responsible for any account losses because of fraud if we reasonably believe that the person transacting business on an account is authorized to do so. Please take precautions to protect yourself from fraud. Keep your account information private, and immediately review any account statements that we provide to you. It is important that you contact the State Street Funds immediately about any transactions or changes to your account that you believe to be unauthorized.

<u>Right to Change Policies</u> 

In addition to the rights expressly stated elsewhere in this Prospectus, the State Street Funds reserve the right, in the future, to:

1. Alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, service, or privilege at any time;

2. Accept initial purchases by telephone;

3. Freeze any account and/or suspend account services if the State Street Funds has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners, or if we reasonably believe a fraudulent transaction may occur or has occurred;

4. Temporarily freeze any account and/or suspend account services upon initial notification to the State Street Funds of the death of the shareholder until the State Street Funds receive required documentation in good order;

5. Alter, impose, discontinue, or waive any redemption fee, account service fee, or other fees charged to a group of shareholders; and

6. Redeem an account or suspend account privileges, without the owner's permission to do so, in cases of threatening conduct or activity the State Street Funds believe to be suspicious, fraudulent, or illegal.

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Changes may affect any or all investors. These actions will be taken when, at the sole discretion of the SSGA FM management, we reasonably believe they are deemed to be in the best interest of the State Street Fund.

<u>Unclaimed Property</u> 

Many states have unclaimed property rules that provide for transfer to the state (also known as "escheatment") of unclaimed property under various circumstances. These circumstances include inactivity (e.g., no owner-initiated contact for a certain period), returned mail (e.g., when mail sent to a shareholder is returned by the post office as undeliverable), or a combination of both inactivity and returned mail. If the Funds' transfer agent identifies property as unclaimed, it will attempt to contact the shareholder, but if that attempt is unsuccessful, the account may be considered abandoned and escheated to the state after the passage of a certain period of time (as required by applicable state law).

It is your responsibility to ensure that you maintain a correct address for your account, and maintain contact in ways such as by contacting the Funds' transfer agent by mail or telephone or accessing your account through the Funds' website, and promptly cashing all checks for dividends, capital gains and redemptions. State requirements for maintaining contact with an account can vary and are subject to change. If you invest in a Fund through a financial intermediary, we encourage you to contact the financial intermediary regarding applicable state unclaimed property laws. The Funds, the transfer agent and the distributor will not be liable to shareholders or their representatives for good faith compliance with state unclaimed property laws. Please check your state's unclaimed or abandoned property website for specific information.

If you are a resident of the state of Texas, you may designate a representative to receive escheatment notifications by completing and submitting a designation form, which you can find on the website of the Texas Comptroller. Designating such a representative may be beneficial, since Texas law provides that the escheatment period will cease if the representative, after receiving an escheatment notification regarding your account, communicates knowledge of your location and confirms that you have not abandoned your account. You can mail a completed designation form to a Fund (if you hold shares directly with a Fund) or to your financial intermediary (if you do not hold shares directly with a Fund).

**Dividends and Distributions**

Each Fund intends to declare and pay dividends as noted in the following table:

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| | | |
|:---|:---|:---|
| **SSGA Fund** | &nbsp;&nbsp;&nbsp; **Dividends**<br> **Declared**<br>| **Dividends Paid** |
| State Street S&P 500 Index Fund | Quarterly | Quarterly |
| State Street International Stock Selection Fund | Annually | Annually |

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Excess dividends and capital gains, if any, generally are distributed in December.

When an SSGA Fund pays a dividend or capital gains, the NAV per share is reduced by the amount of the payment.

*Distribution Options.* You can choose from four different distribution options as indicated on the application:

• Reinvestment Option—Dividends and capital gain distributions will be automatically reinvested in additional shares of a Fund. If you do not indicate a choice on the application, this option will be automatically assigned.

• Income-Earned Option—Capital gain distributions will be automatically reinvested, but a check, direct deposit or wire will be sent for each dividend distribution.

• Cash Option—A check, wire or direct deposit will be sent for each dividend and capital gain distribution.

• Direct Dividends Option—Dividends and capital gain distributions will be automatically invested in another identically registered SSGA Fund of the same share class.

If you have elected to receive distributions by check, and the postal or other delivery service is unable to deliver the checks because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the uncashed distribution and all future distributions will be reinvested at the then-current NAV of the Fund.

*Dividend Policy Upon Purchase*. A shareholder will receive a dividend or capital gain distribution only if the shareholder purchased Fund Shares by the close of the record date of such dividend or capital gain distribution.

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<u>Delivery of Documents to Accounts Sharing an Address</u> 

To reduce expenses, we may mail only one copy of the Funds' Prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please call us at (800) 647-7327, or contact your financial institution. We will begin sending you individual copies thirty (30) days after receiving your request.

**Tax Considerations**

The following discussion is a summary of some important U.S. federal income tax considerations generally applicable to an investment in a Fund. Your investment in a Fund may have other tax implications. Please consult your tax advisor about federal, state, local, foreign or other tax laws applicable to you. Investors, including non-U.S. investors, may wish to consult the SAI tax section for additional disclosure.

Each Fund has elected to be treated as a regulated investment company and intends each year to qualify and to be eligible to be treated as such. A regulated investment company generally is not subject to tax at the corporate level on income and gains that are timely distributed to shareholders. In order to qualify and be eligible for treatment as a regulated investment company, a Fund must, among other things, satisfy diversification, 90% gross income and distribution requirements. A Fund's failure to qualify as a regulated investment company would result in corporate level taxation, and consequently, a reduction in income available for distribution to shareholders.

For U.S. federal income tax purposes, distributions of investment income generally are taxable to you as ordinary income. Taxes on distributions of capital gains generally are determined by how long the applicable Fund owned (or is deemed to have owned) the investments that generated them, rather than how long you have owned your Fund Shares. Distributions of net capital gains (that is, the excess of net long-term capital gains over net short-term capital losses) from the sale of investments that a Fund owned (or is deemed to have owned) for more than one year that are properly reported by a Fund as capital gain dividends generally will be treated as long-term capital gain includible in your net capital gain and taxed to individuals at reduced rates. Distributions of gains from investments that a Fund owned (or is deemed to have owned) for one year or less generally will be taxable to you as ordinary income when distributed to you by the Fund. Distributions of investment income reported by a Fund as derived from "qualified dividend income," which will not include income from the Fund's portfolio securities on loan, are taxed to individuals at the rates applicable to net capital gain, provided holding period and other requirements are met by both the shareholder and the Fund. Distributions are taxable to you even if they are paid from income or gains earned by a Fund before your investment (and thus were included in the price you paid for your shares). Distributions may also be subject to state and local taxes and are taxable whether you receive them in cash or reinvest them in additional shares.

Any gain resulting from the redemption or other taxable disposition of Fund Shares generally will also be taxable to you as either short-term or long-term capital gain, depending upon how long you held such Fund Shares.

An additional 3.8% Medicare contribution tax is imposed on the "net investment income" of individuals, estates and trusts to the extent their income exceeds certain threshold amounts. Net investment income generally includes for this purpose dividends paid by a Fund, including any capital gain dividends, and net gains recognized on the redemption (or other taxable disposition) of Fund Shares.

A Fund's income from or proceeds of dispositions of its investments in non-U.S. assets may be subject to non-U.S. withholding or other taxes, which will reduce the yield on those investments. In certain instances, a Fund may be entitled to elect to pass through to its shareholders a credit (or deduction, for a shareholder that itemizes deductions and so chooses) for foreign taxes (if any) borne with respect to foreign securities income earned by the Fund. If the Fund so elects, shareholders will include in gross income from foreign sources their pro rata shares of such taxes, if any, treated as paid by the Fund. There can be no assurance that a Fund will make such election, even if it is eligible to do so. If a Fund does not qualify for or does not make such election, shareholders will not be entitled separately to claim a credit or deduction with respect to foreign taxes incurred by the Fund; in that case the foreign tax will nonetheless reduce the Fund's taxable income. Shareholders that are not subject to U.S. federal income tax, and those who invest in a Fund through tax-advantaged accounts (including those who invest through IRAs or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed through by the Fund. Under certain circumstances, if a Fund receives a refund of foreign taxes paid in respect of a prior year, the value of Fund Shares could be affected or any foreign tax credits or deductions passed through to shareholders in respect of the Fund's foreign taxes for the current year could be reduced.

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Certain of a Fund's investment practices, including derivative transactions and investments in debt obligations issued or purchased at a discount, will be subject to special and complex U.S. federal income tax provisions. These special rules may affect the timing, character, and/or amount of a Fund's distributions, and may require the Fund to sell its investments at a time when it is not advantageous to do so.

If you are not a U.S. person, dividends paid by a Fund that the Fund properly reports as capital gain dividends, short-term capital gain dividends, or interest-related dividends, each as further defined in the SAI, are not subject to withholding of U.S. federal income tax, provided that certain requirements are met. A Fund is permitted, but is not required, to report any part of its dividends as are eligible for such treatment. A Fund's dividends other than those the Fund so reports as capital gain dividends, short-term capital gain dividends, or interest-related dividends generally will be subject to U.S. withholding tax at a 30% rate (or lower applicable treaty rate). See each Fund's SAI for further information.

The U.S. Treasury and the Internal Revenue Service ("IRS") generally require a Fund to obtain information sufficient to identify the status of each shareholder under sections 1471-1474 of the Code, and the U.S. Treasury and IRS guidance issued thereunder (collectively, "FATCA") or under an applicable intergovernmental agreement between the United States and a foreign government. Please see the SAI for more information on FATCA reporting requirements.

*Cost Basis Reporting*. U.S. Treasury regulations mandate cost basis reporting to shareholders and the IRS for redemptions of Fund Shares acquired on or after January 1, 2012 ("Post Effective Date Shares"). If you acquire and hold shares directly through the Funds and not through a Financial Intermediary, SS&C GIDS, Inc. will use a default average cost basis methodology for tracking and reporting your cost basis on Post Effective Date Shares, unless you request, in writing, another cost basis reporting methodology.

**Financial Intermediary Arrangements**

**Distribution Arrangements and Rule 12b-1 Fees**

The Funds have adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act under which a Fund may compensate SSGA FD (or others) for services in connection with the distribution of a Fund's Class N shares and Class A shares of State Street International Stock Selection Fund and for services provided to shareholders in these classes (the "Plan"). The Plan calls for payments at an annual rate (based on average daily net assets) of 0.25% of a Fund's net assets attributable to its Class N shares or Class A shares of State Street International Stock Selection Fund. As indicated in the expense table for certain Funds, the Board of Trustees of SSGA Funds has limited the amount that may be paid under the Plan for certain Funds. Because these fees are paid out of the assets of a Fund attributable to its Class N shares and Class A shares of State Street International Stock Selection Fund on an ongoing basis, they will increase the cost of your investment and may cost you more over time than paying other types of sales charges. Long-term shareholders of a fund may pay more in Rule 12b-1 fees than the economic equivalent of the maximum front-end sales charge permitted by the Financial Industry Regulatory Authority, Inc. ("FINRA").

A Fund may pay distribution fees and other amounts described in this Prospectus at a time when shares of that Fund are unavailable for purchase.

**Other Payments to Financial Intermediaries**

In addition to payments under the Plan described above, the Funds may reimburse SSGA FD or its affiliates for payments made to Financial Intermediaries that provide certain administrative, recordkeeping, and account maintenance services. The amount of the reimbursement and the manner in which it is calculated are reviewed by the Trustees periodically.

Financial Intermediaries are firms that sell shares of mutual funds, including the Funds, and/or provide certain administrative and account maintenance services to mutual fund investors. Financial Intermediaries may include, among others, brokers, financial planners or advisers, banks, retirement plan recordkeepers and insurance companies.

In some cases, a Financial Intermediary may hold its clients' Fund Shares in nominee or street name and may utilize omnibus accounts. Shareholder services provided by a Financial Intermediary may (though they will not necessarily) include, among other things: establishing and maintaining shareholder account registrations; receiving and processing purchase and redemption orders, including aggregated orders and delivering orders to the Fund's transfer agent; processing and mailing trade confirmations, periodic statements, prospectuses, annual reports, semiannual reports, share

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holder notices, and other SEC-required communications; capturing and processing tax data; issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations; and collecting and posting distributions to shareholder accounts.

The Financial Intermediary is often compensated by SSGA FD or its affiliates for the services it performs and in such cases is typically paid continually over time, during the period when the Financial Intermediary's clients hold investments in the Funds. The amount of continuing compensation paid by SSGA FD or its affiliates to different Financial Intermediaries for distribution and/or shareholder services varies. Any compensation is typically a percentage of the value of the Financial Intermediary's clients' investments in the Funds or a per account fee. The variation in compensation may, but will not necessarily, reflect enhanced or additional services provided by the Financial Intermediary.

If you invest through a Financial Intermediary and meet the eligibility criteria for more than one share class, you should discuss with your Financial Intermediary which share class is appropriate for you. Your financial adviser and the Financial Intermediary employing him or her may have an incentive to recommend one share class over another, when you are eligible to invest in more than one share class. Please speak with your financial adviser to learn more about the total amounts paid to your financial adviser and his or her firm by the Funds or its affiliates with respect to the different share classes offered by the Funds.

SSGA FD and its affiliates (including SSGA FM), at their own expense and out of their own assets, may also provide other compensation to Financial Intermediaries in connection with sales of the Funds' shares or the servicing of shareholders or shareholder accounts. Such compensation may include, but is not limited to, financial assistance to Financial Intermediaries in connection with conferences, sales, or training programs for their employees; seminars for the public; advertising or sales campaigns; or other Financial Intermediary-sponsored special events. In some instances, this compensation may be made available only to certain Financial Intermediaries whose representatives have sold or are expected to sell significant amounts of shares. Dealers may not use sales of the Funds' shares to qualify for this compensation to the extent prohibited by the laws or rules of any state or any self-regulatory agency, such as FINRA.

If payments to Financial Intermediaries by the distributor or adviser for a particular mutual fund complex exceed payments by other mutual fund complexes, your financial adviser and the Financial Intermediary employing him or her may have an incentive to recommend that fund complex over others. Please speak with your financial adviser to learn more about the total amounts paid to your financial adviser and his or her firm by SSGA FD and its affiliates and by sponsors of other mutual funds he or she may recommend to you. You should also consult disclosures made by your Financial Intermediary at the time of purchase.

*Third-Party Transactions*. The State Street Funds have authorized certain Financial Intermediaries to accept purchase, redemption and exchange orders on the State Street Funds' behalf. Orders received for a State Street Fund by a Financial Intermediary that has been authorized to accept orders on the Fund's behalf (or other Financial Intermediaries designated by the Financial Intermediary) will be deemed accepted by the Fund at the time they are received by the Financial Intermediary and will be priced based on the Fund's next NAV determination as long as the Financial Intermediary transmits the order in good form and in a timely manner to the applicable State Street Fund(s). The State Street Funds will be the sole party to determine if a trade is received in good order. The Financial Intermediary is responsible for transmitting your orders and associated funds in good form and in a timely manner to the applicable State Street Fund(s). The State Street Funds will not be responsible for delays by the Financial Intermediary in transmitting your orders, including timely transfer of payment, to a Fund.

If you are purchasing, selling, exchanging or holding State Street Fund shares through a program of services offered by a Financial Intermediary, you may be required by the Financial Intermediary to pay additional fees. You should contact the Financial Intermediary for information concerning what additional fees, if any, may be charged.

<u>Information Regarding Standard & Poor's Corporation</u>

The S&P 500 is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and has been licensed for use by the Adviser ("Licensee"). Standard & Poor's<sup>®</sup>, S&P<sup>®</sup> and S&P 500<sup>®</sup> are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones<sup>®</sup> is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sub-licensed for certain purposes by the Adviser. It is not possible to invest directly in an index. State Street S&P 500 Index Fund is not sponsored, endorsed, sold or marketed by SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively, "S&P Dow Jones Indices"). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the State Street S&P 500

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Index Fund or any member of the public regarding the advisability of investing in securities generally or in State Street S&P 500 Index Fund particularly or the ability of the S&P 500 to track general market performance. S&P Dow Jones Indices licenses to Licensee the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P 500 is determined, composed and calculated by S&P Dow Jones Indices without regard to Licensee or the State Street S&P 500 Index Fund. S&P Dow Jones Indices have no obligation to take the needs of Licensee or the owners of State Street S&P 500 Index Fund into consideration in determining, composing or calculating the S&P 500. S&P Dow Jones Indices is not responsible for and has not participated in the determination of the prices, and amount of State Street S&P 500 Index Fund or the timing of the issuance or sale of State Street S&P 500 Index Fund or in the determination or calculation of the equation by which State Street S&P 500 Index Fund is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of State Street S&P 500 Index Fund. S&P Dow Jones Indices LLC is not an investment or tax advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR THIRD PARTY LICENSOR GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND THIRD-PARTY LICENSOR SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND THIRD PARTY LICENSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE STATE STREET S&P 500 INDEX FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR THIRD PARTY LICENSOR BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND LICENSEE, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

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**Financial Highlights**

The financial highlight tables on the following pages are intended to help you understand the financial performance of the below classes for each of the Funds for the past five fiscal years. Certain information reflects the performance results for a single Fund Share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information has been audited by Ernst & Young LLP, the Trust's independent registered public accounting firm, whose reports, along with each Fund's financial highlights and financial statements, is included in each Fund's Form N-CSR filing, which are available upon request. Any references to Notes in these financial highlight tables refer to the "Notes to Financial Statements" section of each Fund's financial statements and the financial information included in these tables should be read in conjunction with the financial statements incorporated by reference in the SAI.

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**STATE STREET S&P 500 INDEX FUND**

**FINANCIAL HIGHLIGHTS**

***Selected data for a share outstanding throughout each period***

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year**<br> **Ended**<br> **8/31/25**<br>| **Year**<br> **Ended**<br> **8/31/24**<br>| **Year**<br> **Ended**<br> **8/31/23**<br>| **Year**<br> **Ended**<br> **8/31/22**<br>| **Year**<br> **Ended**<br> **8/31/21**<br>|
| **Net asset value, beginning of period** | &nbsp;&nbsp;&nbsp; $267.50 | &nbsp;&nbsp;&nbsp; $236.97 | &nbsp;&nbsp;&nbsp; $226.34 | &nbsp;&nbsp;&nbsp; $286.85 | &nbsp;&nbsp;&nbsp; $253.59 |
| **Income (loss) from investment operations:** |  |  |  |  |  |
| Net investment income (loss) (a) | &nbsp;&nbsp;&nbsp;&nbsp;3.07 | &nbsp;&nbsp;&nbsp;&nbsp;3.22 | &nbsp;&nbsp;&nbsp;&nbsp;3.43 | &nbsp;&nbsp;&nbsp;&nbsp;3.36 | &nbsp;&nbsp;&nbsp;&nbsp;3.43 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;36.67 | &nbsp;&nbsp;&nbsp;&nbsp;55.11 | &nbsp;&nbsp;&nbsp;&nbsp;28.42 | &nbsp;&nbsp;&nbsp; (32.17)<br>| &nbsp;&nbsp;&nbsp;&nbsp;66.60 |
| Total from investment operations | &nbsp;&nbsp;&nbsp;&nbsp;39.74 | &nbsp;&nbsp;&nbsp;&nbsp;58.33 | &nbsp;&nbsp;&nbsp;&nbsp;31.85 | &nbsp;&nbsp;&nbsp; (28.81)<br>| &nbsp;&nbsp;&nbsp;&nbsp;70.03 |
| **Distributions to shareholders from:** |  |  |  |  |  |
| Net investment income | &nbsp;&nbsp;&nbsp; (3.18)<br>| &nbsp;&nbsp;&nbsp; (3.33)<br>| &nbsp;&nbsp;&nbsp; (3.43)<br>| &nbsp;&nbsp;&nbsp; (4.54)<br>| &nbsp;&nbsp;&nbsp; (2.88)<br>|
| Net realized gains | &nbsp;&nbsp;&nbsp; (20.95)<br>| &nbsp;&nbsp;&nbsp; (24.47)<br>| &nbsp;&nbsp;&nbsp; (17.79)<br>| &nbsp;&nbsp;&nbsp; (27.16)<br>| &nbsp;&nbsp;&nbsp; (33.89)<br>|
| Total distributions | &nbsp;&nbsp;&nbsp; (24.13)<br>| &nbsp;&nbsp;&nbsp; (27.80)<br>| &nbsp;&nbsp;&nbsp; (21.22)<br>| &nbsp;&nbsp;&nbsp; (31.70)<br>| &nbsp;&nbsp;&nbsp; (36.77)<br>|
| **Net asset value, end of period** | &nbsp;&nbsp;&nbsp; $283.11 | &nbsp;&nbsp;&nbsp; $267.50 | &nbsp;&nbsp;&nbsp; $236.97 | &nbsp;&nbsp;&nbsp; $226.34 | &nbsp;&nbsp;&nbsp; $286.85 |
| **Total return (b)** | &nbsp;&nbsp;&nbsp;&nbsp; 15.69<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 26.92<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 15.81<br> %<br>| &nbsp;&nbsp;&nbsp; (11.36)%<br>| &nbsp;&nbsp;&nbsp;&nbsp; 31.01<br> %<br>|
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (in 000s) | &nbsp;&nbsp;&nbsp; $1594651 | &nbsp;&nbsp;&nbsp; $1517776 | &nbsp;&nbsp;&nbsp; $1329884 | &nbsp;&nbsp;&nbsp; $1370769 | &nbsp;&nbsp;&nbsp; $1709109 |
| **Ratios to average net assets:** |  |  |  |  |  |
| Total expenses | &nbsp;&nbsp;&nbsp;&nbsp; 0.17<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.16<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.17<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.17<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.18<br> %<br>|
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp; 0.16<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.16<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.16<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.16<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.16<br> %(c)(d)<br>|
| Net investment income (loss) | &nbsp;&nbsp;&nbsp;&nbsp; 1.16<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.33<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.56<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.31<br> %(c)(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.33<br> %(c)(d)<br>|
| Portfolio turnover rate | &nbsp;&nbsp;&nbsp; 2<br> %<br>| &nbsp;&nbsp;&nbsp; 2<br> %<br>| &nbsp;&nbsp;&nbsp; 2<br> %<br>| &nbsp;&nbsp;&nbsp; 2<br> %<br>| &nbsp;&nbsp;&nbsp; 4<br> %<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;(a) Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year.

&nbsp;&nbsp;&nbsp;&nbsp;(b) Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of the Fund. Results represent past performance and are not indicative of future results.

&nbsp;&nbsp;&nbsp;&nbsp;(c) Reflects amounts waived by the administrator.

&nbsp;&nbsp;&nbsp;&nbsp;(d) Reflects amounts waived and/or reimbursed by the investment adviser.

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**STATE STREET INTERNATIONAL STOCK SELECTION FUND**

**FINANCIAL HIGHLIGHTS**

***Selected data for a share outstanding throughout each period***

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
|  | **Year Ended**<br> **8/31/25**<br>| **Year Ended**<br> **8/31/24**<br>| **Year Ended**<br> **8/31/23**<br>| **Year Ended**<br> **8/31/22**<br>| **Year Ended**<br> **8/31/21**<br>|
| **Net asset value, beginning of period** | &nbsp;&nbsp;&nbsp; $12.22 | &nbsp;&nbsp;&nbsp; $10.41 | &nbsp;&nbsp;&nbsp; $9.11 | &nbsp;&nbsp;&nbsp; $11.84 | &nbsp;&nbsp;&nbsp; $9.46 |
| **Income (loss) from investment operations:** |  |  |  |  |  |
| Net investment income (loss) (a)(b) | &nbsp;&nbsp;&nbsp;&nbsp;0.32 | &nbsp;&nbsp;&nbsp;&nbsp;0.26 | &nbsp;&nbsp;&nbsp;&nbsp;0.17 | &nbsp;&nbsp;&nbsp;&nbsp;0.32 | &nbsp;&nbsp;&nbsp;&nbsp;0.25 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;2.36 | &nbsp;&nbsp;&nbsp;&nbsp;1.78 | &nbsp;&nbsp;&nbsp;&nbsp;1.16 | &nbsp;&nbsp;&nbsp; (2.57)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.31 |
| Total from investment operations | &nbsp;&nbsp;&nbsp;&nbsp;2.68 | &nbsp;&nbsp;&nbsp;&nbsp;2.04 | &nbsp;&nbsp;&nbsp;&nbsp;1.33 | &nbsp;&nbsp;&nbsp; (2.25)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.56 |
| **Distributions to shareholders from:** |  |  |  |  |  |
| Net investment income | &nbsp;&nbsp;&nbsp; (0.39)<br>| &nbsp;&nbsp;&nbsp; (0.23)<br>| &nbsp;&nbsp;&nbsp; (0.03)<br>| &nbsp;&nbsp;&nbsp; (0.48)<br>| &nbsp;&nbsp;&nbsp; (0.18)<br>|
| Net asset value, end of period | &nbsp;&nbsp;&nbsp; $14.51 | &nbsp;&nbsp;&nbsp; $12.22 | &nbsp;&nbsp;&nbsp; $10.41 | &nbsp;&nbsp;&nbsp; $9.11 | &nbsp;&nbsp;&nbsp; $11.84 |
| **Total return (c)** | &nbsp;&nbsp;&nbsp;&nbsp; 22.83<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 19.89<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 14.68<br> %<br>| &nbsp;&nbsp;&nbsp; (19.76)%<br>| &nbsp;&nbsp;&nbsp;&nbsp; 27.33<br> %<br>|
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (in 000s) | &nbsp;&nbsp;&nbsp; $673 | &nbsp;&nbsp;&nbsp; $126 | &nbsp;&nbsp;&nbsp; $95 | &nbsp;&nbsp;&nbsp; $3725 | &nbsp;&nbsp;&nbsp; $4642 |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Total expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 1.42<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.49<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.67<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.44<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.55<br> %<br>|
| Net expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 1.18<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.24<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.43<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.20<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.29<br> %<br>|
| Net investment income (loss) (b) | &nbsp;&nbsp;&nbsp;&nbsp; 2.49<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.40<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.87<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.05<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.30<br> %<br>|
| Portfolio turnover rate | &nbsp;&nbsp;&nbsp; 131<br> %<br>| &nbsp;&nbsp;&nbsp; 98<br> %<br>| &nbsp;&nbsp;&nbsp; 106<br> %<br>| &nbsp;&nbsp;&nbsp; 120<br> %<br>| &nbsp;&nbsp;&nbsp; 111<br> %<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;(a) Average daily shares outstanding were used for this calculation.

&nbsp;&nbsp;&nbsp;&nbsp;(b) May reflect amounts waived and/or reimbursed by the investment adviser and for certain funds, custody credit arrangements.

&nbsp;&nbsp;&nbsp;&nbsp;(c) Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of the Fund. Results represent past performance and are not indicative of future results.

------

**STATE STREET INTERNATIONAL STOCK SELECTION FUND**

**FINANCIAL HIGHLIGHTS** 

***Selected data for a share outstanding throughout each period***

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
|  | **Year Ended**<br> **8/31/25**<br>| **Year Ended**<br> **8/31/24**<br>| **Year Ended**<br> **8/31/23**<br>| **Year Ended**<br> **8/31/22**<br>| **Year Ended**<br> **8/31/21**<br>|
| **Net asset value, beginning of period** | &nbsp;&nbsp;&nbsp; $11.85 | &nbsp;&nbsp;&nbsp; $10.43 | &nbsp;&nbsp;&nbsp; $9.17 | &nbsp;&nbsp;&nbsp; $11.93 | &nbsp;&nbsp;&nbsp; $9.51 |
| **Income (loss) from investment operations:** |  |  |  |  |  |
| Net investment income (loss) (a)(b) | &nbsp;&nbsp;&nbsp;&nbsp;0.34 | &nbsp;&nbsp;&nbsp;&nbsp;0.30 | &nbsp;&nbsp;&nbsp;&nbsp;0.34 | &nbsp;&nbsp;&nbsp;&nbsp;0.37 | &nbsp;&nbsp;&nbsp;&nbsp;0.31 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;2.30 | &nbsp;&nbsp;&nbsp;&nbsp;1.73 | &nbsp;&nbsp;&nbsp;&nbsp;1.27 | &nbsp;&nbsp;&nbsp; (2.59)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.32 |
| Total from investment operations | &nbsp;&nbsp;&nbsp;&nbsp;2.64 | &nbsp;&nbsp;&nbsp;&nbsp;2.03 | &nbsp;&nbsp;&nbsp;&nbsp;1.61 | &nbsp;&nbsp;&nbsp; (2.22)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.63 |
| **Distributions to shareholders from:** |  |  |  |  |  |
| Net investment income | &nbsp;&nbsp;&nbsp; (0.42)<br>| &nbsp;&nbsp;&nbsp; (0.61)<br>| &nbsp;&nbsp;&nbsp; (0.35)<br>| &nbsp;&nbsp;&nbsp; (0.54)<br>| &nbsp;&nbsp;&nbsp; (0.21)<br>|
| Net asset value, end of period | &nbsp;&nbsp;&nbsp; $14.07 | &nbsp;&nbsp;&nbsp; $11.85 | &nbsp;&nbsp;&nbsp; $10.43 | &nbsp;&nbsp;&nbsp; $9.17 | &nbsp;&nbsp;&nbsp; $11.93 |
| **Total return (c)** | &nbsp;&nbsp;&nbsp;&nbsp; 23.20<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 20.44<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 17.82<br> %<br>| &nbsp;&nbsp;&nbsp; (19.47)%<br>| &nbsp;&nbsp;&nbsp;&nbsp; 27.94<br> %<br>|
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (in 000s) | &nbsp;&nbsp;&nbsp; $4515 | &nbsp;&nbsp;&nbsp; $3291 | &nbsp;&nbsp;&nbsp; $2456 | &nbsp;&nbsp;&nbsp; $2604 | &nbsp;&nbsp;&nbsp; $3419 |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Total expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 1.05<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.09<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.11<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.04<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.11<br> %<br>|
| Net expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 0.82<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.84<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.87<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.81<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.85<br> %<br>|
| Net investment income (loss) (b) | &nbsp;&nbsp;&nbsp;&nbsp; 2.76<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.81<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.42<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.46<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.88<br> %<br>|
| Portfolio turnover rate | &nbsp;&nbsp;&nbsp; 131<br> %<br>| &nbsp;&nbsp;&nbsp; 98<br> %<br>| &nbsp;&nbsp;&nbsp; 106<br> %<br>| &nbsp;&nbsp;&nbsp; 120<br> %<br>| &nbsp;&nbsp;&nbsp; 111<br> %<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;(a) Average daily shares outstanding were used for this calculation.

&nbsp;&nbsp;&nbsp;&nbsp;(b) May reflect amounts waived and/or reimbursed by the investment adviser and for certain funds, custody credit arrangements.

&nbsp;&nbsp;&nbsp;&nbsp;(c) Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of the Fund. Results represent past performance and are not indicative of future results.

------

**STATE STREET INTERNATIONAL STOCK SELECTION FUND**

**FINANCIAL HIGHLIGHTS** 

***Selected data for a share outstanding throughout each period***

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class K** | **Class K** | **Class K** | **Class K** | **Class K** |
|  | **Year Ended**<br> **8/31/25**<br>| **Year Ended**<br> **8/31/24**<br>| **Year Ended**<br> **8/31/23**<br>| **Year Ended**<br> **8/31/22**<br>| **Year Ended**<br> **8/31/21**<br>|
| **Net asset value, beginning of period** | &nbsp;&nbsp;&nbsp; $11.85 | &nbsp;&nbsp;&nbsp; $10.43 | &nbsp;&nbsp;&nbsp; $9.17 | &nbsp;&nbsp;&nbsp; $11.93 | &nbsp;&nbsp;&nbsp; $9.52 |
| **Income (loss) from investment operations:** |  |  |  |  |  |
| Net investment income (loss) (a)(b) | &nbsp;&nbsp;&nbsp;&nbsp;0.35 | &nbsp;&nbsp;&nbsp;&nbsp;0.31 | &nbsp;&nbsp;&nbsp;&nbsp;0.36 | &nbsp;&nbsp;&nbsp;&nbsp;0.35 | &nbsp;&nbsp;&nbsp;&nbsp;0.32 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;2.30 | &nbsp;&nbsp;&nbsp;&nbsp;1.73 | &nbsp;&nbsp;&nbsp;&nbsp;1.25 | &nbsp;&nbsp;&nbsp; (2.57)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.31 |
| Total from investment operations | &nbsp;&nbsp;&nbsp;&nbsp;2.65 | &nbsp;&nbsp;&nbsp;&nbsp;2.04 | &nbsp;&nbsp;&nbsp;&nbsp;1.61 | &nbsp;&nbsp;&nbsp; (2.22)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.63 |
| **Distributions to shareholders from:** |  |  |  |  |  |
| Net investment income | &nbsp;&nbsp;&nbsp; (0.43)<br>| &nbsp;&nbsp;&nbsp; (0.62)<br>| &nbsp;&nbsp;&nbsp; (0.35)<br>| &nbsp;&nbsp;&nbsp; (0.54)<br>| &nbsp;&nbsp;&nbsp; (0.22)<br>|
| Net asset value, end of period | &nbsp;&nbsp;&nbsp; $14.07 | &nbsp;&nbsp;&nbsp; $11.85 | &nbsp;&nbsp;&nbsp; $10.43 | &nbsp;&nbsp;&nbsp; $9.17 | &nbsp;&nbsp;&nbsp; $11.93 |
| **Total return (c)** | &nbsp;&nbsp;&nbsp;&nbsp; 23.38<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 20.45<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 18.01<br> %<br>| &nbsp;&nbsp;&nbsp; (19.42)%<br>| &nbsp;&nbsp;&nbsp;&nbsp; 27.97<br> %<br>|
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (in 000s) | &nbsp;&nbsp;&nbsp; $47857 | &nbsp;&nbsp;&nbsp; $48521 | &nbsp;&nbsp;&nbsp; $45320 | &nbsp;&nbsp;&nbsp; $66731 | &nbsp;&nbsp;&nbsp; $76748 |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Total expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 0.99<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.00<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.99<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.98<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.01<br> %<br>|
| Net expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 0.75<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.75<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.75<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.75<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.75<br> %<br>|
| Net investment income (loss) (b) | &nbsp;&nbsp;&nbsp;&nbsp; 2.90<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.87<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.70<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.25<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.93<br> %<br>|
| Portfolio turnover rate | &nbsp;&nbsp;&nbsp; 131<br> %<br>| &nbsp;&nbsp;&nbsp; 98<br> %<br>| &nbsp;&nbsp;&nbsp; 106<br> %<br>| &nbsp;&nbsp;&nbsp; 120<br> %<br>| &nbsp;&nbsp;&nbsp; 111<br> %<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;(a) Average daily shares outstanding were used for this calculation.

&nbsp;&nbsp;&nbsp;&nbsp;(b) May reflect amounts waived and/or reimbursed by the investment adviser and for certain funds, custody credit arrangements.

&nbsp;&nbsp;&nbsp;&nbsp;(c) Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of the Fund. Results represent past performance and are not indicative of future results.

------

**STATE STREET INTERNATIONAL STOCK SELECTION FUND**

**FINANCIAL HIGHLIGHTS** 

***Selected data for a share outstanding throughout each period***

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class N** | **Class N** | **Class N** | **Class N** | **Class N** |
|  | **Year Ended**<br> **8/31/25**<br>| **Year Ended**<br> **8/31/24**<br>| **Year Ended**<br> **8/31/23**<br>| **Year Ended**<br> **8/31/22**<br>| **Year Ended**<br> **8/31/21**<br>|
| **Net asset value, beginning of period** | &nbsp;&nbsp;&nbsp; $11.87 | &nbsp;&nbsp;&nbsp; $10.45 | &nbsp;&nbsp;&nbsp; $9.18 | &nbsp;&nbsp;&nbsp; $11.94 | &nbsp;&nbsp;&nbsp; $9.53 |
| **Income (loss) from investment operations:** |  |  |  |  |  |
| Net investment income (loss) (a)(b) | &nbsp;&nbsp;&nbsp;&nbsp;0.30 | &nbsp;&nbsp;&nbsp;&nbsp;0.29 | &nbsp;&nbsp;&nbsp;&nbsp;0.33 | &nbsp;&nbsp;&nbsp;&nbsp;0.35 | &nbsp;&nbsp;&nbsp;&nbsp;0.29 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;2.33 | &nbsp;&nbsp;&nbsp;&nbsp;1.72 | &nbsp;&nbsp;&nbsp;&nbsp;1.27 | &nbsp;&nbsp;&nbsp; (2.60)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.32 |
| Total from investment operations | &nbsp;&nbsp;&nbsp;&nbsp;2.63 | &nbsp;&nbsp;&nbsp;&nbsp;2.01 | &nbsp;&nbsp;&nbsp;&nbsp;1.60 | &nbsp;&nbsp;&nbsp; (2.25)<br>| &nbsp;&nbsp;&nbsp;&nbsp;2.61 |
| **Distributions to shareholders from:** |  |  |  |  |  |
| Net investment income | &nbsp;&nbsp;&nbsp; (0.40)<br>| &nbsp;&nbsp;&nbsp; (0.59)<br>| &nbsp;&nbsp;&nbsp; (0.33)<br>| &nbsp;&nbsp;&nbsp; (0.51)<br>| &nbsp;&nbsp;&nbsp; (0.20)<br>|
| Net asset value, end of period | &nbsp;&nbsp;&nbsp; $14.10 | &nbsp;&nbsp;&nbsp; $11.87 | &nbsp;&nbsp;&nbsp; $10.45 | &nbsp;&nbsp;&nbsp; $9.18 | &nbsp;&nbsp;&nbsp; $11.94 |
| **Total return (c)** | &nbsp;&nbsp;&nbsp;&nbsp; 23.09<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 20.09<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 17.79<br> %<br>| &nbsp;&nbsp;&nbsp; (19.61)%<br>| &nbsp;&nbsp;&nbsp;&nbsp; 27.63<br> %<br>|
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (in 000s) | &nbsp;&nbsp;&nbsp; $127414 | &nbsp;&nbsp;&nbsp; $87702 | &nbsp;&nbsp;&nbsp; $86241 | &nbsp;&nbsp;&nbsp; $86569 | &nbsp;&nbsp;&nbsp; $117474 |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Total expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 1.24<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.25<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.24<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.23<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.26<br> %<br>|
| Net expenses (b) | &nbsp;&nbsp;&nbsp;&nbsp; 1.00<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.00<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.00<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.00<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.00<br> %<br>|
| Net investment income (loss) (b) | &nbsp;&nbsp;&nbsp;&nbsp; 2.48<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.64<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.34<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3.25<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp; 2.64<br> %<br>|
| Portfolio turnover rate | &nbsp;&nbsp;&nbsp; 131<br> %<br>| &nbsp;&nbsp;&nbsp; 98<br> %<br>| &nbsp;&nbsp;&nbsp; 106<br> %<br>| &nbsp;&nbsp;&nbsp; 120<br> %<br>| &nbsp;&nbsp;&nbsp; 111<br> %<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;(a) Average daily shares outstanding were used for this calculation.

&nbsp;&nbsp;&nbsp;&nbsp;(b) May reflect amounts waived and/or reimbursed by the investment adviser and for certain funds, custody credit arrangements.

&nbsp;&nbsp;&nbsp;&nbsp;(c) Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of the Fund. Results represent past performance and are not indicative of future results.

------

<u>Contacting the State Street Funds</u> 

Online: www.statestreet.com/im 24 hours a day, 7 days a week <br> Phone: (800) 647-7327 Monday – Friday 8:00 am – 6:00 pm EST

Written requests should be sent to:

---

| | |
|:---|:---|
| **Regular mail** | **Overnight/Registered, Express, Certified Mail** |
| SSGA Funds<br> P.O. Box 219737<br> Kansas City, MO 64121-9737<br>| SSGA Funds<br> 801 Pennsylvania Avenue, Suite 219737<br> Kansas City, MO 64105-1307<br>|

---

The Funds do not consider the U.S. Postal Service or other independent delivery services to be their agents. Therefore, deposits in the mail or with such services, or receipt at the Funds' post office box, of purchase orders or redemption requests, do not constitute receipt by the Funds or Transfer Agent.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

------

For more information about the Funds:

The Funds' SAI includes additional information about the Funds and is incorporated by reference into this document. Additional information about the Funds' investments is available in the Funds' most recent annual and semi-annual reports to shareholders and in each Fund's Form N-CSR filing. In a Fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. In a Fund's Form N-CSR, you will find the Fund's annual and semi-annual financial statements. The Funds' SAI is available, without charge, upon request. The Funds' annual and semi-annual reports to shareholders, and other information such as Fund financial statements, are available, without charge, upon request. Shareholders in the Funds may make inquiries to the Funds to receive such information by calling (800) 647-7327 or the customer service center at the telephone number shown in the accompanying contract prospectus, if applicable. Each Fund's Prospectus, SAI, annual and semi-annual reports to shareholders and other information such as each Fund's financial statements are available, free of charge, on the Funds' website at www.statestreet.com/im.

Reports and other information about the Funds are available free of charge on the EDGAR Database on the SEC's Internet site at <u>http://www.sec.gov</u>. Copies of this information also may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov.

**SSGA Funds Management, Inc**.

ONE CONGRESS STREET

BOSTON, MASSACHUSETTS 02114

COMBOSTPROSSGA Funds' SEC File No. 811-05430

![](g79608ssim.gif)

------

**SSGA FUNDS**

(the "Trust")

One Congress Street

Boston, Massachusetts 02114

**STATEMENT OF ADDITIONAL INFORMATION** 

December 30, 2025

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class N**<br> **(formerly,**<br> **Institutional**<br> **Class)**<br>| **Class A** | **Class I** | **Class K** |
| **SSGA Domestic Equity Funds** | **SSGA Domestic Equity Funds** | **SSGA Domestic Equity Funds** | **SSGA Domestic Equity Funds** | **SSGA Domestic Equity Funds** |
| STATE STREET S&P 500 INDEX FUND | &nbsp;&nbsp; SVSPX | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A |
| **SSGA International Equity Funds** | **SSGA International Equity Funds** | **SSGA International Equity Funds** | **SSGA International Equity Funds** | **SSGA International Equity Funds** |
| STATE STREET INTERNATIONAL STOCK SELECTION FUND | &nbsp;&nbsp; SSAIX | &nbsp;&nbsp; SSILX | &nbsp;&nbsp; SSIPX | &nbsp;&nbsp; SSIQX |

---

This Statement of Additional Information ("SAI") relates to the Prospectus dated December 30, 2025 for the Funds listed above. This SAI is not a prospectus and should be read in conjunction with the Funds' Prospectus. This SAI describes the Trust generally and provides additional information about the Funds.

Capitalized terms used in this SAI and not otherwise defined have the meanings assigned to them in the Prospectus. A copy of the Prospectus and the Annual Reports to Shareholders dated August 31, 2025 may be obtained without charge by writing to State Street Global Advisors Funds Distributors, LLC, the Trust's principal underwriter (referred to herein as "SSGA FD" or "Distributor"), One Congress Street, Boston, Massachusetts 02114, by visiting the Trust's website at www.statestreet.com/im or by calling (800) 647-7327. The Reports of Independent Registered Public Accounting Firm, financial highlights and financial statements of the Funds included in the Trust's [Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/826686/000119312525262336/d61588dncsr.htm) for the fiscal year ended August 31, 2025 are incorporated by reference into this SAI.

SSGACOMBSAI

------

**TABLE OF CONTENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| [GENERAL](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_1) | &nbsp;&nbsp; 3 |
| [DESCRIPTION OF INVESTMENTS AND RISKS](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_1) | &nbsp;&nbsp; 3 |
| [MANAGEMENT OF THE FUNDS](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_23) | &nbsp;&nbsp; 25 |
| [INVESTMENT ADVISORY AND OTHER SERVICES](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_32) | &nbsp;&nbsp; 34 |
| [BROKERAGE PRACTICES AND COMMISSIONS](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_41) | &nbsp;&nbsp; 43 |
| [PRICING OF SHARES](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_42) | &nbsp;&nbsp; 44 |
| [TAXATION OF THE FUNDS](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_43) | &nbsp;&nbsp; 45 |
| [ADDITIONAL INFORMATION](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_55) | &nbsp;&nbsp; 57 |
| [FINANCIAL STATEMENTS](#xx_ca2f5653-e3df-4e96-b287-10989cbeac31_58) | &nbsp;&nbsp; 60 |
| [APPENDICES](#xx_e1d061da-f1cd-4283-924d-8f2a9a3ae75d_1) | &nbsp;&nbsp; A-1 |

---

------

**GENERAL** 

The Trust is a single legal entity organized on October 3, 1987 as a Massachusetts business trust, and operates under a Second Amended and Restated Master Trust Agreement, dated May 15, 2012, as amended (the "Master Trust Agreement").

The Trust is registered with the Securities and Exchange Commission (the "SEC") as an open-end, management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust offers shares of beneficial interest in the Funds as described in the Prospectus. Each of the Funds is diversified as provided by the 1940 Act. Under the 1940 Act, a diversified company is defined as a management company which meets the following requirements: at least 75% of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities limited in respect of any single issuer to 5% or less of each of the Fund's total assets, and to not more than 10% of the outstanding voting securities of such issuer.

SSGA Funds Management, Inc. (the "Adviser" or "SSGA FM") serves as the investment manager of each Fund.

Effective October 12, 2018, the SSGA International Stock Selection Fund was renamed the State Street International Stock Selection Fund; and the SSGA S&P 500 Index Fund was renamed the State Street S&P 500 Index Fund.

Effective June 17, 2019, the State Street S&P 500 Index Fund no longer operates in a master-feeder arrangement, and will make direct investments consistent with its investment strategy instead of investing substantially all of its assets in a master portfolio advised by SSGA FM that was a separate series of State Street Master Funds (the "Master Portfolio").

**DESCRIPTION OF INVESTMENTS AND RISKS** 

The Funds' Prospectus contains information about the investment objective and policies of each Fund. This SAI should only be read in conjunction with the Prospectus of the Fund or Funds in which you intend to invest.

In addition to the principal investment strategies and the principal risks of the Funds described in the Fund's Prospectus, a Fund may employ other investment practices and may be subject to additional risks, which are described below.

***ADDITIONAL INVESTMENTS AND RISKS*** 

To the extent consistent with its investment objective and restrictions, each Fund may invest in the following instruments and use the following techniques (unless otherwise noted).

**American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs").** State Street International Stock Selection Fund may invest in ADRs, GDRs and EDRs under certain circumstances as an alternative to directly investing in foreign securities. ADRs are issued by a U.S. depository institution, but they represent a specified quantity of shares of a non-U.S. stock company. ADRs trade on U.S. securities exchanges, but are treated as "foreign securities" for purposes of the limitations on the Fund's investments in foreign securities because they are subject to many of the same risks as foreign securities as described below.

In addition to ADRs, State Street International Stock Selection Fund may invest in sponsored or unsponsored GDRs and EDRs to the extent they become available. GDRs and EDRs are typically issued by foreign depositaries and evidence ownership interests in a security or pool of securities issued by either a foreign or a U.S. corporation. Holders of unsponsored GDRs and EDRs generally bear all the costs associated with establishing them. The depositary of an unsponsored GDR or EDR is under no obligation to distribute shareholder communications received from the underlying issuer or to pass through to the GDR or EDR holders any voting rights with respect to the securities or pools of securities represented by the GDR or EDR. As a result, available information concerning the issuer may not be as current as for sponsored GDRs or EDRs, and the prices of unsponsored GDRs or EDRs may be more volatile than if such instruments were sponsored by the issuer. GDRs and EDRs also may not be denominated in the same currency as the underlying securities. Registered GDRs and EDRs are generally designed for use in U.S. securities markets, while bearer form GDRs and EDRs are generally designed for non-U.S. securities markets. The Fund will treat the underlying securities of a GDR or EDR as the investment for purposes of its investment policies and restrictions.

A depositary or issuer may unwind its depositary receipt program, or the relevant exchange may require ADRs, GDRs, or EDRs to be delisted, which could require the Fund to sell its ADRs, GDRs, or EDRs (potentially at disadvantageous prices) or to convert them into shares of the underlying non-U.S. security (which could adversely affect their value or liquidity). ADRs do not eliminate the risk inherent in investing in the securities of foreign issuers. However, by investing in

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ADRs and GDRs rather than directly in a foreign issuer's stock, the Fund can minimize currency risks during the settlement period for either purchases or sales. In general, there is a large liquid market in the U.S. for many ADRs and GDRs although ADRs, GDRs, or EDRs also may be subject to illiquidity risk, and trading in ADRs, GDRs, or EDRs may be suspended by the relevant exchange. The information available for ADRs and GDRs is subject to the accounting, auditing and financial reporting standards of the domestic market or exchange on which they are traded, which standards may be more uniform and more exacting than those to which many foreign issuers are subject.

**Cleared Derivatives Transactions.** Transactions in some types of swaps are required to be centrally cleared by applicable rules and regulations and a Fund may also voluntarily centrally clear other transactions that are available for clearing. In a cleared derivatives transaction, a Fund's counterparty to the transaction is a central derivatives clearing organization, or clearing house, rather than a bank or broker. Because the Funds are not members of a clearing house, and only members of a clearing house can participate directly in the clearing house, the Funds hold cleared derivatives through accounts at clearing members. In cleared derivatives transactions, a Fund will make payments (including margin payments) to and receive payments from a clearing house through its accounts at clearing members. Clearing members guarantee performance of their clients' obligations to the clearing house. Centrally cleared derivative arrangements may be less favorable to a Fund than bilateral (non-cleared) arrangements. For example, a Fund may be required to provide greater amounts of margin for cleared derivatives transactions than for bilateral derivatives transactions. Also, in contrast to bilateral derivatives transactions, in some cases following a period of notice to a Fund, a clearing member generally can require termination of existing cleared derivatives transactions at any time or an increase in margin requirements above the margin that the clearing member required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing transactions or to terminate transactions at any time. Each Fund is subject to risk if it enters into a derivatives transaction that is required to be cleared (or which the Adviser expects to be cleared), and no clearing member is willing or able to clear the transaction on the Fund's behalf. In that case, the transaction might have to be terminated, and the Fund could lose some or all of the benefit of the transaction, including loss of an increase in the value of the transaction and loss of hedging protection. In addition, the documentation governing the relationship between the Funds and clearing members is drafted by the clearing members and generally is less favorable to the Funds than typical bilateral derivatives documentation. For example, documentation relating to cleared derivatives generally includes a one-way indemnity by the Fund in favor of the clearing member for losses the clearing member incurs as the Fund's clearing member. Also, such documentation typically does not provide the Fund any remedies if the clearing member defaults or becomes insolvent.

Counterparty risk with respect to derivatives has been and will continue to be affected by rules and regulations relating to the derivatives market. With respect to a centrally cleared transaction, a party is subject to the credit risk of the clearing house and the clearing member through which it holds its cleared position. Credit risk of market participants with respect to centrally cleared derivatives is concentrated in a few clearing houses, and an increasingly limited number of clearing members. It is not clear how an insolvency proceeding of a clearing house would be conducted and what impact an insolvency of a clearing house would have on the financial system. A clearing member is obligated by contract and regulation to segregate all funds received from customers with respect to cleared derivatives positions from the clearing member's proprietary assets. However, all funds and other property received by a clearing member from its customers with respect to cleared derivatives are generally held by the clearing member on a commingled basis in an omnibus account (which can be invested in instruments permitted under the regulations). Therefore, a Fund might not be fully protected in the event of the bankruptcy of the Fund's clearing member because the Fund would be limited to recovering only a pro rata share of the funds held by the clearing member on behalf of customers, with a claim against the clearing member for any deficiency. Also, the clearing member is required to transfer to the clearing house the amount of margin required by the clearing house for cleared derivatives, which amount is generally held in an omnibus account at the clearing house for all customers of the clearing member. Regulations promulgated by the Commodity Futures Trading Commission (the "CFTC") require that the clearing member notify the clearing house of the initial margin provided by the clearing member to the clearing house that is attributable to each customer. However, if the clearing member does not accurately report the Fund's initial margin, the Fund is subject to the risk that a clearing house will use the assets attributable to it in the clearing house's omnibus account to satisfy payment obligations a defaulting customer of the clearing member has to the clearing house. In addition, clearing members generally provide the clearing house the net amount of variation margin required for cleared swaps for all of its customers, rather than individually for each customer. A Fund is therefore subject to the risk that a clearing house will not make variation margin payments owed to the Fund if another customer of the clearing member has suffered a loss and is in default, and the risk that the Fund will be required to provide additional variation margin to the clearing house before the clearing house will move the Fund's cleared derivatives positions to another

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clearing member. In addition, if a clearing member does not comply with the applicable regulations or its agreement with the Fund, fails to maintain accurate records, or in the event of fraud or misappropriation of customer assets by a clearing member, the Fund could have only an unsecured creditor claim in an insolvency of the clearing member with respect to the margin held by the clearing member.

**Convertible Securities.** State Street International Stock Selection Fund may hold convertible securities of foreign or domestic issuers. A convertible security is a fixed-income security which may be converted into the issuer's common or preferred stock at a stated price within a specified period of time. Convertible securities are senior to common stocks in a corporation's capital structure but are usually subordinated to similar nonconvertible securities. Convertible securities provide, through their conversion feature, an opportunity to participate in capital appreciation resulting from a market price advance in a convertible security's underlying common stock. The price of a convertible security is influenced by the market value of the underlying common stock and tends to increase as the market value of the underlying stock rises, whereas it tends to decrease as the market value of the underlying stock declines.

**Custodial Risk.** There are risks involved in dealing with the custodians or brokers who hold a Fund's investments or settle a Fund's trades. It is possible that, in the event of the insolvency or bankruptcy of a custodian or broker, a Fund would be delayed or prevented from recovering its assets from the custodian or broker, or its estate, and may have only a general unsecured claim against the custodian or broker for those assets. In recent insolvencies of brokers or other financial institutions, the ability of certain customers to recover their assets from the insolvent's estate has been delayed, limited, or prevented, often unpredictably, and there is no assurance that any assets held by a Fund with a custodian or broker will be readily recoverable by the Fund. In addition, there may be limited recourse against non-U.S. sub-custodians in those situations in which a Fund invests in markets where custodial and/or settlement systems and regulations are not fully developed, including emerging markets, and the assets of the Fund have been entrusted to such sub-custodians. SSGA FM or an affiliate may serve as the custodian of the Funds.

**Risks Associated with Derivatives Regulation.** The U.S. government has enacted and is continuing to implement legislation that provides for regulation of the derivatives market, including clearing, margin, reporting, and registration requirements. The European Union (the "EU"), the United Kingdom (the "UK") and some other countries have also adopted and are continuing to implement similar requirements, which will affect a Fund when it enters into a derivatives transaction with a counterparty organized in that country or otherwise subject to that country's derivatives regulations. Such rules and other rules and regulations could, among other things, restrict a Fund's ability to engage in, or increase the cost to the Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Fund, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs. While the rules and regulations and central clearing of some derivatives transactions are designed to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could cause them to suffer liquidity, solvency or other challenges simultaneously), there is no assurance that they will achieve that result, and in the meantime, as noted above, central clearing and related requirements expose the Funds to other kinds of costs and risks.

For example, in the event of a counterparty's (or its affiliate's) insolvency, a Fund's ability to exercise remedies, such as the termination of transactions, netting of obligations and realization on collateral, could be stayed or eliminated under special resolution regimes adopted in the United States, the EU, the UK and various other jurisdictions. Such regimes provide government authorities with broad authority to intervene when a financial institution is experiencing financial difficulty. In particular, with respect to counterparties who are subject to such proceedings in the EU and the UK, the liabilities of such counterparties to the Funds could be reduced, eliminated, or converted to equity in such counterparties (sometimes referred to as a "bail in").

The SEC adopted Rule 18f-4 under the 1940 Act providing for the regulation of registered investment companies' use of derivatives and certain related instruments. The rule, among other things, limits derivatives exposure through one of two value-at-risk tests and eliminates the asset segregation framework for covering derivatives and certain financial instruments arising from the SEC's Release 10666 and ensuing staff guidance. The rule also requires funds to adopt and implement a derivatives risk management program (including the appointment of a derivatives risk manager and the implementation of certain testing requirements) and subjects funds to certain reporting requirements in respect of derivatives. Limited derivatives users (as determined by Rule 18f-4) are not, however, subject to the full requirements under the rule.

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Additionally, U.S. regulators, the EU, the UK and certain other jurisdictions have adopted minimum margin and capital requirements for uncleared derivatives transactions. These rules impose minimum margin requirements on derivatives transactions between a Fund and its counterparties and may increase the amount of margin a Fund is required to provide. They impose regulatory requirements on the timing of transferring margin and the types of collateral that parties are permitted to exchange.

These and other regulations are evolving, so their full impact or the impact of any new rules and regulations on the Funds and the financial system are not certain.

**Other Derivatives Risks.** The use of derivatives involves the risk that their value may not change as expected relative to changes in the value of the assets, rates or indices they are designed to track. In addition, all derivative instruments involve risks that are in addition to, and potentially greater than, the risks of investing directly in securities and other more traditional assets. Derivatives are subject to counterparty risk, which is the risk that a loss may be sustained by a Fund as a result of the failure of the other party to a derivative (usually referred to as a "counterparty") to comply with the terms of the derivative contract. An over-the-counter derivative contract typically can be closed or a position transferred only with the consent of the other party to the contract. If the counterparty defaults, the Fund will still have contractual remedies but may not be able to enforce them. Even when derivatives are required by contract to be collateralized, the Fund typically will not receive the collateral for one or more days after the collateral is required to be posted.

**Debt Securities.** State Street International Stock Selection Fund may invest in debt securities. The Fund may also invest in debt securities with broad credit ratings that may or may not be investment grade. Debt will typically represent less than 5% of the Fund's assets. Debt securities are subject to market and credit risk. Lower rated debt securities may include obligations that are in default or that face the risk of default with respect to principal or interest. Such securities are sometimes referred to as "junk bonds." Please see "Description of Securities Ratings" in Appendix A.

**Equity Swaps.** The Funds may invest in equity swaps. Equity swap agreements are contracts between parties in which one party agrees to make payments to the other party based on an interest rate or the change in market value of a specified index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified index or asset. Although swap agreements entail the risk that a party will default on its payment obligations, the portfolios will seek to manage this risk by entering into agreements only with counterparties that the Adviser deems creditworthy. The Adviser will allow the Funds to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Trust's repurchase agreement guidelines. Swap agreements bear the risk that a Fund will not be able to meet its obligation to the counterparty. A Fund may seek to mitigate this risk by investing in assets generating cash flows consistent with the Fund's payment obligations under the swap agreement.

**Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee Certificates of Deposit ("YCDs").** State Street International Stock Selection Fund may purchase ECDs, ETDs, and YCDs. ECDs are U.S. dollar denominated certificates of deposit and time deposits, respectively, issued by foreign branches of domestic banks. ETDs are U.S. dollar denominated deposits in foreign banks or foreign branches of U.S. banks. YCDs are U.S. dollar denominated certificates of deposit issued by U.S. branches of foreign banks.

Different risks than those associated with the obligations of domestic banks may exist for ECDs, ETDs and YCDs because the banks issuing these instruments, or their domestic or foreign branches, are not necessarily subject to the same regulatory requirements that apply to domestic banks, such as loan limitations, examinations and reserve, accounting, auditing, recordkeeping and public reporting requirements.

**Foreign Currency and Foreign Currency Derivatives.** State Street S&P 500 Index Fund will not speculate in foreign security or currency options or futures or related options. State Street International Stock Selection Fund may invest in foreign currencies. State Street International Stock Selection Fund has authority to deal in forward foreign currency exchange contracts (including those involving the U.S. dollar) as a hedge against possible variations in the exchange rate between various currencies. State Street International Stock Selection Fund may also deal in forward foreign currency exchange contracts (including those involving the U.S. dollar) in order to seek to generate returns consistent with the Fund's investment objective and strategies. This is accomplished through individually negotiated contractual agreements to purchase or to sell a specified currency at a specified future date and price set at the time of the contract. The Fund's dealings in forward foreign currency exchange contracts may be with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. The Fund is not obligated to hedge its portfolio positions and will enter

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into such transactions only to the extent, if any, deemed appropriate by the Adviser. If properly executed, the Fund's use of forward foreign currency exchange contracts for hedging purposes may help to reduce losses resulting from depreciation of a foreign currency in which securities in the Fund's portfolio are denominated.

In addition to the forward foreign currency exchange contracts, State Street International Stock Selection Fund may also purchase or sell listed or over-the-counter ("OTC") foreign currency options and foreign currency futures and related options as a short or long hedge against possible variations in foreign currency exchange rates. The cost to the Fund of engaging in foreign currency transactions varies with such factors as the currencies involved, the length of the contract period and the market conditions then prevailing. Put and call options on currency may also be used to hedge against fluctuation in currency rates when forward contracts and/or futures are deemed to be not cost effective. Options will not be used to provide leverage in any way.

Certain differences exist among these instruments. For example, foreign currency options provide the holder thereof the rights to buy or sell a currency at a fixed price on a future date. A futures contract on a foreign currency is an agreement between two parties to buy and sell a specified amount of a currency for a set price on a future date. Futures contracts and options on futures contracts are traded on boards of trade or futures exchanges.

Like other types of derivatives, forward foreign currency exchange contracts, foreign currency options and foreign currency futures are subject to counterparty risk (i.e., the risk that the counterparty to a transaction or the clearing member through which it holds a position will not perform under the contract). There can be no guarantee that a currency hedging strategy will produce the desired result. The Adviser may be incorrect in its expectations as to currency fluctuations, and the Fund may incur losses in connection with its currency transactions that it would not otherwise incur. Additionally, an imperfect correlation between movements in the price of the derivative and the price of the security, currency or other investment being hedged creates risk. In the event of an imperfect correlation between a derivative position and the portfolio position intended to be hedged, the Fund may realize a loss on the derivative at the same time the Fund is realizing a loss on the portfolio position being hedged.

The Fund may hedge a position with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such transactions) of the securities held in its portfolio denominated or quoted in that particular foreign currency. No Fund will enter into a position hedging commitment if, as a result thereof, it would have more than 20% of the value of its assets committed to such contracts or will enter into a forward contract with a term of more than 36 months.

If the Fund invests in foreign securities or securities denominated in foreign currencies (or related foreign currency derivatives), it may be adversely affected by changes in currency exchange rates, exchange control regulations, foreign country indebtedness and indigenous economic and political developments. The Fund attempts to buy and sell foreign currencies on favorable terms, but will incur the cost of any price spread on currency exchanges when the Fund changes investments from one country to another or when proceeds from the sale of shares in U.S. dollars are used for the purchase of securities in foreign countries. Also, some countries may adopt policies which would prevent the Fund from repatriating invested capital and dividends, withhold portions of interest and dividends at the source, or impose other taxes, with respect to the Fund's investments in securities of issuers of that country. A change in the value of a foreign currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of the Fund's securities. In addition, some emerging market countries may have fixed or managed currencies which are not free-floating against the U.S. dollar. Further, certain emerging market currencies may not be internationally traded. Certain of these currencies have experienced a steady devaluation relative to the U.S. dollar. Many emerging markets countries have experienced substantial and in some periods extremely high rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had, and may continue to have negative effects on the economies and securities markets of certain emerging market countries.

**Foreign Securities** State Street International Stock Selection Fund is permitted to invest in foreign securities. Foreign securities include securities of foreign companies and foreign governments (or agencies or subdivisions thereof). If the Fund's securities are held abroad, the countries in which such securities may be held and the sub-custodian holding them must be approved by the Board of Trustees (the "Board" or "Board of Trustees") or its delegate under applicable rules adopted by the SEC. In buying foreign securities, the Fund may convert U.S. dollars into foreign currency, but only to effect securities transactions on foreign securities exchanges and not to hold such currency as an investment.

The globalization and integration of the world economic system and related financial markets have made it increasingly difficult to define issuers geographically. Accordingly, the Fund intends to construe geographic terms such as "foreign," "non-U.S.," "European," "Latin American," and "Asian," in the manner that affords the Fund the greatest flexibility in

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seeking to achieve its investment objective(s). Specifically, in circumstances where the investment objective and/or strategy is to invest at least some percentage of the Fund's assets in foreign securities, the Fund will take the view that a security meets this description so long as the issuer of a security is tied economically to the particular country or geographic region indicated by words of the relevant investment objective and/or strategy (the "Relevant Language"). For these purposes the issuer of a security is deemed to have that tie if:

&nbsp;&nbsp;&nbsp;&nbsp;(i) The issuer is organized under the laws of the country or a country within the geographic region suggested by the Relevant Language or maintains its principal place of business in that country or region; or

&nbsp;&nbsp;&nbsp;&nbsp;(ii) The securities are traded principally in the country or region suggested by the Relevant Language; or

&nbsp;&nbsp;&nbsp;&nbsp;(iii) The issuer, during its most recent fiscal year, derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed in the country or region suggested by the Relevant Language or has at least 50% of its assets in that country or region.

In addition, the Fund intends to treat derivative securities (e.g., call options) by reference to the underlying security. Conversely, if the investment objective and/or strategy of the Fund limits the percentage of assets that may be invested in "foreign securities," or prohibits such investments altogether, the Fund intends to categorize securities as "foreign," only if the security possesses all of the attributes described above in clauses (i), (ii) and (iii).

Foreign securities also include securities of foreign issuers represented by ADRs, GDRs and EDRs. Please see "American Depositary Receipts, Global Depositary Receipts and European Depositary Receipts" above.

Investments in foreign securities involve special risks and considerations. Foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies, and such practices and standards may vary significantly from country to country. There may be less publicly available information about a foreign company than about a domestic company. The Public Company Accounting Oversight Board, which regulates auditors of U.S. public companies, is unable to inspect audit work papers in certain foreign countries. Investors in foreign countries often have limited rights and few practical remedies to pursue shareholder claims, including class actions or fraud claims, and the ability of the SEC, the U.S. Department of Justice and other authorities to bring and enforce actions against foreign issuers or foreign persons is limited. Foreign markets have different clearance and settlement procedures. Delays in settlement could result in temporary periods when assets of the Fund are uninvested. The inability of the Fund to make intended security purchases due to settlement problems could cause it to miss certain investment opportunities. They may also entail certain other risks, such as the possibility of one or more of the following: imposition of dividend or interest withholding or other taxes (in each case, which taxes could potentially be confiscatory) higher brokerage costs, thinner trading markets, currency blockages or transfer restrictions, expropriation, nationalization, military coups or other adverse political or economic developments; less government supervision and regulation of securities exchanges, brokers and listed companies; and the difficulty of enforcing obligations in other countries. Purchases of foreign securities are usually made in foreign currencies and, as a result, the Fund may incur currency conversion costs and may be affected favorably or unfavorably by changes in the value of foreign currencies against the U.S. dollar. Further, it may be more difficult for the Fund's agents to keep currently informed about corporate actions which may affect the prices of portfolio securities. Communications between the United States and foreign countries may be less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Certain markets may require payment for securities before delivery. The Fund's ability and decisions to purchase and sell portfolio securities may be affected by laws or regulations relating to the convertibility of currencies and repatriation of assets.

A number of current significant political, demographic and economic developments may affect investments in foreign securities and in securities of companies with operations overseas. Such developments include dramatic political changes in government and economic policies in several Eastern European countries and the republics composing the former Soviet Union, as well as the unification of the European Economic Community. The course of any one or more of these events and the effect on trade barriers, competition and markets for consumer goods and services are uncertain. Similar considerations are of concern with respect to developing countries. For example, the possibility of revolution and the dependence on foreign economic assistance may be greater in these countries than in developed countries. Management seeks to mitigate the risks associated with these considerations through diversification and active professional management.

**Forward Commitments.** Each Fund may invest in forward commitments. Each Fund may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with the Fund's ability to manage its investment portfolio and meet redemption requests. A Fund may dispose of a commitment prior to settlement if it is

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appropriate to do so and the Fund may realize short-term profits or losses upon such sale. When effecting such transactions, cash or other liquid assets (such as liquid high quality debt obligations) held by a Fund of a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund's records at the trade date and maintained until the transaction is settled. Such segregated assets will be marked to market on a daily basis, and if the market value of such assets declines or the market value of the securities to be purchased increases, additional cash or assets will be segregated so that the market value of the segregated assets will equal the amount of such Fund's obligations. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, or if the other party fails to complete the transaction.

**Illiquid Securities.** Each Fund may invest in illiquid investments. A Fund may not invest more than 15% of its net assets in illiquid investments that are assets. These securities include repurchase agreements that have a maturity of longer than seven days and securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. These securities may also include time deposits with maturities in excess of seven days, variable rate demand notes with demand periods in excess of seven days, unless the Adviser determines that such notes are readily marketable and could be sold promptly at the prices at which they are valued and guaranteed investment contracts; participation interests, floating and variable rate demand obligations and tender option bonds as to which the Fund cannot exercise a demand feature in seven or fewer days or for which there is no secondary market. Repurchase agreements subject to demand are deemed to have a maturity equal to the notice period. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation. The Adviser will monitor the liquidity of such restricted securities under the supervision of the Board. The absence of a regular trading market for illiquid investments imposes additional risk on investments in these securities. Illiquid investments may be difficult to value and may often be disposed of only after considerable expense and delay.

The SEC has adopted a liquidity risk management rule (the "Liquidity Rule") that requires the Funds to establish a liquidity risk management program (the "LRMP"). The Trustees, including a majority of the Independent Trustees (as defined below), have designated the Adviser to administer the Funds' LRMP. Under the LRMP, the Adviser assesses, manages, and periodically reviews the Funds' liquidity risk. The Liquidity Rule defines "liquidity risk" as the risk that the Funds could not meet requests to redeem shares issued by the Funds without significant dilution of remaining investors' interests in the Funds. The liquidity of the Funds' portfolio investments is determined based on relevant market, trading and investment-specific considerations under the LRMP. To the extent that an investment is deemed to be an illiquid investment or a less liquid investment, the Funds can expect to be exposed to greater liquidity risk. While the LRMP attempts to assess and manage liquidity risk, there is no guarantee it will be effective in its operations and may not reduce the liquidity risk inherent in a Fund's investments. The SEC has recently proposed amendments to Rule 22e-4 under the 1940 Act and Rule 22c-1 under the 1940 Act that, if adopted, would, among other things, cause more investments to be treated as illiquid, and could prevent a Fund from investing in securities that the Adviser believes are appropriate or desirable.

**Interfund Lending.** Each Fund may participate in interfund lending. In accordance with an exemptive order received by the Trust from the SEC, the Funds may participate in a joint lending and borrowing facility (the "Credit Facility"). All such borrowing and lending will be subject to a participating Fund's fundamental investment limitations. To the extent that the Funds borrow through the program, the costs of any such borrowings must be equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day's notice. A participating Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed.

**Initial Public Offerings ("IPOs").** Each Fund may at times have the opportunity to invest in securities offered in IPOs. IPOs may not be available to the Funds at all times, and the Funds may not always invest in IPOs offered to them. Investments in IPOs may have a substantial beneficial effect on the Funds' investment performance. The Funds' investment return earned during a period of substantial investment in IPOs may not be sustained during other periods when the Funds make more-limited, or no, investments in IPOs. The Funds may lose money on an investment in securities offered in an IPO. There can be no assurance that the Funds will have the opportunity to invest in IPOs that are made available to other clients of State Street Investment Management.

**IPO Holding Risk.** Each Fund may participate in IPO holding. IPO holding is the practice of participating in an IPO with the intent of holding the security for investment purposes. Because an IPO is an equity security that is new to the public market, the value of IPOs may fluctuate dramatically. Therefore, IPOs have greater risks than other equity investments. Because of the cyclical nature of the IPO market, from time to time there may not be any IPOs in which a Fund can

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participate. Even when a Fund requests to participate in an IPO, there is no guarantee that the Fund will receive an allotment of shares in an IPO sufficient to satisfy the Fund's desired participation. Due to the volatility of IPOs, these investments can have a significant impact on performance, which may be positive or negative.

**IPO Trading Risk.** Each Fund may participate in IPO trading. IPO trading is the practice of participating in an IPO with the intent of immediately selling the security in the secondary market. Engaging in this strategy could result in active and frequent trading. Use of this strategy could increase a Fund's portfolio turnover and the possibility of realized capital gain. This is not a tax-efficient strategy. From time to time, it may not be possible to pursue an IPO trading strategy effectively because of a limited supply of "hot" IPOs. In addition, this practice may result in losses if a Fund purchases a security in an IPO and there is insufficient demand for the security in the after-market of the IPO. Due to the volatility of IPOs, these investments can have a significant impact on performance, which may be positive or negative.

**Market Disruption and Geopolitical Risk.** The Funds are subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. War, terrorism, and related geopolitical events have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Likewise, trade policy changes or disputes, natural and environmental disasters, epidemics or pandemics, and systemic market dislocations may be highly disruptive to economies and markets. Those events as well as other changes in non-U.S. and domestic economic and political conditions also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment, and other factors affecting the value of a Fund's investments. Given the increasing interdependence between global economies and markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates in other countries, including the U.S. Continuing uncertainty as to the status of the euro and the Economic and Monetary Union of the European Union (the "EMU") has created significant volatility in currency and financial markets generally. Any partial or complete dissolution of the EMU, or any continued uncertainty as to its status, could have significant adverse effects on currency and financial markets, and on the values of a Fund's investments. On January 31, 2020, the United Kingdom ("UK") formally withdrew from the European Union ("EU") (commonly known as "Brexit"). An agreement between the UK and the EU governing their future trade relationship became effective January 1, 2021, but that agreement does not include an agreement on financial services, and it is unlikely that such agreement will be concluded. Moreover, the UK government has started a program of financial services law reform with the ultimate aim of repealing many EU financial services laws that were assimilated into UK law from January 1, 2021, and replacing them with legislation or rules made by the UK government or financial services regulators. Accordingly, uncertainty remains in certain areas as to the future relationship between the UK and the EU. Brexit has already had a significant impact on the UK, Europe, and global economies, and could continue to result in volatility and illiquidity, legal, political, economic and regulatory uncertainties and lower economic growth for these economies that could in turn have an adverse effect on the value of the Portfolios' investments. Any further exits from the EU, or the possibility of such exits, or the abandonment of the euro, may cause additional market disruption globally and introduce new legal and regulatory uncertainties.

Securities markets may be susceptible to market manipulation or other fraudulent trade practices, which could disrupt the orderly functioning of these markets or adversely affect the value of investments traded in these markets, including investments of a Fund.

Recent political activity in the U.S. has increased the risk that the U.S. could default on some or any of its obligations. While it is impossible to predict the consequences of such an unprecedented event, it is likely that a default by the U.S. would be highly disruptive to the U.S. and global securities markets and could significantly impair the value of the Funds' investments. Similarly, political events within the U.S. at times have resulted, and may in the future result, in a shutdown of government services, which could negatively affect the U.S. economy, decrease the value of many Fund investments, and increase uncertainty in or impair the operation of the U.S. or other securities markets. To the extent a Fund has focused its investments in the stock market index of a particular region, adverse geopolitical and other events could have a disproportionate impact on the Fund.

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**Market Turbulence Resulting From Infectious Illness.** A widespread outbreak of an infectious illness may lead to governments and businesses world-wide taking aggressive measures, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations. The spread of such an illness may result in the disruption of and delays in the delivery of healthcare services and processes, the cancellation of organized events and educational institutions, the disruption of production and supply chains, a decline in consumer demand for certain goods and services, and general concern and uncertainty, all of which may contribute to increased volatility in global markets. Epidemics and pandemics that may arise in the future could adversely affect the economies of many nations, the global economy, individual companies, economic sectors and industries, and capital markets in ways that cannot be foreseen at the present time. In addition, the impact of infectious diseases in developing or emerging market countries may be greater due to limited health care resources. Political, economic and social stresses caused by an infectious illness also may exacerbate other pre-existing political, social and economic risks in certain countries. The duration of such an illness and its effects cannot be determined at this time, but the effects could be present for an extended period of time.

**Participation Certificates.** State Street International Stock Selection Fund may purchase participation certificates, also known as participation notes. Participation certificates are issued by banks or broker-dealers and are designed to replicate the performance of foreign companies or foreign securities markets and can be used by a Fund as an alternative means to access the securities market of a country. Participation certificates offer a return linked to a particular underlying equity, debt, index or currency; however, the performance results of participation certificates will not replicate exactly the performance of the foreign companies or foreign securities markets that they seek to replicate due to transaction costs and other expenses. Investments in participation certificates involve the same risks associated with a direct investment in the underlying foreign companies or foreign securities markets that they seek to replicate. Participation certificates are subject to counterparty risk, which is the risk that the broker- dealer or bank that issues them will not fulfill its contractual obligation to complete the transaction with the Fund. Participation certificates constitute general unsecured contractual obligations of the banks or broker-dealers that issue them, the counterparty, and a Fund is relying on the creditworthiness of such counterparty and has no rights under a participation certificate against the issuer of the underlying security. The holder of a participation certificate generally will be entitled to receive from the issuing bank or broker-dealer any dividends paid in connection with the underlying security; however, the holder of the participation certificate does not have voting rights, as the holder would if it owned the underlying security directly.

Participation certificates may be traded OTC or may be listed on an exchange. Participation certificates that are not listed on an exchange may be illiquid and therefore subject to a Fund's percentage limitation for investments in illiquid securities. Due to liquidity and transfer restrictions, the secondary markets on which unlisted participation certificates are traded may be less liquid than the markets for other securities, which may lead to the absence of readily available market quotations for securities in a Fund's portfolio. Consequently, it may nevertheless be more difficult for a Fund to accurately assign a daily value to such securities.

**Preferred Stocks.** A Fund may invest in preferred stocks. Preferred stock, unlike common stock, generally confers a stated dividend rate payable from the corporation's earnings. Such preferred stock dividends may be cumulative or noncumulative, fixed, participating, auction rate or other. If interest rates rise, a fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline either absolutely or relative to alternative investments. Preferred stock may have mandatory sinking fund provisions, as well as provisions that allow the issuer to redeem or call the stock. The right to payment of preferred stock is generally subordinate to rights associated with a corporation's debt securities.

**Purchase of Other Investment Company Funds.** Each Fund may seek to achieve its investment objective by investing in the shares of certain other investment companies, or exchange traded funds registered as investment companies, that have substantially similar investment objectives and policies, including those advised by the Adviser. With respect to the State Street S&P 500 Index Fund, these investments may be made temporarily, for example, to invest uncommitted cash balances or, in limited circumstances, to assist in meeting shareholder redemptions. The 1940 Act and the rules thereunder limits the ability of one registered investment company to invest in another. With respect to investments in other mutual funds, to the extent permitted under the 1940 Act, the amount of securities of underlying mutual funds that a Fund may hold may exceed the limitations in the 1940 Act, provided that certain conditions are met. The conditions are intended to address certain abuses perceived to be associated with a "fund-of-funds," including unnecessary costs (such as sales loads, advisory fees that may be borne by a Fund and administrative costs), and undue influence by a fund-of-funds over the underlying fund. The conditions apply only when a Fund and its affiliates in the aggregate own more than 3% of the outstanding shares of any one underlying fund. If shares of a Fund are purchased by another fund beyond the limits of

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Section 12 of the 1940 Act, and the Fund purchases shares of another investment company, the Fund will not be able to make new investments in other funds, including private funds exempt from the definition of "investment company" under the 1940 Act by Sections 3(c)(1) or 3(c)(7) thereof, if, as a result of such investment, more than 10% of the Fund's assets would be invested in other funds.

**Registration under the Commodity Exchange Act.** The Adviser has claimed an exclusion from the definition of the term "commodity pool operator" with respect to the Funds under the Commodity Exchange Act (the "CEA"), and therefore, is not subject to registration or regulation as a commodity pool operator under the CEA. As a result, the Funds are limited in their ability to trade instruments subject to the CFTC's jurisdiction, including commodity futures (which include futures on broad-based securities indexes, interest rate futures and currency futures), options on commodity futures, certain swaps or other investments (whether directly or indirectly through investments in other investment vehicles).

Under this exclusion, a Fund must satisfy one of the following two trading limitations whenever it enters into a new commodity trading position: (1) the aggregate initial margin and premiums required to establish the Fund's positions in CFTC-regulated instruments may not exceed 5% of the liquidation value of the Fund's portfolio (after accounting for unrealized profits and unrealized losses on any such investments); or (2) the aggregate net notional value of such instruments, determined at the time the most recent position was established, may not exceed 100% of the liquidation value of the Fund's portfolio (after accounting for unrealized profits and unrealized losses on any such positions). A Fund would not be required to consider its exposure to such instruments if they were held for "bona fide hedging" purposes, as such term is defined in the rules of the CFTC. In addition to meeting one of the foregoing trading limitations, the Fund may not market itself as a commodity pool or otherwise as a vehicle for trading in the markets for CFTC-regulated instruments.

**Repurchase Agreements.** Each Fund may enter into repurchase agreements with banks, other financial institutions, such as broker-dealers, and other institutional counterparties. Under a repurchase agreement, the Funds purchase securities from a financial institution that agrees to repurchase the securities at the Fund's original purchase price plus interest within a specified time. A Fund will limit repurchase transactions to those member banks of the Federal Reserve System, broker-dealers and other financial institutions whose creditworthiness the Adviser considers satisfactory. Should the counterparty to a transaction fail financially, a Fund may encounter delay and incur costs before being able to sell the securities, or may be prevented from realizing on the securities. Further, the amount realized upon the sale of the securities may be less than that necessary to fully compensate the Fund. The SEC has finalized new rules requiring the central clearing of certain repurchase transactions involving U.S. Treasuries. Compliance with these new rules is expected to be required in the middle of 2027. These rules could make it more difficult for a Fund to execute certain investment strategies and may have an adverse effect on a Fund's ability to generate returns.

**Private Placements and Restricted Securities.** The Funds may invest in securities that are purchased in private placements and, accordingly, are subject to restrictions on resale as a matter of contract or under federal securities laws. While such private placements may offer attractive opportunities for investment not otherwise available on the open market, the securities so purchased are often "restricted securities," i.e., securities which cannot be sold to the public without registration under the Securities Act of 1933 (the "Securities Act") or the availability of an exemption from registration (such as Rules 144 or 144A), or which are not readily marketable because they are subject to other legal or contractual delays in or restrictions on resale. Generally speaking, restricted securities may be sold only to qualified institutional buyers, or in a privately negotiated transaction to a limited number of purchasers, or in limited quantities after they have been held for a specified period of time and other conditions are met pursuant to an exemption from registration, or in a public offering for which a registration statement is in effect under the Securities Act.

Because there may be relatively few potential purchasers for such investments, especially under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the Fund could find it more difficult to sell such securities when the Adviser believes it advisable to do so or may be able to sell such securities only at prices lower than if such securities were more widely held. Market quotations for such securities are generally less readily available than for publicly traded securities. The absence of a trading market can make it difficult to ascertain a market value for such securities for purposes of computing the Fund's net asset value ("NAV"), and the judgment of the Adviser may at times play a greater role in valuing these securities than in the case of publicly traded securities. Disposing of such securities, which may be illiquid investments, can involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Fund to sell them promptly at an acceptable price. The Fund may have to bear the extra expense of registering such securities for resale and the risk of substantial delay in effecting such registration.

A Fund may be deemed to be an "underwriter" for purposes of the Securities Act when selling restricted securities to the public, and in such event the Fund may be liable to purchasers of such securities if the registration statement prepared by the issuer, or the prospectus forming a part of it, is materially inaccurate or misleading.

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**Reverse Repurchase Agreements.** Each Fund may enter into reverse repurchase agreements, which are a form of borrowing, under the circumstances described in "Investment Restrictions." Under reverse repurchase agreements, a Fund transfers possession of portfolio securities to a counterparty in return for cash in an amount equal to a percentage of the portfolio securities' market value and agrees to repurchase the securities at a future date by repaying the cash with interest. Each Fund retains the right to receive interest and principal payments from the securities while they are in the possession of the securities. Cash or liquid high quality debt obligations from a Fund's portfolio equal in value to the repurchase price including any accrued interest may be segregated by the custodian on the Fund's records while a reverse repurchase agreement is in effect. Reverse repurchase agreements involve the risk that the market value of securities sold by a Fund may decline below the price at which it is obligated to repurchase the securities. Reverse repurchase agreements involve the risk that the buyer of the securities sold might be unable to deliver them when a Fund seeks to repurchase the securities. If the buyer files for bankruptcy or becomes insolvent, a Fund may be delayed or prevented from recovering the security that it sold. The SEC has finalized new rules requiring the central clearing of certain repurchase transactions involving U.S. Treasuries. Compliance with these new rules is expected to be required in the middle of 2027. These rules could make it more difficult for a Fund to execute certain investment strategies and may have an adverse effect on a Fund's ability to generate returns.

**Russia Sanctions Risk.** Following Russia's invasion of Ukraine in late February 2022, various countries, including the U.S. and the U.K., as well as the E.U., issued broad-ranging economic sanctions against Russia. The U.S. and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia's invasion. A large number of corporations and U.S. states have also announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses. These sanctions and any additional sanctions or other intergovernmental actions that have been or may be undertaken in the future, against Russia, Russian entities or Russian individuals, or other countries that support Russia's military invasion, may result in the devaluation of Russian currency, a downgrade in the country's credit rating, an immediate freeze of Russian assets, a decline in the value and liquidity of Russian securities, property or interests, and/or other adverse consequences to the Russian economy or a Fund. The scope and scale of sanctions in place at a particular time may be expanded or otherwise modified in a way that have negative effects on a Fund. Sanctions, or the threat of new or modified sanctions, could impair the ability of a Fund to buy, sell, hold, receive, deliver or otherwise transact in certain affected securities or other investment instruments. Sanctions could also result in Russia taking counter measures or other actions in response (including cyberattacks and espionage), which may further impair the value and liquidity of Russian securities. These sanctions, and the resulting disruption of the Russian economy, may cause volatility in other regional and global markets and may negatively impact the performance of various sectors and industries, as well as companies in other countries, which could have a negative effect on the performance of a Fund, even if a Fund does not have direct exposure to securities of Russian issuers. As a collective result of the imposition of sanctions, Russian government countermeasures and the impact that they have had on the trading markets for Russian securities, certain Funds have used, and may in the future use, fair valuation procedures approved by the Fund's Board to value certain Russian securities, which could result in such securities being deemed to have a zero value.

**Securities Lending.** Each Fund may lend portfolio securities to certain creditworthy borrowers in U.S. and non-U.S. markets in an amount not to exceed 40% of the value of its net assets. The borrowers provide collateral that is marked to market daily in an amount at least equal to the current market value of the securities loaned. A Fund may terminate a loan at any time and obtain the securities loaned. A Fund receives the value of any interest or cash or non-cash distributions paid on the loaned securities. A Fund cannot vote proxies for securities on loan, but may recall loans to vote proxies if a material issue affecting the Fund's economic interest in the investment is to be voted upon. Efforts to recall such securities promptly may be unsuccessful, especially for foreign securities or thinly traded securities. Distributions received on loaned securities in lieu of dividend payments (i.e., substitute payments) would not be considered qualified dividend income.

With respect to loans that are collateralized by cash, the borrower typically will be entitled to receive a fee based on the amount of cash collateral. A Fund is compensated by the difference between the amount earned on the reinvestment of cash collateral and the fee paid to the borrower. In the case of collateral other than cash, a Fund is compensated by a fee paid by the borrower equal to a percentage of the market value of the loaned securities. Any cash collateral may be reinvested in certain high quality short-term instruments either directly on behalf of the lending Fund or through one or more joint accounts or funds, which may include those managed by the Adviser. A Fund could lose money due to a decline in the value of collateral provided for loaned securities or any investments made with cash collateral. Certain non-cash collateral or investments made with cash collateral may have a greater risk of loss than other non-cash collateral or investments.

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A Fund may pay a portion of the interest or fees earned from securities lending to a borrower as described above, and to one or more securities lending agents approved by the Board who administer the lending program for the Funds in accordance with guidelines approved by the Board. In such capacity, the lending agent provides the following services to the Funds in connection with the Funds' securities lending activities: (i) locating borrowers among an approved list of prospective borrowers; (ii) causing the delivery of loaned securities from a Fund to borrowers; (iii) monitoring the value of loaned securities, the value of collateral received, and other lending parameters; (iv) seeking additional collateral, as necessary, from borrowers; (v) receiving and holding collateral from borrowers, and facilitating the investment and reinvestment of all or substantially all cash collateral in an investment vehicle designated by the Funds; (vi) returning collateral to borrowers; (vii) facilitating substitute dividend, interest, and other distribution payments to the Funds from borrowers; (viii) negotiating the terms of each loan of securities, including but not limited to the amount of any loan premium, and monitoring the terms of securities loan agreements with prospective borrowers for consistency with the requirements of the Funds' Securities Lending Authorization Agreement; (ix) selecting securities, including amounts (percentages), to be loaned; (x) recordkeeping and accounting servicing; and (xi) arranging for return of loaned securities to the Fund in accordance with the terms of the Securities Lending Authorization Agreement. State Street Bank and Trust Company ("State Street"), an affiliate of the Trust, has been approved by the Board to serve as securities lending agent for each Fund and the Trust has entered into an agreement with State Street for such services. Among other matters, the Trust has agreed to indemnify State Street for certain liabilities. State Street has received an order of exemption from the SEC under Sections 17(a), 17(d) and 12(d)(1) under the 1940 Act to serve as the lending agent for affiliated investment companies such as the Trust, to invest the cash collateral received from loan transactions in an affiliated cash collateral fund and to receive a fee based on a share of the revenue generated from such transactions.

Securities lending involves exposure to certain risks, including operational risk (i.e., the risk of losses resulting from problems in the settlement and accounting process especially so in certain international markets such as Taiwan), "gap" risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees a Fund has agreed to pay a borrower), risk of loss of collateral, credit, legal, counterparty and market risk. If a securities lending counterparty were to default, a Fund would be subject to the risk of a possible delay in receiving collateral (or the proceeds of its liquidation) or in recovering the loaned securities. In the event a borrower does not return a Fund's securities as agreed, the Fund may experience losses if the proceeds received from liquidating the collateral do not at least equal the value of the loaned security at the time the collateral is liquidated, plus the transaction costs incurred in purchasing replacement securities. Although State Street has agreed to provide a Fund with indemnification in the event of a borrower default, a Fund is still exposed to the risk of losses in the event a borrower does not return a Fund's securities as agreed. For example, delays in recovery of lent securities may cause a Fund to lose the opportunity to sell the securities at a desirable price with guaranteed delivery provisions.

**Special Situations.** State Street International Stock Selection Fund may invest in joint ventures, cooperatives, partnerships, private placements, unlisted securities, and other similar vehicles (collectively, "special situations"). Investments in special situations could enhance the Fund's capital appreciation potential. These investments are generally illiquid and subject to the same risks and limitations associated with illiquid securities, as described above. Due to foreign ownership restrictions, the Fund may invest periodically in illiquid securities which are or become illiquid due to restrictions on foreign ownership imposed by foreign governments. Said securities may be more difficult to price and trade.

**Special Risk Considerations of Investing in China.** State Street International Stock Selection Fund may invest in securities of Chinese issuers. Investing in securities of Chinese issuers, including by investing in A Shares, involves certain risks and considerations not typically associated with investing in securities of U.S. issuers, including, among others, (i) more frequent (and potentially widespread) trading suspensions and U.S. or foreign government interventions or restrictions with respect to Chinese issuers, which could preclude the Fund from making certain investments or result in the Fund selling investments at disadvantageous times and which may also cause reduced liquidity and increased price volatility in such investments, (ii) currency revaluations and other currency exchange rate fluctuations or blockage, (iii) the nature and extent of intervention by the Chinese government in the Chinese securities markets, whether such intervention will continue and the impact of such intervention or its discontinuation, (iv) the risk of nationalization or expropriation of assets, (v) the risk that the Chinese government may decide not to continue to support economic reform programs, (vi) limitations on the use of brokers, (vii) potentially higher rates of inflation, (viii) the unavailability of consistently-reliable economic data, (ix) the relatively small size and absence of operating history of many Chinese companies, (x) accounting, auditing and financial reporting standards in China are different from U.S. standards and, therefore, disclosure of certain material information may not be available, (xi) greater political, economic, social, legal and tax-related uncertainty, (xii) higher market volatility caused by any potential regional territorial conflicts or natural disasters, (xiii) higher dependence on exports and international trade, (xiv) the risk of increased trade tariffs, sanctions, embargoes and other trade limitations,

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(xv) restrictions on foreign ownership, (xvi) risks associated with variable interest entity ("VIE") structures, and (xvii) custody risks associated with investing through programs to access Chinese securities. Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have the ability to suspend the trading of their equity securities, and have shown a willingness to exercise that option in response to market volatility and other events. The liquidity of Chinese securities may shrink or disappear suddenly and without warning as a result of adverse economic, market or political events, or adverse investor perceptions, whether or not accurate.

In addition, unexpected political, regulatory and diplomatic events, such as the U.S.-China "trade war" that intensified in 2018, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The current political climate and the renewal or escalation of a trade war between China and the United States may have an adverse effect on both the U.S. and Chinese economies, including as the result of one country's imposition of tariffs on the other country's products. In addition, sanctions or other investment restrictions could preclude a Fund from investing in certain Chinese issuers or cause a Fund to sell investments at disadvantageous times. Events such as these and their impact on the Fund are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future.

Moreover, the Chinese government is involved in a longstanding dispute with Taiwan that has included threats of invasion. If the political climate between the U.S. and China does not improve or continues to deteriorate, if China were to attempt unification of Taiwan by force, or if other geopolitical conflicts develop or get worse, economies, markets, and individual securities may be severely affected both regionally and globally, and the value of the Fund's assets may go down.

**Total Rate of Return Swaps.** State Street International Stock Selection Fund may invest in total rate of return swaps. The Fund may contract with a counterparty to pay a stream of cash flows and receive the total return of an index or a security for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if they had invested directly in an instrument that yielded that desired return. The Adviser will cause the Fund to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Trust's repurchase agreement guidelines.

**Temporary Defensive Positions.** From time to time, the Street International Stock Selection Fund may take temporary defensive positions in attempting to respond to adverse market, economic or other conditions. Temporary defensive positions may be taken, for example, to preserve capital or if the Fund is unable to pursue its investment strategies or acquire the types of securities in which it normally invests. Temporary defensive positions will be in high-quality fixed income securities, cash or cash equivalents. These positions include, but are not limited to: (1) obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities; (2) commercial paper, bank certificates of deposit, bankers' acceptances and time deposits; (3) repurchase agreements; or (4) uninvested cash, some or all of which may be held in a non-interest bearing demand deposit account at the Fund's affiliated custodian. The Adviser has discretion in determining: (i) whether taking a temporary defensive position is appropriate for the Fund at a particular time, and (ii) the types of instruments that the Fund will hold in taking a temporary defensive position. While investing defensively, the Fund may maintain a substantial portion of its assets in cash, on which the Fund may earn little if any income.

When taking a temporary defensive position, the Fund may not achieve its investment objective.

**U.S. Government Obligations.** Each Fund may invest in U.S. Government obligations. The types of U.S. Government obligations in which each Fund may at times invest include (1) U.S. Treasury obligations, which differ only in their interest rates, maturities and times of issuance and (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Treasury, (c) discretionary authority of the U.S. Government agency or instrumentality or (d) the credit of the instrumentality (examples of agencies and instrumentalities are: Federal Land Banks, Federal Housing Administration, Federal Farm Credit Bank, Farmers Home Administration, Export-Import Bank of the United States, Central Bank for Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Banks, General Services Administration, Maritime Administration, Tennessee Development Bank, Student Loan Marketing Association, International Bank for Reconstruction and Development and Federal National Mortgage Association ("Fannie Mae"). No assurance can be given that in the future the U.S. Government will provide financial support to such U.S. Government agencies or instrumentalities described in (2)(b), (2)(c) and (2)(d), other than as set forth above, since it is not obligated to do so by law. Each such Fund may purchase U.S. Government obligations on a forward commitment basis.

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Since September 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (together, the "GSEs") have been placed under the conservatorship of the Federal Housing Finance Agency ("FHFA"). The U.S. Treasury, FHFA and the Federal Reserve have taken the steps to support the conservatorship. No assurance can be given that those initiatives with respect to the debt

**Warrants.** Each Fund may invest in warrants. Warrants entitle the holder to buy equity securities at a specific price for a specific period of time. Warrants may be considered more speculative than certain other types of investments in that they do not entitle a holder to dividends or voting rights with respect to the securities which may be purchased nor do they represent any rights in the assets of the issuing company. Also, the value of the warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to the expiration date. No Fund will invest more than 5% of the value of its net assets in warrants, or more than 2% in warrants which are not listed on the New York or American Stock Exchanges.

**When-Issued, Delayed Delivery and Forward Commitment Transactions.** To secure an advantageous price or yield, certain Funds may purchase securities on a when-issued, delayed delivery, to-be-announced ("TBA") or forward commitment basis and may sell securities on a forward commitment or delayed delivery basis. A Fund will enter into when-issued, delayed delivery, TBA or forward commitment transactions for the purpose of acquiring securities and not for the purpose of leverage.

When purchasing a security on a when-issued, delayed delivery, TBA or forward commitment basis, a Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its NAV. When such transactions are negotiated, certain terms may be fixed at the time the commitment is made, but delivery and payment for the securities takes place at a later date. In general, a Fund does not pay for the securities until received and does not start earning interest or other income until the contractual settlement date. A Fund may take delivery of the securities or it may sell the securities before the settlement date.

At the time of delivery of the securities, the value may be more or less than the purchase or sale price. If a Fund remains substantially fully invested at a time when when-issued, delayed delivery, TBA or forward commitment purchases are outstanding, the purchases may result in a form of leverage and give rise to increased volatility of the Fund's NAV. Default by, or bankruptcy of, a counterparty to a when-issued, delayed delivery, TBA or forward commitment transaction would expose the Fund to possible losses because of an adverse market action, expenses or delays in connection with the purchase or sale of the pools specified in such transaction. Purchases of when-issued, delayed delivery, TBA or forward commitment securities also involve a risk of loss if the seller fails to deliver after the value of the securities has risen.

A TBA transaction involves a commitment to purchase securities sold for a fixed price where the underlying securities are announced at a future date. The seller does not specify the particular securities to be delivered. Instead, a Fund agrees to accept any security that meets specified terms. For example, in a TBA mortgage-backed security transaction, a Fund and the seller would agree upon the issuer, interest rate and terms of the underlying mortgages. The seller would not identify the specific underlying mortgages until it issues the security. For this reason, in a TBA transaction, a Fund commits to purchase securities for which all specific information is not yet known at the time of the trade, particularly the exact face amount in forward commitment mortgage-backed securities transactions. The purchaser in a TBA transaction generally is subject to increased market risk and interest rate risk because the delivered securities may be less favorable than anticipated by the purchaser.

Certain Funds may also enter into a forward commitment to sell securities it owns. The use of forward commitments enables a Fund to hedge against anticipated changes in interest rates and prices. In a forward sale, a Fund does not participate in gains or losses on the security occurring after the commitment date. Forward commitments to sell securities also involve a risk of loss if the seller fails to take delivery after the value of the securities has declined. Forward commitment transactions involve additional risks similar to those associated with investments in options and futures contracts.

Rule amendments recently implemented by the Financial Industry Regulatory Authority, Inc. ("FINRA") impose mandatory margin requirements for the TBA market with limited exceptions, which requires the Funds to post collateral in connection with its TBA transactions. TBAs have historically not been required to be collateralized. The collateralization of TBA trades is intended to mitigate counterparty credit risk between trade and settlement, but could increase the cost of such transactions and impose added operational complexity. There is no similar regulatory requirement applicable to a Fund's TBA counterparties.

**FUND SPECIFIC INVESTMENT STRATEGIES:** 

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A Fund may invest in the following instruments and utilize the following investment techniques:

**Applicable to State Street International Stock Selection Fund:** 

Investors should consider carefully the substantial risks involved in securities of companies and governments of foreign nations, which are in addition to the usual risks inherent in domestic investments. There may be less publicly available information about foreign companies comparable to the reports and ratings published regarding U.S. companies. Foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards, and auditing practices and requirements may not be comparable to those applicable to U.S. companies. Many foreign markets have substantially less volume than either the established domestic securities exchanges or the OTC markets. Securities of some foreign companies are less liquid and more volatile than securities of comparable U.S. companies. Commission rates in foreign countries, which may be fixed rather than subject to negotiation as in the U.S., are likely to be higher. In many foreign countries there is less government supervision and regulation of securities exchanges, brokers and listed companies than in the U.S., and capital requirements for brokerage firms are generally lower. Settlement of transactions in foreign securities may, in some instances, be subject to delays and related administrative uncertainties.

Investments in companies domiciled in emerging market countries may be subject to additional risks than investment in the U.S. and in other developed countries. These risks include: (1) Volatile social, political and economic conditions in emerging or developing markets can cause exposure to economic structures that are generally less diverse and mature. Emerging market countries can have political systems which can be expected to have less stability than those of more developed countries. The possibility may exist that recent favorable economic developments in certain emerging market countries may be suddenly slowed or reversed by unanticipated political or social events in such countries. Moreover, the economies of individual emerging market countries may differ favorably or unfavorably from the U.S. economy in such respects as the rate of growth in gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. (2) The small current size of the markets for such securities and the currently low or nonexistent volume of trading can result in a lack of liquidity and in greater price volatility. Until recently, there has been an absence of a capital market structure or market-oriented economy in certain emerging market countries. To the extent the Fund invests in securities denominated in foreign currencies, the value of such securities to the Fund will be affected by changes in currency exchange rates and in exchange control regulations. A change in the value of a foreign currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of the Fund's securities. In addition, some emerging market countries may have fixed or managed currencies which are not free-floating against the U.S. dollar. Further, certain emerging market currencies may not be internationally traded. Certain of these currencies have experienced a steady devaluation relative to the U.S. dollar. Many emerging markets countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries. (3) The existence of national policies may restrict the Fund's investment opportunities and may include restrictions on investment in issuers or industries deemed sensitive to national interests. (4) Some emerging markets countries may not have developed structures governing private or foreign investment and may not allow for judicial redress for injury to private property.

The Fund endeavors to buy and sell foreign currencies on favorable terms. Price spreads on currency exchange (to cover service charges) may be incurred, particularly when the Fund changes investments from one country to another or when proceeds from the sale of shares in U.S. dollars are used for the purchase of securities in foreign countries. Also, some countries may adopt policies which would prevent the Fund from repatriating invested capital and dividends, withhold portions of interest and dividends at the source, or impose other taxes, with respect to the Fund's investments in securities of issuers of that country. There also is the possibility of expropriation, nationalization, withholding or other taxation (in each case, which taxes could potentially be confiscatory), foreign exchange controls (which may include suspension of the ability to transfer currency from a given country), default in foreign government securities, domestic and foreign political or social instability, or diplomatic developments that could adversely affect investments in securities of issuers in those nations.

The Fund may be affected either favorably or unfavorably by fluctuations in the relative rates of exchange between the currencies of different nations, exchange control regulations and indigenous economic and political developments.

**Exchange Traded Funds.** An exchange-traded fund ("ETF") is an investment company that trades like a stock throughout the day. An ETF is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index.

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Although ETFs are legally classified as open-end companies or unit investment trusts ("UITs"), they differ from traditional open-end companies and UITs in the following respects:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•ETFs do not sell individual shares directly to investors and only issue their shares in large blocks (blocks of 50,000 shares, for example) that are known as "Creation Units";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Investors generally do not purchase Creation Units with cash. Instead, they buy Creation Units with a basket of securities that generally mirrors the ETF's portfolio. Those who purchase Creation Units are frequently institutions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•After purchasing a Creation Unit, an investor often splits it up and sells the individual shares on a secondary market. This permits other investors to purchase individual shares (instead of Creation Units).

Investors who want to sell their ETF shares have two options: (1) they can sell individual shares to other investors on the secondary market, or (2) they can sell the Creation Units back to the ETF. In addition, ETFs generally redeem Creation Units by giving investors the securities that comprise the portfolio instead of cash. Because of the limited redeemability of ETF shares, ETFs are not considered to be—and may not call themselves—mutual funds. ETFs are subject to the risk that the value of the securities in which the ETF invests may go up or down in response to the prospects of the underlying securities and/or general economic conditions. Price changes may be temporary or may last for extended periods.

**DERIVATIVES, HEDGING STRATEGIES AND RELATED INVESTMENT TECHNIQUES** 

The State Street International Stock Selection Fund may use derivative instruments, among other things, to hedge against movements in the equity markets, interest rates and currency exchange rates through the use of swaps, options, futures transactions, and options on futures. The Fund may also use derivative instruments to seek to generate investment returns. The Fund has authority to write (sell) covered call and put options on portfolio securities, purchase put and call options on securities and engage in transactions in stock index options, stock index futures and financial futures and related options on such futures and may enter into such options and futures transactions either on exchanges or in the OTC markets. The Fund may engage in options and futures transactions for hedging purposes, in which case, the Adviser believes that such strategies will not subject the Fund to the risks frequently associated with the speculative use of options and futures transactions. The Fund may also choose to use derivatives to generate exposure to securities or markets more efficiently than through direct investment in a security or group of securities. Although the use of hedging strategies by the Fund is intended to reduce the volatility of the NAV of the Fund's shares, the NAV will nevertheless fluctuate. There can be no assurance that the use of derivatives or hedging transactions will be effective.

**Writing Covered Call Options.** The Fund is authorized to write (sell) covered call options on the securities in which it may invest and to enter into closing purchase transactions with respect to such options. Writing a call option obligates the Fund to sell or deliver the option's underlying security, in return for the strike price, upon exercise of the option. By writing a call option, the Fund receives an option premium from the purchaser of the call option. Writing covered call options is generally a profitable strategy if prices remain the same or fall. Through receipt of the option premium, the Fund would seek to mitigate the effects of a price decline. By writing covered call options, however, the Fund gives up the opportunity, while the option is in effect, to profit from any price increase in the underlying security above the option exercise price. In addition, the Fund's ability to sell the underlying security will be limited while the option is in effect unless the Fund effects a closing purchase transaction.

**Writing Covered Put Options.** The Fund is authorized to write (sell) covered put options on its portfolio securities and to enter into closing transactions with respect to such options.

When the Fund writes a put option in return for receipt of a premium, the Fund assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. The Fund may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for an option the Fund has written, however, the Fund must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to cover its position.

The Fund may write put options as an alternative to purchasing actual securities. If security prices rise, the Fund would expect to profit from a written put option, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the Fund will also profit, because it should be able to close out the option at a lower price. If security prices fall, the Fund would expect to suffer a loss. This loss should be less than the loss the Fund would have experienced from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline.

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**Purchasing Put Options.** The Fund is authorized to purchase put options to hedge against a decline in the market value of its portfolio securities. By buying a put option the Fund has the right (but not the obligation) to sell the underlying security at the exercise price, thus limiting the Fund's risk of loss through a decline in the market value of the security until the put option expires. The amount of any appreciation in the value of the underlying security will be partially offset by the amount of the premium paid by the Fund for the put option and any related transaction costs. Prior to its expiration, a put option may be sold in a closing sale transaction and profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction costs. A closing sale transaction cancels out the Fund's position as the purchaser of an option by means of an offsetting sale of an identical option prior to the expiration of the option it has purchased. The Fund will not purchase put options on securities (including stock index options) if as a result of such purchase, the aggregate cost of all outstanding options on securities held by the Fund would exceed 5% of the market value of its total assets.

**Purchasing Call Options.** The Fund is also authorized to purchase call options. The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price (call options on futures contracts are settled by purchasing the underlying futures contract). The Fund will purchase call options only in connection with "closing purchase transactions." The Fund will not purchase call options on securities (including stock index options) if as a result of such purchase the aggregate cost of all outstanding options on securities held by the Fund would exceed 5% of the market value of its total assets.

**Interest Rate and Financial Futures and Options.** The Fund may invest in interest rate futures contracts, foreign currency futures contracts, and options thereon that are traded on a U.S. or foreign exchange or board of trade. An interest rate, foreign currency or index futures contract provides for the future sale by one party and purchase by another party of a specified quantity of financial instruments (such as GNMA certificates or Treasury bonds) or foreign currency or the cash value of an index or interest rate at a specified price at a future date. A futures contract on an index is an agreement between two parties (buyer and seller) to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. In the case of futures contracts traded on U.S. exchanges, the exchange itself or an affiliated clearing corporation assumes the opposite side of each transaction (i.e., as buyer or seller). A futures contract may be satisfied or closed out by delivery or purchase, as the case may be, of the financial instrument or by payment of the change in the cash value of the index. Using futures to effect a particular strategy instead of using the underlying or related security or index may result in lower transaction costs being incurred. Although the value of an index may be a function of the value of certain specified securities, no physical delivery of these securities is made. A public market exists in futures contracts covering interest rates, several indexes and a number of financial instruments and foreign currencies.

The Fund may also purchase and write call and put options on futures contracts. Options on futures contracts possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (in the case of a call) or short position (in the case of a put) in a futures contract at a specified exercise price at any time during the period of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true. An option on a futures contract may be closed out (before exercise or expiration) by an offsetting purchase or sale of an option on a futures contract of the same series.

The Fund will only enter into futures contracts and options on futures contracts which are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system. The Fund will enter into a futures contract only if the contract is "covered". The Fund will write a call or put option on a futures contract only if the option is "covered."

**Restrictions on the Use of Futures Transactions.** The purchase or sale of a futures contract differs from the purchase or sale of a security in that no purchase price is paid or received at the outset of the transaction. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contracts more or less valuable, a process known as "marking to market." At any time prior to the settlement date of the futures contract, the Fund may seek to close out a position by taking an opposite position which will operate to terminate the position in the futures contract; however, there is no

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guarantee that the Fund will be able to do so. Upon termination of a futures contract, a final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction.

**Restrictions on OTC Options.** The Fund may engage in OTC options (including OTC foreign security and currency options and options on foreign security and currency futures if permitted by its investment mandate), only with member banks of the Federal Reserve System and primary dealers in U.S. Government securities or with affiliates of such banks or dealers which have capital of at least $50 million or whose obligations are guaranteed by an entity having capital of at least $50 million. The Fund will acquire only those OTC options for which the Adviser believes the Fund can receive on each business day at least two independent bids or offers (one of which will be from an entity other than a party to the option).

The staff of the SEC has taken the position that purchased OTC options and the assets used as cover for written OTC options are illiquid securities. Therefore, the Fund has adopted an operating policy pursuant to which it will not purchase or sell OTC options if, as a result of such transaction, the sum of: (1) the market value of outstanding OTC options held by the Fund; (2) the market value of the underlying securities covered by outstanding OTC call options sold by the Fund; and (3) the market value of all other assets of the Fund that are illiquid or are not otherwise readily marketable, would exceed 15% of its net assets, taken at market value. However, if an OTC option is sold by the Fund to a primary U.S. Government securities dealer recognized by the Federal Reserve Bank of New York and the Fund has the unconditional contractual right to repurchase such OTC option from the dealer at a predetermined price, then the Fund will treat as illiquid such amount of the underlying securities as is equal to the repurchase price less the amount by which the option is "in-the-money" (current market value of the underlying security minus the option's strike price). The repurchase price with primary dealers is typically a formula price which is generally based on a multiple of the premium received for the option plus the amount by which the option is "in-the-money."

**Risk Factors in Options, Futures and Forward Transactions.** The use of options and futures involves the risk of imperfect correlation in movements in the price of options and futures for hedging purposes and movements in the price of the reference asset. If the price of the options or futures moves more or less than the price of reference asset, the Fund will experience a gain or loss which will not be completely offset by movements in the price of the reference asset. The successful use of options and futures also depends on the Adviser's ability to correctly predict price movements in the market involved in a particular options or futures transaction. To compensate for imperfect correlations, the Fund may purchase or sell stock index options or futures contracts in a greater dollar amount than the reference asset if the volatility of the reference asset is historically greater than the volatility of the stock index options or futures contracts. Conversely, the Fund may purchase or sell fewer stock index options or futures contracts, if the historical price volatility of the reference asset is less than that of the stock index options or futures contracts. The risk of imperfect correlation generally tends to diminish as the maturity date of the stock index option or futures contract approaches. Options are also subject to the risks of an illiquid secondary market, particularly in strategies involving writing options, which the Fund cannot terminate by exercise. In general, options whose strike prices are close to their underlying instruments' current value will have the highest trading volume, while options whose strike prices are further away may be less liquid.

The Fund may contract to purchase securities for a fixed price at a future date beyond customary settlement time. The failure of the other party to the transaction to complete the transaction may cause the Fund to miss an advantageous price or yield. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, or if the other party fails to complete the transaction.

The Fund intends to enter into options and futures transactions, on an exchange or in the OTC market, only if there appears to be a liquid secondary market for such options or futures or, in the case of OTC transactions, the Adviser believes the Fund can receive on each business day at least two independent bids or offers. However, there can be no assurance that a liquid secondary market will exist at any specific time. Thus, it may not be possible to close an options or futures position. The inability to close options and futures positions also could have an adverse impact on the Fund's ability to effectively hedge its portfolio. There is also the risk of loss by the Fund of margin deposits or collateral in the event of bankruptcy of a broker with whom the Fund has an open position in a derivative position. To the extent that the Fund uses futures, options or forward instruments to gain direct exposure to a security or market, the use of such instruments could expose the Fund to the effects of leverage, which could increase the Fund's exposure to the market and magnify potential losses.

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The exchanges on which options on securities and currency options are traded have generally established limitations governing the maximum number of call or put options on the same underlying security or currency (whether or not covered) which may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written in one or more accounts or through one or more brokers). "Trading limits" are imposed on the maximum number of contracts which any person may trade on a particular trading day.

In addition, if a futures broker of the Fund becomes bankrupt or insolvent, or otherwise defaults on its obligations to the Fund, the Fund may not receive all amounts owing to it in respect of its trading, despite the futures clearing house fully discharging all of its obligations. In the event of the bankruptcy of a futures broker, the Fund could be limited to recovering only a pro rata share of all available funds segregated on behalf of the futures broker's combined customer accounts by account class. Also, in contrast to the treatment of margin provided for cleared derivatives, the futures broker does not typically notify the futures clearing house of the amount of margin provided by the futures broker to the futures clearing house that is attributable to each customer. Therefore, the Fund is subject to the risk that its margin will be used by the futures clearing house to satisfy the obligations of another customer of its futures broker. In addition, in the event of the bankruptcy or insolvency of a clearing house, the Fund might experience a loss of funds deposited through its futures broker as margin with the clearing house, a loss of unrealized profits on its open positions, and the loss of funds owed to it as realized profits on closed positions. Such a bankruptcy or insolvency might also cause a substantial delay before the Fund could obtain the return of funds owed to it by a futures broker who was a member of such clearing house. Furthermore, if a futures broker does not comply with the applicable regulations or its agreement with a Fund, fails to maintain accurate records, or in the event of fraud or misappropriation of customer assets by a futures broker, the Fund could have only an unsecured creditor claim in an insolvency of the futures broker with respect to margin held by the futures broker.

**Applicable to State Street S&P 500 Index Fund:** 

**Cash Reserves.** The Fund may hold portions of its assets in cash or short-term debt instruments with remaining maturities of 397 days or less pending investment or to meet anticipated redemptions and day-to-day operating expenses. Short-term debt instruments consist of: (i) short-term obligations of the U.S. Government, its agencies, instrumentalities, authorities or political subdivisions; (ii) other short-term debt securities rated at the time of purchase Aa or higher by Moody's or AA or higher by S&P Global Ratings ("S&P") or, if unrated, of comparable quality in the opinion of the Adviser; (iii) commercial paper; (iv) bank obligations, including negotiable certificates of deposit, time deposits and bankers' acceptances; and (v) repurchase agreements. At the time the Fund invests in commercial paper, bank obligations or repurchase agreements, the issuer or the issuer's parent must have outstanding debt rated Aa or higher by Moody's or AA or higher by S&P or outstanding commercial paper or bank obligations rated Prime-1 by Moody's or A-1 by S&P; or, if no such ratings are available, the instrument must be of comparable quality in the opinion of the Adviser. To the extent that the Fund holds the foregoing instruments its ability to track its corresponding Index may be adversely affected. See Appendix A for more information on the ratings of debt instruments.

**Futures Contracts and Options on Futures.** The Fund may enter into futures contracts on securities in which it may invest or on indices comprised of such securities and may purchase and write call and put options on such contracts.

<u>Futures contracts.</u> A financial futures contract is a contract to buy or sell a specified quantity of financial instruments such as U.S. Treasury bills, notes and bonds at a specified future date at a price agreed upon when the contract is made. An index futures contract is a contract to buy or sell specified units of an index at a specified future date at a price agreed upon when the contract is made. The value of a unit is based on the current value of the index. Under such contracts no delivery of the actual securities making up the index takes place. Rather, upon expiration of the contract, settlement is made by exchanging cash in an amount equal to the difference between the contract price and the closing price of the index at expiration, net of variation margin previously paid. Futures contracts are traded in the United States on commodity exchanges or boards of trade — known as "contract markets" — approved for such trading by the CFTC, and must be executed through a futures commission merchant or brokerage firm which is a member of the relevant contract market.

Although futures contracts (other than index futures) by their terms call for actual delivery or acceptance of commodities or securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery, but rather by entering into an offsetting contract (a "closing transaction"). Upon entering into a futures contract, the Fund is required to deposit an initial margin with the futures broker. The initial margin serves as a "good faith" deposit that the 500 Fund will honor its futures commitments. Subsequent payments (called "variation margin" or "maintenance margin") to and

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from the broker are made on a daily basis as the price of the underlying security or commodity fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." Futures contracts also involve brokerage costs. If the Fund is unable to enter into a closing transaction, the amount of the Fund's potential loss may be unlimited.

The Fund will not commit more than 5% of the market value of its total assets to initial margin deposits on futures and premiums paid for options on futures.

**Options on Securities and Securities Indices.** The Fund may purchase or sell options on securities in which it may invest and on indices that are comprised of securities in which it may invest, subject to the limitations set forth above and provided such options are traded on a regulated exchange or in the OTC market. A call option on a securities index grants the purchaser of the call, for a premium paid to the seller, the right to receive in cash an amount equal to the difference between the closing value of the index and the exercise price of the option times a multiplier established by the exchange upon which the option is traded. Typically, a call option will be profitable to the holder of the option if the value of the security or the index increases during the term of the option; a put option will be valuable if the value of the security or the index decreases during the term of the option. The Fund may also invest in warrants, which entitle the holder to buy equity securities at a specific price for a specific period of time.

**Description of Benchmark Indices** 

The following are descriptions of indices against which certain Funds measure their performance, or from which a Fund chooses securities for investment.

**State Street S&P 500 Index Fund.** The S&P 500<sup>®</sup> Index (the "Index") is composed of the common stocks of 500 companies which are chosen by Standard & Poor's Financial Services LLC ("Standard & Poor's") to best capture the performance of the large-cap segment of the market and it is considered to be a proxy of the U.S. equity market. The Index is structured to approximate the general distribution of industries in the U.S. economy. The inclusion of a stock in the Index in no way implies that Standard & Poor's believes the stock to be an attractive investment, nor is Standard & Poor's a sponsor or in any way affiliated with the Fund. The index captures approximately 80% coverage of available market capitalization of all U.S. common stocks. The Index is weighted by float-adjusted market capitalization. Constituent selection is at the discretion of the Index Committee and it is based on the eligibility criteria. The Index has a fixed constituent company count of 500. Sector balance, as measured by a comparison of each GICS sector's weight in an index with its weight in the S&P Total Market Index, in the relevant market capitalization range, is also considered in the selection of companies for the Index.

**State Street International Stock Selection Fund measures its performance against the MSCI**<sup>®</sup> **EAFE**<sup>®</sup> **Index.** The MSCI<sup>®</sup> EAFE<sup>®</sup> Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of developed markets countries excluding USA and Canada. As of October 31, 2025, the MSCI<sup>®</sup> EAFE<sup>®</sup> Index included the following countries: Australia, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

***INVESTMENT RESTRICTIONS*** 

The Trust has adopted the following fundamental investment restrictions with respect to the Funds, which may not be changed without the affirmative vote of a "majority of the outstanding voting securities" of a Fund, which is defined in the 1940 Act to mean the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund and (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding shares are present at the meeting in person or by proxy.

&nbsp;&nbsp;&nbsp;&nbsp;1. A Fund may borrow money and issue senior securities to the extent consistent with applicable law from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;2. A Fund may make loans, including to affiliated investment companies, to the extent consistent with applicable law from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;3. A Fund may purchase or sell commodities to the extent consistent with applicable law from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;4. A Fund may purchase, sell or hold real estate to the extent consistent with applicable law from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;5. A Fund may underwrite securities to the extent consistent with applicable law from time to time.

For State Street International Stock Selection Fund:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;6. The Fund may not purchase any security if, as a result, 25% or more of the Fund's total assets (taken at current value) would be invested in a particular industry (for purposes of this restriction, investment companies are not considered to constitute a particular industry or group of industries), except as is consistent with applicable law from time to time and as follows: the Fund is permitted to invest without limit in "government securities" (as defined in the 1940 Act) and tax-exempt securities issued by a U.S. territory or possession, a state or local government, or a political subdivision of any of the foregoing.

For State Street S&P 500 Index Fund:

&nbsp;&nbsp;&nbsp;&nbsp;6. The Fund may not purchase any security if, as a result, 25% or more of the Fund's total assets (taken at current value) would be invested in a particular industry (for purposes of this restriction, investment companies are not considered to constitute a particular industry or group of industries), except as is consistent with applicable law from time to time and as follows: the Fund is permitted to invest without limit in "government securities" (as defined in the 1940 Act) and tax exempt securities issued by a U.S. territory or possession, a state or local government, or a political subdivision of any of the foregoing. The Fund may concentrate its investments in securities of issuers in the same industry as may be necessary to approximate the composition of the Fund's underlying Index.

For each Fund, all percentage limitations (except the limitation to borrowings) on investments will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment. Except for the investment restrictions expressly identified as fundamental, or to the extent designated as such in the Prospectus with respect to a Fund, the other investment policies described in this SAI or in the Prospectus are not fundamental and may be changed by approval of the Trustees without shareholder approval.

**Additional Information** 

Fundamental Investment Restrictions (1) through (5), as numbered above, limit a Fund's ability to engage in certain investment practices and purchase securities or other instruments to the extent consistent with applicable law as that law changes from time to time. Applicable law includes the 1940 Act, the rules or regulations thereunder and applicable orders of the SEC as are currently in place. In addition, interpretations and guidance provided by the SEC staff may be taken into account, where deemed appropriate by a Fund, to determine if an investment practice or the purchase of securities or other instruments is permitted by applicable law. As such, the effects of these limitations will change as the statute, rules, regulations or orders (or, if applicable, interpretations) change, and no shareholder vote will be required or sought when such changes permit or require a resulting change in practice.

**Names Rule Policy** 

To the extent a Fund is subject to Rule 35d-1 under the 1940 Act, the Fund has an investment policy, described in the Fund's Prospectus, to, under normal circumstances, invest at least 80% of its assets in the particular types of investments suggested by the Fund's name (a "Name Policy"). "Assets" for the purposes of a Name Policy are net assets plus the amount of any borrowings for investment purposes. The percentage limitation applies at the time of purchase of an investment. A Fund's Name Policy may be changed by the Board of Trustees without shareholder approval. However, to the extent required by SEC regulations, shareholders will be provided with at least sixty (60) days' notice prior to any change in a Fund's Name Policy.

***DISCLOSURE OF PORTFOLIO HOLDINGS*** 

*Introduction* 

The policies set forth below to be followed by State Street and SSGA FM (collectively with State Street, the "Service Providers") for the disclosure of information about the portfolio holdings of the Trust. These disclosure policies are intended to ensure compliance by the Service Providers and the Trust with applicable regulations of the federal securities laws, including the 1940 Act and the Investment Advisers Act of 1940, as amended. The Board of Trustees must approve all material amendments to the policy.

*General Policy* 

It is the policy of the Service Providers to protect the confidentiality of client holdings and prevent the selective disclosure of non-public information concerning the Trust.

No information concerning the portfolio holdings of the Trust may be disclosed to any party (including shareholders) except as provided below. The Service Providers are not permitted to receive compensation or other consideration in connection with disclosing information about a Fund's portfolio to third parties. In order to address potential conflicts

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between the interest of Fund shareholders, on the one hand, and those of the Service Providers or any affiliated person of those entities or of the Fund, on the other hand, the Fund's policies require that non-public disclosures of information regarding the Fund's portfolio may be made only if there is a legitimate business purpose consistent with fiduciary duties to all shareholders of the Fund.

The Board of Trustees exercises continuing oversight over the disclosure of each Fund's holdings by (i) overseeing the implementation and enforcement of the portfolio holding disclosure policy, Codes of Ethics and other relevant policies of each Fund and its Service Providers by the Trust's Chief Compliance Officer ("CCO") and (ii) considering reports and recommendations by the Trust's CCO concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act). The Board reserves the right to amend the policy at any time without prior notice in its sole discretion.

<u>Publicly Available Information.</u> Any party may disclose portfolio holdings information after the holdings are publicly available.

Disclosure of the complete holdings of each Fund is required to be made quarterly within 60 days of the end of the Fund's fiscal quarter in the Fund's Form N-CSR filing and in the monthly holdings report on Form N-PORT, with every third month made available to the public by the SEC 60 days after the end of the Funds' fiscal quarter. You can find SEC filings on the SEC's website, <u>www.sec.gov</u>. Each Fund will also make complete portfolio holdings available generally no later than 60 calendar days after the end of such Fund's fiscal quarter or subsequent to periodic portfolio holdings disclosure in the Fund's filings with the SEC or on their website.

*Press Interviews Brokers and Other Discussions* 

Portfolio managers and other senior officers or spokespersons of the Service Providers or the Trust may disclose or confirm the ownership of any individual portfolio holding position to reporters, brokers, shareholders, consultants or other interested persons only if such information has been previously publicly disclosed in accordance with these disclosure policies. For example, a portfolio manager discussing the Trust may indicate that he owns XYZ Company for the Trust only if the Trust's ownership of such company has previously been publicly disclosed.

*Trading Desk Reports* 

The Adviser's trading desk may periodically distribute lists of investments held by its clients (including the Trust) for the general analytical research purposes. In no case may such lists identify individual clients or individual client position sizes. Furthermore, in the case of equity securities, such lists shall not show aggregate client position sizes.

*Miscellaneous* 

<u>Confidentiality Agreement.</u> No non-public disclosure of the Funds' portfolio holdings will be made to any party unless such party has signed a written Confidentiality Agreement. For purposes of the disclosure policies, any Confidentiality Agreement must be in a form and substance acceptable to, and approved by, the Trust's officers.

<u>Evaluation Service Providers.</u> There are numerous mutual fund evaluation services (such as Morningstar, Inc. and Broadridge Financial Solutions, Inc., formerly Lipper, Inc.) and due diligence departments of broker-dealers and wirehouses that regularly analyze the portfolio holdings of mutual funds in order to monitor and report on various attributes. These services and departments then distribute the results of their analysis to the public, paid subscribers and/or in-house brokers. In order to facilitate the review of the Trust by these services and departments, the Trust may distribute (or authorize the Service Providers and the Trust's custodian or fund accountants to distribute) month-end portfolio holdings to such services and departments only if such entity has executed a confidentiality agreement.

<u>Additional Restrictions.</u> Notwithstanding anything herein to the contrary, the Board of Trustees, State Street and SSGA FM may, on a case-by-case basis, impose additional restrictions on the dissemination of portfolio information beyond those found in these disclosure policies.

<u>Waivers of Restrictions.</u> These disclosure policies may not be waived, or exceptions made, without the consent of the Trust's officers. All waivers and exceptions involving the Trust will be disclosed to the Board of Trustees no later than its next regularly scheduled quarterly meeting.

<u>Disclosures Required by Law.</u> Nothing contained herein is intended to prevent the disclosure of portfolio holdings information as may be required by applicable law. For example, SSGA FM, State Street, the Trust or any of its affiliates or service providers may file any report required by applicable law (such as Schedules 13D, 13G and 13F or Form N-MFP), respond to requests from regulators and comply with valid subpoenas.

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***PORTFOLIO TURNOVER*** 

Generally, securities are purchased for the Funds for investment income and/or capital appreciation and not for short-term trading profits. Except as otherwise stated in a Fund's Prospectus or this SAI, the Adviser's sell discipline for each Fund's investment in securities is based on the premise of a long-term investment horizon; however, sudden changes in valuation levels arising from, for example, new macroeconomic policies, political developments, and industry conditions could change the assumed time horizon. Additionally, certain of the Funds may invest in foreign securities. As a result, such investments by a Fund may be subject to restrictions on repatriation of capital and/or dividends that may cause the Adviser to change the assumed time horizon with respect to the investments. Liquidity, volatility, and overall risk of a position are other factors considered by the Adviser in determining the appropriate investment horizon. Therefore, the Funds may dispose of securities without regard to the time they have been held when such action, for defensive or other purposes, appears advisable.

Portfolio turnover is calculated by dividing the lesser of purchases or sales of portfolio securities for the particular year, by the monthly average value of the portfolio securities owned by a Fund during the year. For purposes of determining the rate, all short-term securities, including options, futures, forward contracts and repurchase agreements, are excluded. A high turnover rate (over 100%) will: (1) increase transaction expenses which will adversely affect a Fund's performance; and (2) result in increased brokerage commissions and other transaction costs, and the possibility of realized capital gains. To the extent any realized gains are short-term capital gains, they will generally be taxed at ordinary income rates when distributed to shareholders. The payment of any taxes will impact a shareholder's net return from holding an interest in a Fund.

The portfolio turnover rate of a Fund may also be affected by participation in IPOs. To the extent a Fund is authorized to participate in IPOs, the practice of immediately selling the security in the aftermarket could result in active and frequent trading of portions of the Fund's portfolio and an increase in the Fund's portfolio turnover rate.

**Portfolio Turnover Rate.** The following table shows the Fund's portfolio turnover rate during the two most recent fiscal years ended August 31.

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| | | |
|:---|:---|:---|
| **Fund** | **2025** | **2024** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; 2<br> %<br>| &nbsp;&nbsp; 2<br> %<br>|
| State Street International Stock Selection Fund | &nbsp;&nbsp; 131<br> %<br>| &nbsp;&nbsp; 98<br> %<br>|

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**MANAGEMENT OF THE FUNDS** 

***BOARD OF TRUSTEES AND OFFICERS*** 

The Board of Trustees is responsible for overseeing generally the management, activities and affairs of the Funds and has approved contracts with various organizations to provide, among other services, day-to-day management required by the Trust (see the section called "Investment Advisory and Other Services"). The Board has engaged the Adviser to manage the Funds on a day-to day basis. The Board is responsible for overseeing the Adviser and other service providers in the operation of the Trust in accordance with the provisions of the 1940 Act, applicable Massachusetts law and regulation, other applicable laws and regulations, and the Second Amended and Restated Master Trust Agreement.

The Trustees may hold office for the life of the Trust subject to any retirement policy adopted by the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust (the "Independent Trustees"). The officers, all of whom are elected annually by the Board of Trustees and employed by either the Sub-Administrator or the Adviser or their affiliates, are responsible for the day-to-day management and administration of the Trust's operations. For the fiscal year ended August 31, 2025, the Board of Trustees held 7 meetings.

The Trustees listed below are also Directors of the State Street Variable Insurance Series Funds, Inc. and Trustees of the State Street Institutional Investment Trust, the State Street Master Funds, State Street Institutional Funds and the State Street Navigator Securities Lending Trust (the "Navigator Trust") and their respective series and Elfun Diversified Fund,

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Elfun Government Money Market Fund, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun International Equity Fund and Elfun Trusts (collectively, the "Elfun Funds"). The following table provides information with respect to each Trustee, including the Independent Trustees and each officer of the Trusts.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address,**<br> **and Year of Birth**<br>| **Position(s)**<br> **Held With**<br> **Trust**<br>| **Term of**<br> **Office and**<br> **Length of**<br> **Time Served**<br>| **Principal Occupation**<br> **During Past**<br> **Five**<br> **Years**<br> **and Relevant**<br> **Experience**<br>| **Number of**<br> **Funds in**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee†**<br>| **Other**<br> **Directorships**<br> **Held by**<br> **Trustee**<br> **During Past**<br> **Five Years**<br>|
| **INDEPENDENT TRUSTEES** | **INDEPENDENT TRUSTEES** | **INDEPENDENT TRUSTEES** | **INDEPENDENT TRUSTEES** | **INDEPENDENT TRUSTEES** | **INDEPENDENT TRUSTEES** |
| PATRICK J. RILEY<br> c/o SSGA Funds <br> Management, Inc. <br> One Congress Street<br> Boston, MA 02114 <br> YOB:1948<br>| &nbsp;&nbsp; Trustee and <br> Chairperson of <br> the Board<br>| &nbsp;&nbsp; Term: <br> Indefinite <br> Elected:1988<br>| &nbsp;&nbsp; Independent Director, <br> State Street Global <br> Advisors Europe Limited <br> (investment company) <br> (1998 – 2023); <br> Independent Director, <br> SSGA Liquidity plc <br> (formerly, SSGA Cash <br> Management Fund plc) <br> (1998 – 2023); <br> Independent Director, <br> SSGA Fixed Income plc <br> (January 2009 – 2023).<br>| 56 | &nbsp;&nbsp; Board Director and <br> Chairman, SSGA SPDR <br> ETFs Europe I plc (2011 <br> – March 2023); Board <br> Director and Chairman, <br> SSGA SPDR ETFs <br> Europe II plc (2013 – <br> March 2023); Board <br> Director, State Street <br> Liquidity plc (1998 – <br> March 2023).<br>|
| MARGARET K. <br> MCLAUGHLIN<br> c/o SSGA Funds <br> Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1967<br>| &nbsp;&nbsp; Trustee, <br> Chairperson of <br> the Qualified <br> Legal <br> Compliance <br> Committee, and <br> Vice-Chairperson <br> of the Valuation <br> Committee<br>| &nbsp;&nbsp; Term: <br> Indefinite <br> Elected:<br> 12/24<br>| &nbsp;&nbsp; Consultant, Bates Group <br> (consultants) <br> (September 2020 – <br> January 2023); <br> Consultant, Madison <br> Dearborn Partners <br> (private equity) (2019 – <br> 2020).<br>| 56 | &nbsp;&nbsp; Director, Manning & <br> Napier Fund Inc. (2021 <br> – 2022).<br>|
| GEORGE M. PEREIRA<br> c/o SSGA Funds <br> Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1964<br>| &nbsp;&nbsp; Trustee, <br> Chairperson of <br> the Nominating <br> Committee, <br> Chairperson of <br> the Governance <br> Committee, and <br> Vice-Chairperson <br> of the Qualified <br> Legal <br> Compliance <br> Committee<br>| &nbsp;&nbsp; Term: <br> Indefinite <br> Elected:<br> 12/24<br>| &nbsp;&nbsp; Chief Operating Officer <br> (January 2011 – <br> September 2020) and <br> Chief Financial Officer <br> (November 2004 – <br> September 2020), <br> Charles Schwab <br> Investment <br> Management.<br>| 56 | &nbsp;&nbsp; Director, Pave Finance <br> Inc. (May 2023 – <br> present); Director, <br> Pacific Premier Bancorp <br> and Pacific Premier <br> Bank (2021 – August <br> 2025); Director, Charles <br> Schwab Asset <br> Management (Ireland) <br> Ltd. and Charles <br> Schwab Worldwide <br> Funds plc. (2005 – <br> 2020).<br>|
| DONNA M. RAPACCIOLI<br> c/o SSGA Funds <br> Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1962<br>| &nbsp;&nbsp; Trustee, <br> Chairperson of <br> the Audit <br> Committee, <br> Vice-Chairperson <br> of the <br> Nominating <br> Committee, and <br> Vice-Chairperson <br> of the <br> Governance <br> Committee<br>| &nbsp;&nbsp; Term: <br> Indefinite <br> Elected: <br> 12/18<br>| &nbsp;&nbsp; Dean of the Gabelli <br> School of Business <br> (2007 – June 2022) and <br> Accounting Professor <br> (1987 – present) at <br> Fordham University.<br>| 56 | &nbsp;&nbsp; Director- Graduate <br> Management <br> Admissions Council <br> (2015 – 2022).<br>|
| MARK E. SWANSON<br> c/o SSGA Funds<br> Management, Inc. <br> One Congress Street<br> Boston, MA 02114<br> YOB: 1963<br>| &nbsp;&nbsp; Trustee, <br> Chairperson of <br> the Valuation <br> Committee, and <br> Vice-Chairperson <br> of the Audit <br> Committee<br>| &nbsp;&nbsp; Term: <br> Indefinite<br> Elected:<br> 12/24<br>| &nbsp;&nbsp; Treasurer, Chief <br> Accounting Officer and <br> Chief Financial Officer, <br> Russell Investment <br> Funds ("RIF") (1998 – <br> 2022); Global Head of <br> Fund Services, Russell <br> Investments (2013 – <br> 2022); Treasurer, Chief <br> Accounting Officer and<br>| 56 | &nbsp;&nbsp; Director and President, <br> Russell Investments <br> Fund Services, LLC <br> (2010 – 2023); Director, <br> Russell Investment <br> Management, LLC, <br> Russell Investments <br> Trust Company and <br> Russell Investments <br> Financial Services, LLC <br>|

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address,**<br> **and Year of Birth**<br>| **Position(s)**<br> **Held With**<br> **Trust**<br>| **Term of**<br> **Office and**<br> **Length of**<br> **Time Served**<br>| **Principal Occupation**<br> **During Past**<br> **Five**<br> **Years**<br> **and Relevant**<br> **Experience**<br>| **Number of**<br> **Funds in**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee†**<br>| **Other**<br> **Directorships**<br> **Held by**<br> **Trustee**<br> **During Past**<br> **Five Years**<br>|
|  |  |  | &nbsp;&nbsp; Chief Financial Officer, <br> Russell Investment <br> Company ("RIC") (1998 <br> – 2022); President and <br> Chief Executive Officer, <br> RIF (2016 – 2017 and <br> 2020 – 2022); President <br> and Chief Executive <br> Officer, RIC (2016 – <br> 2017 and 2020 – 2022)<br>|  | (2010 – 2023). |
| **INTERESTED TRUSTEE**<sup>(1)</sup> | **INTERESTED TRUSTEE**<sup>(1)</sup> | **INTERESTED TRUSTEE**<sup>(1)</sup> | **INTERESTED TRUSTEE**<sup>(1)</sup> | **INTERESTED TRUSTEE**<sup>(1)</sup> | **INTERESTED TRUSTEE**<sup>(1)</sup> |
| JEANNE LAPORTA<sup>(2)</sup> <br>c/o SSGA Funds<br> Management, Inc. <br> One Congress Street <br> Boston, MA 02114<br> YOB: 1965<br>| Trustee | &nbsp;&nbsp; Term: <br> Indefinite<br> Elected: <br> 12/24<br>| &nbsp;&nbsp; Chair and Director, <br> SSGA Funds <br> Management, Inc. <br> (October 2024 – <br> Present); Senior <br> Managing Director, State <br> Street Investment <br> Management (August <br> 2024 – Present); Chief <br> Administrative Officer at <br> ClearAlpha <br> Technologies LP <br> (FinTech startup) <br> (January 2021 – August <br> 2024); Senior Managing <br> Director at State Street <br> Investment Management <br> (July 2016 – 2021); <br> Manager of State Street <br> Global Advisors Funds <br> Distributors, LLC (May <br> 2017 – 2021); Director <br> of SSGA Funds <br> Management, Inc. <br> (March 2020 - 2021); <br> President of State Street <br> Institutional Funds and <br> State Street Variable <br> Insurance Series Funds, <br> Inc. (April 2014 – March <br> 2020).<br>| 227 | &nbsp;&nbsp; Interested Trustee, <br> Select Sector SPDR <br> Trust, SPDR Series <br> Trust, SPDR Index <br> Shares Funds and <br> SSGA Active Trust <br> (November 2024 - <br> present); Interested <br> Trustee, Elfun <br> Government Money <br> Market Fund, Elfun <br> Tax-Exempt Income <br> Fund, Elfun Income <br> Fund, Elfun Diversified <br> Fund, Elfun International <br> Equity Fund, Elfun <br> Trusts (2016 – 2021).<br>|

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†

For the purpose of determining the number of portfolios overseen by the Trustees, "Fund Complex" comprises registered investment companies for which SSGA FM serves as investment adviser.

(1) The individual listed below is a Trustee who is an "interested person," as defined in the 1940 Act, of the Trust ("Interested Trustee").

(2) Ms. LaPorta was elected as Interested Trustee effective January 1, 2025. Ms. LaPorta is an Interested Trustee because of her employment with State Street Investment Management, an affiliate of the Trust.

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The following lists the principal officers for the Trust, as well as their mailing addresses and ages, positions with the Trust and length of time served, and present and principal occupations:

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| | | | |
|:---|:---|:---|:---|
| **Name, Address,**<br> **and Year of Birth**<br>| **Position(s)**<br> **Held With**<br> **Trust**<br>| **Term of**<br> **Office and**<br> **Length of**<br> **Time Served**<br>| **Principal Occupation**<br> **During Past Five Years**<br>|
| **OFFICERS** | **OFFICERS** | **OFFICERS** | **OFFICERS** |
| ANN M. CARPENTER<br> SSGA Funds Management, Inc.<br> One Congress Street<br> Boston, MA 02114<br> YOB: 1966<br>| &nbsp;&nbsp; President and <br> Principal Executive <br> Officer; Deputy <br> Treasurer<br>| &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 5/23 (with <br> respect to <br> President and <br> Principal <br> Executive <br> Officer); Term: <br> Indefinite <br> Served: since <br> 4/19 (with <br> respect to <br> Deputy <br> Treasurer)<br>| &nbsp;&nbsp; Chief Operating Officer, SSGA Funds Management, Inc. <br> (April 2005 – present)\*; Managing Director, State Street <br> Investment Management (April 2005 – present).\*<br>|
| BRUCE S. ROSENBERG <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1961<br>| &nbsp;&nbsp; Treasurer and <br> Principal Financial <br> Officer<br>| &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 2/16<br>| &nbsp;&nbsp; Managing Director, State Street Investment <br> Management and SSGA Funds Management, Inc. (July <br> 2015 – present).<br>|
| CHAD C. HALLETT <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1969<br>| Deputy Treasurer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 2/16<br>| &nbsp;&nbsp; Vice President, State Street Investment Management <br> and SSGA Funds Management, Inc. (November 2014 – <br> present).<br>|
| DARLENE ANDERSON-VASQUEZ <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1968<br>| Deputy Treasurer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 11/16<br>| &nbsp;&nbsp; Managing Director, State Street Investment <br> Management and SSGA Funds Management, Inc. (May <br> 2016 – present).<br>|
| ARTHUR A. JENSEN <br> SSGA Funds Management, Inc. <br> 1600 Summer Street <br> Stamford, CT 06905 <br> YOB: 1966<br>| Deputy Treasurer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 11/16<br>| &nbsp;&nbsp; Vice President, State Street Investment Management <br> and SSGA Funds Management, Inc. (July 2016 – <br> present).<br>|
| DAVID LANCASTER <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1971<br>| Assistant Treasurer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 11/20<br>| &nbsp;&nbsp; Vice President, State Street Investment Management <br> and SSGA Funds Management, Inc. (July 2017 – <br> present).\*<br>|
| JOHN BETTENCOURT<br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1976<br>| Assistant Treasurer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 5/22<br>| &nbsp;&nbsp; Vice President, State Street Investment Management <br> and SSGA Funds Management, Inc. (March 2020 – <br> present); Assistant Vice President, State Street <br> Investment Management (June 2007 – March 2020).<br>|
| VEDRAN VUKOVIC<br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1985<br>| Assistant Treasurer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 2/24<br>| &nbsp;&nbsp; Vice President, State Street Investment Management <br> (2023 – present); Assistant Vice President, Brown <br> Brothers Harriman & Co. (2011 – 2023).<br>|
| BRIAN HARRIS <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1973<br>| &nbsp;&nbsp; Chief Compliance <br> Officer; Anti-Money <br> Laundering Officer; <br> Code of Ethics <br> Compliance Officer<br>| &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 7/16<br>| &nbsp;&nbsp; Managing Director, State Street Investment <br> Management and SSGA Funds Management, Inc. (June <br> 2013 – present).\*<br>|

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| | | | |
|:---|:---|:---|:---|
| **Name, Address,**<br> **and Year of Birth**<br>| **Position(s)**<br> **Held With**<br> **Trust**<br>| **Term of**<br> **Office and**<br> **Length of**<br> **Time Served**<br>| **Principal Occupation**<br> **During Past Five Years**<br>|
| ANDREW J. DELORME <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1975<br>| Chief Legal Officer | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 2/24<br>| &nbsp;&nbsp; Managing Director and Managing Counsel, State Street <br> Investment Management (March 2023 – present); <br> Counsel, K&L Gates (February 2021 – March 2023); <br> Vice President and Senior Counsel, State Street <br> Investment Management (August 2014 – February <br> 2021).<br>|
| DAVID BARR <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1974<br>| Secretary | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 9/20<br>| &nbsp;&nbsp; Vice President and Senior Counsel, State Street <br> Investment Management (October 2019 – present).<br>|
| E. GERARD MAIORANA, JR.<br> SSGA Funds Management, Inc.<br> One Congress Street<br> Boston, MA 02114<br> YOB: 1971<br>| Assistant Secretary | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 5/23<br>| &nbsp;&nbsp; Assistant Vice President, State Street Investment <br> Management (July 2014 – present).<br>|
| DAVID URMAN <br> SSGA Funds Management, Inc. <br> One Congress Street <br> Boston, MA 02114 <br> YOB: 1985<br>| Assistant Secretary | &nbsp;&nbsp; Term: Indefinite <br> Served: since <br> 8/19<br>| &nbsp;&nbsp; Vice President and Senior Counsel, State Street <br> Investment Management (April 2019 – present).<br>|

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\* Served in various capacities and/or with various affiliated entities during noted time period.

<u>Summary of Trustees' Qualifications</u> 

Following is a summary of the experience, attributes and skills which qualify each Trustee to serve on the Board.

Patrick J. Riley: Mr. Riley is an experienced business executive with over 47 years of experience in the legal and financial services industries; his experience includes service as a trustee or director of various investment companies and Associate Justice of the Superior Court of the Commonwealth of Massachusetts. He has served on the Board of Trustees and related committees of the Trust for 35 years and possesses significant experience regarding the operations and history of the Trust. Mr. Riley also serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.

Margaret K. McLaughlin: Ms. McLaughlin has over 27 years of experience she has gained in a variety of roles encompassing regulatory, operating, legal, and compliance functions, serving both firms and their boards. Ms. McLaughlin formerly served as a founding member of the executive management team for Kramer Van Kirk Credit Strategies L.P. and its technology affiliate, Mariana Systems LLC, where she was integrally involved in corporate strategy, operational oversight, risk management and board governance. Prior to Kramer Van Kirk, Ms. McLaughlin was Assistant General Counsel to Harris Associates L.P., where she was responsible for legal, regulatory and compliance activities related to the Oakmark Mutual Funds. Ms. McLaughlin has an extensive understanding and perspective on governance, oversight, regulation, policies and procedures from these positions as well as her prior experience with both the Securities and Exchange Commission and the Department of Justice. Ms. McLaughlin currently serves on the Governing Counsel of the Independent Directors Council. Most recently, Ms. McLaughlin has held consulting positions at major private equity and management consulting firms. Ms. McLaughlin serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.

George M. Pereira: Mr. Pereira has over 32 years of experience in executive management with financial institutions, including extensive experience relating to financial reporting, operations, cybersecurity oversight, and enterprise risk management. Mr. Pereira retired from Charles Schwab Investment Management Inc., having served as Chief Operating Officer and Chief Financial Officer during his tenure. Previously, Mr. Pereira also served as Head of Financial Reporting for Charles Schwab & Co., Inc. Earlier in his career, Mr. Pereira gained valuable regulatory experience and perspective while serving as managing director at the New York Stock Exchange. With this professional experience, Mr. Pereira has developed wide-ranging expertise in building and managing financial, operational, technology and risk control platforms for

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growth and scale within the financial services industry. Additionally, Mr. Pereira is a member of the Latino Corporate Directors Association. Mr. Pereira serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.

Donna M. Rapaccioli: Ms. Rapaccioli has over 35 years of service as a full-time member of the business faculty at Fordham University, where she developed and taught undergraduate and graduate courses, including International Accounting and Financial Statement Analysis, and has taught at the executive MBA level. Ms. Rapaccioli is dean emerita after serving as Dean of the Gabelli School of Business for 15 years. She has served on Association to Advance Collegiate Schools of Business accreditation team visits, as a director for the graduate management admissions council, as well as trustee at Emmanuel College. Ms. Rapaccioli has lectured on accounting and finance topics and consulted for numerous investment banks. Ms. Rapaccioli also serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.

Mark E. Swanson: Mr. Swanson has over 27 years of experience in executive management with financial services institutions, including extensive experience relating to, fund operations, financial reporting, fund accounting, and fund services. Mr. Swanson recently retired from Russell Investments, having served most recently as the Global Head of Fund Services. Additionally, Mr. Swanson served as Treasurer, Chief Accounting Officer and Chief Financial Officer of Russell Investment Company ("RIC") and Russell Investment Funds ("RIF"). Previously, Mr. Swanson served as Global Head of Fund Operations for Russell, as well as serving in different directorships with RIC, RIF and other Russell entities. Mr. Swanson serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.

Jeanne LaPorta: Ms. LaPorta is a Senior Managing Director of State Street Investment Management and head of Global Funds Management. Prior to joining State Street Investment Management, she was the Chief Administrative Officer of a Fintech startup and served as a director of their flagship hedge fund. Ms. LaPorta previously worked at State Street Investment Management from 2016 to 2021 as a Senior Managing Director and at GE Asset Management (GEAM) from 1997 to July 2016 where she held various positions at GEAM, including Senior Vice President and Commercial Operations Leader, Senior Vice President and Commercial Administrative Officer, Senior Vice President and Deputy General Counsel and Vice President and Associate General Counsel.

References to the experience, attributes and skills of Trustees above are pursuant to requirements of the SEC, do not constitute holding out of the Board or any Trustee as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.

<u>Standing Committees</u> 

The Board of Trustees has established various committees to facilitate the timely and efficient consideration of various matters of importance to Independent Trustees, the Trust, and the Trust's shareholders and to facilitate compliance with legal and regulatory requirements. Currently, the Board has created an Audit Committee, Governance Committee, Nominating Committee, Valuation Committee and Qualified Legal Compliance Committee (the "QLCC"). The Nominating Committee, Valuation Committee and QLCC were created in January 2019.

The Audit Committee is composed of all of the Independent Trustees. The Audit Committee meets twice a year, or more often as required, in conjunction with meetings of the Board of Trustees. The Audit Committee oversees and monitors the Trust's internal accounting and control structure, its auditing function and its financial reporting process. The Audit Committee is responsible for selecting and retaining the independent accountants for the Trust. The Audit Committee is responsible for approving the audit plans, fees and other material arrangements in respect of the engagement of the independent accountants, including non-audit services performed. The Audit Committee reviews the qualifications of the independent accountant's key personnel involved in the foregoing activities and monitors the independent accountant's independence. During the fiscal year ended August 31, 2025, the Audit Committee held 4 meetings.

Each of the Governance Committee and the Nominating Committee is composed of all the Independent Trustees. The primary functions of the Governance Committee and the Nominating Committee are to review and evaluate the composition and performance of the Board; make nominations for membership on the Board and committees; review the responsibilities of each committee; and review governance procedures, compensation of Independent Trustees, and independence of outside counsel to the Trustees. The Nominating Committee will consider nominees to the Board recommended by shareholders. Recommendations should be submitted in accordance with the procedures set forth in the

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Nominating Committee Charter and should be submitted in writing to the Trust, to the attention of the Trust's Secretary, at the address of the principal executive offices of the Trust. Shareholder recommendations must be delivered to, or mailed and received at, the principal executive offices of the Trust not less than sixty (60) calendar days nor more than ninety (90) calendar days prior to the date of the Board or shareholder meeting at which the nominee candidate would be considered for election. The Governance Committee performs an annual self-evaluation of Board members. During the fiscal year ended August 31, 2025, the Governance Committee and the Nominating Committee held 4 combined meetings.

The Valuation Committee is composed of all the Independent Trustees. The Valuation Committee's primary purpose is to review the actions and recommendations of the Adviser's Oversight Committee no less often than quarterly. The Trust has established procedures and guidelines for valuing portfolio securities and makes fair value determinations from time to time through the Valuation Committee, with the assistance of the Oversight Committee, State Street and SSGA FM. The Valuation Committee reviews the actions and recommendations of the Oversight Committee in connection with quarterly Board meetings. During the fiscal year ended August 31, 2025, the Valuation Committee held 4 meetings.

The QLCC is composed of all the Independent Trustees. The primary functions of the QLCC are to receive quarterly reports from the Trust's CCO; to oversee generally the Trust's responses to regulatory inquiries; and to investigate matters referred to it by the CCO or other officers of the Trust and make recommendations to the Board regarding the implementation of an appropriate response to evidence of a material violation of the securities laws or breach of fiduciary duty or similar violation by the Trust, its officers or the Trustees. During the fiscal year ended August 31, 2025, the QLCC held 4 meetings.

<u>Leadership Structure and Risk Management Oversight</u> 

The Board has chosen to select different individuals as Chairperson of the Board of the Trust, as Chairperson and Vice-Chairperson of the Committees of the Board, and as President of the Trust. Currently, Mr. Riley, an Independent Trustee, serves as Chairperson of the Board, Ms. Rapaccioli serves as Chairperson of the Audit Committee, Ms. McLaughlin serves as Chairperson of the QLCC, Mr. Swanson serves as Chairperson of the Valuation Committee and Mr. Pereira serves as Chairperson of each of the Governance Committee and Nominating Committee. Mr. Swanson serves as Vice-Chairperson of the Audit Committee, Ms. McLaughlin serves as Vice-Chairperson of the Valuation Committee, Mr. Pereira serves as Vice-Chairperson of the QLCC, and Ms. Rapaccioli serves as Vice-Chairperson of each of the Governance Committee and Nominating Committee. Ms. Carpenter, who is an employee of the Adviser, serves as President of the Trust. The Board believes that this leadership structure is appropriate. Ms. Carpenter is available to provide the Board with insight regarding the Trust's day-to-day management when requested, while Mr. Riley provides an independent perspective on the Trust's overall operation and Ms. Rapaccioli provides a specialized perspective on audit matters.

The Board has delegated management of the Trust to service providers who are responsible for the day-to-day management of risks applicable to the Trust. The Board oversees risk management for the Trust in several ways. The Board receives regular reports from both the CCO and administrator for the Trust, detailing the results of the Trust's compliance with its Board-adopted policies and procedures, the investment policies and limitations of the Funds, and applicable provisions of the federal securities laws and the Internal Revenue Code of 1986, as amended (the "Code"). As needed, the Adviser discusses management issues regarding the Trust with the Board, soliciting the Board's input on many aspects of management, including potential risks to the Funds. The Board's Audit Committee also receives reports on various aspects of risk that might affect the Trust and offers advice to management, as appropriate. The Trustees also meet in executive session with the independent counsel to the Independent Trustees, the independent registered public accounting firm, counsel to the Trust, the CCO and representatives of management, as needed. Through these regular reports and interactions, the Board oversees the risk management parameters for the Trust, which are effected on a day-to-day basis by service providers to the Trust.

<u>Trustee Ownership of Securities of the Trust, Adviser and Distributor</u> 

As of December 31, 2024, none of the Independent Trustees or their immediate family members had any ownership of securities of the Adviser, State Street Global Advisors Funds Distributors, LLC ("SSGA FD" or the "Distributor"), the Trust's distributor, or any person directly or indirectly controlling, controlled by or under common control with the Adviser or SSGA FD.

***TRUSTEE COMPENSATION*** 

Independent Trustees are compensated on a calendar year basis. An Interested Trustee does not receive compensation from the Funds for his or her service as a Trustee. Effective January 1, 2025, each Independent Trustee receives for his or her services to the State Street Master Funds, the State Street Institutional Investment Trust, the Trust, the Elfun Funds,

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the Navigator Trust, State Street Institutional Funds and State Street Variable Insurance Series Funds, Inc. (each a "Fund Entity", and together, the "Fund Entities") a $400,000 annual base retainer. In addition, the Chairperson of each of the Valuation Committee, QLCC, Nominating Committee and Governance Committee will receive an additional $25,000 stipend and the Chairperson of the Audit Committee will receive an additional $40,000 stipend. As of January 1, 2024, each Independent Trustee receives an additional $25,000 for each special in-person meeting and $5,000 for each special telephonic meeting. The Chairperson of the Board receives an additional $100,000 annual retainer. The total annual compensation paid to the Independent Trustees (other than telephonic and special meeting fees) is allocated to each Fund Entity as follows: a fixed amount of $21,000 will be allocated to each Fund Entity or, if applicable, each series thereof; and the remainder will be allocated among the Fund Entities or, if applicable, each series thereof that is not a feeder fund in a master-feeder structure, based on relative net assets. The Independent Trustees are reimbursed for travel and other out-of-pocket expenses in connection with meeting attendance. As of the date of this SAI, the Trustees were not paid pension or retirement benefits as part of the Trust's expenses. However, the Trust has, pursuant to an exemptive order from the SEC, implemented an optional deferred compensation plan by which the Independent Trustees may defer receipt of compensation and receive a return on the deferred amount determined with reference to the performance of shares of specified SSGA Funds. As of the fiscal year ended August 31, 2025, none of the Independent Trustees participated in the optional deferred compensation program. The Trust's officers are compensated by the Adviser and its affiliates.

**Trustee Compensation Table**

**For The Fiscal Year Ended August 31, 2025** 

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Trustee** | **Aggregate**<br> **Compensation**<br> **from the Trust**<br>| **Pension or**<br> **Retirement**<br> **Benefits**<br> **Accrued as**<br> **Part of Trust**<br> **Expenses**<br>| **Estimated**<br> **Annual**<br> **Benefits Upon**<br> **Retirement**<br>| **Total**<br> **Compensation**<br> **from the Trust and**<br> **Fund Complex**<br> **Paid to Trustees**<br>|
| *Independent Trustees:* | *Independent Trustees:* | *Independent Trustees:* | *Independent Trustees:* | *Independent Trustees:* |
| Patrick J. Riley | &nbsp;&nbsp; $10014 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $502500 |
| John R. Costantino<sup>(1)</sup> | &nbsp;&nbsp; $1759 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $97500 |
| Michael A. Jessee<sup>(1)</sup> | &nbsp;&nbsp; $1759 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $97500 |
| Donna M. Rapaccioli | &nbsp;&nbsp; $8630 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $432500 |
| Margaret McLaughlin | &nbsp;&nbsp; $8396 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $421250 |
| George M. Pereira | &nbsp;&nbsp; $8396 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $421250 |
| Mark E. Swanson | &nbsp;&nbsp; $8396 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $421250 |
| *Interested Trustee:* | *Interested Trustee:* | *Interested Trustee:* | *Interested Trustee:* | *Interested Trustee:* |
| Jeanne LaPorta<sup>(2)</sup> | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A |

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<sup>(1)</sup>

Messrs. Costantino and Jessee served as Trustees until December 31, 2024.

<sup>(2)</sup>

Ms. LaPorta was elected as Interested Trustee effective January 1, 2025.

***EQUITY SECURITIES BENEFICIALLY OWNED BY TRUSTEES*** 

For any Fund that is not listed below for a Trustee, such Trustee beneficially owned no equity securities of the Fund for the calendar year ended December 31, 2024.

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| | | | |
|:---|:---|:---|:---|
| **Name of Trustee** | **Fund** | **Dollar Range Of** <br> **Equity Securities In** <br> **Each Fund**<br>| **Aggregate Dollar Range**<br> **Of Equity Securities In**<br> **All Registered Investment**<br> **Companies Overseen By**<br> **Trustees In Family of**<br> **Investment Companies**<br>|
| *Independent Trustees:* |  |  |  |
| Patrick J. Riley | State Street S&P 500 Index Fund | Over $100,000 | Over $100,000 |
| John R. Costantino<sup>(1)</sup> |  |  |  |
| Michael A. Jessee<sup>(1)</sup> |  |  |  |
| Donna M. Rapaccioli |  |  |  |
| Margaret McLaughlin |  |  |  |

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| | | | |
|:---|:---|:---|:---|
| **Name of Trustee** | **Fund** | **Dollar Range Of** <br> **Equity Securities In** <br> **Each Fund**<br>| **Aggregate Dollar Range**<br> **Of Equity Securities In**<br> **All Registered Investment**<br> **Companies Overseen By**<br> **Trustees In Family of**<br> **Investment Companies**<br>|
| George M. Pereira |  |  |  |
| Mark E. Swanson |  |  |  |
| *Interested Trustee:* |  |  |  |
| Jeanne LaPorta<sup>(2)</sup> |  |  |  |

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<sup>(1)</sup>

Messrs. Costantino and Jessee retired as Trustees of the Trust effective December 31, 2024.

<sup>(2)</sup>

Ms. LaPorta was elected as Interested Trustee effective January 1, 2025.

***CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES*** 

State Street may from time to time have discretionary authority over accounts which invest in shares of the Funds. These accounts include accounts maintained for securities lending clients and accounts that permit the use of the Funds as short-term cash sweep investments. Shares purchased for all discretionary accounts are held of record by State Street, who retains voting control of such shares. As of November 28, 2025, State Street held of record less than 25% of the issued and outstanding shares of the Funds (in the aggregate) in connection with its discretionary accounts; however, State Street may hold more than 25% of such shares in any one series of the Trust. Consequently, State Street is not deemed to be a controlling person for purposes of the 1940 Act.

The Trustees and officers of the Trust, as a group, own less than 1% of the Funds' voting securities as of November 28, 2025.

Persons or organizations owning 25% or more of the outstanding shares of a Fund may be presumed to "control" (as that term is defined in the 1940 Act) a Fund. As a result, these persons or organizations could have the ability to approve or reject those matters submitted to the shareholders of such Fund for their approval. As of November 28, 2025, to the knowledge of the Trust, the following persons held of record or beneficially through one or more accounts 25% or more of the outstanding shares of a Fund:

**State Street S&P 500 Index Fund** 

• Charles Schwab & Co Inc., Special Cust A/C FBO customers, Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4141—39.90%

**State Street International Stock Selection Fund** 

• Charles Schwab & Co Inc., Special Cust A/C for the benefit of our customers, Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4141—38.60%

As of November 28, 2025, to the knowledge of the Trust, the following shareholders owned of record or beneficially through one or more accounts 5% or more of the issued and outstanding shares of any class of a Fund. Such shares may be held pursuant to a shareholder servicing arrangement in omnibus accounts for underlying shareholders:

**State Street S&P 500 Index Fund – Class N shares** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Charles Schwab & Co Inc., Special Cust A/C FBO customers, Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4141—39.90%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•National Financial Services LLC for the exclusive benefit of our customers, 200 Liberty St., 1 World Financial Center, New York, NY 10281—18.02%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Morgan Stanley Smith Barney LLC for the exclusive benefit of its customers, 1 New York Plaza, Floor 12, New York, NY 10004-1965—8.63%

**State Street International Stock Selection Fund – Class A shares**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•State Street Bank and Trust as Trustee and/or Cust FBO ADP Access Product, 1 Lincoln Street, Boston, MA 02111-2900—89.22%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Mark Herman FBO, ALCO Sales and Service Co 401(k) Prof, 6851 High Grove Blvd, Burr Ridge, IL 60527-7579—7.37%

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**State Street International Stock Selection Fund – Class I shares** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Charles Schwab & Co Inc., Special Cust A/C FBO customers, Mutual Funds, 211 Main Street, San Francisco, CA 94105-1901—30.78%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•National Financial Services LLC for the exclusive benefit of our customers, Attn Mutual Funds Department 4<sup>th</sup> Floor, 499 Washington Blvd, Jersey City, NJ 07310-1995—23.23%

**State Street International Stock Selection Fund – Class K shares** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•National Financial Services LLC for the exclusive benefit of our customers, Attn Mutual Funds Department 4<sup>th</sup> Floor, 499 Washington Blvd, Jersey City, NJ 07310-1995—74.03%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The Northern Trust Company FBO, My Retirement Path Moderate 2055 Fund, Mutual Funds Services WB33, 333 S Wabash Ave, Chicago, IL 60604-4107—6.81%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The Northern Trust Company FBO, My Retirement Path Moderate 2045 Fund, Mutual Funds Services WB33, 333 S Wabash Ave, Chicago, IL 60604-4107—6.68%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The Northern Trust Company FBO, My Retirement Path Moderate 2035 Fund, Mutual Funds Services WB33, 333 S Wabash Ave, Chicago, IL 60604-4107—5.33%

**State Street International Stock Selection Fund – Class N shares** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Charles Schwab & Co Inc., Special Cust A/C FBO customers, Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4141—55.27%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•National Financial Services LLC for the exclusive benefit of our customers, 200 Liberty St., 1 World Financial Center, New York, NY 10281—16.76%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•SEI Private Trust Company C/O Evercore Bank ID 573 Attn. Mutual Fund Administrator, One Freedom Valley Drive, Oaks, PA 19456-9989—15.47%

• Morgan Stanley Smith Barney LLC for the exclusive benefit of its customers, 1 New York Plaza, Floor 12, New York, NY 10004-1965—7.56%

**INVESTMENT ADVISORY AND OTHER SERVICES** 

***ADVISER*** 

SSGA FM serves as the Trust's investment adviser pursuant to an Amended and Restated Advisory Agreement dated April 11, 2012 (the "Advisory Agreement"). The Adviser is a wholly-owned subsidiary of State Street Global Advisors, Inc., which itself is a wholly-owned subsidiary of State Street Corporation, a publicly held financial holding company. The Adviser and other advisory affiliates of State Street Corporation make up State Street Investment Management, the investment management arm of State Street Corporation. State Street, the Trust's custodian and the Distributor, are affiliated persons of the Adviser. The address of the Adviser is One Congress Street, Boston, Massachusetts 02114.

The Advisory Agreement provides for an initial term of two years and thereafter will continue from year to year provided that such continuance is specifically approved at least annually by (a) the Trustees or by the vote of a majority of the outstanding voting securities of a Fund, and (b) vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement may be terminated by the Adviser or a Fund without penalty upon sixty days' notice and will terminate automatically upon its assignment.

Under the Advisory Agreement, the Adviser directs the Funds' investments in accordance with each Fund's investment objective, policies and limitations. For these services, each Fund pays an annual management fee to the Adviser. The management fee rate is a percentage of the average daily NAV of a Fund, calculated daily and paid monthly.

**Advisory Expenses.** The following table shows the expenses each Fund accrued to the Adviser during the fiscal years ended August 31:

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **2025** | **2024** | **2023** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $456250 | &nbsp;&nbsp; $417171 | &nbsp;&nbsp; $384876 |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $1082852 | &nbsp;&nbsp; $985909 | &nbsp;&nbsp; $1102363 |

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The Adviser has contractually agreed to waive the advisory fee and/or reimburse certain expenses in excess of a certain percentage of average daily net assets on an annual basis (an "expense limitation") for the Funds. As described in the Prospectus, certain fees and expenses are excluded from the waiver for each Fund. The expense limitations, shown in the chart below, are in effect through December 31, 2026. In addition, the Adviser has contractually agreed to waive 0.01% of its administration fee. The applicable amount of waivers and reimbursements are also shown in the table below for the fiscal years ended August 31:

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| | |
|:---|:---|
| **Fund** | **Expense Limitation** |
| State Street S&P 500 Index Fund | 0.157<br> %<br>|
| State Street International Stock Selection Fund | 0.75<br> %<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **2025** | **2024** | **2023** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $228684 | &nbsp;&nbsp; $241976 | &nbsp;&nbsp; $193292 |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $343459 | &nbsp;&nbsp; $341106 | &nbsp;&nbsp; $370695 |

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The Funds are permitted to invest their cash reserves (i.e., monies awaiting investment in portfolio securities suitable for the Funds' objectives) in money market funds, including money market funds advised by the Adviser (a "Central Fund"). Shares of a Central Fund sold to and redeemed from any participating Fund will not be subject to a redemption fee, distribution fee or service fee.

**Other Accounts Managed.** The Adviser manages each Fund using a team of investment professionals. The following table lists the number and types of accounts managed by each of the key professionals involved in the day-to-day portfolio management for each Fund and assets under management in those accounts.

**Other Accounts Managed as of August 31, 2025** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Portfolio Manager** | **Registered**<br> **Investment**<br> **Company**<br> **Accounts**<br>| **Assets**<br> **Managed**<br> **(billions)**<br>| **Other Pooled**<br> **Investment**<br> **Vehicle** <br> **Accounts**<br>| **Assets**<br> **Managed**<br> **(billions)**<br>| **Other**<br> **Accounts**<br>| **Assets**<br> **Managed**<br> **(billions)**<br>| **Total**<br> **Assets**<br> **Managed**<br> **(billions)**<br>|
| Adel Daghmouri | &nbsp;&nbsp; 12 | &nbsp;&nbsp; $1.16 | &nbsp;&nbsp; 30<br> \*<br>| &nbsp;&nbsp; $4.87<br> \*<br>| &nbsp;&nbsp; 18<br> \*\*<br>| &nbsp;&nbsp; $8.43<br> \*\*<br>| &nbsp;&nbsp; $14.46 |
| Karl Schneider | &nbsp;&nbsp; 132 | &nbsp;&nbsp; $1433.70 | &nbsp;&nbsp; 371 | &nbsp;&nbsp; $1117.43 | &nbsp;&nbsp; 468 | &nbsp;&nbsp; $604.17 | &nbsp;&nbsp; $3155.30 |
| Emiliano Rabinovich | &nbsp;&nbsp; 132 | &nbsp;&nbsp; $1433.70 | &nbsp;&nbsp; 371 | &nbsp;&nbsp; $1117.43 | &nbsp;&nbsp; 468 | &nbsp;&nbsp; $604.17 | &nbsp;&nbsp; $3155.30 |
| Amy Scofield | &nbsp;&nbsp; 132 | &nbsp;&nbsp; $1433.70 | &nbsp;&nbsp; 371 | &nbsp;&nbsp; $1117.43 | &nbsp;&nbsp; 468 | &nbsp;&nbsp; $604.17 | &nbsp;&nbsp; $3155.30 |

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<sup>\*</sup>

Includes 2 accounts (totaling $0.99 billion in assets under management) with performance-based fees.

<sup>\*\*</sup>

Includes 2 accounts (totaling $1.97 billion in assets under management) with performance-based fees.

**Ownership of Securities.** As of August 31, 2025, none of the portfolio managers listed above beneficially owned shares of any of the Funds.

A portfolio manager that has responsibility for managing more than one account may be subject to potential conflicts of interest because he or she is responsible for other accounts in addition to the Funds. Those conflicts could include preferential treatment of one account over others in terms of: (a) the portfolio manager's execution of different investment strategies for various accounts; or (b) the allocation of resources or of investment opportunities.

Portfolio managers may manage numerous accounts for multiple clients. These accounts may include registered investment companies, other types of pooled accounts (e.g., collective investment funds), and separate accounts (i.e., accounts managed on behalf of individuals or public or private institutions). Portfolio managers make investment decisions for each account based on the investment objectives and policies and other relevant investment considerations applicable to that portfolio. A potential conflict of interest may arise as a result of a 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 allocate to the opportunity. Similar conflicts may arise when multiple accounts seek to dispose of the same investment. The portfolio managers may also manage accounts whose objectives and policies differ from that of the Funds. 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, an account may sell a significant position in a security, which could cause the market price of that security to decrease, while a Fund maintained its position in that security.

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A potential conflict may arise when the portfolio managers are responsible for accounts that have different advisory fees—the difference in fees could create an incentive for the portfolio manager to favor one account over another, for example, in terms of access to investment opportunities. This conflict may be heightened if an account is subject to a performance-based fee, as applicable. Another potential conflict may arise when the portfolio manager has a personal investment in one or more accounts that participate in transactions with other accounts. His or her personal investment(s) may create an incentive for the portfolio manager to favor one account over another. The Adviser has adopted policies and procedures reasonably designed to address these potential material conflicts. For instance, portfolio managers are normally responsible for all accounts within a certain investment discipline and do not, absent special circumstances, differentiate among the various accounts when allocating resources. Additionally, the Adviser and its advisory affiliates have processes and procedures for allocating investment opportunities among portfolios that are designed to provide a fair and equitable allocation. With respect to conflicts arising from personal investments, all employees, including portfolio managers, must comply with personal trading controls established by each of the Adviser's and Trust's Code of Ethics.

<u>Compensation.</u> State Street Investment Management's ("State Street IM") culture is complemented and reinforced by a total rewards strategy that is based on a pay for performance philosophy which seeks to offer a competitive pay mix of base salary, benefits, cash incentives and deferred compensation.

Salary is based on a number of factors, including external benchmarking data and market trends, and performance both at the business and individual level. State Street IM's Global Human Resources department regularly participates in compensation surveys in order to provide State Street IM with market-based compensation information that helps support individual pay decisions.

Additionally, subject to State Street and State Street IM business results, an incentive pool is allocated to State Street IM to reward its employees. The size of the incentive pool for most business units is based on the firm's overall profitability and other factors, including performance against risk-related goals. For most State Street IM investment teams, State Street IM recognizes and rewards performance by linking annual incentive decisions for investment teams to the firm's or business unit's profitability and business unit investment performance over a multi-year period.

Incentive pool funding for most active investment teams is driven in part by the post-tax investment performance of fund(s) managed by the team versus the return levels of the benchmark index(es) of the fund(s) on a one-, three- and, in some cases, five-year basis. For most active investment teams, a material portion of incentive compensation for senior staff is deferred over a four-year period into the State Street Investment Management Long-Term Incentive ("State Street Investment Management LTI") program. For these teams, the State Street Investment Management LTI program indexes the performance of these deferred awards against the post-tax investment performance of fund(s) managed by the team. This is intended to align State Street IM's investment team's compensation with client interests, both through annual incentive compensation awards and through the long-term value of deferred awards in the State Street Investment Management LTI program.

For the index equity investment team, incentive pool funding is driven in part by the post-tax 1 and 3-year tracking error of the funds managed by the team against the benchmark indexes of the funds.

The discretionary allocation of the incentive pool to the business units within State Street IM is influenced by market-based compensation data, as well as the overall performance of each business unit. Individual compensation decisions are made by the employee's manager, in conjunction with the senior management of the employee's business unit. These decisions are based on the overall performance of the employee and, as mentioned above, on the performance of the firm and business unit. Depending on the job level, a portion of the annual incentive may be awarded in deferred compensation, which may include cash and/or Deferred Stock Awards (State Street stock), which typically vest over a four-year period. This helps to retain staff and further aligns State Street IM employees' interests with State Street IM clients' and shareholders' long-term interests.

State Street IM recognizes and rewards outstanding performance by:

&nbsp;&nbsp;&nbsp;&nbsp;•Promoting employee ownership to connect employees directly to the company's success.

&nbsp;&nbsp;&nbsp;&nbsp;•Using rewards to reinforce mission, vision, values and business strategy.

&nbsp;&nbsp;&nbsp;&nbsp;•Seeking to recognize and preserve the firm's unique culture and team orientation.

• Providing all employees the opportunity to share in the success of State Street IM.

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***ADMINISTRATOR*** 

SSGA FM serves as the administrator for the Trust (the "Administrator"), pursuant to an administration agreement dated June 1, 2015 (the "SSGA FM Administration Agreement"). Pursuant to the SSGA FM Administration Agreement, SSGA FM is obligated to continuously provide business management services to the Trust and the Funds and will generally, subject to the general oversight of the Trustees and except as otherwise provided in the SSGA FM Administration Agreement, manage all of the business and affairs of the Trust. The nature and amount of services provided by SSGA FM under the SSGA FM Administration Agreement may vary as between classes of shares of a Fund, and a Fund may pay fees to SSGA FM under that Agreement at different rates in respect of its different share classes.

As consideration for SSGA FM's services as Administrator with respect to the Trust, SSGA FM receives a fee at the annual rate of 0.05% of the average daily net assets attributable to each class of shares of the Fund. The fees are accrued daily at the rate of 1/365th and payable monthly on the first business day of each month. Additionally, the Funds reimburse the Administrator for certain out-of-pocket travel expenses of the CCO and compliance team incurred on the Funds' behalf. The Adviser has contractually agreed to waive 0.01% of its fee for its services as Administrator. This waiver may not be terminated or modified except with approval of the Funds' Board of Trustees and shall continue until at least December 31, 2026.

**Administration Expenses.** The following table shows the expenses each Fund accrued to SSGA FM as the Administrator during the fiscal years ended August 31:

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **2025** | **2024** | **2023** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $760417 | &nbsp;&nbsp; $695285 | &nbsp;&nbsp; $641460 |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $72190 | &nbsp;&nbsp; $65727 | &nbsp;&nbsp; $73491 |

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***SUB-ADMINISTRATOR, CUSTODY AND FUND ACCOUNTING*** 

State Street serves as the sub-administrator for the Trust, pursuant to a sub-administration agreement dated June 1, 2015 (the "Sub-Administration Agreement"). State Street serves as the custodian for the Trust, pursuant to a custody agreement dated April 11, 2012 (the "Custody Agreement"). Under the Sub-Administration Agreement, State Street is obligated to provide certain sub-administrative services to the Trust. Under the Custody Agreement, State Street is obligated to provide certain custody services to the Trust, as well as basic portfolio recordkeeping required by the Trust for regulatory and financial reporting purposes. State Street is a wholly owned subsidiary of State Street Corporation, a publicly held financial holding company, and is affiliated with the Adviser. State Street's mailing address is One Congress Street, Boston, Massachusetts 02114.

As consideration for sub-administration, custody and fund accounting services provided to the Funds, the Adviser and the Funds each pay State Street a portion of the annual fee (payable monthly). Each Fund also pays State Street transaction and service fees for these services and reimburses State Street for out-of-pocket expenses.

**Sub-Administration Fees.** The following table shows the sub-administration and custodian fees paid by the Funds to State Street as for the last three fiscal years ended August 31:

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **2025** | **2024** | **2023** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $76328 | &nbsp;&nbsp; $64401 | &nbsp;&nbsp; $55607 |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $75448 | &nbsp;&nbsp; $75574 | &nbsp;&nbsp; $86655 |

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***TRANSFER AND DIVIDEND PAYING AGENT*** 

SS&C GIDS, Inc. serves as the Transfer and Dividend Paying Agent. SS&C GIDS, Inc. is paid for the following annual account services and activities including but not limited to: establishment and maintenance of each shareholder's account; closing an account; acceptance and processing of trade orders; preparation; and transmission of payments for dividends and distributions declared by each Fund; customer service support including receipt of correspondence and responding to shareholder and financial intermediary inquiries; investigation services; tax related support; financial intermediary and fee payment processing; and charges related to compliance and regulatory services.

Portfolio fees are allocated to each Fund based on the average NAV of each Fund and are billable on a monthly basis at the rate of 1/12 of the annual fee. SS&C GIDS, Inc. is reimbursed by each Fund for supplying certain out-of-pocket expenses including but not limited to: Anti-Money Laundering ("AML") Delegations, omnibus transparency (market timing)

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services; confirmation statements and periodic investor statements, fulfillment, banking fees, postage, forms, audio response, telephone, records retention, customized programming/enhancements, reports, transcripts, and expenses incurred at the specific direction of the Fund. SS&C GIDS, Inc.'s principal business address is 801 Pennsylvania Avenue, Suite 219737, Kansas City, MO 64105-1307.

***SECURITIES LENDING*** 

The Board has approved each Fund's participation in a securities lending program. Under the securities lending program, each Fund has retained State Street to serve as the securities lending agent.

For the fiscal year ended August 31, 2025, the income earned by each Fund as well as the fees and/or compensation paid by each Fund (in dollars) pursuant to the Master Amended and Restated Securities Lending Authorization Agreement among the Trust, State Street Institutional Investment Trust, and State Street Master Funds, each on behalf of its respective series, and State Street (the "Securities Lending Authorization Agreement") were as follows:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Gross**<br> **income**<br> **earned by**<br> **the Fund**<br> **from**<br> **securities**<br> **lending**<br> **activities** | ***Fees and/or compensation paid by the Fund for securities lending activities and***<br> ***related services*** | ***Fees and/or compensation paid by the Fund for securities lending activities and***<br> ***related services*** | ***Fees and/or compensation paid by the Fund for securities lending activities and***<br> ***related services*** | ***Fees and/or compensation paid by the Fund for securities lending activities and***<br> ***related services*** | ***Fees and/or compensation paid by the Fund for securities lending activities and***<br> ***related services*** | ***Fees and/or compensation paid by the Fund for securities lending activities and***<br> ***related services*** | **Aggregate**<br> **fees**<br> **and/or**<br> **compensation**<br> **paid by**<br> **the Fund**<br> **for**<br> **securities**<br> **lending**<br> **activities**<br> **and related**<br> **services** | **Net income**<br> **from**<br> **securities**<br> **lending**<br> **activities** |
|  | **Gross**<br> **income**<br> **earned by**<br> **the Fund**<br> **from**<br> **securities**<br> **lending**<br> **activities** | **Fees**<br> **paid**<br> **to State**<br> **Street**<br> **from a**<br> **revenue**<br> **split**<br>| **Fees**<br> **paid for**<br> **any cash**<br> **collateral**<br> **management**<br> **service**<br> **(including**<br> **fees**<br> **deducted**<br> **from a**<br> **pooled cash**<br> **collateral**<br> **reinvestment**<br> **vehicle)**<br> **that are not**<br> **included in a**<br> **revenue split**<br>| **Admini-**<br> **strative**<br> **fees not**<br> **included**<br> **in a**<br> **revenue**<br> **split**<br>| **Indemnifi-**<br> **cation**<br> **fees**<br> **not**<br> **included in**<br> **a revenue**<br> **split**<br>| **Rebate**<br> **(paid to**<br> **borrower)**<br>| **Other**<br> **fees**<br> **not**<br> **included**<br> **in a**<br> **revenue**<br> **split**<br>| **Aggregate**<br> **fees**<br> **and/or**<br> **compensation**<br> **paid by**<br> **the Fund**<br> **for**<br> **securities**<br> **lending**<br> **activities**<br> **and related**<br> **services** | **Net income**<br> **from**<br> **securities**<br> **lending**<br> **activities** |
| State Street <br> International <br> Stock Selection <br> Fund<br>| &nbsp;&nbsp; $164319 | &nbsp;&nbsp; $2095 | &nbsp;&nbsp; $1362 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $143175 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $146632 | &nbsp;&nbsp; $17687 |
| State Street S&P <br> 500 Index Fund<br>| &nbsp;&nbsp; $102573 | &nbsp;&nbsp; $627 | &nbsp;&nbsp; $877 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $96405 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $97909 | &nbsp;&nbsp; $4664 |

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For the fiscal year ended August 31, 2025, State Street, acting as agent of the Funds, provided the following services to the Funds in connection with the Funds' securities lending activities: (i) locating borrowers among an approved list of prospective borrowers; (ii) monitoring the value of loaned securities, the value of collateral received, and other lending parameters; (iii) seeking additional collateral, as necessary, from borrowers; (iv) receiving and holding collateral from borrowers, and facilitating the investment and reinvestment of all or substantially all cash collateral in an investment vehicle designated by the Funds; (v) returning collateral to borrowers; (vi) facilitating substitute dividend, interest, and other distribution payments to the Funds from borrowers; (vii) negotiating the terms of each loan of securities, including but not limited to the amount of any loan premium, and monitoring the terms of securities loan agreements with prospective borrowers for consistency with the requirements of the Funds' Securities Lending Authorization Agreement; (viii) selecting securities, including amounts (percentages), to be loaned; (ix) recordkeeping and accounting servicing; and (x) arranging for return of loaned securities to the Funds in accordance with the terms of the Securities Lending Authorization Agreement.

***CODES OF ETHICS*** 

The Adviser, Distributor and the Trust have each adopted a code of ethics (the Trust's code being referred to herein as the "Code of Ethics") under Rule 17j-1 of the 1940 Act. The Code of Ethics, by relying on the codes of the underlying service providers, permits personnel of the Funds' Adviser, Distributor and officers, subject to the provisions of the relevant code of ethics, to invest in securities, including securities that may be purchased or held by the Adviser or the Trust. Under the relevant code of ethics, all employees or officers who are deemed to be access persons (persons who have interaction with funds or accounts managed by the Adviser or the Distributor as part of their job function) must pre-clear personal securities transactions. Each code of ethics is designed to ensure that employees conduct their personal securities

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transactions in a manner that does not create an actual or potential conflict of interest to the business or fiduciary responsibilities of the Trust's service providers or officers. In addition, the Code of Ethics establishes standards prohibiting the trading in or recommending of securities based on material, nonpublic information or the divulgence of such information to others.

***DISTRIBUTION ARRANGEMENTS*** 

SSGA FD serves as the distributor of the Funds for the continuous offering of shares pursuant to a distribution agreement (the "Distribution Agreement"), as amended. The Distribution Agreement shall continue in effect for each Fund for two years following its effective date with respect to the Fund; and thereafter only so long as its continuance is specifically approved at least annually by a majority of the Trustees who are not parties to the Distribution Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval, or by vote of a majority of the outstanding voting securities of the Fund. SSGA FD offers the shares of each Fund on an agency or "best efforts" basis under which the SSGA Funds shall only issue such shares as are actually sold. SSGA FD is an indirect wholly-owned subsidiary of State Street Corporation. SSGA FD's mailing address is One Congress Street, Boston, Massachusetts 02114.

**<u>Distribution Plans and Shareholder Servicing Arrangements</u>** 

**Distribution Plans.** To compensate SSGA FD for the services it provides and for the expenses it bears in connection with the distribution of shares of the Funds, SSGA FD will be entitled to receive any front-end sales load applicable to the sale of shares of the Fund. Class N shares of the Funds and Class A shares of the State Street International Stock Selection Fund may also make payments from the assets attributable to certain classes of its shares to SSGA FD under a distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (the "Plan" or "Distribution Plan"). Class I and Class K shares of the State Street International Stock Selection Fund are not subject to the expenses of any distribution plan adopted pursuant to Rule 12b-1. The Distribution Plan is a compensation plan that provides for payments at annual rates (based on average daily net assets) described below.

The Board, including all of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust (the "Independent Trustees") and who have no direct or indirect financial interest in the Distribution Plan or any related agreements, approved the Plan (the "Qualified Distribution Plan Trustees"). The Distribution Plan will continue in effect with respect to a class of shares of a Fund only if such continuance is specifically approved at least annually by a vote of both a majority of the Board and a majority of the Qualified Distribution Plan Trustees. The Plan may not be amended to increase materially the amount of a Fund's permitted expenses thereunder without the approval of a majority of the outstanding shares of the affected share class and may not be materially amended in any case without a vote of the majority of both the Trustees and the Qualified Distribution Plan Trustees. The Distribution Plan calls for payments at an annual rate (based on average net assets) as follows:

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| | |
|:---|:---|
|  | **Annual 12b-1 Fee** |
| Class N | 0.25<br> %<br>|
| Class A | 0.25<br> %<br>|

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Additionally, the Board of Trustees has determined that payments made by the State Street S&P 500 Index Fund will not exceed 0.062% of average daily net assets.

The Distribution Plan may benefit the Funds by increasing sales of shares and reducing redemptions of shares, resulting potentially, for example, in economies of scale and more predictable flows of cash into and out of the Funds. Because Rule 12b-1 fees are paid out of a Fund's assets, all shareholders share in that expense; however, because shareholders hold their shares through varying arrangements (for example, directly or through financial intermediaries), they may not share equally in the benefits of the Plan.

As of December 31, 2024, none of the Independent Trustees had a direct or indirect financial interest in the operation of the 12b-1 Plans.

**Distribution Expenses.** For the fiscal years ended August 31, Class N and Class A shares of the Funds paid to SSGA FD the following amounts related to distribution and/or service fees pursuant to the 12b-1 Plans:

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| | | | |
|:---|:---|:---|:---|
| **Fund – Class N** | **2025** | **2024** | **2023** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $927709 | &nbsp;&nbsp; $848248 | &nbsp;&nbsp; $782581 |

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| | | | |
|:---|:---|:---|:---|
| **Fund – Class N** | **2025** | **2024** | **2023** |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $232621 | &nbsp;&nbsp; $208296 | &nbsp;&nbsp; $215825 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | | |
|:---|:---|:---|:---|
| **Fund – Class A** | **2025** | **2024** | **2023** |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $740 | &nbsp;&nbsp; $250 | &nbsp;&nbsp; $3135 |

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For the fiscal year ended August 31, 2025, the Funds have been informed by SSGA FD that the following expenditures were made using the amounts each Fund's Class N and Class A shares paid under the 12b-1 Plans:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund - Class N** | **Advertising** | **Printing** | **Compensation to** <br> **Dealers**<br>| **Compensation to** <br> **Sales Personnel**<br>| **Other\*** |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $30 | &nbsp;&nbsp; $72 | &nbsp;&nbsp; $915293 | &nbsp;&nbsp; $47648 | &nbsp;&nbsp; $46492 |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $2 | &nbsp;&nbsp; $4 | &nbsp;&nbsp; $205769 | &nbsp;&nbsp; $2939 | &nbsp;&nbsp; $2867 |

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<sup>\*</sup>

Includes such items as compensation for travel, conferences and seminars for staff, professional fees, technology, services, and overhead (including space/facilities and management).

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund - Class A** | **Advertising** | **Printing** | **Compensation to** <br> **Dealers**<br>| **Compensation to** <br> **Sales Personnel**<br>| **Other\*** |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $0 | &nbsp;&nbsp; $759 | &nbsp;&nbsp; $9 | &nbsp;&nbsp; $9 |

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<sup>\*</sup>

Includes such items as compensation for travel, conferences and seminars for staff, professional fees, technology, services, and overhead (including space/facilities and management).

Since the Funds pay distribution, service and other fees for the sale of their shares and for services provided to shareholders out of the Funds' assets on an ongoing basis, over time those fees will increase the cost of an investment in a Fund. In addition, a Fund may pay distribution, service, and other expenditures described above at a time when shares of the Fund are not being actively promoted to new investors generally, or when shares of that Fund are unavailable for purchase.

**<u>Payments to Financial Intermediaries</u>** 

Financial intermediaries are firms that, for compensation, sell shares of mutual funds, including the Funds, and/or provide certain administrative and account maintenance services to mutual fund shareholders. Financial intermediaries may include, among others, brokers, financial planners or advisors, banks, and insurance companies. In some cases, a financial intermediary may hold its clients' Fund shares in nominee or street name. Shareholder services provided by a financial intermediary may (though they will not necessarily) include, among other things: processing and mailing trade confirmations, periodic statements, prospectuses, annual reports, semi-annual reports, shareholder notices, and other SEC-required communications; capturing and processing tax data; issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations; collecting and posting distributions to shareholder accounts; and establishing and maintaining systematic withdrawals and automated investment plans and shareholder account registrations.

Some portion of SSGA FD's payments to financial intermediaries will be made out of amounts received by SSGA FD under the Funds' Distribution Plans. In addition, the Funds may reimburse SSGA FD for payments SSGA FD makes to financial intermediaries that provide recordkeeping, shareholder servicing, sub-transfer agency, administrative and/or account maintenance services (collectively, servicing). The amount of the reimbursement and the manner in which it is calculated are reviewed by the Trustees periodically.

The compensation paid by SSGA FD to a financial intermediary may be paid continually over time, during the period when the intermediary's clients hold investments in the Funds. The compensation to financial intermediaries may include networking fees and account-based fees. The amount of continuing compensation paid by SSGA FD to different financial intermediaries varies. In the case of most financial intermediaries, compensation for servicing in excess of any amount covered by payments under a Distribution Plan is generally paid at an annual rate of 0.10% – 0.20% of the aggregate average daily NAV of Fund shares held by that financial intermediary's customers, although in some cases the compensation may be paid at higher annual rates (which may, but will not necessarily, reflect enhanced or additional services provided by the financial intermediary).

SSGA FD and its affiliates (including SSGA FM), at their own expense and out of their own assets, may also provide compensation to financial intermediaries in connection with sales of the Funds' shares or the servicing of shareholders or shareholder accounts by financial intermediaries. Such compensation may include, but is not limited to, ongoing

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payments, financial assistance to financial intermediaries in connection with conferences, sales, or training programs for their employees, seminars for the public, advertising or sales campaigns, or other financial intermediary-sponsored special events. In some instances, this compensation may be made available only to certain financial intermediaries whose representatives have sold or are expected to sell significant amounts of shares. Financial intermediaries may not use sales of the Funds' shares to qualify for this compensation to the extent prohibited by the laws or rules of any state or any self-regulatory agency, such as FINRA. The level of payments made to a financial intermediary in any given year will vary and, in the case of most financial intermediaries, will not exceed 0.20% of the value of assets attributable to the financial intermediary invested in shares of funds in the SSGA FM fund complex. In certain cases, the payments described in the preceding sentence are subject to minimum payment levels.

If payments to financial intermediaries by the distributor or adviser for a particular mutual fund complex exceed payments by other mutual fund complexes, your financial advisor and the financial intermediary employing him or her may have an incentive to recommend that fund complex over others. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by SSGA FD and its affiliates, and by sponsors of other mutual funds he or she may recommend to you. You should also consult disclosures made by your financial intermediary at the time of purchase.

Set forth below is a list of those financial intermediaries to which SSGA FD (and its affiliates) expects, as of December 1, 2025, to pay compensation in the manner described in this "Payments to Financial Intermediaries" section. This list may change over time. Please contact your financial intermediary to determine whether it or its affiliate currently may be receiving such compensation and to obtain further information regarding any such compensation.

&nbsp;&nbsp;&nbsp;&nbsp;•ADP Broker-Dealer Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Alight Financial Solutions, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Ascensus Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•AXA Advisors, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Brown Brothers Harriman

&nbsp;&nbsp;&nbsp;&nbsp;•Charles Schwab & Co., Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Charles Schwab Trust Bank

&nbsp;&nbsp;&nbsp;&nbsp;•Commerce Bank

&nbsp;&nbsp;&nbsp;&nbsp;•Community Bank NA

&nbsp;&nbsp;&nbsp;&nbsp;•E\*Trade Securities Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Edward Jones

&nbsp;&nbsp;&nbsp;&nbsp;•Empower

&nbsp;&nbsp;&nbsp;&nbsp;•Hancock Securities

&nbsp;&nbsp;&nbsp;&nbsp;•Hand Securities

&nbsp;&nbsp;&nbsp;&nbsp;•Hartford Life Insurance Company

&nbsp;&nbsp;&nbsp;&nbsp;•Interactive Brokers LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Janney Montgomery Scott

&nbsp;&nbsp;&nbsp;&nbsp;•John Hancock

&nbsp;&nbsp;&nbsp;&nbsp;•JP Morgan Chase Bank, N.A.

&nbsp;&nbsp;&nbsp;&nbsp;•Kestra Financial, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•LaSalle St. Securities, LLC.

&nbsp;&nbsp;&nbsp;&nbsp;•Lincoln Financial Advisors Corp.

&nbsp;&nbsp;&nbsp;&nbsp;•LPL Financial LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Matrix Capital Bank

&nbsp;&nbsp;&nbsp;&nbsp;•Merrill Lynch, Pierce, Fenner & Smith Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Mid Atlantic Capital Corp.

&nbsp;&nbsp;&nbsp;&nbsp;•Morgan Stanley Smith Barney LLC

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;•MSCS Financial Services Division of Broadridge Business Process Outsourcing, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•National Financial Services, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Nationwide Financial Services, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Northern Trust Co

&nbsp;&nbsp;&nbsp;&nbsp;•Pershing LLC

&nbsp;&nbsp;&nbsp;&nbsp;•PNC Bank, N.A.

&nbsp;&nbsp;&nbsp;&nbsp;•Principal Life Insurance

&nbsp;&nbsp;&nbsp;&nbsp;•Prudential Investments

&nbsp;&nbsp;&nbsp;&nbsp;•Putnam Investor Services, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Raymond James & Associates

&nbsp;&nbsp;&nbsp;&nbsp;•RBC Capital Markets Corp

&nbsp;&nbsp;&nbsp;&nbsp;•Reliance Trust Company

&nbsp;&nbsp;&nbsp;&nbsp;•Royal Alliance

&nbsp;&nbsp;&nbsp;&nbsp;•SEI Private Trust Company

&nbsp;&nbsp;&nbsp;&nbsp;•Slavic Investment Corporation

&nbsp;&nbsp;&nbsp;&nbsp;•Southwest Securities Inc

&nbsp;&nbsp;&nbsp;&nbsp;•Stifel Nicolaus & Co

&nbsp;&nbsp;&nbsp;&nbsp;•The ON Equity Sales Company

&nbsp;&nbsp;&nbsp;&nbsp;•T Rowe Price

&nbsp;&nbsp;&nbsp;&nbsp;•TIAA-CREF Individual & Institutional Services, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Trust Company of America

&nbsp;&nbsp;&nbsp;&nbsp;•UBS Financial Services, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•US Bank N.A.

&nbsp;&nbsp;&nbsp;&nbsp;•USI Securities Inc.

&nbsp;&nbsp;&nbsp;&nbsp;•Valic Retirement Services

&nbsp;&nbsp;&nbsp;&nbsp;•Vanguard Marketing Corp

&nbsp;&nbsp;&nbsp;&nbsp;•Voya Financial Partners, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Voya Institutional Plan Services, LLC

&nbsp;&nbsp;&nbsp;&nbsp;•Voya Retirement Insurance and Annuity Company

&nbsp;&nbsp;&nbsp;&nbsp;•Wells Fargo Bank, N.A.

&nbsp;&nbsp;&nbsp;&nbsp;•Wells Fargo Clearing Services

***COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM*** 

Ropes & Gray LLP, 800 Boylston Street, Boston Massachusetts 02199, provides legal services to the Trust. Sullivan & Worcester LLP, located at One Post Office Square, Boston, Massachusetts, 02109, provides legal services to the Independent Trustees.

Ernst & Young LLP serves as the independent registered public accounting firm for the Trust and provides (i) audit services and (ii) tax services. In connection with the audit of the 2025 financial statements, the Trust entered into an engagement agreement with Ernst & Young LLP that sets forth the terms of Ernst & Young LLP's audit engagement. The principal business address of Ernst & Young LLP is 200 Clarendon Street, Boston, Massachusetts, 02116.

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**BROKERAGE PRACTICES AND COMMISSIONS** 

All portfolio transactions are placed on behalf of the Funds by the Adviser. Purchases and sales of securities on a securities exchange are affected through brokers who charge a commission for their services. Ordinarily commissions are not charged on over-the-counter orders (e.g., fixed income securities) because the Funds pay a spread which is included in the cost of the security and represents the difference between the dealer's quoted price at which it is willing to sell the security and the dealer's quoted price at which it is willing to buy the security. When a Fund executes an over-the-counter order with an electronic communications network or an alternative trading system, a commission is charged by such electronic communications networks and alternative trading systems as they execute such orders on an agency basis. Securities may be purchased from underwriters at prices that include underwriting fees.

In placing a portfolio transaction, the Adviser seeks to achieve best execution. The Adviser's duty to seek best execution requires the Adviser to take reasonable steps to obtain for the client as favorable an overall result as possible for Fund portfolio transactions under the circumstances, taking into account various factors that are relevant to the particular transaction.

The Adviser refers to and selects from the list of approved trading counterparties maintained by the Adviser's Credit Risk Management team. In selecting a trading counterparty for a particular trade, the Adviser seeks to weigh relevant factors including, but not limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;•Prompt and reliable execution;

&nbsp;&nbsp;&nbsp;&nbsp;•The competitiveness of commission rates and spreads, if applicable;

&nbsp;&nbsp;&nbsp;&nbsp;•The financial strength, stability and/or reputation of the trading counterparty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The willingness and ability of the executing trading counterparty to execute transactions (and commit capital) of size in liquid and illiquid markets without disrupting the market for the security;

&nbsp;&nbsp;&nbsp;&nbsp;•Local laws, regulations or restrictions;

&nbsp;&nbsp;&nbsp;&nbsp;•The ability of the trading counterparty to maintain confidentiality;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The availability and capability of execution venues, including electronic communications networks for trading and execution management systems made available to Adviser;

&nbsp;&nbsp;&nbsp;&nbsp;•Market share;

&nbsp;&nbsp;&nbsp;&nbsp;•Liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;•Price;

&nbsp;&nbsp;&nbsp;&nbsp;•Execution related costs;

&nbsp;&nbsp;&nbsp;&nbsp;•History of execution of orders;

&nbsp;&nbsp;&nbsp;&nbsp;•Likelihood of execution and settlement;

&nbsp;&nbsp;&nbsp;&nbsp;•Order size and nature;

&nbsp;&nbsp;&nbsp;&nbsp;•Clearance and settlement capabilities, especially in high volatility market environments;

&nbsp;&nbsp;&nbsp;&nbsp;•Availability of lendable securities;

&nbsp;&nbsp;&nbsp;&nbsp;•Sophistication of the trading counterparty's trading capabilities and infrastructure/facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The operational efficiency with which transactions are processed and cleared, taking into account the order size and complexity;

&nbsp;&nbsp;&nbsp;&nbsp;•Speed and responsiveness to the Adviser;

&nbsp;&nbsp;&nbsp;&nbsp;•Access to secondary markets;

&nbsp;&nbsp;&nbsp;&nbsp;•Counterparty exposure; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Depending upon the circumstances, the Adviser may take other relevant factors into account if the Adviser believes that these are important in taking all sufficient steps to obtain the best possible result for execution of the order.

In selecting a trading counterparty, the price of the transaction and costs related to the execution of the transaction typically merit a high relative importance, depending on the circumstances. The Adviser does not necessarily select a trading counterparty based upon price and costs but may take other relevant factors into account if it believes that these are important in taking reasonable steps to obtain the best possible result for a Fund under the circumstances.

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Consequently, the Adviser may cause a client to pay a trading counterparty more than another trading counterparty might have charged for the same transaction in recognition of the value and quality of the brokerage services provided. The following matters may influence the relative importance that the Adviser places upon the relevant factors:

&nbsp;&nbsp;&nbsp;&nbsp;(i) The nature and characteristics of the order or transaction. For example, size of order, market impact of order, limits, or other instructions relating to the order;

&nbsp;&nbsp;&nbsp;&nbsp;(ii) The characteristics of the financial instrument(s) or other assets which are the subject of that order. For example, whether the order pertains to an equity, fixed income, derivative or convertible instrument;

&nbsp;&nbsp;&nbsp;&nbsp;(iii) The characteristics of the execution venues to which that order can be directed, if relevant. For example, availability and capabilities of electronic trading systems;

&nbsp;&nbsp;&nbsp;&nbsp;(iv) Whether the transaction is a 'delivery versus payment' or 'over-the-counter' transaction. The creditworthiness of the trading counterparty, the amount of existing exposure to a trading counterparty and trading counterparty settlement capabilities may be given a higher relative importance in the case of 'over-the-counter' transactions; and/or

&nbsp;&nbsp;&nbsp;&nbsp;(v) Any other circumstances that the Adviser believes are relevant at the time.

The process by which trading counterparties are selected to effect transactions is designed to exclude consideration of the sales efforts conducted by broker-dealers in relation to the Funds.

The Adviser does not currently use the Funds' assets in connection with third-party soft dollar arrangements. While the Adviser does not currently use "soft" or commission dollars paid by the Funds for the purchase of third-party research, the Adviser reserves the right to do so in the future.

**Brokerage Commission Expenses.** The following table shows the brokerage commission expenses that the Funds paid during the fiscal years ended August 31:

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **2025** | **2024** | **2023** |
| State Street International Stock Selection Fund | &nbsp;&nbsp; $106327 | &nbsp;&nbsp; $72615 | &nbsp;&nbsp; $90696 |
| State Street S&P 500 Index Fund | &nbsp;&nbsp; $8058 | &nbsp;&nbsp; $10594 | &nbsp;&nbsp; $22681 |

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Securities of "Regular Broker-Dealer." The Trust is required to identify any securities of its "regular brokers and dealers" (as such term is defined in the 1940 Act) which it may hold at the close of its most recent fiscal year. "Regular brokers or dealers" of the Trust are the ten brokers or dealers that, during the most recent fiscal year: (i) received the greatest dollar amounts of brokerage commissions from the Trust's portfolio transactions; (ii) engaged as principal in the largest dollar amounts of portfolio transactions of the Trust; or (iii) sold the largest dollar amounts of the Trust's shares.

The Trust's holdings in Securities of Regular Broker-Dealers as of August 31, 2025 are as follows:

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| | |
|:---|:---|
| JPMorgan Chase & Co. | &nbsp;&nbsp; $24426775.00 |
| Bank of America Corp. | &nbsp;&nbsp; $9635830.00 |
| Goldman Sachs Group, Inc. | &nbsp;&nbsp; $6634961.00 |
| Morgan Stanley | &nbsp;&nbsp; $5362806.00 |
| Citigroup, Inc. | &nbsp;&nbsp; $5246745.00 |
| Barclays PLC | &nbsp;&nbsp; $2367893.00 |
| Nomura Holdings, Inc. | &nbsp;&nbsp; $2008125.00 |
| BNP Paribas SA | &nbsp;&nbsp; $1011009.00 |
| Societe Generale SA | &nbsp;&nbsp; $442102.00 |

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**PRICING OF SHARES** 

Multiple-class funds do not have a single share price. Rather, each class has a share price, called its NAV. The price per share for each class of each Fund is determined each business day (unless otherwise noted) at the scheduled close of the New York Stock Exchange ("NYSE") (ordinarily 4:00 p.m. Eastern time). A business day is one in which the NYSE is open for regular trading. A Fund does not calculate its price on days in which the NYSE is closed for trading. Currently, the NYSE is open for regular trading every weekday except New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The NYSE may close early on certain days, such as Christmas Eve and New Year's Eve and before

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certain other holidays. Please contact your SSGA Funds account representative if you have questions on early NYSE closing times. In unusual circumstances, such as an emergency or an unscheduled close or halt of trading on the NYSE, the time at which share prices are determined may be changed.

Trading may occur in debt securities and in foreign securities at times when the NYSE or Federal Reserve is closed (including weekends and holidays or after 4:00 p.m. Eastern time on a regular business day). The trading of portfolio securities at such times may significantly increase or decrease the NAV of Fund shares when the shareholder is not able to purchase or redeem Fund shares. Further, because foreign securities markets may close prior to the time the Funds determine NAV, events affecting the value of the portfolio securities occurring between the time prices are determined and the time the Funds calculate NAV may not be reflected in the calculation of NAV unless it is determined that a particular event would materially affect the NAV. If such an event occurs, these securities will be valued at their fair value following procedures approved by the Trustees.

The NAV per share of a Fund's share class is determined by dividing the total assets, minus liabilities, allocated to each share class by the number of Fund shares outstanding for that class. Determination of a Fund's NAV per share is made in accordance with generally accepted accounting principles and applicable rules of the SEC.

Portfolio instruments for which market quotations are available are valued at market value (generally determined at the closing time of the market on which the instruments are traded). If market quotations are not readily available or if the Adviser believes that the available quotations are unreliable, the portfolio instruments are valued at fair value by the Adviser as the valuation designee, subject to oversight by the Board of Trustees. This generally means that equity securities and fixed income securities listed and traded principally on any national securities exchange are valued on the basis of the last sale price or, lacking any sales, at the closing bid price, on the primary exchange on which the security is traded. United States equity and fixed-income securities traded principally OTC and options are valued on the basis of the last sale price. Futures contracts are valued on the basis of the last reported sales price.

Because many fixed income securities do not trade each day, last sale or bid prices are frequently not available. Therefore, fixed income securities may be valued using prices provided by a pricing service when such prices are believed to reflect the market value of such securities.

International securities traded on a national securities exchange are valued on the basis of last sale price. International securities traded OTC are valued on the basis of last sale price. In the absence of a last sale price, such securities may be valued on the basis of prices provided by a pricing service if those prices are believed to reflect the fair value of such securities. Some international securities trade on days that the Funds are not open for business. As a result, the NAV of Fund shares may fluctuate on days when Fund shareholders may not buy or sell Funds shares.

The Funds value securities maturing within 60 days of the valuation date at amortized cost unless the Board determines that the amortized cost method does not represent fair value. This method involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, even though the portfolio security may increase or decrease in market value generally in response to changes in interest rates. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price a Fund would receive if it sold the instrument.

The SSGA Funds reserve the right to make payment with respect to any request for redemption (in excess of $15 million) in whole or in part by delivering readily marketable securities chosen by the Fund and valued as they are for purposes of computing the Fund's NAV (known as redemption-in-kind); provided, however, that under the applicable SEC rule, a Fund is obligated to redeem shares to any one shareholder during any 90 day period solely in cash up to the lesser of $250,000 or 1.00% of the NAV of the Fund at the beginning of the period. A redemption is generally a taxable event for shareholders, regardless of whether the redemption is satisfied in cash or in kind. An investor that receives an in-kind distribution of property from a Fund may be required to recognize taxable gain or loss upon a subsequent taxable disposition of that property.

**TAXATION OF THE FUNDS** 

**Cost Basis Reporting.** Department of the Treasury regulations mandate cost basis reporting to shareholders and The Internal Revenue Service ("IRS") for redemptions of Fund shares acquired on or after January 1, 2012 ("Post Effective Date Shares"). If you acquire and hold shares directly through the Funds and not through a Financial Intermediary, SS&C GIDS, Inc. will use a default average cost basis methodology for tracking and reporting your cost basis on Post Effective Date Shares, unless you request, in writing, another cost basis reporting methodology.

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The available methods for reporting your cost-basis include: "average cost basis," "first in-first out" and "specific share identification." You may elect which method you want to use by notifying SS&C GIDS, Inc. in writing. This election may be revoked or changed by you at any time up to the date of your first redemption of Post-Effective Date Shares. If you do not affirmatively elect a cost basis method then the Fund's default cost basis calculation method, which is currently the average cost method will be applied to your account(s). The default method will also be applied to all new accounts established unless otherwise requested by you.

Additionally, for redemptions of Fund shares, SS&C GIDS, Inc. will first redeem all shares acquired prior to January 1, 2012 ("Pre-Effective Date Shares"), before redeeming any Post-Effective Date Shares. You continue to be responsible for tracking cost basis and appropriately reporting sales of Pre-Effective Date Shares to the IRS. If SS&C GIDS, Inc. has historically provided cost basis reporting on these Pre-Effective Date Shares, SS&C GIDS, Inc. will continue to provide those reports. However, no cost basis reporting will be provided to the IRS on the sale of Pre-Effective Date Shares.

If you acquire and hold shares through a Financial Intermediary, please contact your Financial Intermediary for information related to cost basis defaults, cost basis selection, and cost basis reporting.

It is important for you to consult with your own tax advisor(s) when selecting which cost basis methodology is in your best interest.

**<u>U.S. Federal Income Tax Considerations Applicable to the Funds</u>** 

The following discussion of U.S. federal income tax consequences of an investment in the Funds is based on the Code, U.S. Treasury regulations, and other applicable authority, as of the date of this SAI. These authorities are subject to change by legislative or administrative action, possibly with retroactive effect. The following discussion is only a summary of some of the important U.S. federal income tax considerations generally applicable to investments in the Funds. There may be other tax considerations applicable to particular shareholders. Shareholders should consult their own tax advisors regarding their particular situation and the possible application of foreign, state and local tax laws.

Special tax rules apply to investments through defined contribution plans and other tax-qualified plans or tax-advantaged arrangements. Shareholders should consult their tax advisors to determine the suitability of shares of a Fund as an investment through such plans and arrangements and the precise effect of an investment on their particular tax situations.

<u>Qualification as a Regulated Investment Company</u> 

Each Fund has elected to be treated as a regulated investment company ("RIC") under Subchapter M of the Code and intends each year to qualify and be eligible to be treated as such. In order to qualify for the special tax treatment accorded RICs and their shareholders, each Fund must, among other things, (a) derive at least 90% of its gross income for each taxable year from (i) dividends, interest, payments with respect to certain securities loans, gains from the sale of securities or foreign currencies, or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies and (ii) net income derived from interests in "qualified publicly traded partnerships" (as defined below); (b) diversify its holdings so that, at the end of each quarter of the Fund's taxable year, (i) at least 50% of the value of the Fund's total assets consists of cash and cash items (including receivables), U.S. Government securities, securities of other RICs, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of the Fund's total assets and no more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of its assets are invested, including through corporations in which the Fund owns a 20% or more voting stock interest, (x) in the securities (other than those of the U.S. Government or other RICs) of any one issuer or of two or more issuers which the Fund controls and which are engaged in the same, similar or related trades and businesses, or (y) in the securities of one or more qualified publicly traded partnerships (as defined below); and (c) distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid — generally taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses) and net tax-exempt income, for such year.

In general, for purposes of the 90% gross income requirement described in (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a "qualified publicly traded partnership" (a partnership (x) the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof, and (y) that derives less than 90% of its income from the qualifying income described in section (a)(i) of the preceding paragraph), will be treated as

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qualifying income. In general, such entities will be treated as partnerships for federal income tax purposes, because they meet the passive income requirement under Code Section 7704(c)(2). Further, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership.

For purposes of the diversification test in (b) above, the term "outstanding voting securities of such issuer" will include the equity securities of a qualified publicly traded partnership. Also, for purposes of the diversification test in (b) above, the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of investment may adversely affect a Fund's ability to meet the diversification test in (b) above.

If a Fund qualifies as a RIC that is accorded special tax treatment, the Fund will not be subject to federal income tax on income or gains distributed in a timely manner to its shareholders in the form of dividends (including Capital Gain Dividends, as defined below). If a Fund were to fail to meet the income, diversification or distribution test described above, the Fund could in some cases cure such failure, including by paying a Fund-level tax, paying interest or disposing of certain assets. If such Fund were ineligible to or otherwise did not cure such failure for any year, or if such Fund were otherwise to fail to qualify as a RIC accorded special tax treatment in any taxable year, the Fund would be subject to tax at the Fund level on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income (if any) and net capital gains (as defined below), would be taxable to shareholders as ordinary income. Some portions of such distributions may be eligible for the dividends-received deduction in the case of corporate shareholders and may be eligible to be treated as "qualified dividend income" in the case of shareholders taxed as individuals, provided, in both cases, the shareholder meets certain holding period and other requirements in respect of a Fund's shares (each as described below). In addition, a Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before re-qualifying as a RIC that is accorded special tax treatment.

Each Fund intends to distribute at least annually to its shareholders all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction) and its net tax-exempt income (if any), and may distribute its net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards). Any taxable income retained by a Fund will be subject to tax at the Fund level at regular corporate rates. If a Fund retains any net capital gain, it will be subject to tax at regular corporate rates on the amount retained, but it is permitted to designate the retained amount as undistributed capital gain in a timely notice to its shareholders who (a) will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (b) will be entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their federal income tax liabilities, if any, and to claim refunds on a properly-filed U.S. tax return to the extent the credit exceeds such liabilities. If a Fund makes this designation, for U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of the Fund will be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder's gross income under clause (a) of the preceding sentence and the tax deemed paid by the shareholder under clause (b) of the preceding sentence. The Funds are not required to, and there can be no assurance a Fund will, make this designation if it retains all or a portion of its net capital gain in a taxable year.

In determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income, and its earnings and profits, a RIC generally may elect to treat part or all of any post-October capital loss (defined as any net capital loss attributable to the portion, if any, of the taxable year after October 31, or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to any such portion of the taxable year) or late-year ordinary loss (generally, the sum of its (i) net ordinary loss, if any, from the sale, exchange or other taxable disposition of property, attributable to the portion, if any, of the taxable year after October 31, and (ii) other net ordinary loss, if any, attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding taxable year.

If a Fund were to fail to distribute in a calendar year at least an amount equal, in general, to the sum of 98% of its ordinary income for such year and 98.2% of its capital gain net income for the one-year period ending October 31 of such year (or for the one-year period ending November 30 or December 31, if the Fund is eligible to elect and so elects), plus any such amounts retained from the prior year, the Fund would be subject to a nondeductible 4% excise tax on the undistributed amounts. For purposes of the required excise tax distribution, a RIC's ordinary gains and losses from the sale, exchange or other taxable disposition of property that would otherwise be taken into account after October 31 of a calendar year (or

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November 30 of that year, if the Fund makes the election described above) generally are treated as arising on January 1 of the following calendar year; in the case of a Fund with a December 31 year end that makes the election described above, no such gains or losses will be so treated. Also, for these purposes, a Fund will be treated as having distributed any amount on which it is subject to corporate income tax for the taxable year ending within the calendar year. Each Fund intends generally to make distributions sufficient to avoid imposition of the excise tax, although there can be no assurance that it will be able to do so. Distributions declared by a Fund during October, November and December to shareholders of record on a date in any such month and paid by the Fund during the following January will be treated for federal tax purposes as paid by the Fund and received by shareholders on December 31 of the year in which declared.

Capital losses in excess of capital gains ("net capital losses") are not permitted to be deducted against a Fund's net investment income. Instead, potentially subject to certain limitations, a Fund may carry net capital losses from any taxable year forward to subsequent taxable years to offset capital gains, if any, realized during such subsequent taxable years. Distributions from capital gains are generally made after applying any available capital loss carryforwards. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains. A Fund may carry net capital losses forward to one or more subsequent taxable years without expiration; any such carryforward losses will retain their character as short-term or long-term. The Fund must apply such carryforwards first against gains of the same character. See a Fund's most recent Form N-CSR filing for the Fund's available capital loss carryovers as of the end of its most recently ended fiscal year.

<u>Taxation of Distributions Received by Shareholders</u> 

For U.S. federal income tax purposes, distributions of investment income are generally taxable to shareholders as ordinary income. Taxes on distributions of capital gains are determined by how long a Fund has owned (or is deemed to have owned) the investments that generated them, rather than how long a shareholder has owned his or her Fund shares. In general, a Fund will recognize long-term capital gain or loss on the disposition of assets the Fund has owned (or is deemed to have owned) for more than one year , and short-term capital gain or loss on the disposition of investments the Fund has owned (or is deemed to have owned) for one year or less. Distributions of net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss) that are properly reported by a Fund as capital gain dividends ("Capital Gain Dividends") generally will be taxable to a shareholder receiving such distributions as long-term capital gains includible in net capital gain, and taxed to individuals at reduced rates relative to ordinary income. Distributions from capital gains are generally made after applying any available capital loss carryovers. The IRS and the Department of the Treasury have issued regulations that impose special rules in respect of Capital Gain Dividends received through partnership interests constituting "applicable partnership interests" under Section 1061 of the Code. Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to shareholders as ordinary income. Distributions of investment income properly reported by a Fund as derived from "qualified dividend income" will be taxed in the hands of individuals at the rates applicable to net capital gain, provided holding period and other requirements are met at both the shareholder and Fund level.

The Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts and estates to the extent their income exceeds certain threshold amounts. For these purposes, "net investment income" generally includes, among other things, (i) distributions paid by a Fund of net investment income and capital gains, and (ii) any net gain from the sale, redemption, exchange or other taxable disposition of Fund shares. Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in the Fund.

Shareholders of a Fund will be subject to federal income taxes as described herein on distributions made by a Fund whether received in cash or reinvested in additional shares of the Fund.

If a Fund makes a distribution to a shareholder in excess of the Fund's current and accumulated earnings and profits in any taxable year, the excess distribution will be treated as a return of capital to the extent of such shareholder's tax basis in its shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder's tax basis in its shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of its shares.

Distributions with respect to a Fund's shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund's realized income and gains, even though such distributions may economically represent a return of a particular shareholder's investment. Such distributions are likely to occur in respect of shares purchased at a time when a Fund's NAV reflects either unrealized gains, or realized but undistributed income or gains, that

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were therefore included in the price the shareholder paid. Such distributions may reduce the fair market value of the Fund's shares below the shareholder's cost basis in those shares. As described above, a Fund is required to distribute realized income and gains regardless of whether the Fund's NAV also reflects unrealized losses.

In order for some portion of the dividends received by a Fund shareholder to be "qualified dividend income," the Fund must meet holding period and other requirements with respect to the dividend-paying stocks held by the Fund and the shareholder must meet holding period and other requirements with respect to the Fund's shares. In general, a dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (a) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121 day period beginning on the date that is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days during the 181 day period beginning 90 days before such date), (b) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (c) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (d) if the dividend is received from a foreign corporation that is (i) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established securities market in the United States) or (ii) treated as a passive foreign investment company ("PFIC").

In general, distributions of investment income properly reported by a Fund as derived from qualified dividend income will be treated as qualified dividend income in the hands of a shareholder taxed as an individual, provided the shareholder meets the holding period and other requirements described above with respect to the Fund's shares. If the aggregate qualified dividends received by a Fund during any taxable year are 95% or more of the Fund's gross income (excluding net long-term capital gain over net short-term capital loss), then 100% of the Fund's dividends (other than dividends properly reported as Capital Gain Dividends) will be eligible to be treated as qualified dividend income.

In general, dividends of net investment income received by corporate shareholders of a Fund will qualify for the dividends-received deduction generally available to corporations only to the extent of the amount of eligible dividends received by a Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a dividend eligible for the dividends-received deduction (a) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 181 day period beginning 90 days before such date in the case of certain preferred stock) or (b) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Moreover, the dividends-received deduction may otherwise be disallowed or reduced (x) if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund or (y) by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)).

Any distribution of income that is attributable to (a) income received by a Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction or (b) dividend income received by a Fund on securities it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to individual shareholders and will not be eligible for the dividends-received deduction for corporate shareholders. Distributions by a Fund to its shareholders that the Fund properly reports as "section 199A dividends," as defined and subject to certain conditions described below, are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders are permitted a federal income tax deduction equal to 20% of qualified REIT dividends received by them, subject to certain limitations. Very generally, a "section 199A dividend" is any dividend or portion thereof that is attributable to certain dividends received by a RIC from REITs (as defined below), to the extent such dividends are properly reported as such by the RIC in a written notice to its shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially similar or related property. A Fund is permitted to report such part of its dividends as section 199A dividends as are eligible, but is not required to do so.

If a Fund holds, directly or indirectly, one or more "tax credit bonds" issued on or before December 31, 2017, on one or more applicable dates during a taxable year, the Fund may elect to permit its shareholders to claim a tax credit on their income tax returns equal to each shareholder's proportionate share of tax credits from the bond otherwise allowed to the Fund. In such a case, a shareholder will be deemed to receive a distribution of money with respect to its Fund shares

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equal to the shareholder's proportionate share of the amount of such credits and be allowed a credit against the shareholder's U.S. federal income tax liability equal to the amount of such deemed distribution. A shareholder's ability to claim a tax credit associated with one or more tax credit bonds may be subject to certain limitations imposed by the Code, and the amount of the tax credits may not exceed the amount reported by the Fund in a written notice to shareholders. Even if a Fund is eligible to pass through tax credits to shareholders, the Fund may choose not to do so.

As required by federal law, detailed federal tax information with respect to each calendar year will be furnished to each shareholder early in the succeeding year.

<u>Tax Implications of Certain Fund Investments</u> 

*Special Rules for Debt Obligations.* Some debt obligations with a fixed maturity date of more than one year from the date of issuance (and zero-coupon debt obligations with a fixed maturity date of more than one year from the date of issuance) will be treated as debt obligations that are issued originally at a discount. Generally, the original issue discount ("OID") is treated as interest income and is included in the Fund's income and required to be distributed by the Fund over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. In addition, payment-in-kind obligations will give rise to income which is required to be distributed and is taxable even though the Fund holding the obligation receives no interest payment in cash on the obligation during the year.

Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by a Fund in the secondary market may be treated as having "market discount." Very generally, market discount is the excess of the stated redemption price of a debt obligation (or in the case of an obligation issued with OID, its "revised issue price") over the purchase price of such obligation. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt obligation having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the "accrued market discount" on such debt obligation. Alternatively, a Fund may elect to accrue market discount currently, in which case the Fund will be required to include the accrued market discount in the Fund's income (as ordinary income) and thus distribute it over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. The rate at which the market discount accrues, and thus is included in a Fund's income if the Fund elects to accrue market discount, will depend upon which of the permitted accrual methods the Fund elects.

If a Fund holds the foregoing kinds of obligations, or other obligations subject to special rules under the Code, it may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or, if necessary, by disposition of portfolio securities including at a time when it may not be advantageous to do so. These dispositions may cause the Fund to realize higher amounts of short-term capital gains (generally taxed to shareholders at ordinary income tax rates) and, in the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger Capital Gain Dividend than they would have if the Fund had not held such obligations.

A portion of the OID accrued on certain high yield discount obligations may not be deductible to the issuer and will instead be treated as a dividend paid by the issuer for purposes of the dividends-received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by a Fund may be eligible for the dividends-received deduction to the extent attributable to the deemed dividend portion of such OID.

*Securities Purchased at a Premium.* Very generally, where a Fund purchases a bond at a price that exceeds the redemption price at maturity – that is, at a premium — the premium is amortizable over the remaining term of the bond. In the case of a taxable bond, if a Fund makes an election applicable to all such bonds it purchases, which election is irrevocable without consent of the IRS, the Fund reduces the current taxable income from the bond by the amortized premium and reduces its tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January 4, 2013, the Fund is permitted to deduct any remaining premium allocable to a prior period.

*At-risk or Defaulted Securities.* Investments in debt obligations that are at risk of or in default present special tax issues for a Fund. Tax rules are not entirely clear about issues such as when a Fund may cease to accrue interest, OID or market discount; whether, when or to what extent a Fund should recognize market discount on such a debt obligation; when and to what extent a Fund may take deductions for bad debts or worthless securities; and how a Fund should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by a Fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to U.S. federal income or excise tax.

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*Certain Investments in REITs.* Any investment by a Fund in equity securities of real estate investment trusts qualifying as such under Subchapter M of the Code ("REITs") may result in the Fund's receipt of cash in excess of the REIT's earnings; if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Dividends received by a Fund from a REIT will not qualify for the corporate dividends-received deduction and generally will not constitute qualified dividend income.

*Certain Investments in Mortgage Pooling Vehicles.* A Fund may invest directly or indirectly in residual interests in real estate mortgage investment conduits ("REMICs") (including by investing in residual interests in collateralized mortgage obligations ("CMOs") with respect to which an election to be treated as a REMIC is in effect) or equity interests in taxable mortgage pools ("TMPs"). Under a notice issued by the IRS in October 2006 and Treasury regulations that have yet to be issued but may apply retroactively, a portion of a Fund's income (including income allocated to the Fund from certain pass-through entities) that is attributable to a residual interest in a REMIC or an equity interest in a TMP (referred to in the Code as an "excess inclusion") will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a RIC, such as a Fund, will be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. As a result, a Fund investing in such interests may not be a suitable investment for charitable remainder trusts ("CRTs"), as noted below.

In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute unrelated business taxable income ("UBTI") to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and that otherwise might not be required to file a tax return, to file a tax return and pay tax on such income, and (iii) in the case of a foreign shareholder will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the Code.

*Foreign Currency Transactions.* Any transaction by a Fund in foreign currencies, foreign currency-denominated debt obligations or certain foreign currency options, futures contracts or forward contracts (or similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. Any such net gains could require a larger dividend toward the end of the calendar year. Under Section 988 of the Code, gains or losses attributable to fluctuations in exchange rates between the time a fund accrues income or receivables or expenses or other liabilities denominated in a foreign currency and the time a fund actually collects such income or pays such liabilities are generally treated as ordinary income or ordinary loss. In general, gains and losses realized on debt instruments will likewise be treated as ordinary income or loss to the extent attributable to changes in exchange rates between the U.S. dollar and the currencies in which the instruments are denominated. Similarly, gains or losses on foreign currency, foreign currency forward contracts and certain foreign currency options or futures contracts (or similar instruments), to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss unless a fund elects otherwise. Such ordinary income treatment may accelerate fund distributions to shareholders, require a larger dividend toward the end of the calendar year, or increase distributions taxed to shareholders as ordinary income. Any such net losses will generally reduce and potentially require the recharacterization of prior ordinary income distributions. Any net ordinary losses so created cannot be carried forward by the Fund to offset income or gains earned in subsequent taxable years.

*Passive Foreign Investment Companies.* Equity investments by a Fund in certain PFICs could potentially subject the Fund to a U.S. federal income tax (including interest charges) on distributions received from the company or on proceeds received from the disposition of shares in the company. This tax cannot be eliminated by making distributions to Fund shareholders. However, a Fund may elect to avoid the imposition of that tax. For example, a Fund may elect to treat a PFIC as a "qualified electing fund" (i.e., make a "QEF election"), in which case the Fund will be required to include its share of the PFIC's income and net capital gains annually, regardless of whether it receives any distribution from the PFIC. A Fund also may make an election to mark the gains (and to a limited extent losses) in such holdings "to the market" as though it had sold (and, solely for purposes of this mark-to-market election, repurchased) its holdings in those PFICs on the last day of the Fund's taxable year. Such gains and losses are treated as ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition of income (without the receipt of cash) and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require a Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also may accelerate the recognition of gain and affect the Fund's total return. Dividends paid by PFICs will not be eligible to be treated as "qualified dividend income."

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Because it is not always possible to identify a foreign corporation as a PFIC, a Fund may incur the tax and interest charges described above in some instances.

*Options and Futures.* In general, option premiums received by a Fund are not immediately included in the income of the Fund. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or otherwise terminates the option (e.g., through a closing transaction). If a call option written by a Fund is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to (a) the sum of the strike price and the option premium received by the Fund minus (b) the Fund's basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund generally will subtract the premium received for purposes of computing its cost basis in the securities purchased. Gain or loss arising in respect of a termination of a Fund's obligation under an option other than through the exercise of the option will be short-term gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus, for example, if an option written by a Fund expires unexercised, the Fund generally will recognize short-term gain equal to the premium received.

A Fund's options activities may include transactions constituting straddles for U.S. federal income tax purposes, that is, that trigger the U.S. federal income tax straddle rules contained primarily in Section 1092 of the Code. Such straddles include, for example, positions in a particular security, or an index of securities, and one or more options that offset the former position, including options that are "covered" by a Fund's long position in the subject security. Very generally, where applicable, Section 1092 requires (i) that losses be deferred on positions deemed to be offsetting positions with respect to "substantially similar or related property," to the extent of unrealized gain in the latter, and (ii) that the holding period of such a straddle position that has not already been held for the long-term holding period be terminated and begin anew once the position is no longer part of a straddle. Options on single stocks that are not "deep in the money" may constitute qualified covered calls, which generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are "in the money" although not "deep in the money" will be suspended during the period that such calls are outstanding. Thus, the straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as short-term capital gains, and distributions that would otherwise constitute "qualified dividend income" or qualify for the dividends-received deduction to fail to satisfy the holding period requirements and therefore to be taxed as ordinary income or fail to qualify for the dividends-received deduction, as the case may be.

The tax treatment of certain positions entered into by a Fund, including regulated futures contracts, certain foreign currency positions and certain listed non-equity options, will be governed by section 1256 of the Code ("section 1256 contracts"). Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses ("60/40"), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, section 1256 contracts held by a Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are "marked to market" with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.

*Derivatives, Hedging, and Related Transactions.* In addition to the special rules described above in respect of futures and options transactions, a Fund's transactions in other derivative instruments (e.g., forward contracts and swap agreements), as well as any of its hedging, short sale, securities loan or similar transactions, may be subject to one or more special tax rules (e.g., notional principal contract, straddle, constructive sale, wash sale and short sale rules). These rules may affect whether gains and losses recognized by a Fund are treated as ordinary or capital, accelerate the recognition of income or gains to the Fund, defer losses to the Fund, and cause adjustments in the holding periods of the Fund's securities, thereby affecting, among other things, whether capital gains and losses are treated as short-term or long-term. These rules could therefore affect the amount, timing and/or character of distributions to shareholders.

Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether a Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid a Fund-level tax.

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*Commodities and Commodity-Linked Instruments.* A Fund's investments in commodities and commodity-linked instruments can be limited by the Fund's intention to qualify as a RIC, and can bear on the Fund's ability to so qualify. Income and gains from commodities and certain commodity-linked instruments do not constitute qualifying income to a RIC for purposes of the 90% gross income test described above. In addition, the tax treatment of some other commodity-linked instruments in which a Fund might invest is not certain, in particular with respect to whether income or gains from such instruments constitute qualifying income to a RIC.

If a Fund were to treat income or gain from a particular instrument as qualifying income and the income or gain were later determined not to constitute qualifying income and, together with any other nonqualifying income, caused the Fund's nonqualifying income to exceed 10% of its gross income in any taxable year, the Fund would fail to qualify as a RIC unless it is eligible to and does pay a tax at the Fund level.

*Book-Tax Differences.* Certain of a Fund's investments in derivative instruments and foreign currency-denominated instruments, and any of the Fund's transactions in foreign currencies and hedging activities, are likely to produce a difference between its book income and the sum of its taxable income and net tax-exempt income (if any). If such a difference arises, and a Fund's book income is less than the sum of its taxable income and net tax-exempt income, the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to avoid an entity-level tax. In the alternative, if a Fund's book income exceeds the sum of its taxable income (including realized capital gains) and net tax-exempt income, the distribution (if any) of such excess generally will be treated as (i) a dividend to the extent of the Fund's remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter, as a return of capital to the extent of the recipient's basis in its shares, and (iii) thereafter as gain from the sale or exchange of a capital asset.

*Investments in Other RICs.* If a Fund receives dividends from another mutual fund, exchange traded fund or other entity treated as a RIC (each, an "underlying RIC") and the underlying RIC reports such dividends as qualified dividend income, then the Fund is permitted, in turn, to report a portion of such dividends as "qualified dividend income" when it distributes such portion to its shareholders, provided holding period and other requirements are met.

If a Fund receives dividends from an underlying RIC, and the underlying RIC reports such dividends as eligible for the dividends-received deduction, then the Fund is permitted, in turn, to report a portion of such dividends as eligible for the dividends-received deduction as well when it distributes such portion to its shareholders, provided holding period and other requirements are met.

If an underlying RIC in which a Fund invests elects to pass through tax credit bond credits to its shareholders, then the Fund is permitted in turn to elect to pass through its proportionate share of those tax credits to its shareholders, provided that the Fund meets shareholder notice and other requirements.

The foregoing rules may cause the tax treatments of a Fund's gains, losses and distributions to differ at times from the tax treatment that would apply if the Fund invested directly in the types of securities held by the underlying RIC. As a result, investors may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than they otherwise would.

<u>Foreign Taxation</u> 

Income, proceeds and gains received by a Fund from sources within foreign countries may be subject to non-U.S. withholding or other foreign taxes, which will reduce the yield on those investments. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If, at the close of a Fund's taxable year, more than 50% of the assets of the Fund consists of the securities of foreign corporations, the Fund may elect to permit shareholders to claim a credit or deduction (but not both) on their income tax returns for their pro rata portions of qualified taxes paid by the Fund to foreign countries in respect of foreign securities that the Fund has held for at least the minimum period specified in the Code. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes paid by the Fund.

A shareholder's ability to claim an offsetting foreign tax credit or deduction in respect of foreign taxes paid by a Fund is subject to certain limitations imposed by the Code, which may result in the shareholder's not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their U.S. federal income tax returns may claim a credit (but not a deduction) for such foreign taxes. Even if a Fund is eligible to make such an election for a given year, it may determine not to do so. If a Fund does not qualify for or does not make such election, shareholders will not be entitled to claim a credit or deduction with respect to foreign taxes paid by the Fund; in that case the foreign tax will nonetheless reduce the Fund's taxable income. Shareholders that are not subject to U.S. federal income tax, and those

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who invest in a Fund through tax-advantaged accounts (including those who invest through individual retirement accounts or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed through by the Fund. Under certain circumstances, if a Fund receives a refund of foreign taxes paid in respect of a prior year, the value of Fund Shares could be affected or any foreign tax credits or deductions passed through to shareholders in respect of the Fund's foreign taxes for the current year could be reduced.

<u>Backup Withholding</u> 

A Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions and redemption proceeds paid to any individual shareholder who fails to properly furnish the Fund with a correct taxpayer identification number ("TIN"), who has under-reported dividend or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding.

Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder's U.S. federal income tax liability, provided the appropriate information is furnished to the IRS.

<u>Tax-Exempt Shareholders</u> Income of a RIC that would be UBTI if earned directly by a tax-exempt entity generally will not constitute UBTI when distributed to a tax-exempt shareholder of the RIC. Notwithstanding this "blocking" effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).

A tax-exempt shareholder may also recognize UBTI if a Fund recognizes "excess inclusion income" derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs if the amount of such income recognized by the Fund exceeds the Fund's investment company taxable income (after taking into account deductions for dividends paid by the Fund).

In addition, special tax consequences apply to CRTs that invest in RICs that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, a CRT (as defined in Section 664 of the Code) that realizes any UBTI for a taxable year must pay an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI as a result of investing in a Fund that recognizes "excess inclusion income." Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders, such as the United States, a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund that recognizes "excess inclusion income," then the Fund will be subject to a tax on that portion of its "excess inclusion income" for the taxable year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, each Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholder's distributions for the year by the amount of the tax that relates to such shareholder's interest in a Fund. CRTs are urged to consult their tax advisors concerning the consequences of investing in each Fund.

<u>Redemptions and Exchanges</u> 

Redemptions and exchanges of each Fund's shares are taxable events and, accordingly, shareholders may realize gain or loss on these transactions. In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on the taxable disposition of Fund shares will be treated as short-term capital gain or loss. However, any loss realized upon a taxable disposition of Fund shares held by a shareholder for six months or less will be treated as long-term, rather than short-term, to the extent of any Capital Gain Dividends received (or deemed received) by the shareholder with respect to the shares. Furthermore, all or a portion of any loss realized upon a taxable disposition of Fund shares will generally be disallowed under the Code's "wash sale" rule if other substantially identical shares are purchased, including by means of dividend reinvestment, within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.

Upon the redemption or exchange of shares of a Fund, the Fund or, in the case of shares purchased through a financial intermediary, the financial intermediary may be required to provide you and the IRS with cost basis and certain other related tax information about the Fund shares you redeemed or exchanged. See the Funds' prospectus for more information.

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<u>Tax Shelter Reporting</u> 

Under U.S. Treasury regulations, if a shareholder recognizes a loss of at least $2 million in any single taxable year or $4 million in any combination of taxable years for an individual shareholder or $10 million in any single taxable year or $20 million in any combination of taxable years for a corporate shareholder (or a greater loss over a combination of years), the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct holders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer's treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.

<u>Non-U.S. Shareholders</u> 

Non-U.S. shareholders in a Fund should consult their tax advisors concerning the tax consequences of ownership of shares in the Fund. Distributions by a Fund to shareholders that are not "U.S. persons" within the meaning of the Code ("foreign shareholders") properly reported by the Fund as (1) Capital Gain Dividends, (2) short-term capital gain dividends, or (3) interest-related dividends, each as defined and subject to certain conditions described below, generally are not subject to withholding of U.S. federal income tax.

In general, the Code defines (1) "short-term capital gain dividends" as distributions of net short-term capital gains in excess of net long-term capital losses and (2) "interest-related dividends" as distributions from U.S.-source interest income of types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder, in each case to the extent such distributions are properly reported as such by a Fund in a written notice to shareholders.

The exceptions to withholding for Capital Gain Dividends and short-term capital gain dividends do not apply to (A) distributions to an individual foreign shareholder who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (B) distributions attributable to gain that is treated as effectively connected with the conduct by the foreign shareholder of a trade or business within the United States under special rules regarding the disposition of "U.S. real property interests" ("USRPIs") as described below. The exception to withholding for interest-related dividends does not apply to distributions to a foreign shareholder (i) that has not provided a satisfactory statement that the beneficial owner is not a U.S. person, (ii) to the extent that the dividend is attributable to certain interest on an obligation if the foreign shareholder is the issuer or is a 10% shareholder of the issuer, (iii) that is within certain foreign countries that have inadequate information exchange with the United States, or (iv) to the extent the dividend is attributable to interest paid by a person that is a related person of the foreign shareholder and the foreign shareholder is a controlled foreign corporation). If a Fund invests in a RIC that pays such distributions to the Fund, such distributions retain their character as not subject to withholding if properly reported when paid by the Fund to foreign shareholders. A RIC is permitted to report such parts of its dividends as are eligible to be treated as interest-related or short-term capital gain dividends, but is not required to do so. In the case of shares held through an intermediary, the intermediary may withhold even if a Fund reports all or a portion of a payment as an interest-related or short-term capital gain dividend to shareholders.

Foreign shareholders should contact their intermediaries regarding the application of withholding rules to their accounts.

Distributions by a Fund to foreign shareholders other than Capital Gain Dividends, short-term capital gain dividends and interest-related dividends (e.g., dividends attributable to dividend and foreign-source interest income or to short-term capital gains or U.S. source interest income to which the exception from withholding described above does not apply) are generally subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate).

A foreign shareholder is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of a Fund unless (a) such gain is effectively connected with the conduct of a trade or business carried on by such holder within the United States, (b) in the case of an individual holder, the holder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met, or (c) the special rules relating to gain attributable to the sale or exchange of "U.S. real property interests" ("USRPIs") apply to the foreign shareholder's sale of shares of the Fund (as described below).

Foreign shareholders with respect to whom income from a Fund is effectively connected with a trade or business conducted by the foreign person within the United States will in general be subject to U.S. federal income tax on the income derived from the Fund at the graduated rates applicable to U.S. citizens, residents or domestic corporations, whether such income is received in cash or reinvested in shares of the Fund and, in the case of a foreign corporation,

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may also be subject to a branch profits tax. If a foreign shareholder is eligible for the benefits of a tax treaty, any effectively connected income or gain will generally be subject to U.S. federal income tax on a net basis only if it is also attributable to a permanent establishment maintained by the shareholder in the United States. More generally, foreign shareholders who are residents in a country with an income tax treaty with the United States may obtain different tax results than those described herein, and are urged to consult their tax advisors.

Special rules would apply if a Fund were a qualified investment entity ("QIE") because it is either a "U.S. real property holding corporation" ("USRPHC") or would be a USRPHC but for the operation of certain exceptions to the definition thereof. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals or exceeds 50% of the sum of the fair market values of the corporation's USRPIs, interests in real property located outside the United States, and other trade or business assets. USRPIs are generally defined as any interest in U.S. real property and any interest (other than solely as a creditor) in a USRPHC or, very generally, an entity that has been a USRPHC in the last five years. A Fund that holds, directly or indirectly, significant interests in REITs may be a USRPHC. Interests in domestically controlled QIEs, including REITs and RICs that are QIEs, not-greater-than-10% interests in publicly traded classes of stock in REITs and not-greater-than-5% interests in publicly traded classes of stock in RICs generally are not USRPIs, but these exceptions do not apply for purposes of determining whether a Fund is a QIE. If an interest in a Fund were a USRPI, the Fund would be required to withhold U.S. tax on the proceeds of a share redemption by a greater-than-5% foreign shareholder, in which case such foreign shareholder generally would also be required to file U.S. tax returns and pay any additional taxes due in connection with the redemption.

If a Fund were a QIE, under a special "look-through" rule, any distributions by the Fund to a foreign shareholder attributable directly or indirectly to (i) distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to treat as USRPI gain in its hands and (ii) gains realized on the disposition of USRPIs by the Fund, would retain their character as gains realized from USRPIs in the hands of the Fund's foreign shareholders, and would be subject to U.S. tax withholding. In addition, such distributions could result in the foreign shareholder being required to file a U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates. The consequences to a foreign shareholder, including the rate of such withholding and character of such distributions (e.g., as ordinary income or USRPI gain), would vary depending upon the extent of the foreign shareholder's current and past ownership of the Fund. Each Fund generally does not expect that it will be a QIE.

Foreign shareholders of a Fund also may be subject to "wash sale" rules to prevent the avoidance of the tax-filing and -payment obligations discussed above through the sale and repurchase of Fund shares.

Foreign shareholders should consult their tax advisors and, if holding shares through intermediaries, their intermediaries, concerning the application of these rules to their investment in a Fund.

In order for a foreign shareholder to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from back-up withholding, the foreign shareholder must comply with special certification and filing requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, IRS Form W-8BEN-E or substitute form). Foreign shareholders of a Fund should consult their tax advisors in this regard.

Special rules (including withholding and reporting requirements) apply to foreign partnerships and those holding Fund shares through foreign partnerships. Additional considerations may apply to foreign trusts and estates. Investors holding Fund shares through foreign entities should consult their tax advisors about their particular situation. A foreign shareholder may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax on income referred to above.

<u>Shareholder Reporting Obligations With Respect To Foreign Bank and Financial Accounts</u> 

Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of a Fund by vote or value could be required to report annually their "financial interest" in the Fund's "foreign financial accounts," if any, on FinCEN Form 114, Report of Foreign Bank and Financial Accounts ("FBAR"). Shareholders should consult a tax advisor, and persons investing in a Fund through an intermediary should contact their intermediary, regarding the applicability to them of this reporting requirement.

<u>Other Reporting and Withholding Requirements</u> 

Sections 1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, "FATCA") generally require a Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental agreement (an "IGA") between the United States and a foreign government. If a

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shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or Capital Gain Dividends a Fund pays. If a payment by a Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., short-term capital gain dividends and interest-related dividends).

Each prospective investor is urged to consult its tax advisor regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investor's own situation, including investments through an intermediary.

<u>General Considerations</u> 

The U.S. federal income tax discussion set forth above is for general information only. Prospective investors should consult their tax advisors regarding the specific U.S. federal income tax consequences of purchasing, holding, and disposing of shares of a Fund, as well as the effects of state, local, foreign, and other tax laws and any proposed tax law changes.

**ADDITIONAL INFORMATION** 

***SHAREHOLDER MEETINGS*** 

The Trust will not hold an annual meeting of shareholders. Special meetings may be convened: (1) by the Board of Trustees; (2) upon written request to the Board by the holders of at least 10% of the outstanding shares; or (3) upon the Board's failure to honor the shareholders' request described above, by holders of at least 10% of the outstanding shares giving notice of the special meeting to the shareholders.

***DECLARATION OF TRUST*** 

The Master Trust Agreement provides that the Trust may redeem shares of a Fund at the redemption price that would apply if the share redemption were initiated by a shareholder. It is the policy of the Trust that, except upon such conditions as may from time to time be set forth in the then current prospectus of the Trust or to facilitate the Trust's or a Fund's compliance with applicable law or regulation, the Trust would not initiate a redemption of shares unless it were to determine that failing to do so may have a substantial adverse consequence for a Fund or the Trust.

The Trust's organizational documents provide that a Trustee who is not an "interested person" (as defined in the 1940 Act) of the Trust will be deemed independent and disinterested with respect to any demand made in connection with a derivative action or proceeding. It is the policy of the Trust that it will not assert that provision to preclude a shareholder from claiming that a trustee is not independent or disinterested with respect to any demand made in connection with a derivative action or proceeding.

The Trust will not deviate from the foregoing policies in a manner that adversely affects the rights of shareholders of a Fund without the approval of "a vote of a majority of the outstanding voting securities" (as defined in the 1940 Act) of such Fund.

***CAPITALIZATION AND VOTING*** 

Each Fund share has one vote. There are no cumulative voting rights. There is no annual meeting of shareholders, but special meetings may be held. On any matter that affects only a particular investment Fund, only shareholders of that Fund may vote unless otherwise required by the 1940 Act or the Master Trust Agreement.

A Fund share represents an equal proportionate interest in the Fund, has a par value of $.001 per share and is entitled to such relative rights and preferences and dividends and distributions earned on the assets belonging to the Fund as may be declared by the Board of Trustees. Fund shares are fully paid and nonassessable by the Trust and have no preemptive rights.

The SSGA Funds do not issue share certificates. Instead, the Transfer Agent sends monthly statements to shareholders of the Fund concurrent with any transaction activity, confirming all investments in or redemptions from their accounts. Each statement also sets forth the balance of shares held in the account.

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The Trust is authorized to divide shares of any Fund into two or more classes of shares. The shares of each Fund may have such rights and preferences as the Trustees may establish from time to time, including the right of redemption (including the price, manner and terms of redemption), special and relative rights as to dividends and distributions, liquidation rights, sinking or purchase Fund provisions and conditions under which any Fund may have separate voting rights or no voting rights. Each class of shares is entitled to the same rights and privileges as all other classes of the Fund, except that each class bears the expenses associated with the distribution and shareholder servicing arrangements of that class, as well as other expenses attributable to the class and unrelated to the management of the Fund's portfolio securities. The Funds have Class N (formerly, Institutional Class) (the original class of shares); and Class A, Class I and Class K (State Street International Stock Selection Fund only).

***FEDERAL LAW AFFECTING STATE STREET*** 

Federal laws may prohibit state chartered banks such as State Street from engaging in the business of certain kinds of underwriting and other activities and may impact the services provided by State Street. **SSGA Funds shares are not endorsed or guaranteed by State Street or its affiliates, are not deposits or obligations of State Street or its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.** 

Changes in federal or state statutes and regulations relating to the permissible activities of banks and their affiliates, as well as judicial or administrative decisions or interpretations of such or future statutes and regulations, could prevent the Adviser from continuing to perform all or a part of the above services for its customers and/or the Funds. If the Adviser were prohibited from serving the Fund in any of its present capacities, the Board of Trustees would seek an alternative provider(s) of such services. In such event, changes in the operation of the Funds may occur. It is not expected by the Adviser that existing shareholders would suffer any adverse financial consequences (if another Adviser with equivalent abilities is found) as a result of any of these occurrences.

***PROXY VOTING POLICY AND GUIDELINES*** 

The Board has delegated the responsibility to vote proxies on securities held by the Funds to the Adviser for all Funds, subject to certain exceptions. The Board has retained authority to vote proxies for certain bank and bank holding company securities ("Bank Securities") that may be held by one or more Funds from time to time. The Board has adopted the Institutional Shareholder Services, Inc.'s ("ISS") benchmark proxy voting policy with respect to voting such Bank Securities' proxies. The Board has retained this authority in order to permit the Adviser to utilize exemptions from limitations arising under the Bank Holding Company Act of 1956, as amended, that might otherwise prevent the Adviser from investing a Fund's assets in Bank Securities.

Certain Funds that employ an equity index strategy (each such Fund, an "Eligible Fund" and, collectively, the "Eligible Funds") participate in a proxy voting program (the "Program") administered by the Adviser through which Eligible Fund shareholders identified by Broadridge Financial Solutions, Inc. (as described below) have the option of selecting an alternative, third-party proxy voting policy that the Fund will use to vote proxies on securities, including Bank Securities, corresponding to the percentage of the Eligible Fund owned by the shareholder as of the record date of the applicable shareholder meeting. The proxy voting policies made available through the Program comprise proxy voting policies maintained by ISS (each such proxy voting policy, a "Program Proxy Voting Policy"). If an Eligible Fund shareholder does not make a Program Proxy Voting Policy selection, the Eligible Fund's proxies corresponding to the percentage of such shareholder's ownership of the Eligible Fund will be voted in accordance with the Adviser's proxy voting policy, except with respect to proxies on Bank Securities, which will be voted in accordance with the ISS benchmark proxy voting policy. In an unusual case, the Adviser may override a vote that would otherwise be made pursuant to a Program Proxy Voting Policy if the Adviser determines that it is not in the best interests of the Eligible Fund and its shareholders to vote pursuant to such Program Proxy Voting Policy. This might be the case, for example, if the Adviser becomes aware that ISS is planning to vote in a way that creates material concerns related to a conflict of interest with ISS; if the Adviser believes that the voting position, if successful, might have a material impact on an Eligible Fund's ability to trade the security; if the Adviser determines that sanctions affecting a company or an individual prevent such a vote; if issuer specific documentation or market confirmation is required; or if the Adviser determines that custodial restrictions or expenses make voting in accordance with the policy inadvisable or impracticable. In the unusual event the Adviser overrides a proxy vote that would otherwise be made pursuant to a Program Proxy Voting Policy, such proxy will be voted in accordance with the Adviser's proxy voting policy, except with respect to proxies on Bank Securities, which will be voted in accordance with the ISS benchmark proxy voting policy.

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The Adviser has engaged Broadridge Financial Solutions, Inc. ("Broadridge") to periodically, but at least annually, identify beneficial owners of Eligible Fund shares held through a financial intermediary for participation in the Program. Eligible Fund shareholders that hold Eligible Fund shares in an account directly with the Eligible Fund and not through a financial intermediary currently are not able to participate in the Program. Eligible Fund shareholders that do not own their Eligible Fund shares as of the most recent date used by Broadridge for shareholder identification purposes will not be able to participate in the Program (but may be eligible to participate in the future if identified as an Eligible Fund shareholder by Broadridge at a later date). It is also possible that some Eligible Fund shareholders that own Eligible Fund shares as of the most recent date used by Broadridge for shareholder identification purposes may not be able to participate in the Program if the beneficial ownership information for their shares is not immediately available to Broadridge (e.g., where a shareholder's financial intermediary is not part of Broadridge's network of financial intermediaries that provides shareholder information to Broadridge or where a shareholder has objected to its financial intermediary releasing the shareholder's personal information to issuers for proxy voting purposes). Eligible Fund shareholders identified by Broadridge will receive a communication that will invite such shareholders to participate in the Program by selecting a Program Proxy Voting Policy on the Program's website. Shareholders should carefully read Program communications and the Program's website for more details regarding how Eligible Fund shareholders may participate in the Program, how Eligible Fund shareholders may change or cancel their Program Proxy Voting Policy selection, risk factors associated with the Program and how an Eligible Fund shareholder's selection of a specific Program Proxy Voting Policy will be implemented. Shareholders may call 1-866-787-2257 for a list of Funds that are currently participating in the Program.

Each of the Trust's and the Adviser's proxy voting policy, ISS' benchmark proxy voting policy, as well as each Program Proxy Voting Policy, is attached as an appendix to this SAI. Information regarding how a Fund voted proxies relating to its portfolio securities during the most recent twelve-month period ended June 30 is available: (1) without charge by calling 1-866-787-2257; (2) on the Funds' website at www.statestreet.com/im; and (3) on the SEC's website at https://www.sec.gov.

***MASSACHUSETTS BUSINESS TRUST*** 

Each individual Fund of the Trust is a series of a "Massachusetts business trust." A copy of the Trust's Master Trust Agreement is on file in the office of the Secretary of the Commonwealth of Massachusetts. The Master Trust Agreement and the By-Laws of the Trust are designed to make the Trust similar in most respects to a Massachusetts business corporation. The principal distinctions between the two forms relate to shareholder liability and are described below.

Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for the obligations of the trust. This is not the case for a Massachusetts business corporation. However, the Master Trust Agreement provides that the shareholders are not subject to any personal liability for the acts or obligations of the SSGA Funds and that every note, bond, contract, instrument, certificate or undertaking made on behalf of the SSGA Funds contains a provision to the effect that the shareholders are not personally liable.

No personal liability will attach to the shareholders under any undertaking containing such provision when adequate notice of such provision is given, except possibly in a few jurisdictions. With respect to all types of claims in the latter jurisdictions, (1) tort claims, (2) contract claims where the provision referred to is omitted from the undertaking, (3) claims for taxes, and (4) certain statutory liabilities in other jurisdictions, a shareholder may be held personally liable to the extent that claims are not satisfied by the SSGA Funds. However, upon payment of such liability, the shareholder will be entitled to reimbursement from the general assets of the SSGA Funds. The Trustees intend to conduct the operations of the SSGA Funds in a way as to avoid, as far as possible, ultimate liability of the shareholders.

The Master Trust Agreement further provides that the name of the SSGA Funds refers to the Trustees collectively as Trustees, not as individuals or personally, and that no Trustee, officer, employee or agent is liable to any third persons in connection with the affairs of the SSGA Funds, except if the liability arises from his or its own bad faith, willful misfeasance, gross negligence or reckless disregard of his or its duties to such third persons. It also provides that all third persons shall look solely to the property of the SSGA Funds for any satisfaction of claims arising in connection with the affairs of the SSGA Funds. With the exceptions stated, the Trust's Master Trust Agreement provides that a Trustee, officer, employee or agent is entitled to be indemnified against all liability in connection with the affairs of the Trust.

The Trust shall continue without limitation of time subject to the provisions in the Master Trust Agreement concerning termination by action of the shareholders and the Trustees upon notice to the shareholders.

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**FINANCIAL STATEMENTS** 

The audited financial statements for the fiscal year ended August 31, 2025 for the Funds are included in each Fund's Form N-CSR filing, which were filed with the SEC on November 3, 2025 (SEC Accession No. 0001193125-25-262336) and are incorporated into this SAI by reference. Economic or market sector categorizations appearing in the financial statements are for indicative purposes only and do not necessarily reflect any economic or market sector determination that the Funds have made in respect of any specific investment for other purposes. Each Fund's Form N-CSR filing is available, without charge, upon request, by calling (800) 647-7327 or through the Funds' website at www.statestreet.com/im.

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**APPENDIX A** 

**RATINGS OF DEBT INSTRUMENTS** 

**<u>MOODY'S INVESTORS SERVICE, INC. (</u><u>"</u><u>MOODY'S</u><u>"</u><u>)</u>** 

GLOBAL LONG-TERM RATING SCALE

Ratings assigned on Moody's global long-term rating scale are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.

**Aaa:** Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

**Aa:** Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

**A:** Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

**Baa:** Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

**Ba:** Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

**B:** Obligations rated B are considered speculative and are subject to high credit risk.

**Caa:** Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.

**Ca:** Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

**C:** Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a "(hyb)" indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.\*

\*

By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the relative credit risk associated with that security.

GLOBAL SHORT-TERM RATING SCALE

Ratings assigned on Moody's global short-term rating scale are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.

**P-1:** Ratings of Prime-1 reflect a superior ability to repay short-term obligations.

**P-2:** Ratings of Prime-2 reflect a strong ability to repay short-term obligations.

**P-3:** Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.

**NP:** Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

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**<u>S&P GLOBAL RATINGS (</u><u>"</u><u>S&P</u><u>"</u><u>)</u>** 

ISSUE CREDIT RATING DEFINITIONS

An S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&P Global Ratings' view of the obligor's capacity and willingness to meet its financial commitments as they come due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.

Issue credit ratings can be either long-term or short-term. Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. Short-term ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. Medium-term notes are assigned long-term ratings.

LONG-TERM ISSUE CREDIT RATINGS\*

**AAA:** An obligation rated 'AAA' has the highest rating assigned by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is extremely strong.

**AA:** An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.

**A:** An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitments on the obligation is strong.

**BBB:** An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation.

**BB; B; CCC; CC; and C:** Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions.

**BB:** An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation.

**B:** An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation.

**CCC:** An obligation rated 'CCC' is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitments on the obligation.

**CC:** An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC' rating is used when a default has not yet occurred, but S&P Global Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.

**C:** An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.

**D:** An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within the next five business days in the absence of a stated grace period or within the earlier of the stated grace period or the next 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.

**NR:** This indicates that a rating has not been assigned or is no longer assigned.

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\*

Ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.

SHORT-TERM ISSUE CREDIT RATINGS

**A-1:** A short-term obligation rated 'A-1' is rated in the highest category by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments on these obligations is extremely strong.

**A-2:** A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory.

**A-3:** A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor's capacity to meet its financial commitments on the obligation.

**B:** A short-term obligation rated 'B' is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity to meet its financial commitments.

**C:** A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.

**D:** A short-term obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation's rating is lowered to 'D' if it is subject to a distressed debt restructuring.

**<u>FITCH RATINGS. (</u><u>"</u><u>FITCH</u><u>"</u><u>)</u>** 

ISSUER DEFAULT RATINGS

Rated entities in several sectors, including financial and non-financial corporations, sovereigns, insurance companies and some sectors within public finance, are generally assigned Issuer Default Ratings (IDRs). IDRs are also assigned to certain entities or enterprises in global infrastructure, project and public finance. IDRs opine on an entity's relative vulnerability to default including by way of a distressed debt exchange (DDE) on financial obligations. The threshold default risk addressed by the IDR is generally that of the financial obligations whose non-payment would best reflect the uncured failure of that entity. As such, IDRs also address relative vulnerability to bankruptcy, administrative receivership or similar concepts.

In aggregate, IDRs provide an ordinal ranking of issuers based on the agency's view of their relative vulnerability to default, rather than a prediction of a specific percentage likelihood of default.

**AAA: Highest credit quality.** 

'AAA' ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

**AA: Very high credit quality.** 

'AA' ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

**A: High credit quality.** 

'A' ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

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**BBB: Good credit quality.** 

'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

**BB: Speculative.** 

'BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.

**B: Highly speculative.** 

'B' ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

**CCC: Substantial credit risk.** 

Very low margin for safety. Default is a real possibility.

**CC: Very high levels of credit risk.** 

Default of some kind appears probable.

**C: Near default** 

A default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a 'C' category rating for an issuer include:

&nbsp;&nbsp;&nbsp;&nbsp;a. the issuer has entered into a grace or cure period following non-payment of a material financial obligation;

&nbsp;&nbsp;&nbsp;&nbsp;b. the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation;

&nbsp;&nbsp;&nbsp;&nbsp;c. the formal announcement by the issuer or their agent of a distressed debt exchange;

&nbsp;&nbsp;&nbsp;&nbsp;d. a closed financing vehicle where payment capacity is irrevocably impaired such that it is not expected to pay interest and/or principal in full during the life of the transaction, but where no payment default is imminent.

**RD: Restricted default.** 

'RD' ratings indicate an issuer that in Fitch's opinion has experienced:

&nbsp;&nbsp;&nbsp;&nbsp;a. an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but

&nbsp;&nbsp;&nbsp;&nbsp;b. has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and

&nbsp;&nbsp;&nbsp;&nbsp;c. has not otherwise ceased operating.

This would include:

&nbsp;&nbsp;&nbsp;&nbsp;i. the selective payment default on a specific class or currency of debt;

&nbsp;&nbsp;&nbsp;&nbsp;ii. the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation;

&nbsp;&nbsp;&nbsp;&nbsp;iii. the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; ordinary execution of a distressed debt exchange on one or more material financial obligations.

**D: Default.** 

'D' ratings indicate an issuer that in Fitch's opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure or that has otherwise ceased business.

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Default ratings are not assigned prospectively to entities or their obligations; within this context, non-payment on an instrument that contains a deferral feature or grace period will generally not be considered a default until after the expiration of the deferral or grace period, unless a default is otherwise driven by bankruptcy or other similar circumstance, or by a distressed debt exchange.

In all cases, the assignment of a default rating reflects the agency's opinion as to the most appropriate rating category consistent with the rest of its universe of ratings and may differ from the definition of default under the terms of an issuer's financial obligations or local commercial practice.

SHORT-TERM RATINGS ASSIGNED TO ISSUERS AND OBLIGATIONS

A short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for loss severity. Short-Term Ratings are assigned to obligations whose initial maturity is viewed as "short term" based on market convention (a long term rating can also be used to rate an issue with short maturity). Typically, this means a timeframe of up to 13 months for corporate, sovereign, and structured obligations and up to 36 months for obligations in U.S. public finance markets.

**F1: Highest Short-Term Credit Quality.** Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature.

**F2: Good Short-Term Credit Quality.** Good intrinsic capacity for timely payment of financial commitments.

**F3: Fair Short-Term Credit Quality.** The intrinsic capacity for timely payment of financial commitments is adequate.

**B: Speculative Short-Term Credit Quality.** Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.

**C: High Short-Term Default risk.** Default is a real possibility.

**RD: Restricted Default.** Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Typically applicable to entity ratings only.

**D: Default.** Indicates a broad-based default event for an entity, or the default of a short-term obligation.

*Note: The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. For example, the rating category 'AA' has three notch-specific rating levels ('AA+'; 'AA'; 'AA-'; each a rating level). Such suffixes are not added to 'AAA' ratings and ratings below the 'CCC' category. For the short-term rating category of 'F1', a '+' may be appended. For Viability Ratings, the modifiers "+" or "–" may be appended to a rating to denote relative status within categories from 'AA' to 'CCC'. For derivative counterparty ratings the modifiers "+" or "–" may be appended to the ratings within 'AA(dcr)' to 'CCC(dcr)' categories.*

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**APPENDIX B - TRUST'S PROXY VOTING POLICY AND PROCEDURES** 

**SSGA FUNDS**

**STATE STREET MASTER FUNDS**

**STATE STREET INSTITUTIONAL INVESTMENT TRUST**

**ELFUN GOVERNMENT MONEY MARKET FUND**

**ELFUN TAX-EXEMPT INCOME FUND**

**ELFUN INCOME FUND**

**ELFUN DIVERSIFIED FUND**

**ELFUN INTERNATIONAL EQUITY FUND**

**ELFUN TRUSTS**

**STATE STREET NAVIGATOR SECURITIES LENDING TRUST**

**STATE STREET INSTITUTIONAL FUNDS**

**STATE STREET VARIABLE INSURANCE SERIES FUNDS, INC. (THE "COMPANY")**<sup>1</sup>

**<u>PROXY VOTING POLICY AND PROCEDURES</u>** 

**As of September 20, 2017** 

The Board of Trustees/Directors of the Trust/Company (each series thereof, a "Fund") have adopted the following policy and procedures with respect to voting proxies relating to portfolio securities held by the Trust/Company's investment portfolios.

**1. Proxy Voting Policy** 

The policy of the Trust/Company is to delegate the responsibility for voting proxies relating to portfolio securities held by the Trust/Company to SSGA Funds Management, Inc., the Trust/Company's investment adviser (the "Adviser"), subject to the Trustees/Directors' continuing oversight.

**2. Fiduciary Duty** 

The right to vote proxies with respect to a portfolio security held by the Trust/Company is an asset of the Trust/Company. The Adviser acts as a fiduciary of the Trust/Company and must vote proxies in a manner consistent with the best interest of the Trust/Company and its shareholders.

**3. Proxy Voting Procedures** 

A. At least annually, the Adviser shall present to the Boards of Trustees/Directors its policies, procedures and other guidelines for voting proxies ("Policy") and the policy of any Sub-adviser (as defined below) to which proxy voting authority has been delegated (see Section 9 below). In addition, the Adviser shall notify the Trustees/Directors of material changes to its Policy or the policy of any Sub-adviser promptly and not later than the next regular meeting of the Board of Trustees/Directors after such amendment is implemented.

B. At least annually, the Adviser shall present to the Boards of Trustees/Directors its policy for managing conflicts of interests that may arise through the Adviser's proxy voting activities. In addition, the Adviser shall report any Policy overrides involving portfolio securities held by a Fund to the Trustees/Directors at the next regular meeting of the Board of Trustees/Directors after such override(s) occur.

C. At least annually, the Adviser shall inform the Trustees/Director that a record is available with respect to each proxy voted with respect to portfolio securities of the Trust/Company during the year. Also see Section 5 below.

**4. Revocation of Authority to Vote** 

The delegation by the Trustees/Directors of the authority to vote proxies relating to portfolio securities of the Trust/Company may be revoked by the Trustees/Directors, in whole or in part, at any time.

____________

Unless otherwise noted, the singular term "Trust/Company" used throughout this document means each of SSGA Funds, State Street Master Funds, State Street Institutional Investment Trust, State Street Navigator Securities Lending Trust, Elfun Government Money Market Fund, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun Diversified Fund, Elfun International Equity Fund, Elfun Trusts, State Street Institutional Funds, and State Street Variable Insurance Series Funds, Inc.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**5. Annual Filing of Proxy Voting Record** 

The Adviser shall provide the required data for each proxy voted with respect to portfolio securities of the Trust/Company to the Trust/Company or its designated service provider in a timely manner and in a format acceptable to be filed in the Trust/Company's annual proxy voting report on Form N-PX for the twelve-month period ended June 30. Form N-PX is required to be filed not later than August 31 of each year.

**6. Retention and Oversight of Proxy Advisory Firms** 

A. In considering whether to retain or continue retaining a particular proxy advisory firm, the Adviser will ascertain whether the proxy advisory firm has the capacity and competency to adequately analyze proxy issues, act as proxy voting agent as requested, and implement the Policy. In this regard, the Adviser will consider, at least annually, among other things, the adequacy and quality of the proxy advisory firm's staffing and personnel and the robustness of its policies and procedures regarding its ability to identify and address any conflicts of interest. The Adviser shall, at least annually, report to Boards of Trustees/Directors regarding the results of this review.

B. The Adviser will request quarterly and annual reporting from any proxy advisory firm retained by the Adviser, and hold ad hoc meetings with such proxy advisory firm, in order to determine whether there has been any business changes that might impact the proxy advisory firm's capacity or competency to provide proxy voting advice or services or changes to the proxy advisory firm's conflicts policies or procedures. The Adviser will also take reasonable steps to investigate any material factual error, notified to the Adviser by the proxy advisory firm or identified by the Adviser, made by the proxy advisory firm in providing proxy voting services.

**7. Periodic Sampling** 

The Adviser will periodically sample proxy votes to review whether they complied with the Policy. The Adviser shall, at least annually, report to the Boards of Trustees/Directors regarding the frequency and results of the sampling performed.

**8. Disclosures** 

&nbsp;&nbsp;&nbsp;&nbsp;A. The Trust/Company shall include in its registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. A description of this policy and of the policies and procedures used by the Adviser to determine how to vote proxies relating to portfolio securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. A statement disclosing that information regarding how the Trust/Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, upon request, by calling the Trust/Company's toll-free telephone number; or through a specified Internet address; or both; and on the Securities and Exchange Commission's (the "SEC") website.

&nbsp;&nbsp;&nbsp;&nbsp;B. The Trust/Company shall include in its Form N-CSR filings to shareholders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. A statement disclosing that a description of the policies and procedures used by or on behalf of the Trust/Company to determine how to vote proxies relating to portfolio securities of the Funds is available without charge, upon request, by calling the Trust/Company's toll-free telephone number; through a specified Internet address, if applicable; and on the SEC's website; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. A statement disclosing that information regarding how the Trust/Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, upon request, by calling the Trust/Company's toll-free telephone number; or through a specified Internet address; or both; and on the SEC's website.

**9. Sub-Advisers** 

For certain Funds, the Adviser may retain investment management firms ("Sub-advisers") to provide day-to-day investment management services to the Funds pursuant to sub-advisory agreements. It is the policy of the Trust/Company that the Adviser may delegate proxy voting authority with respect to a Fund to a Sub-adviser. Pursuant to such delegation, a Sub-adviser is authorized to vote proxies on behalf of the applicable Fund or Funds for which it serves as sub-adviser, in accordance with the Sub-adviser's proxy voting policies and procedures.

**10. Review of Policy** 

The Trustees/Directors shall review this policy to determine its continued sufficiency as necessary from time to time.

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**APPENDIX C - ADVISER'S PROXY VOTING PROCEDURES AND GUIDELINES** 

Adviser's Proxy Voting Policies and Procedures

![](g357752img931bc90f1.jpg)

**March 2025** 

**Global Proxy Voting and Engagement Policy** 

State Street Global Advisors is the investment management arm of State Street Corporation, a leading provider of financial services to institutional investors. As an asset manager, State Street Global Advisors votes its clients' proxies where the client has delegated proxy voting authority to it, and State Street Global Advisors votes these proxies and engages with companies in the manner that we believe will most likely protect and promote the long-term economic value of client investments, as described in this document.<sup>1</sup>

When engaging with and voting proxies with respect to the portfolio companies in which we invest our clients' assets, we do so on behalf of and in the best interests of the client accounts we manage and do not seek to change or influence control of any such portfolio companies. The State Street Global Advisors Global Proxy Voting and Engagement Policy (the "Policy") contains certain policies that State Street Global Advisors will only apply in jurisdictions where permitted by local law and regulations. State Street Global Advisors will not apply any policies contained herein in any jurisdictions where State Street Global Advisors believes that implementing or following such policies would be deemed to constitute seeking to change or influence control of a portfolio company.

**Introduction** 

At State Street Global Advisors, we take our fiduciary duties as an asset manager very seriously. Our primary fiduciary obligation to our clients is to maximize the long-term value of their investments. State Street Global Advisors focuses on risks and opportunities that may impact long-term value creation for our clients. We rely on the elected representatives of the companies in which we invest — the board of directors — to oversee these firms' strategies. We expect effective independent board oversight of the material risks and opportunities to a firm's business and operations. We believe that appropriate consideration of these risks and opportunities is an essential component of a firm's long-term business strategy, and expect boards to actively oversee the management of this strategy.

**Our Asset Stewardship Program** 

State Street Global Advisors' Asset Stewardship Team is responsible for developing and implementing this Policy, the implementation of third-party proxy voting guidelines where applicable, case-by-case voting items, issuer engagement activities, and research and analysis of corporate governance issues and proxy voting items. The Asset Stewardship Team's activities are overseen by our internal governance body, State Street Global Advisors' Global Fiduciary and Conduct Committee ("GFCC"). The GFCC is responsible for reviewing State Street Global Advisors' stewardship strategy, engagement priorities, the Policy, and for monitoring the delivery of voting objectives.

In order to facilitate the execution of our proxy votes, we retain Institutional Shareholder Services Inc. ("ISS"). We utilize ISS to: (1) act as our proxy voting agent (providing State Street Global Advisors with vote execution and administration services), (2) assist in applying the Policy, and (3) provide research and analysis relating to general corporate governance issues and specific proxy items. State Street Global Advisors does not follow the voting recommendations of any policy offered by ISS or any other proxy voting policy provider in implementing the Policy.

All voting decisions and engagement activities for which State Street Global Advisors has been given voting discretion are undertaken in accordance with this Policy, ensuring that the interests of our clients remain the sole consideration when discharging our stewardship responsibilities. Exceptions to this policy include the use of an independent third party to vote on State Street Corporation ("State Street") stock and the stock of other State Street affiliated entities, to mitigate a

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This Policy is applicable to SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other investment advisory affiliates of State Street Corporation.

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conflict of interest of voting on our parent company or affiliated entities, and other situations where we believe we may be conflicted from voting (for example, stock of a public company for which a State Street director also serves as a director, or due to an outside business interest). In such cases, delegated third parties exercise vote decisions based on their independent voting policy.

We aim to vote at all shareholder meetings where our clients have given us the authority to vote their shares and where it is feasible to do so. However, when we deem appropriate, we may refrain from voting at meetings in cases where:

• Power of attorney documentation is required.

• Voting would have a material impact on our ability to trade the security.

• Voting is not permissible due to sanctions affecting a company or individual.

• Issuer-specific special documentation is required or various market or issuer certifications are required.

• Certain market limitations would prohibit voting (e.g., partial/split voting prohibitions or residency restrictions).

&nbsp;&nbsp;&nbsp;&nbsp;•Unless a client directs otherwise in so-called "share blocking" markets (markets where proxy voters have their securities blocked from trading during the period of the annual meeting).

Additionally, we are unable to vote proxies when certain custodians used by our clients do not offer proxy voting in a jurisdiction or when they charge a meeting-specific fee in excess of the typical custody service agreement.

Voting authority attached to certain securities held by State Street Global Advisors pooled funds may be delegated to an independent third party as required by regulatory or other requirements. Under such arrangements, voting will be conducted by the independent third party pursuant to its proxy voting policy and not pursuant to this Policy.

**The State Street Global Advisors Proxy Voting Choice Program** 

In addition to the option of delegating proxy voting authority to State Street Global Advisors pursuant to this Policy, clients may alternatively choose to participate in the State Street Global Advisors Proxy Voting Choice Program (the "Proxy Voting Choice Program"), which empowers clients to direct the proxy voting of shares held by the eligible fund or segregated account they own. Clients that participate in the Proxy Voting Choice Program have the option of selecting a third-party proxy voting guideline from the policies included in the Proxy Voting Choice Program to apply to the vote of the client's pro rata share of the securities held by the eligible fund or segregated account they own. This Policy does not apply to shares voted under the Proxy Voting Choice Program.

**Securities Not Voted Pursuant to the Policy** 

Where clients have asked State Street Global Advisors to vote the client's shares on their behalf, including where a pooled fund fiduciary has delegated the responsibility to vote the fund's securities to State Street Global Advisors, State Street Global Advisors votes those securities in a unified manner, consistent with the principles described in this Policy. Exceptions to this unified voting policy are: (1) where State Street Global Advisors has made its Proxy Voting Choice Program available to its separately managed account clients and investors within a fund managed by State Street Global Advisors, in which case a pro rata portion of shares held by the fund or segregated account attributable to clients who choose to participate in the Proxy Voting Choice Program will be voted consistent with the third-party proxy voting guidelines selected by the clients, (2) where a pooled investment vehicle managed by State Street Global Advisors utilizes a third party proxy voting guideline as set forth in that fund's organizational and/or offering documents, and (3) where voting authority with respect to certain securities held by State Street Global Advisors pooled funds may be delegated to an independent third party as required by regulatory or other requirements. With respect to such funds and separately managed accounts utilizing third-party proxy voting guidelines, the terms of the applicable third-party proxy voting guidelines shall apply in place of the Policy described herein and the proxy votes implemented with respect to such a fund or account may differ from and be contrary to the votes implemented for other portfolios managed by State Street Global Advisors pursuant to this Policy.

**Regional Nuances** 

When voting and engaging with companies, we may consider market-specific nuances that may be relevant to that company. We expect companies to observe the relevant laws and regulations of their respective markets, as well as country-specific best practice guidelines and corporate governance codes, and to publicly disclose their level of compliance with the applicable provisions and requirements. Except where specified, this Policy applies globally.

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**Our Proxy Voting and Engagement Principles** 

State Street Global Advisors' proxy voting and engagement program focuses on three broad principles:

1. **Effective Board Oversight:** We believe that well-governed companies can protect and pursue shareholder interests better and withstand the challenges of an uncertain economic environment. Principally, a board acts on behalf of shareholders by protecting their interests and preserving their rights. In order to carry out their primary responsibilities, directors undertake activities that include setting strategy and providing guidance on strategic matters, selecting the CEO and other senior executives, overseeing executive management, creating a succession plan for the board and management, and providing effective oversight of material risks and opportunities relevant to their business. Further, good corporate governance necessitates the existence of effective internal controls and risk management systems, which should be governed by the board.

We view board quality as a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. We believe independent directors are crucial to good corporate governance; they help management establish sound corporate governance policies and practices. We believe a sufficiently independent board is key to effectively monitoring management, maintaining appropriate governance practices, and performing oversight functions necessary to protect shareholder interests. We also believe the right mix of skills, independence, diversity, and qualifications among directors provides boards with the knowledge and experience to manage risks and operating structures that are often complex and industry-specific.

2. **Disclosure:** It is important for shareholders to receive timely and accurate reporting of a company's financial performance and strategy so that they are able to assess both the value and risk of their investment. In addition to information related to strategy and performance, companies should also provide disclosure relating to their approach to corporate governance and shareholder rights. Such information allows investors to determine whether their economic interests have been safeguarded by the board and provides insights into the quality of the board's oversight of management. Ultimately, the board of directors is accountable for the oversight and disclosure of the material risks and opportunities faced by the company.

3. **Shareholder Protection:** State Street Global Advisors believes it is in the best interest of shareholders for companies to have appropriate shareholder rights and accountability mechanisms in place. As a starting place for voting rights, it is necessary for ownership rights to reflect one vote for one share to ensure that economic interests and proxy voting power are aligned. This share structure best supports the shareholders' right to exercise their proxy vote on matters that are important to the protection of their investment, such as share issuances and other dilutive events, authorization of strategic transactions, approval of a shareholder rights plan, and changes to the corporate bylaws or charter, among others. In terms of accountability to shareholders and appropriate checks and balances, we believe there should be annual elections of the full board of directors.

**Application of Principles** 

These three principles of effective board oversight, disclosure and shareholder protection apply across all of State Street Global Advisors' proxy voting decisions. When voting at portfolio companies in different markets, State Street Global Advisors may apply the principles in ways that are specific to a given market based on factors such as availability of data, resources, disclosure practices, and size of holdings in our clients' accounts.

**Shareholder Proposals** 

When voting our clients' proxies, we may be presented with shareholder proposals at portfolio companies that must be evaluated on a case-by-case basis and in accordance with the principles set forth above. For proposals related to commonly requested disclosure topics, we have developed the criteria found in Appendix A to assess the effectiveness of disclosure on such topics in connection with these types of proposals.

**Engagement** 

We conduct engagements with individual issuers to communicate the principles set forth in this Policy and to learn more about companies' strategy, board oversight and disclosure practices. We do not seek to change or influence control of any portfolio company through these engagements. In addition, we encourage issuers to increase the amount of direct communication board members have with shareholders. We believe direct communication with executive board members and independent non- executive directors is critical to helping companies understand shareholder concerns.

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**Section I. Effective Board Oversight** 

**Director Independence** 

We believe independent directors are crucial to good corporate governance; they help management establish sound corporate governance policies and practices. We have developed criteria for determining director independence, which vary by region and/or local jurisdiction. These criteria generally follow relevant listing standards, local regulatory requirements and/or local market practice standards. Such criteria may include:

• Participation in related-party transactions or other material business relations with the company

• Employment history with the company

• Status as founder or member of the founding family

• Government representative

• Excessive tenure and preponderance of long-tenured directors

• Relations with significant shareholders

• Close family ties with any of the company's advisers, directors or senior employees

• Cross-directorships

• Receipt of non-board related compensation from the issuer, its auditors or advisors

• Company's own classification of a director as non-independent

In some cases, State Street Global Advisors' criteria may be more rigorous than applicable local or listing requirements.

**Majority Independent Board** 

We believe a sufficiently independent board is key to effectively monitoring management, maintaining appropriate governance practices, and performing oversight functions necessary to protect shareholder interests.

**Separation of Chair/CEO** 

Our primary focus is to ensure there is strong independent leadership of the board, in accordance with the principles discussed above. We generally believe the board is best placed to choose the governance structure that is most appropriate for that company.

**Board Committees** 

We believe that board committees are crucial to robust corporate governance and should be composed of a sufficient number of independent directors. We use the same criteria for determining committee independence as we do for determining director independence, which varies by region and/or local jurisdiction. Although we recognize that board structures may vary by jurisdiction, where a board has established an audit committee and/or compensation/remuneration committee, we generally expect the committee to be primarily, and in some cases, fully independent.

**Refreshment and Tenure** 

We believe that average board tenure should generally align with the length of the business cycle of the respective industry in which a company operates. In assessing excessive tenure, we consider factors such as the preponderance of long tenured directors, board refreshment practices, classified board structures and the business cycle for the industry in which a company operates.

**Director Time Commitments** 

We believe a company's nominating committee is best placed to determine appropriate time commitments for the company's directors. We consider if a company publicly discloses its director time commitment policy (e.g., within corporate governance guidelines, proxy statement, annual report, company website, etc.) and if this policy or associated disclosure outlines the factors that the nominating committee considers to assess director time commitments during the annual policy review process.

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**Board Composition** 

We believe effective board oversight of a company's long-term business strategy necessitates a diversity of backgrounds, experiences, and perspectives, which may include a range of characteristics such as skills, gender, race, ethnicity, and age. By having a critical mass of diverse perspectives, boards could experience the benefits that may lead to innovative ideas and foster more robust conversations about a company's strategy.

We recognize that many factors may influence board composition, including board size, geographic location, and local regulations, among others. Further, we believe that a robust nominating and governance process is essential to achieving a board composition that is designed to facilitate effective, independent oversight of a company's long-term strategy. We believe nominating committees are best placed to determine the most effective board composition and we encourage companies to ensure that there are sufficient levels of diverse experiences and perspectives represented in the boardroom.

**Board Expertise** 

We believe board members should have adequate skills to provide effective oversight of corporate strategy, operations, and risks, including sustainability-related issues.

Boards should also have a regular evaluation process in place to assess the effectiveness of the board and the skills of board members to address issues, such as emerging risks, changes to corporate strategy, and diversification of operations and geographic footprint. We believe nominating committees are best positioned to evaluate the skillset and expertise of both existing and prospective board members. However, we may take such considerations into account in certain circumstances.

**Board Accountability** 

**Oversight of Strategy and Risk**

We believe that risk management is a key function of the board, which is responsible for setting the overall risk appetite of a company and for providing oversight on the risk management process established by senior executives at a company. We allow boards to have discretion regarding the ways in which they provide oversight in this area. However, we expect companies to disclose how the board provides oversight of its risk management system and risk identification. Boards should also review existing and emerging risks that evolve in tandem with the changing political and economic landscape or as companies diversify or expand their operations into new areas.

As responsible stewards, we believe in the importance of effective risk management and oversight of issues that are material to a company. To effectively manage and assess the risk of our clients' portfolios, we expect our portfolio companies to manage risks and opportunities that are material and industry-specific and that have a demonstrated link to long-term value creation, and to provide high-quality disclosure of this process to shareholders.

When evaluating a board's oversight of risks and opportunities, we assess the following factors, based on disclosures by, and engagements with, portfolio companies:

1. Oversees Long-term Strategy

–Articulates the material risks and opportunities and how those risks and opportunities fit into the firm's long-term business strategy

–Regularly assesses the effectiveness of the company's long-term strategy, and management's execution of this strategy

2. Demonstrates an Effective Oversight Process

–Describes which committee(s) have oversight over specific risks and opportunities, as well as which topics are overseen and/or discussed at the full-board level

–Includes risks and opportunities in board and/or committee agendas, and articulates how often specific topics are discussed at the committee and/or full- board level

–Utilizes KPIs or metrics to assess the effectiveness of risk management processes

–Engages with key stakeholders including employees and investors

3. Ensures Effective Leadership

–Holds management accountable for progress on relevant metrics and targets

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–Integrates necessary skills and perspectives into the board nominating and executive hiring processes, and provides training to directors and executives on topics material to the company's business or operations

–Conducts a periodic effectiveness review

4. Ensures Disclosures of Material Information

–Ensures publication of relevant disclosures, including those regarding material topics

**Compliance with Corporate Governance Principles**

Our minimum expectation is that companies will comply with their respective market governance codes and/or stewardship principles. Issuers are encouraged to provide explanations of their level of compliance with their local market code and why their preferred governance structure (if not compliant with the code) serves shareholders' long-term interests.

We will review governance practices at companies in selected indexes for their adherence to market governance codes and/or stewardship principles.

**Proxy Contests**

We believe nominating committees that are comprised of independent directors are best placed to assess which individuals are adequately equipped with the skills and expertise to fulfill the duties of board members, and to act as effective fiduciaries.

While our default position is to support the committees' judgement, we consider the following factors when evaluating dissident nominees:

• Strategy presented by dissident nominees versus that of current management, as overseen by the incumbent board

• Effectiveness, quality, and experience of the management slate

&nbsp;&nbsp;&nbsp;&nbsp;•Material governance failures and the level of responsiveness to shareholder concerns and market signals by the incumbent board

&nbsp;&nbsp;&nbsp;&nbsp;•Quality of disclosure and engagement practices to support changes to shareholder rights, capital allocation and/or governance structure

• Company performance and, if applicable, the merit of a recovery plan

• Expertise of board members with respect to company industry and strategy

**Board Oversight of Geopolitical Risk**

As stewards of our clients' assets, we are aware of the financial risks associated with geopolitical risk, including risks arising from unexpected conflict between or among nations. We expect portfolio companies that may be impacted by geopolitical risk to:

&nbsp;&nbsp;&nbsp;&nbsp;•Manage and mitigate risks related to operating in impacted markets, which may include financial, sanctions-related, regulatory, and/or reputational risks, among others;

• Strengthen board oversight of these efforts; and

• Describe these efforts in public disclosures.

**Compensation and Remuneration**

We consider it the board's responsibility to determine the appropriate level of executive compensation. Despite the differences among the possible types of plans and awards, there is a simple underlying philosophy that guides our analysis of executive compensation: we believe that there should be a direct relationship between executive compensation and company performance over the long term.

Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration reports, we consider factors such as adequate disclosure of various remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests, as well as with corporate strategy and performance.

For example, criteria we may consider include the following:

• Overall quantum relative to company performance

• Vesting periods and length of performance targets

• Mix of performance, time and options-based stock units

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• Use of special grants and one-time awards

• Retesting and repricing features

• Disclosure and transparency

**Board Meeting Attendance**

We expect directors to attend at least 75 percent of board meetings in the last financial year or provide an appropriate explanation for why they were unable to meet this attendance threshold.

**Section II. Disclosure** 

It is important for shareholders to receive timely and accurate reporting of a company's financial performance and strategy so that they are able to assess both the value and risk of their investment. In addition to information related to strategy and performance, companies should provide disclosure relating to their approach to corporate governance and shareholder rights. Such information allows investors to determine whether their financial interests have been protected by the board and provides insights into the board's oversight of management. Ultimately, the board of directors is accountable for the oversight and disclosure of the material risks and opportunities faced by the company.

**Reporting** 

**Financial Statements**

We believe the disclosure and availability of reliable financial statements in a timely manner is imperative for investment analysis. We expect external auditors to provide assurance of a company's financial condition.

**Sustainability-related Disclosures**

We believe in the importance of effective risk management and governance of issues that are material to a company. This may include sustainability-related risks and opportunities where a company has identified such risks and opportunities as material to its business. Such disclosure allows shareholders to effectively assess companies' oversight, strategy, and business practices related to these sustainability issues identified as material.

We look to companies to provide disclosure on sustainability-related risks and opportunities relevant to their businesses in line with applicable local regulatory requirements and any voluntary standards and frameworks adopted by the company.

**Climate-related Disclosures**

We believe that managing climate-related risks and opportunities is a key element in maximizing long-term risk-adjusted returns for our clients. As a result, we have a longstanding commitment to enhancing investor-useful disclosure related to this topic.

For companies that have identified climate risk as material to their business, we expect the company to provide disclosure on climate-related risks and opportunities relevant to their businesses in line with applicable local regulatory requirements and any voluntary standards and frameworks adopted by the company.

&nbsp;&nbsp;&nbsp;&nbsp;•We encourage the disclosure of Scope 1 and Scope 2 emissions and related targets. However, State Street Global Advisors is not prescriptive in how a company sets its targets. We expect companies that have adopted net zero ambitions to disclose interim climate targets. In each case, if a company chooses not to disclose any climate targets, we expect the company to provide an explanation of how the company measures and monitors progress on managing climate-related risks and opportunities.

&nbsp;&nbsp;&nbsp;&nbsp;•We do not expect any company to set Scope 3 targets. We encourage companies to identify and disclose the most relevant categories of Scope 3 emissions. However, we recognize that Scope 3 emissions estimates have a high degree of uncertainty. Therefore, if a company determines that categories of Scope 3 emissions are impracticable to estimate, we encourage the company to explain the relevant limitations. We also encourage companies to explain any efforts to address Scope 3 emissions, such as engagement with suppliers, customers, or other stakeholders across the value chain, where relevant.

**Say-on-Climate Proposals**

While we generally believe in the importance of effective disclosure of climate-related risks a company has deemed material to its business, we do not endorse annual advisory climate votes. Where management chooses to include a Say-on-Climate vote, we assess the company's climate-related disclosure in accordance with the criteria listed in Appendix A.

**Board and Workforce Demographics**

We expect disclosure on the composition of both the board and workforce.

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**Section III. Shareholder Protection** 

**Capital** 

**Share Capital Structure**

The ability to raise capital is critical for companies to carry out strategy, to grow, and to achieve returns above their cost of capital. The approval of capital raising activities is fundamental to a shareholder's ability to monitor the amounts of proceeds and to ensure capital is deployed efficiently. Altering the capital structure of a company is a critical decision for boards. When making such a decision, we believe the company should disclose a comprehensive business rationale that is consistent with corporate strategy and not overly dilutive to its shareholders.

Our approach to share capital structure matters may vary by local market and jurisdiction, due to regional nuances. Such proposals may include:

• Increase in Authorized Common Shares

• Increase in Authorized Preferred Shares

• Unequal Voting Rights

• Share Repurchase Programs

**Dividend Payouts (Japan Only**)

For Japanese issuers, we are generally supportive of dividend payouts that constitute 30 percent or more of net income; however we consider whether the payment may damage the company's long-term financial health.

**Reorganization, Mergers and Acquisitions**

The reorganization of the structure of a company or mergers often involve proposals relating to reincorporation, restructurings, liquidations, and other major changes to the corporation.

We expect proposals to be in the best interests of shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations.

We evaluate mergers and structural reorganizations on a case-by-case basis and expect transactions to maximize shareholder value. Some of the considerations include the following:

• Offer premium

• Strategic rationale

&nbsp;&nbsp;&nbsp;&nbsp;•Board oversight of the process for the recommended transaction, including director and/or management conflicts of interest

• Offers made at a premium and where there are no other higher bidders

• Offers in which the secondary market price is substantially lower than the net asset value

We also consider the following:

• Offers with potentially damaging consequences for minority shareholders because of illiquid stock

• Offers where we believe there is a reasonable prospect for an enhanced bid or other bidders

• The current market price of the security exceeds the bid price at the time of voting

**Related-Party Transactions**

Some companies have a controlled ownership structure and complex cross- shareholdings between subsidiaries and parent companies ("related companies"). Such structures may result in the prevalence of related-party transactions between the company and its various stakeholders, such as directors and management, subsidiaries and shareholders. In markets where shareholders are required to approve such transactions, we expect companies to disclose details of the transaction, such as the nature, the value and the purpose of such a transaction. We also believe independent directors should ratify such transactions. Further, we believe companies should describe the level of independent board oversight and the approval process, including details of any independent valuations provided by financial advisors on related-party transactions.

**Cross-Shareholdings (Japan Only)**

"Cross-shareholdings" are a long-standing feature of the balance sheets of many Japanese companies, but, in our view, can be detrimental for corporate governance practices and ultimately shareholder returns.

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**Shareholder Rights** 

**Proxy Access**

In general, we believe that proxy access is a fundamental right and an accountability mechanism for all long-term shareholders. We consider proposals relating to proxy access on a case-by-case basis and consider a balance between providing long-term shareholders accountability while preserving flexibility for management to design a process that is appropriate for the company's circumstances.

**Vote Standards** 

&nbsp;&nbsp;&nbsp;&nbsp;•**Annual Elections:** We believe the establishment of annual elections of the board of directors is appropriate. We also consider the overall level of board independence and the independence of the key committees, as well as the existence of a shareholder rights plan.

• **Majority Voting:** We believe a majority vote standard based on votes cast for the election of directors is appropriate.

**Shareholder Meetings** 

&nbsp;&nbsp;&nbsp;&nbsp;•**Special Meetings and Written Consent:** We believe the ability for shareholders to call special meetings, as well as act by written consent is appropriate. We believe an appropriate threshold for both calling a special meeting and acting by written consent can be 25% of outstanding shares or less.

&nbsp;&nbsp;&nbsp;&nbsp;•**Notice Period to Convene a General Meeting:** We expect companies to give as much notice as is practicable when calling a general meeting, generally at least 14 days.

&nbsp;&nbsp;&nbsp;&nbsp;•**Virtual/Hybrid Shareholder Meetings:** We believe the right to hold shareholder meetings in a virtual or hybrid format is appropriate with the following best practices:

–Afford virtual attendee shareholders the same rights as would normally be granted to in-person attendee shareholders

–Commit to time-bound renewal (five years or less) of meeting format authorization by shareholders

–Provide a written record of all questions posed during the meeting, and

–Comply with local market laws and regulations relating to virtual and hybrid shareholder meeting practices

In evaluating these proposals we also consider the operating environment of the company, including local regulatory developments and specific market circumstances impacting virtual meeting practices.

**Governance Documents & Miscellaneous Items** 

**Article Amendments**

We believe amendments to company bylaws that may negatively impact shareholder rights (such as fee-shifting, forum selection, and exclusion service bylaws) should be put to a shareholder vote.

We believe a majority voting standard is generally appropriate.

We generally believe companies should have a fixed board size, or designate a range for the board size.

**Anti-Takeover Issues**

Occasionally, companies add anti-takeover provisions that reduce the chances of a potential acquirer to make an offer, or to reduce the likelihood of a successful offer. We generally believe shareholders should have the right to vote on reasonable offers. Our approach to anti-takeover issues may vary by local market and jurisdiction, due to regional nuances.

**Accounting and Audit-Related Issues**

Companies should have robust internal audit and internal control systems designed for effective management of any potential and emerging risks to company operations and strategy. The responsibility of setting out an internal audit function lies with the audit committee, which should have independent non-executive directors designated as members.

We believe the disclosure and availability of reliable financial statements in a timely manner is imperative for investment analysis. As a result, board oversight of the internal controls and the independence of the audit process are essential if investors are to rely upon financial statements. It is important for the audit committee to appoint external auditors who are independent from management as we expect auditors to provide assurance of a company's financial condition.

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State Street Global Advisors believes that a company's external auditor is an essential feature of an effective and transparent system of external independent assurance. Shareholders should be given the opportunity to vote on their (re-)appointment at the annual meeting. When appointing external auditors and approving audit fees, we will take into consideration the level of detail in company disclosures.

In circumstances where "other" fees include fees related to initial public offerings, bankruptcy emergence, and spin-offs, and the company makes public disclosure of the amount and nature of those fees which are determined to be an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

We believe a company should be able to discharge its auditors in the absence of pending litigation, governmental investigation, charges or fraud or other indication of significant concern. Further, we believe that auditors should attend the annual meeting of shareholders.

**Indemnification and Liability**

Generally, we believe directors should be able to limit their liability and/or expand indemnification and liability protection if a director has not acted in bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.

**Section IV. Shareholder Proposals** 

We believe that company boards do right by investors and are responsible for overseeing strategy and company management. Towards that end, we generally do not support shareholder proposals that appear to impose changes to business strategy or operations, such as increasing or decreasing investment in certain products or businesses or phasing out a product or business line or if it is not a topic that the company has deemed to be material in their public disclosure documents.

When assessing shareholder proposals, we fundamentally consider whether the adoption of the resolution would promote long-term shareholder value in the context of our core governance principles:

1. Effective board oversight

2. Quality disclosure

3. Shareholder protection

We will consider supporting a shareholder proposal if:

• the request is focused on enhanced disclosure of the company's governance and/or risk oversight

• the adoption of the request would protect our clients' interests as minority shareholders; or

&nbsp;&nbsp;&nbsp;&nbsp;•for common proposal topics for which we have developed assessment criteria, the extent to which the request satisfies the criteria found in Appendix A.

**Section V. Engagement** 

As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with portfolio companies. Our stewardship prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate risks in our client's portfolios. Through engagement, we aim to build long-term relationships with the issuers in which we invest on behalf of our clients and to address a broad range of topics relating to the promotion of long-term shareholder value creation. We do not seek to change or influence control of any portfolio company through engagement.

**Equity Engagements** 

In general, there are three types of engagements that State Street Global Advisors may hold on behalf of equity holders:

1. **Engagements with Portfolio Companies in Connection with a Ballot Item or Other Topic In our Policy:** Engagements held with portfolio companies to discuss a ballot item, event or other established topic found in our Policy. Such engagements generally, but not necessarily, occur during "proxy season." They may be held at the request of State Street Global Advisors or the portfolio company.

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2. **Off-Season Engagement at the Request of a Portfolio Company:** From time- to-time, portfolio companies may seek to engage with State Street Global Advisors in the 'off-season' to discuss a particular topic.

3. **Off-Season Proactive Engagement Campaigns:** Each year, State Street Global Advisors will identify thematic engagement campaigns on important topics for which we are seeking more information to potentially inform our future voting positions.

**Fixed Income Engagements** 

From time-to-time, certain corporate action election events, reclassifications or other changes to the investment terms of debt holdings may occur or an issuer may seek to engage with State Street Global Advisors to discuss matters pertaining to the debt instruments that State Street Global Advisors holds on behalf of its clients. In such instances, State Street Global Advisors may engage with the issuer to obtain further information about the matter for purposes of its investment decision making. Such engagements are the responsibility of the Fixed Income portfolio management team, but may be supported by State Street Global Advisors' Asset Stewardship Team. All election decisions are the responsibility of the relevant portfolio management team.

In addition, State Street Global Advisors may identify themes for engagement campaigns with issuers on topics that it believes may affect value of its clients' debt investments. State Street Global Advisors may proactively engage with portfolio companies and other issuers on these topics to help inform our views on the subject.

Where such themes align with those relating to equities, such engagements may be carried out jointly on behalf of both equity and fixed income holdings where there is mutual benefit for both asset classes. Such engagements are led by the State Street Global Advisors Asset Stewardship Team, but may also be attended by the relevant portfolio management teams.

**Engaging with Other Investors Soliciting State Street Global Advisors' Votes in Connection with Contested Shareholder Meetings, Vote-No Campaigns, or Shareholder Proposals** 

While it may be helpful to speak to other investors that are running proxy contests, putting forth vote-no campaigns, or proposing shareholder proposals at investee companies, we limit such discussions to investors who have filed necessary documentation with regulators and engage in these discussions at our own discretion.

Our primary purpose of engaging with investors is:

1. To gain a better understanding of their position or concerns at investee companies.

2. In proxy contest situations:

–To assess possible director candidates where investors are seeking board representation in proxy contest situations

–To understand the investor's proposed strategy for the company and investment time horizon to assess their alignment with State Street Global Advisors' views and interests as a long-term shareholder

Any information about our vote decisions are available in this document and on our website. All requests for engagement should be sent to GovernanceTeam@ssga.com.

**Section VI. Other Matters** 

**Securities on Loan** 

As a responsible investor and fiduciary, we recognize the importance of balancing the benefits of voting shares and the incremental lending revenue for the pooled funds that participate in State Street Global Advisors' securities lending program (the "Funds"). Our objective is to recall securities on loan and restrict future lending until after the record date for the respective vote in instances where we believe that a particular vote could have a material impact on the Funds' long-term financial performance and the benefit of voting shares will outweigh the forgone lending income.

Accordingly, we have set systematic recall and lending restriction criteria for shareholder meetings involving situations with the highest potential financial implications (such as proxy contests and strategic transactions including mergers and acquisitions, going dark transactions, change of corporate form, or bankruptcy and liquidation). Generally, these criteria for recall and restriction for lending only apply to certain large cap indices in developed markets.

------

State Street Global Advisors monitors the forgone lending revenue associated with each recall to determine if the impact on the Funds' long-term financial performance and the benefit of voting shares will outweigh the forgone lending income.

Although our objective is to systematically recall securities based on the aforementioned criteria, we must receive notice of the vote in sufficient time to recall the shares on or before the record date. When we do not receive timely notice, we may be unable to recall the shares on or before the record date.

**Reporting** 

We provide transparency for our stewardship activities through our regular client reports and relevant information reported online. We publish an annual stewardship report that provides details of our stewardship approach, engagement and voting policies, and activities during the year. The annual stewardship report is complemented by quarterly stewardship activity reports as well as the publication of thought leadership on governance and sustainability on our website. Our voting record information is available on Vote View, an interactive platform that provides relevant company details, proposal types, resolution descriptions, and records of our votes cast.

**Appendix A: Assessment Criteria for Common Disclosure Topics** 

As outlined above, the pillars of our Asset Stewardship Program rest on effective board oversight, quality disclosure and shareholder protection. We are frequently asked to evaluate proposals on various topics, including requests for enhanced disclosure.

Where a company receives a proposal on a topic that the company has determined is material to its business, we will assess the proposal in accordance with the below criteria that we believe represent quality disclosure on commonly requested disclosure topics. In each case, in assessing the proposal against the applicable criteria, we may review the company's relevant disclosures against industry and market practice (e.g., peer disclosure, relevant frameworks, relevant industry guidance).

**Climate Disclosure Criteria** 

For companies that have identified climate-related risks or opportunities as material to their business, we expect the company to provide disclosure on climate-related risks and opportunities relevant to their businesses in line with applicable local regulatory requirements and any voluntary standards and frameworks adopted by the company, as described in the section related to Climate-Related Disclosures above.

Additionally, where a company is among the highest emitters, we consider whether the company discloses:

• Scenario-planning on relevant risk assessment and strategic planning processes;

&nbsp;&nbsp;&nbsp;&nbsp;•The company's plans to achieve stated climate-related targets, if any, including information on timelines and expected emissions reductions; and

• Incorporation of relevant climate considerations in financial planning and/or capital allocation decisions.

**Climate Transition Plan Disclosure Criteria for Companies that have Adopted a Climate Transition Plan** 

We do not expect or require companies to adopt net zero ambitions or join relevant industry initiatives. For companies that have adopted a net zero ambition and/or climate transition plan and that receive a related proposal, we assess the proposal against the disclosure criteria set out below. Given that climate related risks present differently across industries, our assessment of the below criteria may vary to account for best practices in specific industries.

**General Climate-related Disclosures** 

• Description of approach to identifying and assessing climate-related risks and opportunities

• Disclosure of resilience of the company's strategy taking into consideration a range of climate-related scenarios

• Disclosure of Scope 1, Scope 2, and relevant categories of Scope 3 emissions and any assurance

**Ambition** 

• Disclosure of long-term climate ambitions

**Targets** 

• Disclosure of short- and/or medium-term interim climate targets

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of alignment of climate targets with relevant jurisdictional commitments, specific temperature pathways, and/or sectoral decarbonization approaches

**Decarbonization Strategy** 

• Disclosure of plans and actions to support stated climate targets and ambitions

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of emissions management efforts within the company's operations and, as applicable, across the value chain

• Disclosure of carbon offsets utilization, if any

• Disclosure of the role of climate solutions (e.g., carbon capture and storage)

• Disclosure of potential social risks and opportunities related to climate transition plan, if any

**Capital Allocation** 

• Disclosure integration of relevant climate considerations in financial planning

• Disclosure of total actual and planned capital deployed toward climate transition plan

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of approach to assessing and prioritizing investments toward climate transition plan (e.g. marginal abatement cost curves, internal carbon pricing, if any)

**Climate Policy Engagement** 

• Disclosure of position on climate-related topics relevant to the company's decarbonization strategy

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of assessment of stated positions on relevant climate-related topics versus those of associations and other relevant policy-influencing entities, such as trade associations, industry bodies, or coalitions, to which the company belongs, and any efforts taken as a result of this review to address potential misalignment.

**Climate Governance** 

• Disclosure of the board's role in overseeing climate transition plan

• Disclosure of management's role in overseeing climate transition plan

**Physical Risk** 

• Disclosure of assessment of climate-related physical risks

• Disclosure of approach to managing identified climate-related physical risks

**Stakeholder Engagement** 

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of engagement with relevant internal stakeholders related to climate transition plan (e.g., workforce training, cross-functional collaboration)

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of engagement with relevant external stakeholders related to climate transition plan (e.g., industry collaboration, customer engagement)

**Methane Disclosure Criteria** 

Where a company has determined that methane emissions-related risks or opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

• Disclosure of methane emissions detection and monitoring efforts

• An explanation of efforts to enhance measurement, reporting, and verification

• A description of the company's strategy to manage methane emissions

• Disclosure of any methane-related metrics and targets utilized

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**Nature-Related Disclosures: Biodiversity, Deforestation and other Land-Use, Water Management, Pollution and Waste** 

Where a company has determined that one or more nature-related risks and opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

• **Governance:** Board oversight of the material nature-related risks and opportunities

&nbsp;&nbsp;&nbsp;&nbsp;•**Risk Management:** Approach to identifying, assessing, monitoring, and mitigating the material nature-related risks and opportunities

&nbsp;&nbsp;&nbsp;&nbsp;•**Strategy:** Consideration of material nature-related risks and opportunities in business strategy, resiliency, and planning

&nbsp;&nbsp;&nbsp;&nbsp;•**Metrics and Targets (when relevant):** Metrics used to assess, monitor, and manage nature-related risks and opportunities

**Human Capital Management Disclosure Criteria** 

Where a company has determined that human capital management-related risks or opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

• **Board Oversight:** Methods outlining how the board oversees human capital- related risks and opportunities;

• **Strategy:** Approaches to human capital management and how these advance the long-term business strategy;

&nbsp;&nbsp;&nbsp;&nbsp;•**Compensation:** Strategies throughout the organization that aim to attract and retain employees, and incentivize contribution to an effective human capital strategy;

&nbsp;&nbsp;&nbsp;&nbsp;•**Voice:** Channels to ensure the concerns and ideas from workers are solicited and acted upon, and how the workforce is engaged and empowered in the organization; and

• **Workforce Demographics:** Role of the board in overseeing workforce demographics efforts

**Diversity Equity and Inclusion Disclosure Criteria** 

Where a company has determined that diversity, equity and inclusion-related risks or opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

&nbsp;&nbsp;&nbsp;&nbsp;•**Board Oversight:** Describe how the board executes its oversight role in risks and opportunities related to diversity, equity and inclusion

&nbsp;&nbsp;&nbsp;&nbsp;•**Strategy:** Articulate the role that diversity, equity, and inclusion plays in the company's broader human capital management practices and long-term strategy, as well as how the company intends to implement that strategy

• **Metrics:** Provide disclosure on the company's global employee base and board demographics, where permitted

&nbsp;&nbsp;&nbsp;&nbsp;•**Board Composition:** Articulate the role of diversity of skills, backgrounds, experiences, and perspectives in the board's nominating process

**Pay Equity Disclosure Criteria (United States and United Kingdom Only)** 

Where a company has determined that pay equity-related risks or opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of adjusted pay gaps related to race and gender within the company (disclosure of the unadjusted pay gap is also encouraged, but not expected outside of the United Kingdom market at this time);

• Disclosure of strategy to achieve and maintain pay equity; and

• Disclosure of the role of the board in overseeing pay strategies as well as diversity-related efforts

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**Civil Rights Disclosure Criteria (United States Only)** 

Where a company has determined that civil rights-related risks or opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

• Disclosure of risk related to civil rights, including risks associated with products, practices, and services;

• Disclosure of plans to manage and mitigate these risks; and

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of processes at the board for overseeing such risks (e.g., committee responsible, frequency of discussions, etc.).

**Human Rights Disclosure Criteria** 

Where a company has determined that human rights-related risks or opportunities are material to its business and has received a related shareholder proposal, we will assess the proposal in accordance with the following disclosure criteria:

• Human rights-related risks the company considers more relevant;

• Plans to manage and mitigate these risks;

• Board oversight of these risks; and

• Assessment of the effectiveness of the human rights risk management program.

**Political Contributions Disclosure Criteria (United States Only)** 

For all companies that receive a shareholder proposal related to political contributions, we will assess the proposal in accordance with the following disclosure criteria:

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of all contributions, no matter the dollar value, made by the company, its subsidiaries, and/ or affiliated Political Action Committees (PACs) to individual candidates, PACs, and other political organizations at the state and federal levels in the US; and

• Disclosure of the role of the board in oversight of political contributions.

**Lobbying Disclosure Criteria (United States Only)** 

For all companies that receive a shareholder proposal related to lobbying disclosure, we will assess the proposal in accordance with the following disclosure criteria:

• Disclosure of membership in United States trade associations (to which payments are above $50,000 per year) and

• Disclosure of the role of the board in overseeing lobbying activities.

**Trade Association Alignment Disclosure Criteria** 

For all companies that receive a shareholder proposal related to trade association alignment, we will assess the proposal in accordance with the following disclosure criteria:

&nbsp;&nbsp;&nbsp;&nbsp;•Disclosure of the board's role in overseeing the company's participation in the political process, including membership in trade associations or other policy- influencing entities; and

&nbsp;&nbsp;&nbsp;&nbsp;•Whether the company regularly performs a gap analysis of its stated positions on relevant issues versus those of the trade associations or other policy-influencing organizations of which it is a member, and

• Whether the company disclosed a list of its trade association memberships

Note: We believe that management is best suited to take positions on the matters related to their company and therefore we do not recommend any specific position. Our support of these types of shareholder proposals, if any, solely reflect our support for enhanced disclosure on assessing alignment between stated company positions and the positions of associations and other relevant policy-influencing entities to which the company belongs in line with market expectations and effective risk management.

------

**About State Street Investment Management** 

For over four decades, State Street Investment Management has served the world's governments, institutions, and financial advisors. With a rigorous, risk-aware approach built on research, analysis, and market-tested experience, and as pioneers in index and ETF investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager\* with US $5.12 trillion† under our care.

\*

Pensions & Investments Research Center, as of December 31, 2023.

†

This figure is presented as of December 31, 2024 and includes ETF AUM of $1,577.74 billion USD of which approximately $82.19 billion USD in gold assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Investment Management are affiliated. Please note all AUM is unaudited.

statestreet.com/im© 2025 State Street Corporation.

All Rights Reserved.

ID2658960

Exp. Date: 03/31/2026

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## **TABLE OF CONTENTS**

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| | |
|:---|:---|
|  Coverage | 9 |
| 1. Board of Directors | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp; Voting on Director Nominees in Uncontested Elections | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Independence | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ISS Classification of Directors – U.S. | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Composition | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Attendance | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Overboarded Directors | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gender Diversity | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Racial and/or Ethnic Diversity | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Responsiveness | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accountability | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Poison Pills | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unequal Voting Rights | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Classified Board Structure | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Removal of Shareholder Discretion on Classified Boards | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Problematic Governance Structure | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unilateral Bylaw/Charter Amendments | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricting Binding Shareholder Proposals | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Director Performance Evaluation | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management Proposals to Ratify Existing Charter or Bylaw Provisions | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Problematic Audit-Related Practices | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Problematic Compensation Practices | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Problematic Pledging of Company Stock | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Climate Accountability | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Governance Failures | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp; Voting on Director Nominees in Contested Elections | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vote-No Campaigns | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proxy Contests/Proxy Access | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Board-Related Proposals | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adopt Anti-Hedging/Pledging/Speculative Investments Policy | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Board Refreshment | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Term/Tenure Limits | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Age Limits | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Board Size | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Classification/Declassification of the Board | 20 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CEO Succession Planning | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cumulative Voting | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Director and Officer Indemnification, Liability Protection, and Exculpation | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Establish/Amend Nominee Qualifications | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Establish Other Board Committee Proposals | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Filling Vacancies/Removal of Directors | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Independent Board Chair | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Majority of Independent Directors/Establishment of Independent Committees | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Majority Vote Standard for the Election of Directors | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proxy Access | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Require More Nominees than Open Seats | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Engagement Policy (Shareholder Advisory Committee) | 24 |
| 2. Audit-Related | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Auditor Indemnification and Limitation of Liability | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Auditor Ratification | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Proposals Limiting Non-Audit Services | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Proposals on Audit Firm Rotation | 25 |
| 3. Shareholder Rights & Defenses | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advance Notice Requirements for Shareholder Proposals/Nominations | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amend Bylaws without Shareholder Consent | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Control Share Acquisition Provisions | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Control Share Cash-Out Provisions | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disgorgement Provisions | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair Price Provisions | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Freeze-Out Provisions | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Greenmail | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Litigation Rights | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Forum Selection Provisions | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exclusive Forum Provisions for State Law Matters | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fee shifting | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Operating Loss (NOL) Protective Amendments | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp; Poison Pills (Shareholder Rights Plans) | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management Proposals to Ratify a Poison Pill | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs) | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proxy Voting Disclosure, Confidentiality, and Tabulation | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reimbursing Proxy Solicitation Expenses | 32 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reincorporation Proposals | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Ability to Act by Written Consent | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Ability to Call Special Meetings | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stakeholder Provisions | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State Antitakeover Statutes | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supermajority Vote Requirements | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Virtual Shareholder Meetings | 33 |
| 4. Capital/Restructuring | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp; Capital | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to Par Value of Common Stock | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock Authorization | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Authorization Requests | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Specific Authorization Requests | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dual Class Structure | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issue Stock for Use with Rights Plan | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preemptive Rights | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock Authorization | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Authorization Requests | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recapitalization Plans | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reverse Stock Splits | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S. | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share Repurchase Programs | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share Repurchase Programs Shareholder Proposals | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock Distributions: Splits and Dividends | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tracking Stock | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp; Restructuring | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appraisal Rights | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Purchases | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Sales | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bundled Proposals | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Conversion of Securities | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Formation of Holding Company | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs) | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Joint Ventures | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liquidations | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mergers and Acquisitions | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Private Placements/Warrants/Convertible Debentures | 42 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reorganization/Restructuring Plan (Bankruptcy) | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Special Purpose Acquisition Corporations (SPACs) | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Spin-offs | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Value Maximization Shareholder Proposals | 44 |
| 5. Compensation | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp; Executive Pay Evaluation | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advisory Votes on Executive Compensation—Management Proposals (Say-on-Pay) | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pay-for-Performance Evaluation | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Problematic Pay Practices | 47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Compensation Committee Communications and Responsiveness | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Frequency of Advisory Vote on Executive Compensation ("Say When on Pay") | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp; Equity-Based and Other Incentive Plans | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Value Transfer (SVT) | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Three-Year Value-Adjusted Burn Rate | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Egregious Factors | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liberal Change in Control Definition | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repricing Provisions | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Problematic Pay Practices or Significant Pay-for-Performance Disconnect | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m)) | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Specific Treatment of Certain Award Types in Equity Plan Evaluations | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend Equivalent Rights | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Compensation Plans | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 401(k) Employee Benefit Plans | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee Stock Ownership Plans (ESOPs) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee Stock Purchase Plans—Qualified Plans | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee Stock Purchase Plans—Non-Qualified Plans | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Option Exchange Programs/Repricing Options | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock Plans in Lieu of Cash | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfer Stock Option (TSO) Programs | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp; Director Compensation | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shareholder Ratification of Director Pay Programs | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity Plans for Non-Employee Directors | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-Employee Director Retirement Plans | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp; Shareholder Proposals on Compensation | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bonus Banking/Bonus Banking "Plus" | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Compensation Consultants—Disclosure of Board or Company's Utilization | 56 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disclosure/Setting Levels or Types of Compensation for Executives and Directors | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Golden Coffins/Executive Death Benefits | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hold Equity Past Retirement or for a Significant Period of Time | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pay Disparity | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pay for Performance/Performance-Based Awards | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pay for Superior Performance | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pre-Arranged Trading Plans (10b5-1 Plans) | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prohibit Outside CEOs from Serving on Compensation Committees | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recoupment of Incentive or Stock Compensation in Specified Circumstances | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Severance and Golden Parachute Agreements | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share Buyback Impact on Incentive Program Metrics | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supplemental Executive Retirement Plans (SERPs) | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax Gross-Up Proposals | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity | 60 |
| 6. Routine/Miscellaneous | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjourn Meeting | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amend Quorum Requirements | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amend Minor Bylaws | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change Company Name | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change Date, Time, or Location of Annual Meeting | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Business | 62 |
| 7. Social and Environmental Issues | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp; Global Approach – E&S Shareholder Proposals | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp; Endorsement of Principles | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp; Animal Welfare | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Animal Welfare Policies | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Animal Testing | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Animal Slaughter | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp; Consumer Issues | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Genetically Modified Ingredients | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reports on Potentially Controversial Business/Financial Practices | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pharmaceutical Pricing, Access to Medicines, and Prescription Drug Reimportation | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Product Safety and Toxic/Hazardous Materials | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tobacco-Related Proposals | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp; Climate Change | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Say on Climate (SoC) Management Proposals | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Say on Climate (SoC) Shareholder Proposals | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Climate Change/Greenhouse Gas (GHG) Emissions | 67 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Energy Efficiency | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Renewable Energy | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diversity | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Board Diversity | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equality of Opportunity | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gender Identity, Sexual Orientation, and Domestic Partner Benefits | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gender, Race/Ethnicity Pay Gap | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Racial Equity and/or Civil Rights Audit Guidelines | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp; Environment and Sustainability | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Facility and Workplace Safety | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural Capital- Related and/or Community Impact Assessment Proposals | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hydraulic Fracturing | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operations in Protected Areas | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recycling | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sustainability Reporting | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water Issues | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp; General Corporate Issues | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charitable Contributions | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Data Security, Privacy, and Internet Issues | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ESG Compensation-Related Proposals | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp; Human Rights, Human Capital Management, and International Operations | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Human Rights Proposals | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mandatory Arbitration | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operations in High-Risk Markets | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Outsourcing/Offshoring | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sexual Harassment | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weapons and Military Sales | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp; Political Activities | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lobbying | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Political Contributions | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Political Expenditures and Lobbying Congruency | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Political Ties | 76 |
| 8. Mutual Fund Proxies | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Election of Directors | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Converting Closed-end Fund to Open-end Fund | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proxy Contests | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment Advisory Agreements | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Approving New Classes or Series of Shares | 78 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock Proposals | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1940 Act Policies | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changing a Fundamental Restriction to a Nonfundamental Restriction | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change Fundamental Investment Objective to Nonfundamental | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name Change Proposals | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in Fund's Subclassification | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposition of Assets/Termination/Liquidation | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes to the Charter Document | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changing the Domicile of a Fund | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distribution Agreements | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Master-Feeder Structure | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mergers | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp; Shareholder Proposals for Mutual Funds | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Establish Director Ownership Requirement | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reimburse Shareholder for Expenses Incurred | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Terminate the Investment Advisor | 81 |

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Coverage

The U.S. research team provides proxy analyses and voting recommendations for the common shareholder meetings of U.S. - incorporated companies that are publicly-traded on U.S. exchanges, as well as certain OTC companies, if they are held in our institutional investor clients' portfolios. Coverage generally includes corporate actions for common equity holders, such as written consents and bankruptcies. ISS' U.S. coverage includes investment companies (including open-end funds, closed-end funds, exchange-traded funds, and unit investment trusts), limited partnerships ("LPs"), master limited partnerships ("MLPs"), limited liability companies ("LLCs"), and business development companies. ISS reviews its universe of coverage on an annual basis, and the coverage is subject to change based on client need and industry trends.

#### Foreign-incorporated companies
In addition to U.S.- incorporated, U.S.- listed companies, ISS' U.S. policies are applied to certain foreign-incorporated company analyses. Like the SEC, ISS distinguishes two types of companies that list but are not incorporated in the U.S.:

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| | |
|:---|:---|
| ◾ | U.S. Domestic Issuers – which have a majority of outstanding shares held in the U.S. and meet other criteria, as determined by the SEC, and are subject to the same disclosure and listing standards as U.S. incorporated companies (e.g. they are required to file DEF14A proxy statements) – are generally covered under standard U.S. policy guidelines.  |

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◾ Foreign Private Issuers (FPIs) – which are allowed to take exemptions from most disclosure requirements (e.g., they are allowed to file 6-K for their proxy materials) and U.S. listing standards – are generally covered under a combination of policy guidelines:

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| | |
|:---|:---|
| ◾ | FPI Guidelines (see the <u>Americas Regional Proxy Voting Guidelines)</u>, may apply to companies incorporated in governance havens, and apply certain minimum independence and disclosure standards in the evaluation of key proxy ballot items, such as the election of directors; and/or  |

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◾ Guidelines for the market that is responsible for, or most relevant to, the item on the ballot.

U.S. incorporated companies listed only on non-U.S. exchanges are generally covered under the ISS guidelines for the market on which they are traded.

An FPI is generally covered under ISS' approach to FPIs outlined above, even if such FPI voluntarily files a proxy statement and/or other filing normally required of a U.S. Domestic Issuer, so long as the company retains its FPI status.

In all cases – including with respect to other companies with cross-market features that may lead to ballot items related to multiple markets – items that are on the ballot solely due to the requirements of another market (listing, incorporation, or national code) may be evaluated under the policy of the relevant market, regardless of the "assigned" primary market coverage.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Board of Directors

Voting on Director Nominees in Uncontested Elections

Four fundamental principles apply when determining votes on director nominees:

**Independence:** Boards should be sufficiently independent from management (and significant shareholders) to ensure that they are able and motivated to effectively supervise management's performance for the benefit of all shareholders, including in setting and monitoring the execution of corporate strategy, with appropriate use of shareholder capital, and in setting and monitoring executive compensation programs that support that strategy. The chair of the board should ideally be an independent director, and all boards should have an independent leadership position or a similar role in order to help provide appropriate counterbalance to executive management, as well as having sufficiently independent committees that focus on key governance concerns such as audit, compensation, and nomination of directors.

Composition: Companies should ensure that directors add value to the board through their specific skills and expertise and by having sufficient time and commitment to serve effectively. Boards should be of a size appropriate to accommodate diversity, expertise, and independence, while ensuring active and collaborative participation by all members. Boards should be sufficiently diverse to ensure consideration of a wide range of perspectives.

Responsiveness: Directors should respond to investor input, such as that expressed through significant opposition to management proposals, significant support for shareholder proposals (whether binding or non-binding), and tender offers where a majority of shares are tendered.

Accountability:Boards should be sufficiently accountable to shareholders, including through transparency of the company's governance practices and regular board elections, by the provision of sufficient information for shareholders to be able to assess directors and board composition, and through the ability of shareholders to remove directors.

**General Recommendation:**Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>1</sup>** considered on case-by-case basis):

Independence

Vote against**<sup>2</sup>** or withhold from non-independent directors (Executive Directors and Non-Independent Non-Executive Directors per ISS' Classification of Directors) when:

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| | |
|:---|:---|
| ◾ | Independent directors comprise 50 percent or less of the board;  |

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◾ The non-independent director serves on the audit, compensation, or nominating committee;

◾ The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or

**<sup>1</sup>** A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

**<sup>2</sup>** In general, companies with a plurality vote standard use "Withhold" as the contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.

The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee.

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ISS Classification of Directors – U.S.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**1.** **Executive Director** 

1.1. Current officer **<sup>1</sup>** of the company or one of its affiliates **<sup>2</sup> .** 

**2.** **Non-Independent Non-Executive Director** 

<u>Board Identification</u> 

2.1. Director identified as not independent by the board.

<u>Controlling/Significant Shareholder</u> 

2.2. Beneficial owner of more than 50 percent of the company's voting power (this may be aggregated if voting power is distributed among more than one member of a group).

<u>Current Employment at Company or Related Company</u> 

2.3. Non-officer employee of the firm (including employee representatives).

2.4. Officer **<sup>1</sup>**, former officer, or general or limited partner of a joint venture or partnership with the company.

<u>Former Employment</u> 

2.5. Former CEO of the company. **<sup>3, 4</sup>** 

2.6. Former non-CEO officer **<sup>1</sup>** of the company or an affiliate **<sup>2</sup>** within the past five years.

2.7. Former officer **<sup>1</sup>** of an acquired company within the past five years. **<sup>4</sup>** 

2.8. Officer **<sup>1</sup>** of a former parent or predecessor firm at the time the company was sold or split off within the past five years.

2.9. Former interim officer if the service was longer than 18 months. If the service was between 12 and 18 months an assessment of the interim officer's employment agreement will be made. **<sup>5</sup>** 

<u>Family Members</u> 

2.10. Immediate family member **<sup>6</sup>** of a current or former officer **<sup>1</sup>** of the company or its affiliates **<sup>2</sup>** within the last five years.

2.11. Immediate family member **<sup>6</sup>** of a current employee of company or its affiliates **<sup>2</sup>** where additional factors raise concern (which may include, but are not limited to, the following: a director related to numerous employees; the company or its affiliates employ relatives of numerous board members; or a non-Section 16 officer in a key strategic role).

<u>Professional, Transactional, and Charitable Relationships</u> 

2.12. Director who (or whose immediate family member **<sup>6</sup>**) currently provides professional services **<sup>7</sup>** in excess of $10,000 per year to: the company, an affiliate **<sup>2</sup>**, or an individual officer of the company or an affiliate; or who is (or whose immediate family member **<sup>6</sup>** is) a partner, employee, or controlling shareholder of an organization which provides the services.

2.13. Director who (or whose immediate family member **<sup>6</sup>**) currently has any material transactional relationship **<sup>8</sup>** with the company or its affiliates **<sup>2</sup>**; or who is (or whose immediate family member **<sup>6</sup>** is) a partner in, or a controlling shareholder or an executive officer of, an organization which has the material transactional relationship **<sup>8</sup>** (excluding investments in the company through a private placement).

2.14. Director who (or whose immediate family member **<sup>6</sup>)** is a trustee, director, or employee of a charitable or non-profit organization that receives material grants or endowments **<sup>8</sup>** from the company or its affiliates **<sup>2</sup>**.

<u>Other Relationships</u> 

2.15. Party to a voting agreement **<sup>9</sup>** to vote in line with management on proposals being brought to shareholder vote.

2.16. Has (or an immediate family member **<sup>6</sup>** has) an interlocking relationship as defined by the SEC involving members of the board of directors or its Compensation Committee. **<sup>10</sup>** 

2.17. Founder **<sup>11</sup>** of the company but not currently an employee.

2.18. Director with pay comparable to Named Executive Officers.

2.19. Any material **<sup>12</sup>** relationship with the company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**3.** **Independent Director** 

3.1. No material **<sup>12</sup>** connection to the company other than a board seat.

#### Footnotes:
&nbsp;&nbsp;&nbsp;&nbsp;*1.* The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will generally be classified as a Non-Independent Non-Executive Director under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation exceeding $10,000 per year for serving in that capacity, then the director will be classified as an Independent Director.

&nbsp;&nbsp;&nbsp;&nbsp;*2.* "Affiliate" includes a subsidiary, sibling company, or parent company. ISS uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;*3.* Includes any former CEO of the company prior to the company's initial public offering (IPO).

&nbsp;&nbsp;&nbsp;&nbsp;*4.* When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, ISS will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

&nbsp;&nbsp;&nbsp;&nbsp;*5.* ISS will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. ISS will also consider if a formal search process was under way for a full-time officer at the time.

&nbsp;&nbsp;&nbsp;&nbsp;*6.* "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

&nbsp;&nbsp;&nbsp;&nbsp;*7.* Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include but are not limited to the following: investment banking/financial advisory services, commercial banking (beyond deposit services), investment services, insurance services, accounting/audit services, consulting services, marketing services, legal services, property management services, realtor services, lobbying services, executive search services, and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services, IT tech support services, educational services, and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

&nbsp;&nbsp;&nbsp;&nbsp;*8.* A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity, exceeding the greater of: $200,000 or 5 percent of the recipient's gross revenues, for a company that follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, for a company that follows NYSE listing standards. For a company that follows neither of the preceding standards, ISS will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

&nbsp;&nbsp;&nbsp;&nbsp;*9.* Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as Independent Directors if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;*10.* Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

&nbsp;&nbsp;&nbsp;&nbsp;*11.* The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, ISS may deem him or her an Independent Director.

&nbsp;&nbsp;&nbsp;&nbsp;*12.* For purposes of ISS's director independence classification, "material" will be defined as a standard of relationship (financial, personal, or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Composition

**Attendance at Board and Committee Meetings:**Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>3</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

◾ Medical issues/illness;

◾ Family emergencies; and

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| | |
|:---|:---|
| ◾ | Missing only one meeting (when the total of all meetings is three or fewer).  |

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In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

**Overboarded Directors:**Generally vote against or withhold from individual directors who:

◾ Sit on more than five public company boards; or

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| | |
|:---|:---|
| ◾ | Are CEOs of public companies who sit on the boards of more than two public companies besides their own— withhold only at their outside boards**<sup>4</sup>**.  |

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*NOTE: For shareholder meeting reports published on or after February 25th, 2025, Institutional Shareholder Services (ISS) has indefinitely halted the consideration of the gender diversity of a company's board when making vote recommendations with respect to the election or re-election of directors at U.S. companies covered by these guidelines under its proprietary ISS U.S. Benchmark policy.*

<sup>3</sup> Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

<sup>4</sup> Although all of a CEO's subsidiary boards with publicly-traded common stock will be counted as separate boards, ISS will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

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**Gender Diversity:** Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company's board. An exception will be made if there was at least one woman on the board at the preceding annual meeting and the board makes a firm commitment to return to a gender-diverse status within a year.

*NOTE: For shareholder meeting reports published on or after February 25th, 2025, Institutional Shareholder Services (ISS) has indefinitely halted the consideration of the racial and/or ethnic diversity of a company's board when making vote recommendations with respect to the election or re-election of directors at U.S. companies covered under these guidelines under its proprietary ISS U.S. Benchmark policy.*

Racial and/or Ethnic Diversity: For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members**<sup>5</sup>**. An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or ethnic diverse member within a year.

Responsiveness

Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

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| | |
|:---|:---|
| ◾ | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:  |

---

---

| | |
|:---|:---|
| ◾ | Disclosed outreach efforts by the board to shareholders in the wake of the vote;  |

---

◾ Rationale provided in the proxy statement for the level of implementation;

◾ The subject matter of the proposal;

◾ The level of support for and opposition to the resolution in past meetings;

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| | |
|:---|:---|
| ◾ | Actions taken by the board in response to the majority vote and its engagement with shareholders;  |

---

◾ The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and

◾ Other factors as appropriate.

◾ The board failed to act on takeover offers where the majority of shares are tendered; or

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| | |
|:---|:---|
| ◾ | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote.  |

---

Vote case-by-case on Compensation Committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

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| | |
|:---|:---|
| ◾ | The company's previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are:  |

---

◾ The company's response, including:

◾ Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated);

◾ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition; and

◾ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

◾ Other recent compensation actions taken by the company;

◾ Whether the issues raised are recurring or isolated;

◾ The company's ownership structure; and

<sup>5</sup> Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

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|:---|:---|
| ◾ | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

---

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|:---|:---|
| ◾ | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Accountability

PROBLEMATIC TAKEOVER DEFENSES, CAPITAL STRUCTURE, AND GOVERNANCE STRUCTURE

Poison Pills: Generally vote against or withhold from all nominees (except new nominees **<sup>1</sup>**, **who** should be considered case-by-case) if:

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| | |
|:---|:---|
| ◾ | The company has a poison pill with a deadhand or slowhand feature**<sup>6</sup>**;  |

---

◾ The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

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| | |
|:---|:---|
| ◾ | The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders**<sup>7</sup>**.  |

---

Vote case-by-case on nominees if the board adopts an initial short-term pill<sup>6</sup> (with a term of one year or less) without shareholder approval, taking into consideration:

◾ The trigger threshold and other terms of the pill;

◾ The disclosed rationale for the adoption;

◾ The context in which the pill was adopted, (e.g., factors such as the company's size and stage of development, sudden changes in its market capitalization, and extraordinary industry-wide or macroeconomic events);

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| | |
|:---|:---|
| ◾ | A commitment to put any renewal to a shareholder vote;  |

---

◾ The company's overall track record on corporate governance and responsiveness to shareholders; and

◾ Other factors as relevant.

Unequal Voting Rights: Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees **<sup>1</sup>**, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>8</sup>**.

Exceptions to this policy will generally be limited to:

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| | |
|:---|:---|
| ◾ | Newly-public companies**<sup>9</sup>** with a sunset provision of no more than seven years from the date of going public;  |

---

◾ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

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| | |
|:---|:---|
| ◾ | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be *de minimis*; or  |

---

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| | |
|:---|:---|
| ◾ | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

---

<sup>6</sup> If a short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, ISS will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

<sup>7</sup> Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

<sup>8</sup> This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

<sup>9</sup> Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

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Classified Board Structure: The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election. All appropriate nominees (except new) may be held accountable.

**Removal of Shareholder Discretion on Classified Boards**: The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

**Problematic Governance Structure**: For companies that hold or held their first annual meeting **<sup>9</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees **<sup>1</sup>**, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

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| | |
|:---|:---|
| ◾ | Supermajority vote requirements to amend the bylaws or charter;  |

---

◾ A classified board structure; or

◾ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

**Unilateral Bylaw/Charter Amendments:** Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees **<sup>1</sup>**, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

◾ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

◾ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

◾ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

◾ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

◾ The company's ownership structure;

◾ The company's existing governance provisions;

◾ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

◾ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against (except new nominees **<sup>1</sup>**, who should be considered case-by-case) if the directors:

◾ Classified the board;

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| | |
|:---|:---|
| ◾ | Adopted supermajority vote requirements to amend the bylaws or charter;  |

---

◾ Eliminated shareholders' ability to amend bylaws;

◾ Adopted a fee-shifting provision; or

◾ Adopted another provision deemed egregious.

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Restricting Binding Shareholder Proposals: Generally vote against or withhold from the members of the governance committee if:

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| | |
|:---|:---|
| ◾ | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

---

Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Director Performance Evaluation: The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted. Problematic provisions include but are not limited to:

◾ A classified board structure;

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| | |
|:---|:---|
| ◾ | A supermajority vote requirement;  |

---

---

| | |
|:---|:---|
| ◾ | Either a plurality vote standard in uncontested director elections, or a majority vote standard in contested elections;  |

---

◾ The inability of shareholders to call special meetings;

◾ The inability of shareholders to act by written consent;

◾ A multi-class capital structure; and/or

◾ A non-shareholder-approved poison pill.

Management Proposals to Ratify Existing Charter or Bylaw Provisions: Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

◾ The presence of a shareholder proposal addressing the same issue on the same ballot;

◾ The board's rationale for seeking ratification;

◾ Disclosure of actions to be taken by the board should the ratification proposal fail;

◾ Disclosure of shareholder engagement regarding the board's ratification request;

◾ The level of impairment to shareholders' rights caused by the existing provision;

◾ The history of management and shareholder proposals on the provision at the company's past meetings;

◾ Whether the current provision was adopted in response to the shareholder proposal;

◾ The company's ownership structure; and

◾ Previous use of ratification proposals to exclude shareholder proposals.

Problematic Audit-Related Practices

Generally vote against or withhold from the members of the Audit Committee if:

◾ The non-audit fees paid to the auditor are excessive;

◾ The company receives an adverse opinion on the company's financial statements from its auditor; or

◾ There is persuasive evidence that the Audit Committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

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Vote case-by-case on members of the Audit Committee and potentially the full board if:

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| | |
|:---|:---|
| ◾ | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company's efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted.  |

---

Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the Compensation Committee and potentially the full board if:

◾ There is an unmitigated misalignment between CEO pay and company performance (<u>pay for performance</u>);

◾ The company maintains significant <u>problematic pay practices</u>; or

◾ The board exhibits a significant level of <u>poor communication and responsiveness</u> to shareholders.

Generally vote against or withhold from the Compensation Committee chair, other committee members, or potentially the full board if:

◾ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

◾ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

Problematic Pledging of Company Stock: Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

◾ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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| | |
|:---|:---|
| ◾ | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

---

◾ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

◾ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

◾ Any other relevant factors.

Climate Accountability

For companies that are significant greenhouse gas (GHG) emitters, through their operations or value chain**<sup>10</sup>**, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where ISS determines that the company is not taking the minimum steps needed to understand, assess, and mitigate risks related to climate change to the company and the larger economy.

Minimum steps to understand and mitigate those risks are considered to be the following. Both minimum criteria will be required to be in alignment with the policy :

<sup>10</sup> Companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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◾ Detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

◾ Board governance measures;

◾ Corporate strategy;

◾ Risk management analyses; and

◾ Metrics and targets.

◾ Appropriate GHG emissions reduction targets.

At this time, "appropriate GHG emissions reductions targets" will be medium-term GHG reduction targets or Net Zero-by-2050 GHG reduction targets for a company's operations (Scope 1) and electricity use (Scope 2). Targets should cover the vast majority of the company's direct emissions.

Governance Failures

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

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| | |
|:---|:---|
| ◾ | Material failures of governance, stewardship, risk oversight**<sup>11</sup>**, or fiduciary responsibilities at the company;  |

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◾ Failure to replace management as appropriate; or

◾ Egregious actions related to a director's service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

Voting on Director Nominees in Contested Elections

Vote-No Campaigns

**General Recommendation:** In cases where companies are targeted in connection with public "vote-no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

Proxy Contests/Proxy Access

**General Recommendation:**Vote case-by-case on the election of directors in contested elections, considering the following factors:

◾ Long-term financial performance of the company relative to its industry;

◾ Management's track record;

◾ Background to the contested election;

◾ Nominee qualifications and any compensatory arrangements;

◾ Strategic plan of dissident slate and quality of the critique against management;

◾ Likelihood that the proposed goals and objectives can be achieved (both slates); and

◾ Stock ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether there are more candidates than board seats).

<sup>11</sup> Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant adverse legal judgments or settlement; or hedging of company stock.

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Other Board-Related Proposals

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

General Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

Board Refreshment

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

Term/Tenure Limits

General Recommendation:Vote case-by-case on management proposals regarding director term/tenure limits, considering:

◾ The rationale provided for adoption of the term/tenure limit;

◾ The robustness of the company's board evaluation process;

◾ Whether the limit is of sufficient length to allow for a broad range of director tenures;

◾ Whether the limit would disadvantage independent directors compared to non-independent directors; and

◾ Whether the board will impose the limit evenly, and not have the ability to waive it in a discriminatory manner.

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| | |
|:---|:---|
| ◾ | Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:  |

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◾ The scope of the shareholder proposal; and

◾ Evidence of problematic issues at the company combined with, or exacerbated by, a lack of board refreshment.

Age Limits

General Recommendation: Generally vote against management and shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

Board Size

General Recommendation: Vote for proposals seeking to fix the board size or designate a range for the board size.

Vote against proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.

Classification/Declassification of the Board

General Recommendation: Vote against proposals to classify (stagger) the board.

Vote for proposals to repeal classified boards and to elect all directors annually.

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CEO Succession Planning

General Recommendation: Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering, at a minimum, the following factors:

◾ The reasonableness/scope of the request; and

◾ The company's existing disclosure on its current CEO succession planning process.

Cumulative Voting

General Recommendation: Generally vote against management proposals to eliminate cumulate voting, and for shareholder proposals to restore or provide for cumulative voting, unless:

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| | |
|:---|:---|
| ◾ | The company has proxy access**<sup>12</sup>**, thereby allowing shareholders to nominate directors to the company's ballot; and  |

---

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| | |
|:---|:---|
| ◾ | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

---

Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

Director and Officer Indemnification, Liability Protection, and Exculpation

General Recommendation: Vote case-by-case on proposals on director and officer indemnification, liability protection, and exculpation**<sup>13</sup>**.

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

◾ Eliminate directors' and officers' liability for monetary damages for violating the duty of care;

◾ Eliminate directors' and officers' liability for monetary damages for violating the duty of loyalt;

◾ Expand coverage beyond just legal expenses to liability for acts that are more serious violations of fiduciary obligation than mere carelessness; and

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| | |
|:---|:---|
| ◾ | Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (*i.e.*, "permissive indemnification"), but that previously the company was not required to indemnify.  |

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Vote for those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

◾ If the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and

◾ If only the individual's legal expenses would be covered.

<sup>12</sup> A proxy access right that meets the recommended guidelines.

<sup>13</sup> **Indemnification**: the condition of being secured against loss or damage.

**Limited liability**: a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation**: to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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Establish/Amend Nominee Qualifications

General Recommendation: Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and the degree to which they may preclude dissident nominees from joining the board.

Vote case-by-case on shareholder resolutions seeking a director nominee who possesses a particular subject matter expertise, considering:

◾ The company's board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers;

◾ The company's existing board and management oversight mechanisms regarding the issue for which board oversight is sought;

◾ The company's disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies; and

◾ The scope and structure of the proposal.

Establish Other Board Committee Proposals

**General Recommendation:** Generally vote against shareholder proposals to establish a new board committee, as such proposals seek a specific oversight mechanism/structure that potentially limits a company's flexibility to determine an appropriate oversight mechanism for itself. However, the following factors will be considered:

◾ Existing oversight mechanisms (including current committee structure) regarding the issue for which board oversight is sought;

◾ Level of disclosure regarding the issue for which board oversight is sought;

◾ Company performance related to the issue for which board oversight is sought;

◾ Board committee structure compared to that of other companies in its industry sector; and

◾ The scope and structure of the proposal.

Filling Vacancies/Removal of Directors

General Recommendation: Vote against proposals that provide that directors may be removed only for cause. Vote for proposals to restore shareholders' ability to remove directors with or without cause.

Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies.

Vote for proposals that permit shareholders to elect directors to fill board vacancies.

Independent Board Chair

General Recommendation: Generally vote for shareholder proposals requiring that the board chair position be filled by an independent director, taking into consideration the following:

◾ The scope and rationale of the proposal;

◾ The company's current board leadership structure;

◾ The company's governance structure and practices;

◾ Company performance; and

◾ Any other relevant factors that may be applicable.

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The following factors will increase the likelihood of a "for" recommendation:

◾ A majority non-independent board and/or the presence of non-independent directors on key board committees;

◾ A weak or poorly-defined lead independent director role that fails to serve as an appropriate counterbalance to a combined CEO/chair role;

◾ The presence of an executive or non-independent chair in addition to the CEO, a recent recombination of the role of CEO and chair, and/or departure from a structure with an independent chair;

◾ Evidence that the board has failed to oversee and address material risks facing the company;

◾ A material governance failure, particularly if the board has failed to adequately respond to shareholder concerns or if the board has materially diminished shareholder rights; or

◾ Evidence that the board has failed to intervene when management's interests are contrary to shareholders' interests.

Majority of Independent Directors/Establishment of Independent Committees

General Recommendation: Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by ISS' definition of Independent Director (See ISS' Classification of Directors.)

Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors unless they currently meet that standard.

Majority Vote Standard for the Election of Directors

General Recommendation: Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections. Vote against if no carve-out for a plurality vote standard in contested elections is included.

Generally vote for precatory and binding shareholder resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

Proxy Access

General Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions:

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| | |
|:---|:---|
| ◾ | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| | |
|:---|:---|
| ◾ | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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| | |
|:---|:---|
| ◾ | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group; and  |

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| | |
|:---|:---|
| ◾ | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access. Generally vote against proposals that are more restrictive than these guidelines.

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Require More Nominees than Open Seats

General Recommendation: Vote against shareholder proposals that would require a company to nominate more candidates than the number of open board seats.

Shareholder Engagement Policy (Shareholder Advisory Committee)

General Recommendation: Generally vote for shareholder proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

◾ Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board;

◾ Effectively disclosed information with respect to this structure to its shareholders;

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| | |
|:---|:---|
| ◾ | Company has not ignored majority-supported shareholder proposals, or a majority withhold vote on a director nominee; and  |

---

◾ The company has an independent chair or a lead director, according to ISS' definition. This individual must be made available for periodic consultation and direct communication with major shareholders.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Audit-Related

Auditor Indemnification and Limitation of Liability

General Recommendation: Vote case-by-case on the issue of auditor indemnification and limitation of liability. Factors to be assessed include, but are not limited to:

◾ The terms of the auditor agreement—the degree to which these agreements impact shareholders' rights;

◾ The motivation and rationale for establishing the agreements;

◾ The quality of the company's disclosure; and

◾ The company's historical practices in the audit area.

Vote against or withhold from members of an audit committee in situations where there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Auditor Ratification

General Recommendation: Vote for proposals to ratify auditors unless any of the following apply:

◾ An auditor has a financial interest in or association with the company, and is therefore not independent;

◾ There is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company's financial position;

◾ Poor accounting practices are identified that rise to a serious level of concern, such as fraud or misapplication of GAAP; or

◾ Fees for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

◾ Non-audit ("other") fees > audit fees + audit-related fees + tax compliance/preparation fees

Tax compliance and preparation include the preparation of original and amended tax returns and refund claims, and tax payment planning. All other services in the tax category, such as tax advice, planning, or consulting, should be added to "Other" fees. If the breakout of tax fees cannot be determined, add all tax fees to "Other" fees.

In circumstances where "Other" fees include fees related to significant one-time capital structure events (such as initial public offerings, bankruptcy emergence, and spin-offs) and the company makes public disclosure of the amount and nature of those fees that are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

Shareholder Proposals Limiting Non-Audit Services

General Recommendation: Vote case-by-case on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.

Shareholder Proposals on Audit Firm Rotation

General Recommendation: Vote case-by-case on shareholder proposals asking for audit firm rotation, taking into account:

◾ The tenure of the audit firm;

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◾ The length of rotation specified in the proposal;

◾ Any significant audit-related issues at the company;

◾ The number of Audit Committee meetings held each year;

◾ The number of financial experts serving on the committee; and

◾ Whether the company has a periodic renewal process where the auditor is evaluated for both audit quality and competitive price.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Shareholder Rights & Defenses

Advance Notice Requirements for Shareholder Proposals/Nominations

General Recommendation: Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory, and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120-day window). The submittal window is the period under which shareholders must file their proposals/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

Amend Bylaws without Shareholder Consent

General Recommendation: Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote case-by-case on proposals giving the board the ability to amend the bylaws in addition to shareholders, taking into account the following:

◾ Any impediments to shareholders' ability to amend the bylaws (i.e. supermajority voting requirements);

◾ The company's ownership structure and historical voting turnout;

◾ Whether the board could amend bylaws adopted by shareholders; and

◾ Whether shareholders would retain the ability to ratify any board-initiated amendments.

Control Share Acquisition Provisions

General Recommendation: Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.

Vote against proposals to amend the charter to include control share acquisition provisions.

Vote for proposals to restore voting rights to the control shares.

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

Control Share Cash-Out Provisions

General Recommendation: Vote for proposals to opt out of control share cash-out statutes.

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Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

Disgorgement Provisions

General Recommendation: Vote for proposals to opt out of state disgorgement provisions.

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

Fair Price Provisions

General Recommendation: Vote case-by-case on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.

Generally vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

Freeze-Out Provisions

General Recommendation: Vote for proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

Greenmail

General Recommendation: Vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.

Vote case-by-case on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.

Shareholder Litigation Rights

Federal Forum Selection Provisions

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

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General Recommendation: Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Exclusive Forum Provisions for State Law Matters

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

General Recommendation: Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

◾ The company's stated rationale for adopting such a provision;

◾ Disclosure of past harm from duplicative shareholder lawsuits in more than one forum;

◾ The breadth of application of the charter or bylaw provision, including the types of lawsuits to which it would apply and the definition of key terms; and

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| | |
|:---|:---|
| ◾ | Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the charter or bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections.  |

---

Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendmentspolicy.

Fee shifting

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

General Recommendation: Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the Unilateral Bylaw/Charter Amendments policy.

Net Operating Loss (NOL) Protective Amendments

General Recommendation: Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses (NOL) if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

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Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

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| | |
|:---|:---|
| ◾ | The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing 5-percent holder);  |

---

◾ The value of the NOLs;

◾ Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL);

◾ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

◾ Any other factors that may be applicable.

Poison Pills (Shareholder Rights Plans)

Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy

General Recommendation: Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: (1) A shareholder-approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

◾ Shareholders have approved the adoption of the plan; or

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| | |
|:---|:---|
| ◾ | The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e., the "fiduciary out" provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.  |

---

If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

Management Proposals to Ratify a Poison Pill

General Recommendation: Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

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| | |
|:---|:---|
| ◾ | No lower than a 20 percent trigger, flip-in or flip-over;  |

---

◾ A term of no more than three years;

◾ No deadhand, slowhand, no-hand, or similar feature that limits the ability of a future board to redeem the pill; and

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| | |
|:---|:---|
| ◾ | Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.  |

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In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.

Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)

General Recommendation: Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses (NOL) if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

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Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

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| | |
|:---|:---|
| ◾ | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5 percent);  |

---

◾ The value of the NOLs;

◾ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

◾ The company's existing governance structure, including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

◾ Any other factors that may be applicable.

Proxy Voting Disclosure, Confidentiality, and Tabulation

General Recommendation: Vote case-by-case on proposals regarding proxy voting mechanics, taking into consideration whether implementation of the proposal is likely to enhance or protect shareholder rights. Specific issues covered under the policy include, but are not limited to, confidential voting of individual proxies and ballots, confidentiality of running vote tallies, and the treatment of abstentions and/or broker non-votes in the company's vote-counting methodology.

While a variety of factors may be considered in each analysis, the guiding principles are: transparency, consistency, and fairness in the proxy voting process. The factors considered, as applicable to the proposal, may include:

◾ The scope and structure of the proposal;

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| | |
|:---|:---|
| ◾ | The company's stated confidential voting policy (or other relevant policies) and whether it ensures a "level playing field" by providing shareholder proponents with equal access to vote information prior to the annual meeting;  |

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|:---|:---|
| ◾ | The company's vote standard for management and shareholder proposals and whether it ensures consistency and fairness in the proxy voting process and maintains the integrity of vote results;  |

---

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| | |
|:---|:---|
| ◾ | Whether the company's disclosure regarding its vote counting method and other relevant voting policies with respect to management and shareholder proposals are consistent and clear;  |

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◾ Any recent controversies or concerns related to the company's proxy voting mechanics;

◾ Any unintended consequences resulting from implementation of the proposal; and

◾ Any other factors that may be relevant.

Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions

General Recommendation: Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

◾ The presence of a shareholder proposal addressing the same issue on the same ballot;

◾ The board's rationale for seeking ratification;

◾ Disclosure of actions to be taken by the board should the ratification proposal fail;

◾ Disclosure of shareholder engagement regarding the board's ratification request;

◾ The level of impairment to shareholders' rights caused by the existing provision;

◾ The history of management and shareholder proposals on the provision at the company's past meetings;

◾ Whether the current provision was adopted in response to the shareholder proposal;

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◾ The company's ownership structure; and

◾ Previous use of ratification proposals to exclude shareholder proposals.

Reimbursing Proxy Solicitation Expenses

General Recommendation: Vote case-by-case on proposals to reimburse proxy solicitation expenses.

When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Generally vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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|:---|:---|
| ◾ | The election of fewer than 50 percent of the directors to be elected is contested in the election;  |

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◾ One or more of the dissident's candidates is elected;

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| | |
|:---|:---|
| ◾ | Shareholders are not permitted to cumulate their votes for directors; and  |

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◾ The election occurred, and the expenses were incurred, after the adoption of this bylaw.

Reincorporation Proposals

General Recommendation: Management or shareholder proposals to change a company's state of incorporation should be evaluated case-by-case, giving consideration to both financial and corporate governance concerns including the following:

◾ Reasons for reincorporation;

◾ Comparison of company's governance practices and provisions prior to and following the reincorporation; and

◾ Comparison of corporation laws of original state and destination state.

Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.

Shareholder Ability to Act by Written Consent

General Recommendation: Generally vote against management and shareholder proposals to restrict or prohibit shareholders' ability to act by written consent.

Generally vote for management and shareholder proposals that provide shareholders with the ability to act by written consent, taking into account the following factors:

◾ Shareholders' current right to act by written consent;

◾ The consent threshold;

◾ The inclusion of exclusionary or prohibitive language;

◾ Investor ownership structure; and

◾ Shareholder support of, and management's response to, previous shareholder proposals.

Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:

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|:---|:---|
| ◾ | An unfettered<sup>14</sup> right for shareholders to call special meetings at a 10 percent threshold;  |

---

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| | |
|:---|:---|
| ◾ | A majority vote standard in uncontested director elections;  |

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<sup>14</sup> quality of the company's disclosure; and "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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◾ No non-shareholder-approved pill; and

◾ An annually elected board.

Shareholder Ability to Call Special Meetings

General Recommendation: Vote against management or shareholder proposals to restrict or prohibit shareholders' ability to call special meetings.

Generally vote for management or shareholder proposals that provide shareholders with the ability to call special meetings taking into account the following factors:

◾ Shareholders' current right to call special meetings;

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| | |
|:---|:---|
| ◾ | Minimum ownership threshold necessary to call special meetings (10 percent preferred);  |

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◾ The inclusion of exclusionary or prohibitive language;

◾ Investor ownership structure; and

◾ Shareholder support of, and management's response to, previous shareholder proposals.

Stakeholder Provisions

General Recommendation: Vote against proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.

State Antitakeover Statutes

General Recommendation: Vote case-by-case on proposals to opt in or out of state takeover statutes (including fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, and anti-greenmail provisions).

Supermajority Vote Requirements

General Recommendation: Vote against proposals to require a supermajority shareholder vote.

Vote for management or shareholder proposals to reduce supermajority vote requirements. However, for companies with shareholder(s) who have significant ownership levels, vote case-by-case, taking into account:

◾ Ownership structure;

◾ Quorum requirements; and

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| | |
|:---|:---|
| ◾ | Vote requirements.  |

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Virtual Shareholder Meetings

General Recommendation: Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only<sup>15</sup> meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

<sup>15</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

◾ Scope and rationale of the proposal; and

◾ Concerns identified with the company's prior meeting practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Capital/Restructuring

Capital

Adjustments to Par Value of Common Stock

General Recommendation: Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.

Vote for management proposals to eliminate par value.

Common Stock Authorization

General Authorization Requests

General Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes:

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| | |
|:---|:---|
| ◾ | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized share;  |

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| | |
|:---|:---|
| ◾ | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares;  |

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| | |
|:---|:---|
| ◾ | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage; or  |

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◾ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

◾ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

◾ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

◾ The company has a non-shareholder approved poison pill (including an NOL pill); or

◾ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

◾ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

◾ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

◾ A government body has in the past year required the company to increase its capital ratios.

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For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

Specific Authorization Requests

General Recommendation: Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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| | |
|:---|:---|
| ◾ | twice the amount needed to support the transactions on the ballot, and  |

---

◾ the allowable increase as calculated for general issuances above.

Dual Class Structure

General Recommendation: Generally vote against proposals to create a new class of common stock unless:

◾ The company discloses a compelling rationale for the dual-class capital structure, such as:

◾ The company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or

◾ The new class of shares will be transitory;

◾ The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term; and

◾ The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.

Issue Stock for Use with Rights Plan

General Recommendation: Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder-approved shareholder rights plan (poison pill).

Preemptive Rights

General Recommendation: Vote case-by-case on shareholder proposals that seek preemptive rights, taking into consideration:

◾ The size of the company;

◾ The shareholder base; and

◾ The liquidity of the stock.

Preferred Stock Authorization

General Authorization Requests

General Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes:

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| | |
|:---|:---|
| ◾ | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares;  |

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|:---|:---|
| ◾ | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares;  |

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| | |
|:---|:---|
| ◾ | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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◾ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization; or

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| | |
|:---|:---|
| ◾ | If no preferred shares are currently issued and outstanding, vote against the request, unless the company discloses a specific use for the shares.  |

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Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

◾ If the shares requested are blank check preferred shares that can be used for antitakeover purposes;<sup>16</sup>

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| | |
|:---|:---|
| ◾ | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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| | |
|:---|:---|
| ◾ | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they are convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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◾ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

◾ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

◾ The company has a non-shareholder approved poison pill (including an NOL pill); and

◾ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

◾ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

◾ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

◾ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

#### Specific Authorization Requests
General Recommendation: Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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| | |
|:---|:---|
| ◾ | twice the amount needed to support the transactions on the ballot, and  |

---

◾ the allowable increase as calculated for general issuances above.

<sup>16</sup> To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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Recapitalization Plans

General Recommendation: Vote case-by-case on recapitalizations (reclassifications of securities), taking into account the following:

◾ More simplified capital structure;

◾ Enhanced liquidity;

◾ Fairness of conversion terms;

◾ Impact on voting power and dividends;

◾ Reasons for the reclassification;

◾ Conflicts of interest; and

◾ Other alternatives considered.

Reverse Stock Splits

General Recommendation: Vote for management proposals to implement a reverse stock split if:

◾ The number of authorized shares will be proportionately reduced; or

◾ The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with ISS' Common Stock Authorization policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

◾ Stock exchange notification to the company of a potential delisting;

◾ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

◾ The company's rationale; or

◾ Other factors as applicable.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

General Recommendation: For U.S. domestic issuers incorporated outside the U.S. and listed <u>solely</u> on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

Share Repurchase Programs

General Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

◾ Greenmail;

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◾ The use of buybacks to inappropriately manipulate incentive compensation metrics;

◾ Threats to the company's long-term viability; or

◾ Other company-specific factors as warranted.

Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Share Repurchase Programs Shareholder Proposals

General Recommendation: Generally vote against shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote for the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.

Stock Distributions: Splits and Dividends

General Recommendation: Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in accordance with ISS' Common Stock Authorization policy.

Tracking Stock

General Recommendation: Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

◾ Adverse governance changes;

◾ Excessive increases in authorized capital stock;

◾ Unfair method of distribution;

◾ Diminution of voting rights;

◾ Adverse conversion features;

◾ Negative impact on stock option plans; and

◾ Alternatives such as spin-off.

Restructuring

Appraisal Rights

General Recommendation: Vote for proposals to restore or provide shareholders with rights of appraisal.

Asset Purchases

General Recommendation: Vote case-by-case on asset purchase proposals, considering the following factors:

◾ Purchase price;

◾ Fairness opinion;

◾ Financial and strategic benefits;

◾ How the deal was negotiated;

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◾ Conflicts of interest;

◾ Other alternatives for the business; and

◾ Non-completion risk.

Asset Sales

General Recommendation: Vote case-by-case on asset sales, considering the following factors:

◾ Impact on the balance sheet/working capital;

◾ Potential elimination of diseconomies;

◾ Anticipated financial and operating benefits;

◾ Anticipated use of funds;

◾ Value received for the asset;

◾ Fairness opinion;

◾ How the deal was negotiated; and

◾ Conflicts of interest.

Bundled Proposals

General Recommendation: Vote case-by-case on bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

Conversion of Securities

General Recommendation: Vote case-by-case on proposals regarding conversion of securities. When evaluating these proposals, the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy

Plans/Reverse Leveraged Buyouts/Wrap Plans

General Recommendation: Vote case-by-case on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, after evaluating:

◾ Dilution to existing shareholders' positions;

◾ Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; termination penalties; exit strategy;

◾ Financial issues - company's financial situation; degree of need for capital; use of proceeds; effect of the financing on the company's cost of capital;

◾ Management's efforts to pursue other alternatives;

◾ Control issues - change in management; change in control, guaranteed board and committee seats; standstill provisions; voting agreements; veto power over certain corporate actions; and

◾ Conflict of interest - arm's length transaction, managerial incentives.

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Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.

Formation of Holding Company

General Recommendation: Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration the following:

◾ The reasons for the change;

◾ Any financial or tax benefits;

◾ Regulatory benefits;

◾ Increases in capital structure; and

◾ Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend for the transaction, vote against the formation of a holding company if the transaction would include either of the following:

◾ Increases in common or preferred stock in excess of the allowable maximum (see discussion under "Capital"); or

◾ Adverse changes in shareholder rights.

Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)

General Recommendation: Vote case-by-case on going private transactions, taking into account the following:

◾ Offer price/premium;

◾ Fairness opinion;

◾ How the deal was negotiated;

◾ Conflicts of interest;

◾ Other alternatives/offers considered; and

◾ Non-completion risk.

Vote case-by-case on going dark transactions, determining whether the transaction enhances shareholder value by taking into consideration:

◾ Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock); and

◾ Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:

◾ Are all shareholders able to participate in the transaction?

◾ Will there be a liquid market for remaining shareholders following the transaction?

◾ Does the company have strong corporate governance?

◾ Will insiders reap the gains of control following the proposed transaction? and

◾ Does the state of incorporation have laws requiring continued reporting that may benefit shareholders?

Joint Ventures

General Recommendation: Vote case-by-case on proposals to form joint ventures, taking into account the following:

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|:---|:---|
| ◾ | Percentage of assets/business contributed;  |

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|:---|:---|
| ◾ | Percentage ownership;  |

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◾ Financial and strategic benefits;

◾ Governance structure;

◾ Conflicts of interest;

◾ Other alternatives; and

◾ Non-completion risk.

Liquidations

General Recommendation: Vote case-by-case on liquidations, taking into account the following:

◾ Management's efforts to pursue other alternatives;

◾ Appraisal value of assets; and

◾ The compensation plan for executives managing the liquidation.

Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

Mergers and Acquisitions

General Recommendation: Vote case-by-case on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

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| | |
|:---|:---|
| ◾ | *Valuation* - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction, and strategic rationale.  |

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◾ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.

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| | |
|:---|:---|
| ◾ | *Strategic rationale* - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.  |

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| | |
|:---|:---|
| ◾ | *Negotiations and process* - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value.  |

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|:---|:---|
| ◾ | *Conflicts of interest* - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger. The CIC figure presented in the "ISS Transaction Summary" section of this report is an aggregate figure that can in certain cases be a misleading indicator of the true value transfer from shareholders to insiders. Where such figure appears to be excessive, analyze the underlying assumptions to determine whether a potential conflict exists.  |

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|:---|:---|
| ◾ | *Governance* - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.  |

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Private Placements/Warrants/Convertible Debentures

General Recommendation: Vote case-by-case on proposals regarding private placements, warrants, and convertible debentures taking into consideration:

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| | |
|:---|:---|
| ◾ | Dilution to existing shareholders' position: The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion. Although newly issued common stock, absent preemptive rights, is typically dilutive to existing shareholders, share price appreciation is often the necessary event to trigger the exercise of "out of the money" warrants and convertible debt. In these instances from a value standpoint, the negative impact of dilution is mitigated by the increase in the company's stock price that must occur to trigger the dilutive event.  |

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◾ Terms of the offer (discount/premium in purchase price to investor, including any fairness opinion, conversion features, termination penalties, exit strategy):

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| | |
|:---|:---|
| ◾ | The terms of the offer should be weighed against the alternatives of the company and in light of company's financial condition. Ideally, the conversion price for convertible debt and the exercise price for warrants should be at a premium to the then prevailing stock price at the time of private placement.  |

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◾ When evaluating the magnitude of a private placement discount or premium, consider factors that influence the discount or premium, such as, liquidity, due diligence costs, control and monitoring costs, capital scarcity, information asymmetry, and anticipation of future performance.

◾ Financial issues:

◾ The company's financial condition;

◾ Degree of need for capital;

◾ Use of proceeds;

◾ Effect of the financing on the company's cost of capital;

◾ Current and proposed cash burn rate; and

◾ Going concern viability and the state of the capital and credit markets.

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|:---|:---|
| ◾ | Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives: A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger, or sale of part or all of the company.  |

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◾ Control issues:

◾ Change in management;

◾ Change in control;

◾ Guaranteed board and committee seats;

◾ Standstill provisions;

◾ Voting agreements;

◾ Veto power over certain corporate actions; and

◾ Minority versus majority ownership and corresponding minority discount or majority control premium.

◾ Conflicts of interest:

◾ Conflicts of interest should be viewed from the perspective of the company and the investor; and

◾ Were the terms of the transaction negotiated at arm's length? Are managerial incentives aligned with shareholder interests?

◾ Market reaction:

◾ The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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Vote for the private placement, or for the issuance of warrants and/or convertible debentures in a private placement, if it is expected that the company will file for bankruptcy if the transaction is not approved.

Reorganization/Restructuring Plan (Bankruptcy)

General Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

◾ Estimated value and financial prospects of the reorganized company;

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|:---|:---|
| ◾ | Percentage ownership of current shareholders in the reorganized company;  |

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◾ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an Official Equity Committee);

◾ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

◾ Existence of a superior alternative to the plan of reorganization; and

◾ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

General Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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| | |
|:---|:---|
| ◾ | *Valuation* - Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target if it is a private entity.  |

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◾ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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|:---|:---|
| ◾ | *Deal timing* - A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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◾ *Negotiations and process* - What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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|:---|:---|
| ◾ | *Conflicts of interest* - How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24-month timeframe.  |

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|:---|:---|
| ◾ | *Voting agreements* - Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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◾ *Governance* - What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions

The main purpose of SPACs is to identify and acquire a viable target within a specified timeframe, and failure to achieve this objective within the allotted time calls into question management's ability to execute its primary objective. The end of that timeframe is generally referred to as the termination date.

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**General Recommendation:** Generally support requests to extend the termination date by up to one year from the SPAC's original termination date (inclusive of any built-in extension options, and accounting for prior extension requests).

Other factors that may be considered include: any added incentives, business combination status, other amendment terms, and, if applicable, use of money in the trust fund to pay excise taxes on redeemed shares.

Spin-offs

General Recommendation: Vote case-by-case on spin-offs, considering:

◾ Tax and regulatory advantages;

◾ Planned use of the sale proceeds;

◾ Valuation of spinoff;

◾ Fairness opinion;

◾ Benefits to the parent company;

◾ Conflicts of interest;

◾ Managerial incentives;

◾ Corporate governance changes; and

◾ Changes in the capital structure.

Value Maximization Shareholder Proposals

General Recommendation: Vote case-by-case on shareholder proposals seeking to maximize shareholder value by:

◾ Hiring a financial advisor to explore strategic alternatives;

◾ Selling the company; or

◾ Liquidating the company and distributing the proceeds to shareholders.

These proposals should be evaluated based on the following factors:

◾ Prolonged poor performance with no turnaround in sight;

◾ Signs of entrenched board and management (such as the adoption of takeover defenses);

◾ Strategic plan in place for improving value;

◾ Likelihood of receiving reasonable value in a sale or dissolution; and

◾ The company actively exploring its strategic options, including retaining a financial advisor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Compensation

Executive Pay Evaluation

Underlying all evaluations are five global principles that most investors expect corporations to adhere to in designing and administering executive and director compensation programs:

1. Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs;

2. Avoid arrangements that risk "pay for failure": This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation;

3. Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (*e.g.*, including access to independent expertise and advice when needed);

4. Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly; and

5. Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors is reasonable and does not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance. At the market level, it may incorporate a variety of generally accepted best practices.

Advisory Votes on Executive Compensation—Management Proposals (Say-on-Pay)

General Recommendation: Vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation.

Vote against Advisory Votes on Executive Compensation (Say-on-Pay or "SOP") if:

◾ There is an unmitigated misalignment between CEO pay and company performance (pay for performance);

◾ The company maintains significant problematic pay practices; or

◾ The board exhibits a significant level of poor communication and responsiveness to shareholders.

Vote against or withhold from the members of the Compensation Committee and potentially the full board if:

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| ◾ | There is no SOP on the ballot, and an against vote on an SOP would otherwise be warranted due to pay-for-performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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| ◾ | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast;  |

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◾ The company has recently practiced or approved problematic pay practices, such as option repricing or option backdating; or

◾ The situation is egregious.

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**Primary Evaluation Factors for Executive Pay**

Pay-for-Performance Evaluation

ISS annually conducts a pay-for-performance analysis to identify strong or satisfactory alignment between pay and performance over a sustained period. With respect to companies in the S&P1500, Russell 3000, or Russell 3000E Indices**<sup>17</sup>**, this analysis considers the following:

1. Peer Group **<sup>18</sup>** Alignment:

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|:---|:---|
| ◾ | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period.  |

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|:---|:---|
| ◾ | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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|:---|:---|
| ◾ | The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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2. Absolute Alignment **<sup>19</sup>** – the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, a misalignment between pay and performance is otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to an evaluation of how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

◾ The ratio of performance- to time-based incentive awards;

◾ The overall ratio of performance-based compensation to fixed or discretionary pay;

◾ The rigor of performance goals;

◾ The complexity and risks around pay program design;

◾ The transparency and clarity of disclosure;

◾ The company's peer group benchmarking practices;

◾ Financial/operational results, both absolute and relative to peers;

◾ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

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| ◾ | Realizable pay**<sup>20</sup>** compared to grant pay; and  |

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◾ Any other factors deemed relevant.

<sup>17</sup> The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

<sup>18</sup> The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market-cap bucket that is reflective of the company's market cap. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

<sup>19</sup> Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

<sup>20</sup> ISS research reports include realizable pay for S&P1500 companies.

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Problematic Pay Practices

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

◾ Problematic practices related to non-performance-based compensation elements;

◾ Incentives that may motivate excessive risk-taking or present a windfall risk; and

◾ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

◾ Repricing or replacing of underwater stock options/SARs without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);

◾ Extraordinary perquisites or tax gross-ups;

◾ New or materially amended agreements that provide for:

◾ Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus);

◾ CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition;

◾ CIC excise tax gross-up entitlements (including "modified" gross-ups); and/or

◾ Multi-year guaranteed awards that are not at risk due to rigorous performance conditions;

◾ Liberal CIC definition combined with any single-trigger CIC benefits;

◾ Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible;

◾ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason); and/or

◾ Any other provision or practice deemed to be egregious and present a significant risk to investors.

The above examples are not an exhaustive list. Please refer to ISS' U.S. Compensation Policies FAQdocument for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

**Options Backdating**

The following factors should be examined case-by-case to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud:

◾ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

◾ Duration of options backdating;

◾ Size of restatement due to options backdating;

◾ Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants; and

◾ Adoption of a grant policy that prohibits backdating and creates a fixed grant schedule or window period for equity grants in the future.

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Compensation Committee Communications and Responsiveness

Consider the following factors case-by-case when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

◾ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

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|:---|:---|
| ◾ | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:  |

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◾ Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated);

◾ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

◾ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

◾ Other recent compensation actions taken by the company;

◾ Whether the issues raised are recurring or isolated;

◾ The company's ownership structure; and

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|:---|:---|
| ◾ | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")

General Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

General Recommendation: Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers but also considering new or extended arrangements.

Features that may result in an "against" recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

◾ Single- or modified-single-trigger cash severance;

◾ Single-trigger acceleration of unvested equity awards;

◾ Full acceleration of equity awards granted shortly before the change in control;

◾ Acceleration of performance awards above the target level of performance without compelling rationale;

◾ Excessive cash severance (generally >3x base salary and bonus);

◾ Excise tax gross-ups triggered and payable;

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|:---|:---|
| ◾ | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or  |

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◾ Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or

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|:---|:---|
| ◾ | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote.  |

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Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

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In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation (management say-on-pay), ISS will evaluate the say-on-pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity-Based and Other Incentive Plans

Please refer to ISS' U.S. Equity Compensation Plans FAQ document for additional details on the Equity Plan Scorecard policy.

General Recommendation: Vote case-by-case on certain equity-based compensation plans<sup>21</sup> depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars:

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|:---|:---|
| ◾ | **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:  |

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◾ SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and

◾ SVT based only on new shares requested plus shares remaining for future grants.

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|:---|:---|
| ◾ | **Plan Features:**  |

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◾ Quality of disclosure around vesting upon a change in control (CIC);

◾ Discretionary vesting authority;

◾ Liberal share recycling on various award types;

◾ Lack of minimum vesting period for grants made under the plan; and

◾ Dividends payable prior to award vesting.

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|:---|:---|
| ◾ | **Grant Practices:**  |

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◾ The company's three-year burn rate relative to its industry/market cap peers;

◾ Vesting requirements in CEO's recent equity grants (3-year look-back);

◾ The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years);

◾ The proportion of the CEO's most recent equity grants/awards subject to performance conditions;

◾ Whether the company maintains a sufficient claw-back policy; and

◾ Whether the company maintains sufficient post-exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following egregious factors ("overriding factors") apply:

◾ Awards may vest in connection with a liberal change-of-control definition;

◾ The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies – or by not prohibiting it when the company has a history of repricing – for non-listed companies);

◾ The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances;

◾ The plan is excessively dilutive to shareholders' holdings;

◾ The plan contains an evergreen (automatic share replenishment) feature; or

◾ Any other plan features are determined to have a significant negative impact on shareholder interests.

<sup>21</sup> Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors; amended plans will be further evaluated case-by-case.

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**Further Information on certain EPSC Factors:**

Shareholder Value Transfer (SVT)

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full-value awards), the assumption is made that all awards to be granted will be the most expensive types.

For proposals that are not subject to the Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size, and cash compensation into the industry cap equations to arrive at the company's benchmark.**<sup>22</sup>**

Three-Year Value-Adjusted Burn Rate

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks are calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a *de minimis* threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate is calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Egregious Factors

Liberal Change in Control Definition

Generally vote against equity plans if the plan has a liberal definition of change in control and the equity awards could vest upon such liberal definition of change in control, even though an actual change in control may not occur. Examples of such a definition include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

<sup>22</sup> For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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Repricing Provisions

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" typically includes the ability to do any of the following:

◾ Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs;

◾ Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs;

◾ Cancel underwater options in exchange for stock awards; or

◾ Provide cash buyouts of underwater options.

While the above cover most types of repricing, ISS may view other provisions as akin to repricing depending on the facts and circumstances.

Also, vote against or withhold from members of the Compensation Committee who approved repricing (as defined above or otherwise determined by ISS), without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans that do not expressly prohibit repricing or cash buyout of underwater options without shareholder approval if the company has a history of repricing/buyouts without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Problematic Pay Practices or Significant Pay-for-Performance Disconnect

If the equity plan on the ballot is a vehicle for problematic pay practices<u>,</u> vote against the plan.

ISS may recommend a vote against the equity plan if the plan is determined to be a vehicle for pay-for-performance misalignment. Considerations in voting against the equity plan may include, but are not limited to:

◾ Severity of the pay-for-performance misalignment;

◾ Whether problematic equity grant practices are driving the misalignment; and/or

◾ Whether equity plan awards have been heavily concentrated to the CEO and/or the other NEOs.

Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))

General Recommendation: Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

◾ Addresses administrative features only; or

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|:---|:---|
| ◾ | Seeks approval for Section 162(m) purposes <u>only</u>, and the plan administering committee consists entirely of independent directors, per ISS' Classification of Directors. Note that if the company is presenting the plan to shareholders for the first time for any reason (including after the company's initial public offering), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).  |

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Vote against proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

◾ Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent directors, per ISS' Classification of Directors.

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Vote case-by-case on all other proposals to amend <u>cash</u> incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes.

Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

◾ If the proposal requests additional shares and/or the amendments include a term extension or addition of full value awards as an award type, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments;

◾ If the plan is being presented to shareholders for the first time (including after the company's IPO), whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments; and

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|:---|:---|
| ◾ | If there is no request for additional shares and the amendments do not include a term extension or addition of full value awards as an award type, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown only for informational purposes.  |

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In the first two case-by-case evaluation scenarios, the EPSC evaluation/score is the more heavily weighted consideration.

Specific Treatment of Certain Award Types in Equity Plan Evaluations

Dividend Equivalent Rights

Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.

Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)

For Real Estate Investment Trusts (REITS), include the common shares issuable upon conversion of outstanding Operating Partnership (OP) units in the share count for the purposes of determining: (1) market capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares outstanding in the burn rate analysis.

Other Compensation Plans

401(k) Employee Benefit Plans

**General Recommendation:**Vote for proposals to implement a 401(k) savings plan for employees.

Employee Stock Ownership Plans (ESOPs)

**General Recommendation:**Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

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Employee Stock Purchase Plans—Qualified Plans

General Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

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|:---|:---|
| ◾ | Purchase price is at least 85 percent of fair market value;  |

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◾ Offering period is 27 months or less; and

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|:---|:---|
| ◾ | The number of shares allocated to the plan is 10 percent or less of the outstanding shares.  |

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Vote against qualified employee stock purchase plans where when the plan features do not meet all of the above criteria.

Employee Stock Purchase Plans—Non-Qualified Plans

General Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

◾ Broad-based participation;

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|:---|:---|
| ◾ | Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;  |

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|:---|:---|
| ◾ | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value; and  |

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◾ No discount on the stock price on the date of purchase when there is a company matching contribution.

Vote against nonqualified employee stock purchase plans when the plan features do not meet all of the above criteria. If the matching contribution or effective discount exceeds the above, ISS may evaluate the SVT cost of the plan as part of the assessment.

Option Exchange Programs/Repricing Options

General Recommendation:Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

◾ Historic trading patterns--the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

◾ Rationale for the re-pricing--was the stock price decline beyond management's control?;

◾ Is this a value-for-value exchange?;

◾ Are surrendered stock options added back to the plan reserve?;

◾ Timing—repricing should occur at least one year out from any precipitous drop in company's stock price;

◾ Option vesting—does the new option vest immediately or is there a black-out period?;

◾ Term of the option--the term should remain the same as that of the replaced option;

◾ Exercise price—should be set at fair market or a premium to market; and

◾ Participants—executive officers and directors must be excluded.

If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing

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and warrants additional scrutiny. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

Stock Plans in Lieu of Cash

General Recommendation:Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.

Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.

Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, ISS will not make any adjustments to carve out the in-lieu-of cash compensation.

Transfer Stock Option (TSO) Programs

**General Recommendation:**One-time Transfers: Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote case-by-case on one-time transfers. Vote for if:

◾ Executive officers and non-employee directors are excluded from participating;

◾ Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models; and

◾ There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure, and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

◾ Eligibility;

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|:---|:---|
| ◾ | Vesting;  |

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◾ Bid-price;

◾ Term of options;

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| ◾ | Cost of the program and impact of the TSOs on company's total option expense; and  |

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◾ Option repricing policy.

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Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

Director Compensation

Shareholder Ratification of Director Pay Programs

General Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

◾ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

◾ An assessment of the following qualitative factors:

◾ The relative magnitude of director compensation as compared to companies of a similar profile;

◾ The presence of problematic pay practices relating to director compensation;

◾ Director stock ownership guidelines and holding requirements;

◾ Equity award vesting schedules;

◾ The mix of cash and equity-based compensation;

◾ Meaningful limits on director compensation;

◾ The availability of retirement benefits or perquisites; and

◾ The quality of disclosure surrounding director compensation.

Equity Plans for Non-Employee Directors

**General Recommendation:** Vote case-by-case on compensation plans for non-employee directors, based on:

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|:---|:---|
| ◾ | The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants;  |

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◾ The company's three-year burn rate relative to its industry/market cap peers (in certain circumstances); and

◾ The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).

On occasion, non-employee director stock plans will exceed the plan cost or burn-rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:

◾ The relative magnitude of director compensation as compared to companies of a similar profile;

◾ The presence of problematic pay practices relating to director compensation;

◾ Director stock ownership guidelines and holding requirements;

◾ Equity award vesting schedules;

◾ The mix of cash and equity-based compensation;

◾ Meaningful limits on director compensation;

◾ The availability of retirement benefits or perquisites; and

◾ The quality of disclosure surrounding director compensation.

Non-Employee Director Retirement Plans

**General Recommendation:** Vote against retirement plans for non-employee directors. Vote for shareholder proposals to eliminate retirement plans for non-employee directors.

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Shareholder Proposals on Compensation

Bonus Banking/Bonus Banking "Plus"

**General Recommendation:**Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

◾ The company's past practices regarding equity and cash compensation;

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|:---|:---|
| ◾ | Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and  |

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◾ Whether the company has a rigorous claw-back policy in place.

Compensation Consultants—Disclosure of Board or Company's Utilization

**General Recommendation:** Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s), and fees paid.

Disclosure/Setting Levels or Types of Compensation for Executives and Directors

**General Recommendation:**Generally vote for shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders' needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.

Generally vote against shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation (such as types of compensation elements or specific metrics) to be used for executive or directors.

Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Vote case-by-case on all other shareholder proposals regarding executive and director pay, taking into account relevant factors, including but not limited to: company performance, pay level and design versus peers, history of compensation concerns or pay-for-performance disconnect, and/or the scope and prescriptive nature of the proposal.

Golden Coffins/Executive Death Benefits

**General Recommendation:**Generally vote for proposals calling for companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals for which the broad-based employee population is eligible.

Hold Equity Past Retirement or for a Significant Period of Time

**General Recommendation:**Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans. The following factors will be taken into account:

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|:---|:---|
| ◾ | The percentage/ratio of net shares required to be retained;  |

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◾ The time period required to retain the shares;

◾ Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements;

◾ Whether the company has any other policies aimed at mitigating risk taking by executives;

◾ Executives' actual stock ownership and the degree to which it meets or exceeds the proponent's suggested holding period/retention ratio or the company's existing requirements; and

◾ Problematic pay practices, current and past, which may demonstrate a short-term versus long-term focus.

Pay Disparity

**General Recommendation:**Vote case-by-case on proposals calling for an analysis of the pay disparity between corporate executives and other non-executive employees. The following factors will be considered:

◾ The company's current level of disclosure of its executive compensation setting process, including how the company considers pay disparity;

◾ If any problematic pay practices or pay-for-performance concerns have been identified at the company; and

◾ The level of shareholder support for the company's pay programs.

Generally vote against proposals calling for the company to use the pay disparity analysis or pay ratio in a specific way to set or limit executive pay.

Pay for Performance/Performance-Based Awards

**General Recommendation:** Vote case-by-case on shareholder proposals requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

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|:---|:---|
| ◾ | First, vote for shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options, or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a "substantial" portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a meaningful premium to be considered performance-based awards; and  |

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|:---|:---|
| ◾ | Second, assess the rigor of the company's performance-based equity program. If the bar set for the performance-based program is too low based on the company's historical or peer group comparison, generally vote for the proposal. Furthermore, if target performance results in an above target payout, vote for the shareholder proposal due to program's poor design. If the company does not disclose the performance metric of the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.  |

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

Pay for Superior Performance

**General Recommendation:** Vote case-by-case on shareholder proposals that request the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. These proposals generally include the following principles:

◾ Set compensation targets for the plan's annual and long-term incentive pay components at or below the peer group median;

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◾ Deliver a majority of the plan's target long-term compensation through performance-vested, not simply time-vested, equity awards;

◾ Provide the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the plan;

◾ Establish performance targets for each plan financial metric relative to the performance of the company's peer companies; and

◾ Limit payment under the annual and performance-vested long-term incentive components of the plan to when the company's performance on its selected financial performance metrics exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

◾ What aspects of the company's annual and long-term equity incentive programs are performance driven?

◾ If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates disclosed to shareholders or are they benchmarked against a disclosed peer group?

◾ Can shareholders assess the correlation between pay and performance based on the current disclosure? and

◾ What type of industry and stage of business cycle does the company belong to?

Pre-Arranged Trading Plans (10b5-1 Plans)

**General Recommendation:** Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

◾ Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

◾ Amendment or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances, as determined by the board;

◾ Request that a certain number of days that must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan;

◾ Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

◾ An executive may not trade in company stock outside the 10b5-1 Plan; and

◾ Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive.

Prohibit Outside CEOs from Serving on Compensation Committees

**General Recommendation:**Generally vote against proposals seeking a policy to prohibit any outside CEO from serving on a company's compensation committee, unless the company has demonstrated problematic pay practices that raise concerns about the performance and composition of the committee.

Recoupment of Incentive or Stock Compensation in Specified Circumstances

**General Recommendation:**Vote case-by-case on proposals to recoup incentive cash or stock compensation made to senior executives if it is later determined that the figures upon which incentive compensation is earned turn out to have been in error, or if the senior executive has breached company policy or has engaged in misconduct that may be significantly detrimental to the company's financial position or reputation, or if the senior executive failed to manage or monitor risks that subsequently led to significant financial or reputational harm to the company. Many companies have adopted policies that permit recoupment in cases where an executive's fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. However, such policies may be narrow given that not all misconduct or negligence may result in significant financial restatements. Misconduct, negligence, or lack of sufficient oversight by senior executives may lead to significant financial loss or reputational damage that may have long-lasting impact.

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In considering whether to support such shareholder proposals, ISS will take into consideration the following factors:

◾ If the company has adopted a formal recoupment policy;

◾ The rigor of the recoupment policy focusing on how and under what circumstances the company may recoup incentive or stock compensation;

◾ Whether the company has chronic restatement history or material financial problems;

◾ Whether the company's policy substantially addresses the concerns raised by the proponent;

◾ Disclosure of recoupment of incentive or stock compensation from senior executives or lack thereof; and

◾ Any other relevant factors.

Severance and Golden Parachute Agreements

**General Recommendation:**Vote case-by-case on shareholder proposals requiring that executive severance (including change-in-control related) arrangements or payments be submitted for shareholder ratification.

Factors that will be considered include, but are not limited to:

◾ The company's severance or change-in-control agreements in place, and the presence of problematic features (such as excessive severance entitlements, single triggers, excise tax gross-ups, etc.);

◾ Any existing limits on cash severance payouts or policies which require shareholder ratification of severance payments exceeding a certain level;

◾ Any recent severance-related controversies; and

◾ Whether the proposal is overly prescriptive, such as requiring shareholder approval of severance that does not exceed market norms.

Share Buyback Impact on Incentive Program Metrics

**General Recommendation:** Vote case-by-case on proposals requesting the company exclude the impact of share buybacks from the calculation of incentive program metrics, considering the following factors:

◾ The frequency and timing of the company's share buybacks;

◾ The use of per-share metrics in incentive plans;

◾ The effect of recent buybacks on incentive metric results and payouts; and

◾ Whether there is any indication of metric result manipulation.

Supplemental Executive Retirement Plans (SERPs)

**General Recommendation:**Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Generally vote for shareholder proposals requesting to limit the executive benefits provided under the company's supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive's annual salary or those pay elements covered for the general employee population.

Tax Gross-Up Proposals

**General Recommendation:**Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

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Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity

**General Recommendation:**Vote case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment and/or eliminating accelerated vesting of unvested equity.

The following factors will be considered:

◾ The company's current treatment of equity upon employment termination and/or in change-in-control situations (i.e., vesting is double triggered and/or pro rata, does it allow for the assumption of equity by acquiring company, the treatment of performance shares, etc.); and

◾ Current employment agreements, including potential poor pay practices such as gross-ups embedded in those agreements.

Generally vote for proposals seeking a policy that prohibits automatic acceleration of the vesting of equity awards to senior executives upon a voluntary termination of employment or in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Routine/Miscellaneous

Adjourn Meeting

General Recommendation: Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.

Vote for proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote against proposals if the wording is too vague or if the proposal includes "other business."

Amend Quorum Requirements

General Recommendation: Vote case-by-case on proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

◾ The new quorum threshold requested;

◾ The rationale presented for the reduction;

◾ The market capitalization of the company (size, inclusion in indices);

◾ The company's ownership structure;

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| ◾ | Previous voter turnout or attempts to achieve quorum;  |

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◾ Other factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

Amend Minor Bylaws

General Recommendation: Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Change Company Name

General Recommendation: Vote for proposals to change the corporate name unless there is compelling evidence that the change would adversely impact shareholder value.

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Change Date, Time, or Location of Annual Meeting

General Recommendation: Vote for management proposals to change the date, time, or location of the annual meeting unless the proposed change is unreasonable.

Vote against shareholder proposals to change the date, time, or location of the annual meeting unless the current scheduling or location is unreasonable.

Other Business

General Recommendation: Vote against proposals to approve other business when it appears as a voting item.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Social and Environmental Issues

Global Approach – E&S Shareholder Proposals

ISS applies a common approach globally to evaluating social and environmental proposals which cover a wide range of topics, including consumer and product safety, environment and energy, labor standards and human rights, workplace and board diversity, and corporate political issues. While a variety of factors goes into each analysis, the overall principle guiding all vote recommendations focuses on how the proposal may enhance or protect shareholder value in either the short or long term.

General Recommendation: Generally vote case-by-case, examining primarily whether implementation of the proposal is likely to enhance or protect shareholder value. The following factors will be considered:

◾ If the issues presented in the proposal are being appropriately or effectively dealt with through legislation or government regulation;

◾ If the company has already responded in an appropriate and sufficient manner to the issue(s) raised in the proposal;

◾ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive;

◾ The company's approach compared with any industry standard practices for addressing the issue(s) raised by the proposal;

◾ Whether there are significant controversies, fines, penalties, or litigation associated with the company's practices related to the issue(s) raised in the proposal;

◾ If the proposal requests increased disclosure or greater transparency, whether reasonable and sufficient information is currently available to shareholders from the company or from other publicly available sources; and

◾ If the proposal requests increased disclosure or greater transparency, whether implementation would reveal proprietary or confidential information that could place the company at a competitive disadvantage.

Endorsement of Principles

General Recommendation: Generally vote against proposals seeking a company's endorsement of principles that support a particular public policy position. Endorsing a set of principles may require a company to take a stand on an issue that is beyond its own control and may limit its flexibility with respect to future developments.

Management and the board should be afforded the flexibility to make decisions on specific public policy positions based on their own assessment of the most beneficial strategies for the company.

Animal Welfare

Animal Welfare Policies

General Recommendation: Generally vote for proposals seeking a report on a company's animal welfare standards, or animal welfare-related risks, unless:

◾ The company has already published a set of animal welfare standards and monitors compliance;

◾ The company's standards are comparable to industry peers; and

◾ There are no recent significant fines, litigation, or controversies related to the company's and/or its suppliers' treatment of animals.

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Animal Testing

General Recommendation: Generally vote against proposals to phase out the use of animals in product testing, unless:

◾ The company is conducting animal testing programs that are unnecessary or not required by regulation;

◾ The company is conducting animal testing when suitable alternatives are commonly accepted and used by industry peers; or

◾ There are recent, significant fines or litigation related to the company's treatment of animals.

Animal Slaughter

General Recommendation: Generally vote against proposals requesting the implementation of Controlled Atmosphere Killing (CAK) methods at company and/or supplier operations unless such methods are required by legislation or generally accepted as the industry standard.

Vote case-by-case on proposals requesting a report on the feasibility of implementing CAK methods at company and/or supplier operations considering the availability of existing research conducted by the company or industry groups on this topic and any fines or litigation related to current animal processing procedures at the company.

Consumer Issues

Genetically Modified Ingredients

General Recommendation: Generally vote against proposals requesting that a company voluntarily label genetically engineered (GE) ingredients in its products. The labeling of products with GE ingredients is best left to the appropriate regulatory authorities.

Vote case-by-case on proposals asking for a report on the feasibility of labeling products containing GE ingredients, taking into account:

◾ The potential impact of such labeling on the company's business;

◾ The quality of the company's disclosure on GE product labeling, related voluntary initiatives, and how this disclosure compares with industry peer disclosure; and

◾ Company's current disclosure on the feasibility of GE product labeling.

Generally vote against proposals seeking a report on the social, health, and environmental effects of genetically modified organisms (GMOs). Studies of this sort are better undertaken by regulators and the scientific community.

Generally vote against proposals to eliminate GE ingredients from the company's products, or proposals asking for reports outlining the steps necessary to eliminate GE ingredients from the company's products. Such decisions are more appropriately made by management with consideration of current regulations.

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Reports on Potentially Controversial Business/Financial Practices

General Recommendation: Vote case-by-case on requests for reports on a company's potentially controversial business or financial practices or products, taking into account:

◾ Whether the company has adequately disclosed mechanisms in place to prevent abuses;

◾ Whether the company has adequately disclosed the financial risks of the products/practices in question;

◾ Whether the company has been subject to violations of related laws or serious controversies; and

◾ Peer companies' policies/practices in this area.

Pharmaceutical Pricing, Access to Medicines, and Prescription Drug Reimportation

General Recommendation: Generally vote against proposals requesting that companies implement specific price restraints on pharmaceutical products unless the company fails to adhere to legislative guidelines or industry norms in its product pricing practices.

Vote case-by-case on proposals requesting that a company report on its product pricing or access to medicine policies, considering:

◾ The potential for reputational, market, and regulatory risk exposure;

◾ Existing disclosure of relevant policies;

◾ Deviation from established industry norms;

◾ Relevant company initiatives to provide research and/or products to disadvantaged consumers;

◾ Whether the proposal focuses on specific products or geographic regions;

◾ The potential burden and scope of the requested report; and

◾ Recent significant controversies, litigation, or fines at the company.

Generally vote for proposals requesting that a company report on the financial and legal impact of its prescription drug reimportation policies unless such information is already publicly disclosed.

Generally vote against proposals requesting that companies adopt specific policies to encourage or constrain prescription drug reimportation. Such matters are more appropriately the province of legislative activity and may place the company at a competitive disadvantage relative to its peers.

Product Safety and Toxic/Hazardous Materials

General Recommendation: Generally vote for proposals requesting that a company report on its policies, initiatives/procedures, and oversight mechanisms related to toxic/hazardous materials or product safety in its supply chain, unless:

◾ The company already discloses similar information through existing reports such as a supplier code of conduct and/or a sustainability report;

◾ The company has formally committed to the implementation of a toxic/hazardous materials and/or product safety and supply chain reporting and monitoring program based on industry norms or similar standards within a specified time frame; or

◾ The company has not been recently involved in relevant significant controversies, fines, or litigation.

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Vote case-by-case on resolutions requesting that companies develop a feasibility assessment to phase-out of certain toxic/hazardous materials, or evaluate and disclose the potential financial and legal risks associated with utilizing certain materials, considering:

◾ The company's current level of disclosure regarding its product safety policies, initiatives, and oversight mechanisms;

◾ Current regulations in the markets in which the company operates; and

◾ Recent significant controversies, litigation, or fines stemming from toxic/hazardous materials at the company.

Generally vote against resolutions requiring that a company reformulate its products.

Tobacco-Related Proposals

General Recommendation: Vote case-by-case on resolutions regarding the advertisement of tobacco products, considering:

◾ Recent related fines, controversies, or significant litigation;

◾ Whether the company complies with relevant laws and regulations on the marketing of tobacco;

◾ Whether the company's advertising restrictions deviate from those of industry peers;

◾ Whether the company entered into the Master Settlement Agreement, which restricts marketing of tobacco to youth; and

◾ Whether restrictions on marketing to youth extend to foreign countries.

Vote case-by-case on proposals regarding second-hand smoke, considering;

◾ Whether the company complies with all laws and regulations;

◾ The degree that voluntary restrictions beyond those mandated by law might hurt the company's competitiveness; and

◾ The risk of any health-related liabilities.

Generally vote against resolutions to cease production of tobacco-related products, to avoid selling products to tobacco companies, to spin-off tobacco-related businesses, or prohibit investment in tobacco equities. Such business decisions are better left to company management or portfolio managers.

Generally vote against proposals regarding tobacco product warnings. Such decisions are better left to public health authorities.

Climate Change

Say on Climate (SoC) Management Proposals

General Recommendation: Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan**<sup>23</sup>**, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

◾ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

<sup>23</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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◾ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

◾ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions (Scopes 1, 2, and 3 if relevant);

◾ Whether the company has sought and received third-party approval that its targets are science-based;

◾ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

◾ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

◾ Whether the company's climate data has received third-party assurance;

◾ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

◾ Whether there are specific industry decarbonization challenges; and

◾ The company's related commitment, disclosure, and performance compared to its industry peers.

Say on Climate (SoC) Shareholder Proposals

General Recommendation: Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

◾ The completeness and rigor of the company's climate-related disclosure;

◾ The company's actual GHG emissions performance;

◾ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

◾ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Climate Change/Greenhouse Gas (GHG) Emissions

General Recommendation: Generally vote for resolutions requesting that a company disclose information on the financial, physical, or regulatory risks it faces related to climate change on its operations and investments or on how the company identifies, measures, and manages such risks, considering:

◾ Whether the company already provides current, publicly-available information on the impact that climate change may have on the company as well as associated company policies and procedures to address related risks and/or opportunities;

◾ The company's level of disclosure compared to industry peers; and

◾ Whether there are significant controversies, fines, penalties, or litigation associated with the company's climate change-related performance.

Generally vote for proposals requesting a report on greenhouse gas (GHG) emissions from company operations and/or products and operations, unless:

◾ The company already discloses current, publicly-available information on the impacts that GHG emissions may have on the company as well as associated company policies and procedures to address related risks and/or opportunities;

◾ The company's level of disclosure is comparable to that of industry peers; or

◾ There are no significant, controversies, fines, penalties, or litigation associated with the company's GHG emissions.

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Vote case-by-case on proposals that call for the adoption of GHG reduction goals from products and operations, taking into account:

◾ Whether the company provides disclosure of year-over-year GHG emissions performance data;

◾ Whether company disclosure lags behind industry peers;

◾ The company's actual GHG emissions performance;

◾ The company's current GHG emission policies, oversight mechanisms, and related initiatives; and

◾ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to GHG emissions.

Energy Efficiency

General Recommendation: Generally vote for proposals requesting that a company report on its energy efficiency policies, unless:

◾ The company complies with applicable energy efficiency regulations and laws, and discloses its participation in energy efficiency policies and programs, including disclosure of benchmark data, targets, and performance measures; or

◾ The proponent requests adoption of specific energy efficiency goals within specific timelines.

Renewable Energy

General Recommendation: Generally vote for requests for reports on the feasibility of developing renewable energy resources unless the report would be duplicative of existing disclosure or irrelevant to the company's line of business.

Generally vote against proposals requesting that the company invest in renewable energy resources. Such decisions are best left to management's evaluation of the feasibility and financial impact that such programs may have on the company.

Generally vote against proposals that call for the adoption of renewable energy goals, taking into account:

◾ The scope and structure of the proposal;

◾ The company's current level of disclosure on renewable energy use and GHG emissions; and

◾ The company's disclosure of policies, practices, and oversight implemented to manage GHG emissions and mitigate climate change risks.

Diversity

Board Diversity

General Recommendation: Generally vote for requests for reports on a company's efforts to diversify the board, unless:

◾ The gender and racial minority representation of the company's board is reasonably inclusive in relation to companies of similar size and business; or

◾ The board already reports on its nominating procedures and gender and racial minority initiatives on the board and within the company.

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Vote case-by-case on proposals asking a company to increase the gender and racial minority representation on its board, taking into account:

◾ The degree of existing gender and racial minority diversity on the company's board and among its executive officers;

◾ The level of gender and racial minority representation that exists at the company's industry peers;

◾ The company's established process for addressing gender and racial minority board representation;

◾ Whether the proposal includes an overly prescriptive request to amend nominating committee charter language;

◾ The independence of the company's nominating committee;

◾ Whether the company uses an outside search firm to identify potential director nominees; and

◾ Whether the company has had recent controversies, fines, or litigation regarding equal employment practices.

Equality of Opportunity

General Recommendation: Generally vote for proposals requesting a company disclose its diversity policies or initiatives, or proposals requesting disclosure of a company's comprehensive workforce diversity data, including requests for EEO-1 data, unless:

◾ The company publicly discloses equal opportunity policies and initiatives in a comprehensive manner;

◾ The company already publicly discloses comprehensive workforce diversity data; or

◾ The company has no recent significant EEO-related violations or litigation.

Generally vote against proposals seeking information on the diversity efforts of suppliers and service providers. Such requests may pose a significant burden on the company.

Gender Identity, Sexual Orientation, and Domestic Partner Benefits

General Recommendation: Generally vote for proposals seeking to amend a company's EEO statement or diversity policies to prohibit discrimination based on sexual orientation and/or gender identity, unless the change would be unduly burdensome.

Generally vote against proposals to extend company benefits to, or eliminate benefits from, domestic partners. Decisions regarding benefits should be left to the discretion of the company.

Gender, Race/Ethnicity Pay Gap

General Recommendation: Vote case-by-case on requests for reports on a company's pay data by gender or race/ ethnicity, or a report on a company's policies and goals to reduce any gender or race/ethnicity pay gaps, taking into account:

◾ The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy on fair and equitable compensation practices;

◾ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race, or ethnicity pay gap issues;

◾ The company's disclosure regarding gender, race, or ethnicity pay gap policies or initiatives compared to its industry peers; and

◾ Local laws regarding categorization of race and/or ethnicity and definitions of ethnic and/or racial minorities.

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Racial Equity and/or Civil Rights Audit Guidelines

General Recommendation: Vote case-by-case on proposals asking a company to conduct an independent racial equity and/or civil rights audit, taking into account:

◾ The company's established process or framework for addressing racial inequity and discrimination internally;

◾ Whether the company adequately discloses workforce diversity and inclusion metrics and goals;

◾ Whether the company has issued a public statement related to its racial justice efforts in recent years, or has committed to internal policy review;

◾ Whether the company has engaged with impacted communities, stakeholders, and civil rights experts;

◾ The company's track record in recent years of racial justice measures and outreach externally; and

◾ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to racial inequity or discrimination.

Environment and Sustainability

Facility and Workplace Safety

General Recommendation: Vote case-by-case on requests for workplace safety reports, including reports on accident risk reduction efforts, taking into account:

◾ The company's current level of disclosure of its workplace health and safety performance data, health and safety management policies, initiatives, and oversight mechanisms;

◾ The nature of the company's business, specifically regarding company and employee exposure to health and safety risks;

◾ Recent significant controversies, fines, or violations related to workplace health and safety; and

◾ The company's workplace health and safety performance relative to industry peers.

Vote case-by-case on resolutions requesting that a company report on safety and/or security risks associated with its operations and/or facilities, considering:

◾ The company's compliance with applicable regulations and guidelines;

◾ The company's current level of disclosure regarding its security and safety policies, procedures, and compliance monitoring; and

◾ The existence of recent, significant violations, fines, or controversy regarding the safety and security of the company's operations and/or facilities.

Natural Capital- Related and/or Community Impact Assessment Proposals

General Recommendation: Vote case-by-case on requests for reports on policies and/or the potential (community) social and/or environmental impact of company operations, considering:

◾ Alignment of current disclosure of applicable company policies, metrics, risk assessment report(s) and risk management procedures with any relevant, broadly accepted reporting frameworks;

◾ The impact of regulatory non-compliance, litigation, remediation, or reputational loss that may be associated with failure to manage the company's operations in question, including the management of relevant community and stakeholder relations;

◾ The nature, purpose, and scope of the company's operations in the specific region(s);

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◾ The degree to which company policies and procedures are consistent with industry norms; and

◾ The scope of the resolution.

Hydraulic Fracturing

General Recommendation: Generally vote for proposals requesting greater disclosure of a company's (natural gas) hydraulic fracturing operations, including measures the company has taken to manage and mitigate the potential community and environmental impacts of those operations, considering:

◾ The company's current level of disclosure of relevant policies and oversight mechanisms;

◾ The company's current level of such disclosure relative to its industry peers;

◾ Potential relevant local, state, or national regulatory developments; and

◾ Controversies, fines, or litigation related to the company's hydraulic fracturing operations.

Operations in Protected Areas

General Recommendation: Generally vote for requests for reports on potential environmental damage as a result of company operations in protected regions, unless:

◾ Operations in the specified regions are not permitted by current laws or regulations;

◾ The company does not currently have operations or plans to develop operations in these protected regions; or

◾ The company's disclosure of its operations and environmental policies in these regions is comparable to industry peers.

Recycling

General Recommendation: Vote case-by-case on proposals to report on an existing recycling program, or adopt a new recycling program, taking into account:

◾ The nature of the company's business;

◾ The current level of disclosure of the company's existing related programs;

◾ The timetable and methods of program implementation prescribed by the proposal;

◾ The company's ability to address the issues raised in the proposal; and

◾ How the company's recycling programs compare to similar programs of its industry peers.

Sustainability Reporting

General Recommendation: Generally vote for proposals requesting that a company report on its policies, initiatives, and oversight mechanisms related to social, economic, and environmental sustainability, unless:

◾ The company already discloses similar information through existing reports or policies such as an environment, health, and safety (EHS) report; a comprehensive code of corporate conduct; and/or a diversity report; or

◾ The company has formally committed to the implementation of a reporting program based on Global Reporting Initiative (GRI) guidelines or a similar standard within a specified time frame.

Water Issues

General Recommendation: Vote case-by-case on proposals requesting a company report on, or adopt a new policy on, water-related risks and concerns, taking into account:

◾ The company's current disclosure of relevant policies, initiatives, oversight mechanisms, and water usage metrics;

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◾ Whether or not the company's existing water-related policies and practices are consistent with relevant internationally recognized standards and national/local regulations;

◾ The potential financial impact or risk to the company associated with water-related concerns or issues; and

◾ Recent, significant company controversies, fines, or litigation regarding water use by the company and its suppliers.

General Corporate Issues

Charitable Contributions

General Recommendation: Vote against proposals restricting a company from making charitable contributions. Charitable contributions are generally useful for assisting worthwhile causes and for creating goodwill in the community. In the absence of bad faith, self-dealing, or gross negligence, management should determine which, and if, contributions are in the best interests of the company.

Data Security, Privacy, and Internet Issues

General Recommendation: Vote case-by-case on proposals requesting the disclosure or implementation of data security, privacy, or information access and management policies and procedures, considering:

◾ The level of disclosure of company policies and procedures relating to data security, privacy, freedom of speech, information access and management, and Internet censorship;

◾ Engagement in dialogue with governments or relevant groups with respect to data security, privacy, or the free flow of information on the Internet;

◾ The scope of business involvement and of investment in countries whose governments censor or monitor the Internet and other telecommunications;

◾ Applicable market-specific laws or regulations that may be imposed on the company; and

◾ Controversies, fines, or litigation related to data security, privacy, freedom of speech, or Internet censorship.

ESG Compensation-Related Proposals

General Recommendation: Vote case-by-case on proposals seeking a report or additional disclosure on the company's approach, policies, and practices on incorporating environmental and social criteria into its executive compensation strategy, considering:

◾ The scope and prescriptive nature of the proposal;

◾ The company's current level of disclosure regarding its environmental and social performance and governance;

◾ The degree to which the board or compensation committee already discloses information on whether it has considered related E&S criteria; and

◾ Whether the company has significant controversies or regulatory violations regarding social or environmental issues.

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Human Rights, Human Capital Management, and International Operations

Human Rights Proposals

General Recommendation: Generally vote for proposals requesting a report on company or company supplier labor and/or human rights standards and policies unless such information is already publicly disclosed.

Vote case-by-case on proposals to implement company or company supplier labor and/or human rights standards and policies, considering:

◾ The degree to which existing relevant policies and practices are disclosed;

◾ Whether or not existing relevant policies are consistent with internationally recognized standards;

◾ Whether company facilities and those of its suppliers are monitored and how;

◾ Company participation in fair labor organizations or other internationally recognized human rights initiatives;

◾ Scope and nature of business conducted in markets known to have higher risk of workplace labor/human rights abuse;

◾ Recent, significant company controversies, fines, or litigation regarding human rights at the company or its suppliers;

◾ The scope of the request; and

◾ Deviation from industry sector peer company standards and practices.

Vote case-by-case on proposals requesting that a company conduct an assessment of the human rights risks in its operations or in its supply chain, or report on its human rights risk assessment process, considering:

◾ The degree to which existing relevant policies and practices are disclosed, including information on the implementation of these policies and any related oversight mechanisms;

◾ The company's industry and whether the company or its suppliers operate in countries or areas where there is a history of human rights concerns;

◾ Recent significant controversies, fines, or litigation regarding human rights involving the company or its suppliers, and whether the company has taken remedial steps; and

◾ Whether the proposal is unduly burdensome or overly prescriptive.

Mandatory Arbitration

General Recommendation: Vote case-by-case on requests for a report on a company's use of mandatory arbitration on employment-related claims, taking into account:

◾ The company's current policies and practices related to the use of mandatory arbitration agreements on workplace claims;

◾ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to the use of mandatory arbitration agreements on workplace claims; and

◾ The company's disclosure of its policies and practices related to the use of mandatory arbitration agreements compared to its peers.

Operations in High-Risk Markets

General Recommendation: Vote case-by-case on requests for a report on a company's potential financial and reputational risks associated with operations in "high-risk" markets, such as a terrorism-sponsoring state or politically/socially unstable region, taking into account:

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◾ The nature, purpose, and scope of the operations and business involved that could be affected by social or political disruption;

◾ Current disclosure of applicable risk assessment(s) and risk management procedures;

◾ Compliance with U.S. sanctions and laws;

◾ Consideration of other international policies, standards, and laws; and

◾ Whether the company has been recently involved in recent, significant controversies, fines, or litigation related to its operations in "high-risk" markets.

Outsourcing/Offshoring

General Recommendation: Vote case-by-case on proposals calling for companies to report on the risks associated with outsourcing/plant closures, considering:

◾ Controversies surrounding operations in the relevant market(s);

◾ The value of the requested report to shareholders;

◾ The company's current level of disclosure of relevant information on outsourcing and plant closure procedures; and

◾ The company's existing human rights standards relative to industry peers.

Sexual Harassment

General Recommendation: Vote case-by-case on requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment, taking into account:

◾ The company's current policies, practices, oversight mechanisms related to preventing workplace sexual harassment;

◾ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to workplace sexual harassment issues; and

◾ The company's disclosure regarding workplace sexual harassment policies or initiatives compared to its industry peers.

Weapons and Military Sales

General Recommendation: Vote against reports on foreign military sales or offsets. Such disclosures may involve sensitive and confidential information. Moreover, companies must comply with government controls and reporting on foreign military sales.

Generally vote against proposals asking a company to cease production or report on the risks associated with the use of depleted uranium munitions or nuclear weapons components and delivery systems, including disengaging from current and proposed contracts. Such contracts are monitored by government agencies, serve multiple military and non-military uses, and withdrawal from these contracts could have a negative impact on the company's business.

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Political Activities

Lobbying

General Recommendation: Vote case-by-case on proposals requesting information on a company's lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures, considering:

◾ The company's current disclosure of relevant lobbying policies, and management and board oversight;

◾ The company's disclosure regarding trade associations or other groups that it supports, or is a member of, that engage in lobbying activities; and

◾ Recent significant controversies, fines, or litigation regarding the company's lobbying-related activities.

Political Contributions

General Recommendation: Generally vote for proposals requesting greater disclosure of a company's political contributions and trade association spending policies and activities, considering:

◾ The company's policies, and management and board oversight related to its direct political contributions and payments to trade associations or other groups that may be used for political purposes;

◾ The company's disclosure regarding its support of, and participation in, trade associations or other groups that may make political contributions; and

◾ Recent significant controversies, fines, or litigation related to the company's political contributions or political activities.

Vote against proposals barring a company from making political contributions. Businesses are affected by legislation at the federal, state, and local level; barring political contributions can put the company at a competitive disadvantage.

Vote against proposals to publish in newspapers and other media a company's political contributions. Such publications could present significant cost to the company without providing commensurate value to shareholders.

Political Expenditures and Lobbying Congruency

General Recommendation: Generally vote case-by-case on proposals requesting greater disclosure of a company's alignment of political contributions, lobbying, and electioneering spending with a company's publicly stated values and policies, considering:

◾ The company's policies, management, board oversight, governance processes, and level of disclosure related to direct political contributions, lobbying activities, and payments to trade associations, political action committees, or other groups that may be used for political purposes;

◾ The company's disclosure regarding: the reasons for its support of candidates for public offices; the reasons for support of and participation in trade associations or other groups that may make political contributions; and other political activities;

◾ Any incongruencies identified between a company's direct and indirect political expenditures and its publicly stated values and priorities; and

◾ Recent significant controversies related to the company's direct and indirect lobbying, political contributions, or political activities.

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![LOGO](g79608g02g02.jpg)

Generally vote case-by-case on proposals requesting comparison of a company's political spending to objectives that can mitigate material risks for the company, such as limiting global warming.

Political Ties

General Recommendation: Generally vote against proposals asking a company to affirm political nonpartisanship in the workplace, so long as:

◾ There are no recent, significant controversies, fines, or litigation regarding the company's political contributions or trade association spending; and

◾ The company has procedures in place to ensure that employee contributions to company-sponsored political action committees (PACs) are strictly voluntary and prohibit coercion.

Vote against proposals asking for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have prior government service and whether such service had a bearing on the business of the company. Such a list would be burdensome to prepare without providing any meaningful information to shareholders.

W W W . I S S G O V E R N A N C E . C O M 76 of 82

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![LOGO](g79608g02g02.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Mutual Fund Proxies

Election of Directors

General Recommendation: Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes

General Recommendation: For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

Converting Closed-end Fund to Open-end Fund

General Recommendation: Vote case-by-case on conversion proposals, considering the following factors:

◾ Past performance as a closed-end fund;

◾ Market in which the fund invests;

◾ Measures taken by the board to address the discount; and

---

| | |
|:---|:---|
| ◾ | Past shareholder activism, board activity, and votes on related proposals.  |

---

Proxy Contests

General Recommendation: Vote case-by-case on proxy contests, considering the following factors:

◾ Past performance relative to its peers;

◾ Market in which the fund invests;

◾ Measures taken by the board to address the issues;

---

| | |
|:---|:---|
| ◾ | Past shareholder activism, board activity, and votes on related proposals;  |

---

◾ Strategy of the incumbents versus the dissidents;

◾ Independence of directors;

◾ Experience and skills of director candidates;

◾ Governance profile of the company; and

◾ Evidence of management entrenchment.

Investment Advisory Agreements

General Recommendation: Vote case-by-case on investment advisory agreements, considering the following factors:

◾ Proposed and current fee schedules;

◾ Fund category/investment objective;

◾ Performance benchmarks;

◾ Share price performance as compared with peers;

◾ Resulting fees relative to peers; and

◾ Assignments (where the advisor undergoes a change of control).

W W W . I S S G O V E R N A N C E . C O M 77 of 82

------

![LOGO](g79608g02g02.jpg)

Approving New Classes or Series of Shares

General Recommendation: Vote for the establishment of new classes or series of shares.

Preferred Stock Proposals

General Recommendation: Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

◾ Stated specific financing purpose;

◾ Possible dilution for common shares; and

◾ Whether the shares can be used for antitakeover purposes.

1940 Act Policies

General Recommendation: Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors:

◾ Potential competitiveness;

◾ Regulatory developments;

◾ Current and potential returns; and

◾ Current and potential risk.

Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.

Changing a Fundamental Restriction to a Nonfundamental Restriction

General Recommendation: Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

◾ The fund's target investments;

◾ The reasons given by the fund for the change; and

◾ The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Nonfundamental

General Recommendation: Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

Name Change Proposals

General Recommendation: Vote case-by-case on name change proposals, considering the following factors:

◾ Political/economic changes in the target market;

◾ Consolidation in the target market; and

◾ Current asset composition.

W W W . I S S G O V E R N A N C E . C O M 78 of 82

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![LOGO](g79608g02g02.jpg)

Change in Fund's Subclassification

General Recommendation: Vote case-by-case on changes in a fund's sub-classification, considering the following factors:

◾ Potential competitiveness;

◾ Current and potential returns;

◾ Risk of concentration; and

◾ Consolidation in target industry.

Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value

General Recommendation: Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV) if:

◾ The proposal to allow share issuances below NAV has an expiration date no more than one year from the date shareholders approve the underlying proposal, as required under the Investment Company Act of 1940;

◾ The sale is deemed to be in the best interests of shareholders by (1) a majority of the company's independent directors and (2) a majority of the company's directors who have no financial interest in the issuance; and

◾ The company has demonstrated responsible past use of share issuances by either:

◾ Outperforming peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

◾ Providing disclosure that its past share issuances were priced at levels that resulted in only small or moderate discounts to NAV and economic dilution to existing non-participating shareholders.

Disposition of Assets/Termination/Liquidation

General Recommendation: Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors:

◾ Strategies employed to salvage the company;

◾ The fund's past performance; and

◾ The terms of the liquidation.

Changes to the Charter Document

General Recommendation: Vote case-by-case on changes to the charter document, considering the following factors:

◾ The degree of change implied by the proposal;

◾ The efficiencies that could result;

◾ The state of incorporation; and

◾ Regulatory standards and implications.

Vote against any of the following changes:

◾ Removal of shareholder approval requirement to reorganize or terminate the trust or any of its series;

◾ Removal of shareholder approval requirement for amendments to the new declaration of trust;

◾ Removal of shareholder approval requirement to amend the fund's management contract, allowing the contract to be modified by the investment manager and the trust management, as permitted by the 1940 Act;

W W W . I S S G O V E R N A N C E . C O M 79 of 82

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![LOGO](g79608g02g02.jpg)

◾ Allow the trustees to impose other fees in addition to sales charges on investment in a fund, such as deferred sales charges and redemption fees that may be imposed upon redemption of a fund's shares;

◾ Removal of shareholder approval requirement to engage in and terminate subadvisory arrangements; or

◾ Removal of shareholder approval requirement to change the domicile of the fund.

Changing the Domicile of a Fund

General Recommendation: Vote case-by-case on re-incorporations, considering the following factors:

◾ Regulations of both states;

◾ Required fundamental policies of both states; and

◾ The increased flexibility available.

Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval

General Recommendation: Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

Distribution Agreements

General Recommendation: Vote case-by-case on distribution agreement proposals, considering the following factors:

◾ Fees charged to comparably sized funds with similar objectives;

◾ The proposed distributor's reputation and past performance;

◾ The competitiveness of the fund in the industry; and

◾ The terms of the agreement.

Master-Feeder Structure

General Recommendation: Vote for the establishment of a master-feeder structure.

Mergers

General Recommendation: Vote case-by-case on merger proposals, considering the following factors:

◾ Resulting fee structure;

◾ Performance of both funds;

◾ Continuity of management personnel; and

◾ Changes in corporate governance and their impact on shareholder rights.

Shareholder Proposals for Mutual Funds

Establish Director Ownership Requirement

General Recommendation: Generally vote against shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

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![LOGO](g79608g02g02.jpg)

Reimburse Shareholder for Expenses Incurred

General Recommendation: Vote case-by-case on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote for the reimbursement of the proxy solicitation expenses.

Terminate the Investment Advisor

General Recommendation: Vote case-by-case on proposals to terminate the investment advisor, considering the following factors:

◾ Performance of the fund's Net Asset Value (NAV);

◾ The fund's history of shareholder relations; and

◾ The performance of other funds under the advisor's management.

W W W . I S S G O V E R N A N C E . C O M 81 of 82

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![LOGO](g79608g02g02.jpg)

We empower investors and companies to build for long-term and sustainable growth by providing

high-quality data, analytics, and insight.

G E T S T A R T E D W I T H I S S S O L U T I O N S

Email sales@issgovernance.comor visit www.issgovernance.comfor more information.

Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS' 2,600 employees operate worldwide across 29 global locations in 15 countries. Its approximately 3,400 clients include many of the world's leading institutional investors who rely on ISS' objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS' expertise to help them make informed investment decisions. This document and all of the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the "Information") is the property of Institutional Shareholder Services Inc. (ISS), its subsidiaries, or, in some cases third party suppliers.

The Information has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), or a promotion or recommendation of, any security, financial product or other investment vehicle or any trading strategy, and ISS does not endorse, approve, or otherwise express any opinion regarding any issuer, securities, financial products or instruments or trading strategies.

The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information.

ISS MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, TIMELINESS, NON-INFRINGEMENT, COMPLETENESS, MERCHANTABILITY, AND FITNESS for A PARTICULAR PURPOSE) WITH RESPECT TO ANY OF THE INFORMATION.

Without limiting any of the foregoing and to the maximum extent permitted by law, in no event shall ISS have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits), or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.© 2025 \| Institutional Shareholder Services and/or its affiliates

W W W . I S S G O V E R N A N C E . C O M 82 of 82

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#### APPENDIX E – IVC PROGRAM PROXY VOTING POLICY DOCUMENTS

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![LOGO](g79608g00k01.jpg)

## SSGA – VOTE WITH COMPANY BOARD RECOMMENDATION
Custom Policy developed by ISS for use solely in State Street Global Advisors' proxy voting program

2023

ISS

Proxy Advisory \| Proxy Voting \| Securities Class Action Services \| Global Proxy Distribution

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E-1

------

## SSGA – Vote With Company Board Recommendation Policy

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;Default Position | Vote in accordance with the recommendation of the company's board of directors as set forth on the applicable proxy statement on all items where a company's board of directors recommendation can be provided and exists. |
|  | &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **If the company's board of directors provides no vote recommendation (company's board of directors' vote recommendation = NONE), then ABSTAIN.** |
|  | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **In certain limited cases, proxies seek factual information about shareholders (e.g., if the shareholder is a citizen of the country where the vote is being held, or if the shareholder has a personal interest in the proposed agenda item). In such cases, the proxy form instructs shareholders on how to vote based on factual circumstances and State Street Global Advisors will provide the factual information requested on behalf of the fund holding the securities.** |

---

ISS \| Institutional Shareholder Services E-2 2

------

For more information, please visit: www.issgovernance.com

![LOGO](g79608g00k02.jpg)

ISS \| Institutional Shareholder Services E-3 3

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![LOGO](g79608g12e95.jpg)

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![LOGO](g79608g00k04.jpg)

## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  [**Introduction**](#appd79608_1) | E-10 |
| [**1. Board of Directors**](#appd79608_2) | E-11 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Voting on Director Nominees in Uncontested Elections](#appd79608_3) | E-11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independence](#appd79608_4) | E-11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [ISS Classification of Directors – U.S.](#appd79608_5) | E-12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Composition](#appd79608_6) | E-14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Attendance](#appd79608_7) | E-14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Overboarded Directors](#appd79608_8) | E-14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender Diversity](#appd79608_9) | E-14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial and/or Ethnic Diversity](#appd79608_10) | E-14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Responsiveness](#appd79608_11) | E-15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Accountability](#appd79608_12) | E-15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills](#appd79608_13) | E-15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unequal Voting Rights](#appd79608_14) | E-16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classified Board Structure](#appd79608_15) | E-16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Removal of Shareholder Discretion on Classified Boards](#appd79608_16) | E-16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Governance Structure](#appd79608_17) | E-16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unilateral Bylaw/Charter Amendments](#appd79608_18) | E-17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Restricting Binding Shareholder Proposals](#appd79608_19) | E-17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Performance Evaluation](#appd79608_20) | E-17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appd79608_21) | E-18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Audit-Related Practices](#appd79608_22) | E-18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Compensation Practices](#appd79608_23) | E-18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pledging of Company Stock](#appd79608_24) | E-19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Governance Failures](#appd79608_25) | E-19 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Voting on Director Nominees in Contested Elections](#appd79608_26) | E-19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Vote-No Campaigns](#appd79608_27) | E-19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access](#appd79608_28) | E-19 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Board-Related Proposals](#appd79608_29) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appd79608_30) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appd79608_31) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Term/Tenure Limits](#appd79608_32) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Age Limits](#appd79608_33) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Size](#appd79608_34) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification/Declassification of the Board](#appd79608_35) | E-20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appd79608_36) | E-21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appd79608_37) | E-21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification, Liability Protection, and Exculpation](#appd79608_38) | E-21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appd79608_39) | E-22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish Other Board Committee Proposals](#appd79608_40) | E-22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Filling Vacancies/Removal of Directors](#appd79608_41) | E-22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independent Board Chair](#appd79608_42) | E-22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority of Independent Directors/Establishment of Independent Committees](#appd79608_43) | E-23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Vote Standard for the Election of Directors](#appd79608_44) | E-23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Access](#appd79608_45) | E-23 |

---

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![LOGO](g79608g00k04.jpg)

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Require More Nominees than Open Seats](#appd79608_46) | E-23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Engagement Policy (Shareholder Advisory Committee)](#appd79608_47) | E-24 |
| [**2. Audit- Related**](#appd79608_48) | E-25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Indemnification and Limitation of Liability](#appd79608_49) | E-25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Ratification](#appd79608_50) | E-25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals Limiting Non-Audit Services](#appd79608_51) | E-25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Audit Firm Rotation](#appd79608_52) | E-26 |
| [**3. Shareholder Rights & Defenses**](#appd79608_53) | E-27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advance Notice Requirements for Shareholder Proposals/Nominations](#appd79608_54) | E-27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Bylaws without Shareholder Consent](#appd79608_55) | E-27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Acquisition Provisions](#appd79608_56) | E-27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Cash-Out Provisions](#appd79608_57) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disgorgement Provisions](#appd79608_58) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appd79608_59) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Freeze-Out Provisions](#appd79608_60) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appd79608_61) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Litigation Rights](#appd79608_62) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Federal Forum Selection Provisions](#appd79608_63) | E-28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Forum Provisions for State Law Matters](#appd79608_64) | E-29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee shifting](#appd79608_65) | E-29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Protective Amendments](#appd79608_66) | E-30 |
| [Poison Pills (Shareholder Rights Plans)](#appd79608_67) | E-30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy](#appd79608_68) | E-30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify a Poison Pill](#appd79608_69) | E-30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)](#appd79608_70) | E-31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Voting Disclosure, Confidentiality, and Tabulation](#appd79608_71) | E-31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appd79608_72) | E-31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimbursing Proxy Solicitation Expenses](#appd79608_73) | E-32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appd79608_74) | E-32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appd79608_75) | E-32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call Special Meetings](#appd79608_76) | E-33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stakeholder Provisions](#appd79608_77) | E-33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [State Antitakeover Statutes](#appd79608_78) | E-33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Vote Requirements](#appd79608_79) | E-33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appd79608_80) | E-34 |
| [**4. Capital/Restructuring**](#appd79608_81) | E-35 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Capital](#appd79608_82) | E-35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjustments to Par Value of Common Stock](#appd79608_83) | E-35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appd79608_84) | E-35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appd79608_85) | E-35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appd79608_86) | E-36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Dual Class Structure](#appd79608_87) | E-36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Issue Stock for Use with Rights Plan](#appd79608_88) | E-36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appd79608_89) | E-36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appd79608_90) | E-36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appd79608_91) | E-36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recapitalization Plans](#appd79608_92) | E-37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appd79608_93) | E-38 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.](#appd79608_94) | E-38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appd79608_95) | E-38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs Shareholder Proposals](#appd79608_96) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appd79608_97) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tracking Stock](#appd79608_98) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Restructuring](#appd79608_99) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appd79608_100) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Purchases](#appd79608_101) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appd79608_102) | E-39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appd79608_103) | E-40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conversion of Securities](#appd79608_104) | E-40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans](#appd79608_105) | E-40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Formation of Holding Company](#appd79608_106) | E-40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)](#appd79608_107) | E-41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Joint Ventures](#appd79608_108) | E-41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appd79608_109) | E-42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers and Acquisitions](#appd79608_110) | E-42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Private Placements/Warrants/Convertible Debentures](#appd79608_111) | E-42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reorganization/Restructuring Plan (Bankruptcy)](#appd79608_112) | E-43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appd79608_113) | E-44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions](#appd79608_114) | E-44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appd79608_115) | E-45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Value Maximization Shareholder Proposals](#appd79608_116) | E-45 |
| [**5. Compensation**](#appd79608_117) | E-46 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Executive Pay Evaluation](#appd79608_118) | E-46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation—Management Proposals (Say-on-Pay)](#appd79608_119) | E-46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Evaluation](#appd79608_120) | E-47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices](#appd79608_121) | E-48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Committee Communications and Responsiveness](#appd79608_122) | E-49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")](#appd79608_123) | E-49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appd79608_124) | E-49 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Equity-Based and Other Incentive Plans](#appd79608_125) | E-50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Value Transfer (SVT)](#appd79608_126) | E-51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Three-Year Value-Adjusted Burn Rate](#appd79608_127) | E-51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Egregious Factors](#appd79608_128) | E-51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liberal Change in Control Definition](#appd79608_129) | E-51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Repricing Provisions](#appd79608_130) | E-52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices or Significant Pay-for-Performance Disconnect](#appd79608_131) | E-52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))](#appd79608_132) | E-52 |
| [Specific Treatment of Certain Award Types in Equity Plan Evaluations](#appd79608_133) | E-53 |
| [Dividend Equivalent Rights](#appd79608_134) | E-53 |
| [Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)](#appd79608_135) | E-53 |
| [Other Compensation Plans](#appd79608_136) | E-53 |
| [401(k) Employee Benefit Plans](#appd79608_137) | E-53 |
| [Employee Stock Ownership Plans (ESOPs)](#appd79608_138) | E-53 |
| [Employee Stock Purchase Plans—Qualified Plans](#appd79608_139) | E-53 |
| [Employee Stock Purchase Plans—Non-Qualified Plans](#appd79608_140) | E-54 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appd79608_141) | E-54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Plans in Lieu of Cash](#appd79608_142) | E-55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Stock Option (TSO) Programs](#appd79608_143) | E-55 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Director Compensation](#appd79608_144) | E-56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appd79608_145) | E-56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Plans for Non-Employee Directors](#appd79608_146) | E-56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Employee Director Retirement Plans](#appd79608_147) | E-56 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Compensation](#appd79608_148) | E-57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking/Bonus Banking "Plus"](#appd79608_149) | E-57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants—Disclosure of Board or Company's Utilization](#appd79608_150) | E-57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure/Setting Levels or Types of Compensation for Executives and Directors](#appd79608_151) | E-57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden Coffins/Executive Death Benefits](#appd79608_152) | E-57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hold Equity Past Retirement or for a Significant Period of Time](#appd79608_153) | E-58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay Disparity](#appd79608_154) | E-58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Performance/Performance-Based Awards](#appd79608_155) | E-58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appd79608_156) | E-59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pre-Arranged Trading Plans (10b5-1 Plans)](#appd79608_157) | E-59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit Outside CEOs from Serving on Compensation Committees](#appd79608_158) | E-59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoupment of Incentive or Stock Compensation in Specified Circumstances](#appd79608_159) | E-59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements for Executives/Golden Parachutes](#appd79608_160) | E-60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Buyback Impact on Incentive Program Metrics](#appd79608_161) | E-60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supplemental Executive Retirement Plans (SERPs)](#appd79608_162) | E-60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-Up Proposals](#appd79608_163) | E-61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity](#appd79608_164) | E-61 |
| [**6. Routine/Miscellaneous**](#appd79608_165) | E-62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjourn Meeting](#appd79608_166) | E-62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Quorum Requirements](#appd79608_167) | E-62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Minor Bylaws](#appd79608_168) | E-62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Company Name](#appd79608_169) | E-62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Date, Time, or Location of Annual Meeting](#appd79608_170) | E-62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Other Business](#appd79608_171) | E-62 |
| [**7. Environmental and Social Issues**](#appd79608_172) | E-63 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Global Approach – E&S-related Proposals](#appd79608_173) | E-63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appd79608_174) | E-63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appd79608_175) | E-63 |
| [**8. Mutual Fund Proxies**](#appd79608_176) | E-64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Election of Directors](#appd79608_177) | E-64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes](#appd79608_178) | E-64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Converting Closed-end Fund to Open-end Fund](#appd79608_179) | E-64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests](#appd79608_180) | E-64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Advisory Agreements](#appd79608_181) | E-64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Approving New Classes or Series of Shares](#appd79608_182) | E-65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Proposals](#appd79608_183) | E-65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [1940 Act Policies](#appd79608_184) | E-65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing a Fundamental Restriction to a Nonfundamental Restriction](#appd79608_185) | E-65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Fundamental Investment Objective to Nonfundamental](#appd79608_186) | E-65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Name Change Proposals](#appd79608_187) | E-65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change in Fund's Subclassification](#appd79608_188) | E-66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value](#appd79608_189) | E-66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disposition of Assets/Termination/Liquidation](#appd79608_190) | E-66 |

---

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![LOGO](g79608g00k04.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changes to the Charter Document](#appd79608_191) | E-66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing the Domicile of a Fund](#appd79608_192) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval](#appd79608_193) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Distribution Agreements](#appd79608_194) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Master-Feeder Structure](#appd79608_195) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers](#appd79608_196) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals for Mutual Funds](#appd79608_197) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish Director Ownership Requirement](#appd79608_198) | E-67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimburse Shareholder for Expenses Incurred](#appd79608_199) | E-68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Terminate the Investment Advisor](#appd79608_200) | E-68 |

---

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## Introduction
ISS' Global Board-Aligned Policy is designed to enable subscribing investors to vote in a manner that upholds foundational corporate governance principles as a means of protecting and maximizing their investments, whilst generally aligning with issuers' board recommendations for voting on environmental and social matters.

On matters of corporate governance, executive compensation, and corporate structure, the Global Board-Aligned Policy guidelines are focused on widely accepted good standards of corporate governance and shareholder rights protection, and on the creation and preservation of economic value. On environmental or social matters, the Global Board-Aligned Policy will generally be in line with the board's recommendations, with support limited to circumstances where it is considered that greater disclosure will directly enhance or protect shareholder value and is reflective of a clearly established reporting standard in the market. Details are as further described in these guidelines.

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1. Board of Directors

Voting on Director Nominees in Uncontested Elections

Four fundamental principles apply when determining votes on director nominees:

Independence: Boards should be sufficiently independent from management (and significant shareholders) to ensure that they are able and motivated to effectively supervise management's performance for the benefit of all shareholders, including in setting and monitoring the execution of corporate strategy, with appropriate use of shareholder capital, and in setting and monitoring executive compensation programs that support that strategy. The chair of the board should ideally be an independent director, and all boards should have an independent leadership position or a similar role in order to help provide appropriate counterbalance to executive management, as well as having sufficiently independent committees that focus on key governance concerns such as audit, compensation, and nomination of directors.

Composition: Companies should ensure that directors add value to the board through their specific skills and expertise and by having sufficient time and commitment to serve effectively. Boards should be of a size appropriate to accommodate diversity, expertise, and independence, while ensuring active and collaborative participation by all members. Boards should be sufficiently diverse to ensure consideration of a wide range of perspectives.

Responsiveness: Directors should respond to investor input, such as that expressed through significant opposition to management proposals, significant support for shareholder proposals (whether binding or non-binding), and tender offers where a majority of shares are tendered.

Accountability: Boards should be sufficiently accountable to shareholders, including through transparency of the company's governance practices and regular board elections, by the provision of sufficient information for shareholders to be able to assess directors and board composition, and through the ability of shareholders to remove directors.

General Recommendation: Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>1</sup>** considered on case-by-case basis):

Independence

Vote against**<sup>2</sup>** or withhold from non-independent directors (Executive Directors and Non-Independent Non-Executive Directors per ISS' Classification of Directors) when:

---

| | |
|:---|:---|
| § | Independent directors comprise 50 percent or less of the board;  |

---

§ The non-independent director serves on the audit, compensation, or nominating committee;

§ The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or

§ The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee.

**<sup>1</sup>** A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

**<sup>2</sup>** In general, companies with a plurality vote standard use "Withhold" as the contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.

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ISS Classification of Directors – U.S.

1. **Executive Director** 

1.1. Current officer **<sup>1</sup>** of the company or one of its affiliates **<sup>2</sup>.** 

2. **Non-Independent Non-Executive Director** 

<u>Board Identification</u> 

2.1. Director identified as not independent by the board.

<u>Controlling/Significant Shareholder</u> 

2.2. Beneficial owner of more than 50 percent of the company's voting power (this may be aggregated if voting power is distributed among more than one member of a group).

<u>Current Employment at Company or Related Company</u> 

2.3. Non-officer employee of the firm (including employee representatives).

2.4. Officer **<sup>1</sup>**, former officer, or general or limited partner of a joint venture or partnership with the company.

<u>Former Employment</u> 

2.5. Former CEO of the company. **<sup>3, 4</sup>** 

2.6. Former non-CEO officer **<sup>1</sup>** of the company or an affiliate **<sup>2</sup>** within the past five years. 2.7. Former officer **<sup>1</sup>** of an acquired company within the past five years. **<sup>4</sup>** 

2.8. Officer **<sup>1</sup>** of a former parent or predecessor firm at the time the company was sold or split off within the past five years.

2.9. Former interim officer if the service was longer than 18 months. If the service was between 12 and 18 months an assessment of the interim officer's employment agreement will be made. **<sup>5</sup>** 

<u>Family Members</u> 

2.10. Immediate family member **<sup>6</sup>** of a current or former officer **<sup>1</sup>** of the company or its affiliates **<sup>2</sup>** within the last five years.

2.11. Immediate family member **<sup>6</sup>** of a current employee of company or its affiliates **<sup>2</sup>** where additional factors raise concern (which may include, but are not limited to, the following: a director related to numerous employees; the company or its affiliates employ relatives of numerous board members; or a non-Section 16 officer in a key strategic role).

<u>Professional, Transactional, and Charitable Relationships</u> 

2.12. Director who (or whose immediate family member **<sup>6</sup>**) currently provides professional services **<sup>7</sup>** in excess of $10,000 per year to: the company, an affiliate **<sup>2</sup>**, or an individual officer of the company or an affiliate; or who is (or whose immediate family member **<sup>6</sup>** is) a partner, employee, or controlling shareholder of an organization which provides the services.

2.13. Director who (or whose immediate family member **<sup>6</sup>**) currently has any material transactional relationship **<sup>8</sup>** with the company or its affiliates **<sup>2</sup>**; or who is (or whose immediate family member **<sup>6</sup>** is) a partner in, or a controlling shareholder or an executive officer of, an organization which has the material transactional relationship **<sup>8</sup>** (excluding investments in the company through a private placement).

2.14. Director who (or whose immediate family member **<sup>6</sup>)** is a trustee, director, or employee of a charitable or non-profit organization that receives material grants or endowments **<sup>8</sup>** from the company or its affiliates **<sup>2</sup>**.

<u>Other Relationships</u> 

2.15. Party to a voting agreement **<sup>9</sup>** to vote in line with management on proposals being brought to shareholder vote.

2.16. Has (or an immediate family member **<sup>6</sup>** has) an interlocking relationship as defined by the SEC involving members of the board of directors or its Compensation Committee. **<sup>10</sup>** 

2.17. Founder **<sup>11</sup>** of the company but not currently an employee.

2.18. Director with pay comparable to Named Executive Officers. 2.19. Any material **<sup>12</sup>** relationship with the company.

3. **Independent Director** 

3.1. No material **<sup>12</sup>** connection to the company other than a board seat.

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#### Footnotes:
&nbsp;&nbsp;&nbsp;&nbsp;*1.* The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will generally be classified as a Non-Independent Non-Executive Director under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation exceeding $10,000 per year for serving in that capacity, then the director will be classified as an Independent Director.

&nbsp;&nbsp;&nbsp;&nbsp;*2.* "Affiliate" includes a subsidiary, sibling company, or parent company. ISS uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;*3.* Includes any former CEO of the company prior to the company's initial public offering (IPO).

&nbsp;&nbsp;&nbsp;&nbsp;*4.* When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, ISS will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

&nbsp;&nbsp;&nbsp;&nbsp;*5.* ISS will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. ISS will also consider if a formal search process was under way for a full-time officer at the time.

&nbsp;&nbsp;&nbsp;&nbsp;*6.* "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

&nbsp;&nbsp;&nbsp;&nbsp;*7.* Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include but are not limited to the following: investment banking/financial advisory services, commercial banking (beyond deposit services), investment services, insurance services, accounting/audit services, consulting services, marketing services, legal services, property management services, realtor services, lobbying services, executive search services, and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services, IT tech support services, educational services, and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

&nbsp;&nbsp;&nbsp;&nbsp;*8.* A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity, exceeding the greater of: $200,000 or 5 percent of the recipient's gross revenues, for a company that follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, for a company that follows NYSE listing standards. For a company that follows neither of the preceding standards, ISS will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

&nbsp;&nbsp;&nbsp;&nbsp;*9.* Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as Independent Directors if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

&nbsp;&nbsp;&nbsp;&nbsp;*10.* Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

&nbsp;&nbsp;&nbsp;&nbsp;*11.* The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, ISS may deem him or her an Independent Director.

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&nbsp;&nbsp;&nbsp;&nbsp;*12.* For purposes of ISS's director independence classification, "material" will be defined as a standard of relationship (financial, personal, or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Composition

Attendance at Board and Committee Meetings: Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>3</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

§ Medical issues/illness;

§ Family emergencies; and

---

| | |
|:---|:---|
| § | Missing only one meeting (when the total of all meetings is three or fewer).  |

---

In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

Overboarded Directors: Generally vote against or withhold from individual directors who:

§ Sit on more than five public company boards; or

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|:---|:---|
| § | Are CEOs of public companies who sit on the boards of more than two public companies besides their own—withhold only at their outside boards**<sup>4</sup>**.  |

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Gender Diversity: Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company's board. An exception will be made if there was at least one woman on the board at the preceding annual meeting and the board makes a firm commitment to return to a gender-diverse status within a year.

Racial and/or Ethnic Diversity: For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members**<sup>5</sup>**. An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or ethnic diverse member within a year.

**<sup>3</sup>** Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

**<sup>4</sup>** Although all of a CEO's subsidiary boards with publicly-traded common stock will be counted as separate boards, ISS will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

**<sup>5</sup>** Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

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Responsiveness

Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

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|:---|:---|
| § | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:  |

---

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|:---|:---|
| § | Disclosed outreach efforts by the board to shareholders in the wake of the vote;  |

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§ Rationale provided in the proxy statement for the level of implementation;

§ The subject matter of the proposal;

§ The level of support for and opposition to the resolution in past meetings;

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| | |
|:---|:---|
| § | Actions taken by the board in response to the majority vote and its engagement with shareholders;  |

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§ The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and

§ Other factors as appropriate.

§ The board failed to act on takeover offers where the majority of shares are tendered;

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|:---|:---|
| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote.  |

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Vote case-by-case on Compensation Committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

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| | |
|:---|:---|
| § | The company's previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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|:---|:---|
| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Accountability

PROBLEMATIC TAKEOVER DEFENSES, CAPITAL STRUCTURE, AND GOVERNANCE STRUCTURE

Poison Pills: Generally vote against or withhold from all nominees (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if:

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|:---|:---|
| § | The company has a poison pill with a deadhand or slowhand feature**<sup>6</sup>**;  |

---

§ The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

**<sup>6</sup>** If a short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, ISS will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

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| § | The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders**<sup>7</sup>**.  |

---

Vote case-by-case on nominees if the board adopts an initial short-term pill**<sup>6</sup>** (with a term of one year or less) without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

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| | |
|:---|:---|
| § | A commitment to put any renewal to a shareholder vote; and  |

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§ Other factors as relevant.

Unequal Voting Rights: Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>8</sup>**.

Exceptions to this policy will generally be limited to:

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|:---|:---|
| § | Newly-public companies**<sup>9</sup>** with a sunset provision of no more than seven years from the date of going public;  |

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§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

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|:---|:---|
| § | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be *de minimis*; or  |

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|:---|:---|
| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

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Classified Board Structure: The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election. All appropriate nominees (except new) may be held accountable.

Removal of Shareholder Discretion on Classified Boards: The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

Problematic Governance Structure: For companies that hold or held their first annual meeting**<sup>9</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

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|:---|:---|
| § | Supermajority vote requirements to amend the bylaws or charter;  |

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§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

**<sup>7</sup>** Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

**<sup>8</sup>** This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

**<sup>9</sup>** Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

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Unilateral Bylaw/Charter Amendments:Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if the directors:

§ Classified the board;

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| | |
|:---|:---|
| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

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§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a fee-shifting provision; or

§ Adopted another provision deemed egregious.

Restricting Binding Shareholder Proposals: Generally vote against or withhold from the members of the governance committee if:

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| | |
|:---|:---|
| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

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Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Director Performance Evaluation: The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted. Problematic provisions include but are not limited to:

§ A classified board structure;

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| | |
|:---|:---|
| § | A supermajority vote requirement;  |

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|:---|:---|
| § | Either a plurality vote standard in uncontested director elections, or a majority vote standard in contested elections;  |

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§ The inability of shareholders to call special meetings;

§ The inability of shareholders to act by written consent;

§ A multi-class capital structure; and/or

§ A non-shareholder-approved poison pill.

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Management Proposals to Ratify Existing Charter or Bylaw Provisions: Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Problematic Audit-Related Practices

Generally vote against or withhold from the members of the Audit Committee if:

§ The non-audit fees paid to the auditor are excessive;

§ The company receives an adverse opinion on the company's financial statements from its auditor; or

§ There is persuasive evidence that the Audit Committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Vote case-by-case on members of the Audit Committee and potentially the full board if:

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|:---|:---|
| § | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company's efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted.  |

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Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the Compensation Committee and potentially the full board if:

§ There is an unmitigated misalignment between CEO pay and company performance (pay for performance);

§ The company maintains significant problematic pay practices; or

§ The board exhibits a significant level of poor communication and responsiveness to shareholders.

Generally vote against or withhold from the Compensation Committee chair, other committee members, or potentially the full board if:

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

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Problematic Pledging of Company Stock: Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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|:---|:---|
| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

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§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Governance Failures

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

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|:---|:---|
| § | Material failures of governance, stewardship, risk oversight**<sup>10</sup>**, or fiduciary responsibilities at the company;  |

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§ Failure to replace management as appropriate; or

§ Egregious actions related to a director's service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

Voting on Director Nominees in Contested Elections

Vote-No Campaigns

General Recommendation: In cases where companies are targeted in connection with public "vote-no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

Proxy Contests/Proxy Access

General Recommendation: Vote case-by-case on the election of directors in contested elections, considering the following factors:

§ Long-term financial performance of the company relative to its industry;

§ Management's track record;

§ Background to the contested election;

§ Nominee qualifications and any compensatory arrangements;

§ Strategic plan of dissident slate and quality of the critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates); and

§ Stock ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether there are more candidates than board seats).

**<sup>10</sup>** Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; significant adverse legal judgments or settlement; or hedging of company stock.

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Other Board-Related Proposals

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

General Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

Board Refreshment

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

Term/Tenure Limits

General Recommendation: Vote case-by-case on management proposals regarding director term/tenure limits, considering:

§ The rationale provided for adoption of the term/tenure limit;

§ The robustness of the company's board evaluation process;

§ Whether the limit is of sufficient length to allow for a broad range of director tenures;

§ Whether the limit would disadvantage independent directors compared to non-independent directors; and

§ Whether the board will impose the limit evenly, and not have the ability to waive it in a discriminatory manner.

Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:

§ The scope of the shareholder proposal; and

§ Evidence of problematic issues at the company combined with, or exacerbated by, a lack of board refreshment.

Age Limits

General Recommendation: Generally vote against management and shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

Board Size

General Recommendation: Vote for proposals seeking to fix the board size or designate a range for the board size.

Vote against proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.

Classification/Declassification of the Board

General Recommendation: Vote against proposals to classify (stagger) the board.

Vote for proposals to repeal classified boards and to elect all directors annually.

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CEO Succession Planning

General Recommendation: Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering, at a minimum, the following factors:

§ The reasonableness/scope of the request; and

§ The company's existing disclosure on its current CEO succession planning process.

Cumulative Voting

General Recommendation: Generally vote against management proposals to eliminate cumulate voting, and for shareholder proposals to restore or provide for cumulative voting, unless:

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|:---|:---|
| § | The company has proxy access**<sup>11</sup>**, thereby allowing shareholders to nominate directors to the company's ballot; and  |

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|:---|:---|
| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

Director and Officer Indemnification, Liability Protection, and Exculpation

General Recommendation: Vote case-by-case on proposals on director and officer indemnification, liability protection, and exculpation**<sup>12</sup>**.

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of care.

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of loyalty.

§ Expand coverage beyond just legal expenses to liability for acts that are more serious violations of fiduciary obligation than mere carelessness.

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|:---|:---|
| § | Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (*i.e.*, "permissive indemnification"), but that previously the company was not required to indemnify.  |

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Vote for those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

§ If the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and

If only the individual's legal expenses would be covered.

**<sup>11</sup>** A proxy access right that meets the recommended guidelines.

**<sup>12</sup> Indemnification**: the condition of being secured against loss or damage.

**Limited liability**: a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation**: to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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Establish/Amend Nominee Qualifications

General Recommendation: Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and the degree to which they may preclude dissident nominees from joining the board.

Vote case-by-case on shareholder resolutions seeking a director nominee who possesses a particular subject matter expertise, considering:

§ The company's board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers;

§ The company's existing board and management oversight mechanisms regarding the issue for which board oversight is sought;

§ The company's disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies; and

§ The scope and structure of the proposal.

Establish Other Board Committee Proposals

General Recommendation: Generally vote against shareholder proposals to establish a new board committee, as such proposals seek a specific oversight mechanism/structure that potentially limits a company's flexibility to determine an appropriate oversight mechanism for itself. However, the following factors will be considered:

§ Existing oversight mechanisms (including current committee structure) regarding the issue for which board oversight is sought;

§ Level of disclosure regarding the issue for which board oversight is sought;

§ Company performance related to the issue for which board oversight is sought;

§ Board committee structure compared to that of other companies in its industry sector; and

§ The scope and structure of the proposal.

Filling Vacancies/Removal of Directors

General Recommendation: Vote against proposals that provide that directors may be removed only for cause.

Vote for proposals to restore shareholders' ability to remove directors with or without cause.

Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies.

Vote for proposals that permit shareholders to elect directors to fill board vacancies.

Independent Board Chair

General Recommendation: Generally vote for shareholder proposals requiring that the board chair position be filled by an independent director, taking into consideration the following:

§ The scope and rationale of the proposal;

§ The company's current board leadership structure;

§ The company's governance structure and practices;

§ Company performance; and

§ Any other relevant factors that may be applicable.

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The following factors will increase the likelihood of a "for" recommendation:

§ A majority non-independent board and/or the presence of non-independent directors on key board committees;

§ A weak or poorly-defined lead independent director role that fails to serve as an appropriate counterbalance to a combined CEO/chair role;

§ The presence of an executive or non-independent chair in addition to the CEO, a recent recombination of the role of CEO and chair, and/or departure from a structure with an independent chair;

§ Evidence that the board has failed to oversee and address material risks facing the company;

§ A material governance failure, particularly if the board has failed to adequately respond to shareholder concerns or if the board has materially diminished shareholder rights; or

§ Evidence that the board has failed to intervene when management's interests are contrary to shareholders' interests.

Majority of Independent Directors/Establishment of Independent Committees

General Recommendation: Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by ISS' definition of Independent

Director (See ISS' Classification of Directors.)

Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors unless they currently meet that standard.

Majority Vote Standard for the Election of Directors

General Recommendation: Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections. Vote against if no carve-out for a plurality vote standard in contested elections is included.

Generally vote for precatory and binding shareholder resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

Proxy Access

General Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions:

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|:---|:---|
| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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|:---|:---|
| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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|:---|:---|
| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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|:---|:---|
| § | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access. Generally vote against proposals that are more restrictive than these guidelines.

Require More Nominees than Open Seats

General Recommendation: Vote against shareholder proposals that would require a company to nominate more candidates than the number of open board seats.

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Shareholder Engagement Policy (Shareholder Advisory Committee)

General Recommendation: Generally vote for shareholder proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

§ Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board;

§ Effectively disclosed information with respect to this structure to its shareholders;

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|:---|:---|
| § | Company has not ignored majority-supported shareholder proposals, or a majority withhold vote on a director nominee; and  |

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§ The company has an independent chair or a lead director, according to ISS' definition. This individual must be made available for periodic consultation and direct communication with major shareholders.

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2. Audit-Related

Auditor Indemnification and Limitation of Liability

General Recommendation: Vote case-by-case on the issue of auditor indemnification and limitation of liability. Factors to be assessed include, but are not limited to:

§ The terms of the auditor agreement—the degree to which these agreements impact shareholders' rights;

§ The motivation and rationale for establishing the agreements;

§ The quality of the company's disclosure; and

§ The company's historical practices in the audit area.

Vote against or withhold from members of an audit committee in situations where there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Auditor Ratification

General Recommendation: Vote for proposals to ratify auditors unless any of the following apply:

§ An auditor has a financial interest in or association with the company, and is therefore not independent;

§ There is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company's financial position;

§ Poor accounting practices are identified that rise to a serious level of concern, such as fraud or misapplication of GAAP; or

§ Fees for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

§ Non-audit ("other") fees > audit fees + audit-related fees + tax compliance/preparation fees

Tax compliance and preparation include the preparation of original and amended tax returns and refund claims, and tax payment planning. All other services in the tax category, such as tax advice, planning, or consulting, should be added to "Other" fees. If the breakout of tax fees cannot be determined, add all tax fees to "Other" fees.

In circumstances where "Other" fees include fees related to significant one-time capital structure events (such as initial public offerings, bankruptcy emergence, and spin-offs) and the company makes public disclosure of the amount and nature of those fees that are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

Shareholder Proposals Limiting Non-Audit Services

General Recommendation: Vote case-by-case on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.

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Shareholder Proposals on Audit Firm Rotation

General Recommendation: Vote case-by-case on shareholder proposals asking for audit firm rotation, taking into account:

§ The tenure of the audit firm;

§ The length of rotation specified in the proposal;

§ Any significant audit-related issues at the company;

§ The number of Audit Committee meetings held each year;

§ The number of financial experts serving on the committee; and

§ Whether the company has a periodic renewal process where the auditor is evaluated for both audit quality and competitive price.

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3. Shareholder Rights & Defenses

Advance Notice Requirements for Shareholder Proposals/Nominations

General Recommendation: Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory, and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120-day window). The submittal window is the period under which shareholders must file their proposals/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

Amend Bylaws without Shareholder Consent

General Recommendation: Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote case-by-case on proposals giving the board the ability to amend the bylaws in addition to shareholders, taking into account the following:

§ Any impediments to shareholders' ability to amend the bylaws (i.e. supermajority voting requirements);

§ The company's ownership structure and historical voting turnout;

§ Whether the board could amend bylaws adopted by shareholders; and

§ Whether shareholders would retain the ability to ratify any board-initiated amendments.

Control Share Acquisition Provisions

General Recommendation: Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.

Vote against proposals to amend the charter to include control share acquisition provisions.

Vote for proposals to restore voting rights to the control shares.

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

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Control Share Cash-Out Provisions

General Recommendation: Vote for proposals to opt out of control share cash-out statutes.

Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

Disgorgement Provisions

General Recommendation: Vote for proposals to opt out of state disgorgement provisions.

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

Fair Price Provisions

General Recommendation: Vote case-by-case on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.

Generally vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

Freeze-Out Provisions

General Recommendation: Vote for proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

Greenmail

General Recommendation: Vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.

Vote case-by-case on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.

Shareholder Litigation Rights

Federal Forum Selection Provisions

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

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General Recommendation: Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Exclusive Forum Provisions for State Law Matters

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

General Recommendation: Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

§ The company's stated rationale for adopting such a provision;

§ Disclosure of past harm from duplicative shareholder lawsuits in more than one forum;

§ The breadth of application of the charter or bylaw provision, including the types of lawsuits to which it would apply and the definition of key terms; and

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|:---|:---|
| § | Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the charter or bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections.  |

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Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Fee shifting

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

General Recommendation: Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the Unilateral Bylaw/Charter Amendments policy.

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Net Operating Loss (NOL) Protective Amendments

General Recommendation: Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses (NOL) if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

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|:---|:---|
| § | The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing 5-percent holder);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Poison Pills (Shareholder Rights Plans)

Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy

General Recommendation: Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: (1) A shareholder-approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

§ Shareholders have approved the adoption of the plan; or

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|:---|:---|
| § | The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e., the "fiduciary out" provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.  |

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If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

Management Proposals to Ratify a Poison Pill

General Recommendation: Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

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|:---|:---|
| § | No lower than a 20 percent trigger, flip-in or flip-over;  |

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§ A term of no more than three years;

§ No deadhand, slowhand, no-hand, or similar feature that limits the ability of a future board to redeem the pill;

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|:---|:---|
| § | Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.  |

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In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.

Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)

General Recommendation: Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses (NOL) if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

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|:---|:---|
| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5 percent);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure, including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Proxy Voting Disclosure, Confidentiality, and Tabulation

General Recommendation: Vote case-by-case on proposals regarding proxy voting mechanics, taking into consideration whether implementation of the proposal is likely to enhance or protect shareholder rights. Specific issues covered under the policy include, but are not limited to, confidential voting of individual proxies and ballots, confidentiality of running vote tallies, and the treatment of abstentions and/or broker non-votes in the company's vote-counting methodology.

While a variety of factors may be considered in each analysis, the guiding principles are: transparency, consistency, and fairness in the proxy voting process. The factors considered, as applicable to the proposal, may include:

§ The scope and structure of the proposal;

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|:---|:---|
| § | The company's stated confidential voting policy (or other relevant policies) and whether it ensures a "level playing field" by providing shareholder proponents with equal access to vote information prior to the annual meeting;  |

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|:---|:---|
| § | The company's vote standard for management and shareholder proposals and whether it ensures consistency and fairness in the proxy voting process and maintains the integrity of vote results;  |

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|:---|:---|
| § | Whether the company's disclosure regarding its vote counting method and other relevant voting policies with respect to management and shareholder proposals are consistent and clear;  |

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§ Any recent controversies or concerns related to the company's proxy voting mechanics;

§ Any unintended consequences resulting from implementation of the proposal; and

§ Any other factors that may be relevant.

Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions

General Recommendation: Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

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In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Reimbursing Proxy Solicitation Expenses

General Recommendation: Vote case-by-case on proposals to reimburse proxy solicitation expenses.

When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Generally vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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| § | The election of fewer than 50 percent of the directors to be elected is contested in the election;  |

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§ One or more of the dissident's candidates is elected;

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|:---|:---|
| § | Shareholders are not permitted to cumulate their votes for directors; and  |

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§ The election occurred, and the expenses were incurred, after the adoption of this bylaw.

Reincorporation Proposals

General Recommendation: Management or shareholder proposals to change a company's state of incorporation should be evaluated case-by-case, giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation; and

§ Comparison of corporation laws of original state and destination state.

Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.

Shareholder Ability to Act by Written Consent

General Recommendation: Generally vote against management and shareholder proposals to restrict or prohibit shareholders' ability to act by written consent.

Generally vote for management and shareholder proposals that provide shareholders with the ability to act by written consent, taking into account the following factors:

§ Shareholders' current right to act by written consent;

§ The consent threshold;

§ The inclusion of exclusionary or prohibitive language;

§ Investor ownership structure; and

§ Shareholder support of, and management's response to, previous shareholder proposals.

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Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:

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| § | An unfettered**<sup>13</sup>** right for shareholders to call special meetings at a 10 percent threshold;  |

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|:---|:---|
| § | A majority vote standard in uncontested director elections;  |

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§ No non-shareholder-approved pill; and

§ An annually elected board.

Shareholder Ability to Call Special Meetings

General Recommendation: Vote against management or shareholder proposals to restrict or prohibit shareholders' ability to call special meetings.

Generally vote for management or shareholder proposals that provide shareholders with the ability to call special meetings taking into account the following factors:

§ Shareholders' current right to call special meetings;

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|:---|:---|
| § | Minimum ownership threshold necessary to call special meetings (10 percent preferred);  |

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§ The inclusion of exclusionary or prohibitive language;

§ Investor ownership structure; and

§ Shareholder support of, and management's response to, previous shareholder proposals.

Stakeholder Provisions

General Recommendation: Vote against proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.

State Antitakeover Statutes

General Recommendation: Vote case-by-case on proposals to opt in or out of state takeover statutes (including fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, and anti-greenmail provisions).

Supermajority Vote Requirements

General Recommendation: Vote against proposals to require a supermajority shareholder vote.

Vote for management or shareholder proposals to reduce supermajority vote requirements. However, for companies with shareholder(s) who have significant ownership levels, vote case-by-case, taking into account:

§ Ownership structure;

§ Quorum requirements; and

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|:---|:---|
| § | Vote requirements.  |

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**<sup>13</sup>** "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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Virtual Shareholder Meetings

General Recommendation: Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only**<sup>14</sup>** meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

<sup>14</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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4. Capital/Restructuring

Capital

Adjustments to Par Value of Common Stock

General Recommendation: Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.

Vote for management proposals to eliminate par value.

Common Stock Authorization

General Authorization Requests

General Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes:

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|:---|:---|
| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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Specific Authorization Requests

General Recommendation: Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Dual Class Structure

General Recommendation: Generally vote against proposals to create a new class of common stock unless:

§ The company discloses a compelling rationale for the dual-class capital structure, such as:

§ The company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or

§ The new class of shares will be transitory;

§ The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term; and

§ The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.

Issue Stock for Use with Rights Plan

General Recommendation: Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder-approved shareholder rights plan (poison pill).

Preemptive Rights

General Recommendation: Vote case-by-case on shareholder proposals that seek preemptive rights, taking into consideration:

§ The size of the company;

§ The shareholder base; and

§ The liquidity of the stock.

Preferred Stock Authorization

General Authorization Requests

General Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes:

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|:---|:---|
| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

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|:---|:---|
| § | If no preferred shares are currently issued and outstanding, vote against the request, unless the company discloses a specific use for the shares.  |

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Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

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|:---|:---|
| § | If the shares requested are blank check preferred shares that can be used for antitakeover purposes;**<sup>15</sup>**  |

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|:---|:---|
| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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|:---|:---|
| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they are convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

#### Specific Authorization Requests
General Recommendation: Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Recapitalization Plans

General Recommendation: Vote case-by-case on recapitalizations (reclassifications of securities), taking into account the following:

§ More simplified capital structure;

§ Enhanced liquidity;

§ Fairness of conversion terms;

§ Impact on voting power and dividends;

**<sup>15</sup>** To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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§ Reasons for the reclassification;

§ Conflicts of interest; and

§ Other alternatives considered.

Reverse Stock Splits

General Recommendation: Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with ISS' Common Stock Authorization policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting;

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

General Recommendation: For U.S. domestic issuers incorporated outside the U.S. and listed solely on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

Share Repurchase Programs

General Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail;

§ The use of buybacks to inappropriately manipulate incentive compensation metrics;

§ Threats to the company's long-term viability; or

§ Other company-specific factors as warranted.

Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

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Share Repurchase Programs Shareholder Proposals

General Recommendation: Generally vote against shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote for the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.

Stock Distributions: Splits and Dividends

General Recommendation: Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in accordance with ISS' Common Stock Authorization policy.

Tracking Stock

General Recommendation: Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

§ Adverse governance changes;

§ Excessive increases in authorized capital stock;

§ Unfair method of distribution;

§ Diminution of voting rights;

§ Adverse conversion features;

§ Negative impact on stock option plans; and

§ Alternatives such as spin-off.

Restructuring

Appraisal Rights

General Recommendation: Vote for proposals to restore or provide shareholders with rights of appraisal.

Asset Purchases

General Recommendation: Vote case-by-case on asset purchase proposals, considering the following factors:

§ Purchase price;

§ Fairness opinion;

§ Financial and strategic benefits;

§ How the deal was negotiated;

§ Conflicts of interest;

§ Other alternatives for the business;

§ Non-completion risk.

Asset Sales

General Recommendation: Vote case-by-case on asset sales, considering the following factors:

§ Impact on the balance sheet/working capital;

§ Potential elimination of diseconomies;

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§ Anticipated financial and operating benefits;

§ Anticipated use of funds;

§ Value received for the asset;

§ Fairness opinion;

§ How the deal was negotiated;

§ Conflicts of interest.

Bundled Proposals

General Recommendation: Vote case-by-case on bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

Conversion of Securities

General Recommendation: Vote case-by-case on proposals regarding conversion of securities. When evaluating these proposals, the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans

General Recommendation: Vote case-by-case on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, after evaluating:

§ Dilution to existing shareholders' positions;

§ Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; termination penalties; exit strategy;

§ Financial issues - company's financial situation; degree of need for capital; use of proceeds; effect of the financing on the company's cost of capital;

§ Management's efforts to pursue other alternatives;

§ Control issues - change in management; change in control, guaranteed board and committee seats; standstill provisions; voting agreements; veto power over certain corporate actions; and

§ Conflict of interest - arm's length transaction, managerial incentives.

Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.

Formation of Holding Company

General Recommendation: Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration the following:

§ The reasons for the change;

§ Any financial or tax benefits;

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§ Regulatory benefits;

§ Increases in capital structure; and

§ Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend for the transaction, vote against the formation of a holding company if the transaction would include either of the following:

§ Increases in common or preferred stock in excess of the allowable maximum (see discussion under "Capital"); or

§ Adverse changes in shareholder rights.

Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)

General Recommendation: Vote case-by-case on going private transactions, taking into account the following:

§ Offer price/premium;

§ Fairness opinion;

§ How the deal was negotiated;

§ Conflicts of interest;

§ Other alternatives/offers considered; and

§ Non-completion risk.

Vote case-by-case on going dark transactions, determining whether the transaction enhances shareholder value by taking into consideration:

§ Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock);

§ Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:

§ Are all shareholders able to participate in the transaction?

§ Will there be a liquid market for remaining shareholders following the transaction?

§ Does the company have strong corporate governance?

§ Will insiders reap the gains of control following the proposed transaction?

§ Does the state of incorporation have laws requiring continued reporting that may benefit shareholders?

Joint Ventures

General Recommendation: Vote case-by-case on proposals to form joint ventures, taking into account the following:

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|:---|:---|
| § | Percentage of assets/business contributed;  |

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| § | Percentage ownership;  |

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§ Financial and strategic benefits;

§ Governance structure;

§ Conflicts of interest;

§ Other alternatives; and

§ Non-completion risk.

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Liquidations

General Recommendation: Vote case-by-case on liquidations, taking into account the following:

§ Management's efforts to pursue other alternatives;

§ Appraisal value of assets; and

§ The compensation plan for executives managing the liquidation.

Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

Mergers and Acquisitions

General Recommendation: Vote case-by-case on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

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|:---|:---|
| § | *Valuation* - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction, and strategic rationale.  |

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§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.

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|:---|:---|
| § | *Strategic rationale* - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.  |

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|:---|:---|
| § | *Negotiations and process* - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value.  |

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|:---|:---|
| § | *Conflicts of interest* - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger. The CIC figure presented in the "ISS Transaction Summary" section of this report is an aggregate figure that can in certain cases be a misleading indicator of the true value transfer from shareholders to insiders. Where such figure appears to be excessive, analyze the underlying assumptions to determine whether a potential conflict exists.  |

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|:---|:---|
| § | *Governance* - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.  |

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Private Placements/Warrants/Convertible Debentures

General Recommendation: Vote case-by-case on proposals regarding private placements, warrants, and convertible debentures taking into consideration:

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|:---|:---|
| § | Dilution to existing shareholders' position: The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion. Although newly issued common stock, absent preemptive rights, is typically dilutive to existing shareholders, share price appreciation is often the necessary event to trigger the exercise of "out of the money" warrants and convertible debt. In these instances from a value standpoint, the negative impact of dilution is mitigated by the increase in the company's stock price that must occur to trigger the dilutive event.  |

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§ Terms of the offer (discount/premium in purchase price to investor, including any fairness opinion, conversion features, termination penalties, exit strategy):

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|:---|:---|
| § | The terms of the offer should be weighed against the alternatives of the company and in light of company's financial condition. Ideally, the conversion price for convertible debt and the exercise price for warrants should be at a premium to the then prevailing stock price at the time of private placement.  |

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§ When evaluating the magnitude of a private placement discount or premium, consider factors that influence the discount or premium, such as, liquidity, due diligence costs, control and monitoring costs, capital scarcity, information asymmetry, and anticipation of future performance.

§ Financial issues:

§ The company's financial condition;

§ Degree of need for capital;

§ Use of proceeds;

§ Effect of the financing on the company's cost of capital;

§ Current and proposed cash burn rate;

§ Going concern viability and the state of the capital and credit markets.

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|:---|:---|
| § | Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives: A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger, or sale of part or all of the company.  |

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§ Control issues:

§ Change in management;

§ Change in control;

§ Guaranteed board and committee seats;

§ Standstill provisions;

§ Voting agreements;

§ Veto power over certain corporate actions; and

§ Minority versus majority ownership and corresponding minority discount or majority control premium.

§ Conflicts of interest:

§ Conflicts of interest should be viewed from the perspective of the company and the investor.

§ Were the terms of the transaction negotiated at arm's length? Are managerial incentives aligned with shareholder interests?

§ Market reaction:

§ The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

Vote for the private placement, or for the issuance of warrants and/or convertible debentures in a private placement, if it is expected that the company will file for bankruptcy if the transaction is not approved.

Reorganization/Restructuring Plan (Bankruptcy)

General Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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|:---|:---|
| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an Official Equity Committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization; and

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

General Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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|:---|:---|
| § | *Valuation* - Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target if it is a private entity.  |

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§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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|:---|:---|
| § | *Deal timing* - A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *Negotiations and process* - What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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|:---|:---|
| § | *Conflicts of interest* - How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24-month timeframe.  |

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|:---|:---|
| § | *Voting agreements* - Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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§ *Governance* - What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions

General Recommendation: Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ *Length of request*: Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquistion process.

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|:---|:---|
| § | *Pending transaction(s)* or *progression of the acquisition process:* Sometimes an intial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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|:---|:---|
| § | *Added incentive for non-redeeming shareholders*: Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.  |

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§ *Prior extension requests*: Some SPACs request additional time beyond the extension period sought in prior extension requests.

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Spin-offs

General Recommendation: Vote case-by-case on spin-offs, considering:

§ Tax and regulatory advantages;

§ Planned use of the sale proceeds;

§ Valuation of spinoff;

§ Fairness opinion;

§ Benefits to the parent company;

§ Conflicts of interest;

§ Managerial incentives;

§ Corporate governance changes;

§ Changes in the capital structure.

Value Maximization Shareholder Proposals

General Recommendation: Vote case-by-case on shareholder proposals seeking to maximize shareholder value by:

§ Hiring a financial advisor to explore strategic alternatives;

§ Selling the company; or

§ Liquidating the company and distributing the proceeds to shareholders.

These proposals should be evaluated based on the following factors:

§ Prolonged poor performance with no turnaround in sight;

§ Signs of entrenched board and management (such as the adoption of takeover defenses);

§ Strategic plan in place for improving value;

§ Likelihood of receiving reasonable value in a sale or dissolution; and

§ The company actively exploring its strategic options, including retaining a financial advisor.

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5. Compensation

Executive Pay Evaluation

Underlying all evaluations are five global principles that most investors expect corporations to adhere to in designing and administering executive and director compensation programs:

1. Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs;

2. Avoid arrangements that risk "pay for failure": This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation;

3. Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (*e.g.*, including access to independent expertise and advice when needed);

4. Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly;

5. Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors is reasonable and does not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance. At the market level, it may incorporate a variety of generally accepted best practices.

Advisory Votes on Executive Compensation—Management Proposals (Say-on-Pay)

General Recommendation: Vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation.

Vote against Advisory Votes on Executive Compensation (Say-on-Pay or "SOP") if:

§ There is an unmitigated misalignment between CEO pay and company performance (pay for performance);

§ The company maintains significant problematic pay practices;

§ The board exhibits a significant level of poor communication and responsiveness to shareholders.

Vote against or withhold from the members of the Compensation Committee and potentially the full board if:

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| § | There is no SOP on the ballot, and an against vote on an SOP would otherwise be warranted due to pay-for-performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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| § | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast;  |

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§ The company has recently practiced or approved problematic pay practices, such as option repricing or option backdating; or

§ The situation is egregious.

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#### Primary Evaluation Factors for Executive Pay
Pay-for-Performance Evaluation

ISS annually conducts a pay-for-performance analysis to identify strong or satisfactory alignment between pay and performance over a sustained period. With respect to companies in the S&P1500, Russell 3000, or Russell 3000E Indices**<sup>16</sup>**, this analysis considers the following:

1. Peer Group **<sup>17</sup>** Alignment:

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| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period.  |

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| § | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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| § | The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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2. Absolute Alignment **<sup>18</sup>** – the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, a misalignment between pay and performance is otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to an evaluation of how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance- to time-based incentive awards;

§ The overall ratio of performance-based compensation to fixed or discretionary pay;

§ The rigor of performance goals;

§ The complexity and risks around pay program design;

§ The transparency and clarity of disclosure;

§ The company's peer group benchmarking practices;

§ Financial/operational results, both absolute and relative to peers;

§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

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| § | Realizable pay**<sup>19</sup>** compared to grant pay; and  |

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§ Any other factors deemed relevant.

**<sup>16</sup>** The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

**<sup>17</sup>** The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market-cap bucket that is reflective of the company's market cap. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

**<sup>18</sup>** Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

**<sup>19</sup>** ISS research reports include realizable pay for S&P1500 companies.

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Problematic Pay Practices

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

§ Problematic practices related to non-performance-based compensation elements;

§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

§ Repricing or replacing of underwater stock options/SARs without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);

§ Extraordinary perquisites or tax gross-ups;

§ New or materially amended agreements that provide for:

§ Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus);

§ CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition;

§ CIC excise tax gross-up entitlements (including "modified" gross-ups);

§ Multi-year guaranteed awards that are not at risk due to rigorous performance conditions;

§ Liberal CIC definition combined with any single-trigger CIC benefits;

§ Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason);

§ Any other provision or practice deemed to be egregious and present a significant risk to investors.

The above examples are not an exhaustive list. Please refer to ISS' U.S. Compensation Policies FAQ document for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

#### Options Backdating
The following factors should be examined case-by-case to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud:

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

§ Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants; and

§ Adoption of a grant policy that prohibits backdating and creates a fixed grant schedule or window period for equity grants in the future.

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Compensation Committee Communications and Responsiveness

Consider the following factors case-by-case when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

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| § | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:  |

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§ Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")

General Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

General Recommendation: Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers but also considering new or extended arrangements.

Features that may result in an "against" recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

§ Single- or modified-single-trigger cash severance;

§ Single-trigger acceleration of unvested equity awards;

§ Full acceleration of equity awards granted shortly before the change in control;

§ Acceleration of performance awards above the target level of performance without compelling rationale;

§ Excessive cash severance (generally >3x base salary and bonus);

§ Excise tax gross-ups triggered and payable;

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|:---|:---|
| § | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or  |

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§ Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or

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| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote.  |

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Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation (management say-on-pay), ISS will evaluate the say-on-pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

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Equity-Based and Other Incentive Plans

Please refer to ISS' U.S. Equity Compensation Plans FAQ document for additional details on the Equity Plan Scorecard policy.

General Recommendation: Vote case-by-case on certain equity-based compensation plans**<sup>20</sup>** depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars:

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| § | **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:  |

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§ SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and

§ SVT based only on new shares requested plus shares remaining for future grants.

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|:---|:---|
| § | **Plan Features:**  |

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§ Quality of disclosure around vesting upon a change in control (CIC);

§ Discretionary vesting authority;

§ Liberal share recycling on various award types;

§ Lack of minimum vesting period for grants made under the plan;

§ Dividends payable prior to award vesting.

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|:---|:---|
| § | **Grant Practices:**  |

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§ The company's three-year burn rate relative to its industry/market cap peers;

§ Vesting requirements in CEO's recent equity grants (3-year look-back);

§ The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years);

§ The proportion of the CEO's most recent equity grants/awards subject to performance conditions;

§ Whether the company maintains a sufficient claw-back policy;

§ Whether the company maintains sufficient post-exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following egregious factors ("overriding factors") apply:

§ Awards may vest in connection with a liberal change-of-control definition;

§ The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies – or by not prohibiting it when the company has a history of repricing – for non-listed companies);

§ The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances;

§ The plan is excessively dilutive to shareholders' holdings;

§ The plan contains an evergreen (automatic share replenishment) feature; or

§ Any other plan features are determined to have a significant negative impact on shareholder interests.

**<sup>20</sup>** Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors; amended plans will be further evaluated case-by-case.

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#### Further Information on certain EPSC Factors:
Shareholder Value Transfer (SVT)

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full-value awards), the assumption is made that all awards to be granted will be the most expensive types.

For proposals that are not subject to the Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size, and cash compensation into the industry cap equations to arrive at the company's benchmark.**<sup>21</sup>**

Three-Year Value-Adjusted Burn Rate

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks are calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a *de minimis* threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate is calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Egregious Factors

Liberal Change in Control Definition

Generally vote against equity plans if the plan has a liberal definition of change in control and the equity awards could vest upon such liberal definition of change in control, even though an actual change in control may not occur. Examples of such a definition include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

**<sup>21</sup>** For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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Repricing Provisions

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" typically includes the ability to do any of the following:

§ Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs;

§ Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs;

§ Cancel underwater options in exchange for stock awards; or

§ Provide cash buyouts of underwater options.

While the above cover most types of repricing, ISS may view other provisions as akin to repricing depending on the facts and circumstances.

Also, vote against or withhold from members of the Compensation Committee who approved repricing (as defined above or otherwise determined by ISS), without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans that do not expressly prohibit repricing or cash buyout of underwater options without shareholder approval if the company has a history of repricing/buyouts without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Problematic Pay Practices or Significant Pay-for-Performance Disconnect

If the equity plan on the ballot is a vehicle for problematic pay practices, vote against the plan.

ISS may recommend a vote against the equity plan if the plan is determined to be a vehicle for pay-for-performance misalignment. Considerations in voting against the equity plan may include, but are not limited to:

§ Severity of the pay-for-performance misalignment;

§ Whether problematic equity grant practices are driving the misalignment; and/or

§ Whether equity plan awards have been heavily concentrated to the CEO and/or the other NEOs.

Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))

General Recommendation: Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Addresses administrative features only; or

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|:---|:---|
| § | Seeks approval for Section 162(m) purposes only, and the plan administering committee consists entirely of independent directors, per ISS' Classification of Directors. Note that if the company is presenting the plan to shareholders for the first time for any reason (including after the company's initial public offering), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).  |

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Vote against proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent directors, per ISS' Classification of Directors.

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Vote case-by-case on all other proposals to amend <u>cash</u> incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes.

Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

§ If the proposal requests additional shares and/or the amendments include a term extension or addition of full value awards as an award type, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments.

§ If the plan is being presented to shareholders for the first time (including after the company's IPO), whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments.

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|:---|:---|
| § | If there is no request for additional shares and the amendments do not include a term extension or addition of full value awards as an award type, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown only for informational purposes.  |

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In the first two case-by-case evaluation scenarios, the EPSC evaluation/score is the more heavily weighted consideration.

Specific Treatment of Certain Award Types in Equity Plan Evaluations

Dividend Equivalent Rights

Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.

Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)

For Real Estate Investment Trusts (REITS), include the common shares issuable upon conversion of outstanding Operating Partnership (OP) units in the share count for the purposes of determining: (1) market capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares outstanding in the burn rate analysis.

Other Compensation Plans

401(k) Employee Benefit Plans

General Recommendation: Vote for proposals to implement a 401(k) savings plan for employees.

Employee Stock Ownership Plans (ESOPs)

General Recommendation: Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

Employee Stock Purchase Plans—Qualified Plans

General Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

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| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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| § | The number of shares allocated to the plan is 10 percent or less of the outstanding shares.  |

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Vote against qualified employee stock purchase plans where when the plan features do not meet all of the above criteria.

Employee Stock Purchase Plans—Non-Qualified Plans

General Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

§ Broad-based participation;

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|:---|:---|
| § | Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;  |

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|:---|:---|
| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value; and  |

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§ No discount on the stock price on the date of purchase when there is a company matching contribution.

Vote against nonqualified employee stock purchase plans when the plan features do not meet all of the above criteria. If the matching contribution or effective discount exceeds the above, ISS may evaluate the SVT cost of the plan as part of the assessment.

Option Exchange Programs/Repricing Options

General Recommendation: Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

§ Historic trading patterns--the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing--was the stock price decline beyond management's control?;

§ Is this a value-for-value exchange?;

§ Are surrendered stock options added back to the plan reserve?;

§ Timing--repricing should occur at least one year out from any precipitous drop in company's stock price;

§ Option vesting--does the new option vest immediately or is there a black-out period?;

§ Term of the option--the term should remain the same as that of the replaced option;

§ Exercise price--should be set at fair market or a premium to market;

§ Participants--executive officers and directors must be excluded.

If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing and warrants additional scrutiny. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

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Stock Plans in Lieu of Cash

General Recommendation: Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.

Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.

Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, ISS will not make any adjustments to carve out the in-lieu-of cash compensation.

Transfer Stock Option (TSO) Programs

General Recommendation: One-time Transfers: Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote case-by-case on one-time transfers. Vote for if:

§ Executive officers and non-employee directors are excluded from participating;

§ Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models; and

§ There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure, and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

§ Eligibility;

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|:---|:---|
| § | Vesting;  |

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§ Bid-price;

§ Term of options;

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|:---|:---|
| § | Cost of the program and impact of the TSOs on company's total option expense; and  |

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§ Option repricing policy.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

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Director Compensation

Shareholder Ratification of Director Pay Programs

General Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Equity Plans for Non-Employee Directors

General Recommendation: Vote case-by-case on compensation plans for non-employee directors, based on:

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|:---|:---|
| § | The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants;  |

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§ The company's three-year burn rate relative to its industry/market cap peers (in certain circumstances); and

§ The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).

On occasion, non-employee director stock plans will exceed the plan cost or burn-rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Non-Employee Director Retirement Plans

General Recommendation: Vote against retirement plans for non-employee directors. Vote for shareholder proposals to eliminate retirement plans for non-employee directors.

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Shareholder Proposals on Compensation

Bonus Banking/Bonus Banking "Plus"

General Recommendation: Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

§ The company's past practices regarding equity and cash compensation;

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|:---|:---|
| § | Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and  |

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§ Whether the company has a rigorous claw-back policy in place.

Compensation Consultants—Disclosure of Board or Company's Utilization

General Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s), and fees paid.

Disclosure/Setting Levels or Types of Compensation for Executives and Directors

General Recommendation: Generally vote for shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders' needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.

Generally vote against shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation (such as types of compensation elements or specific metrics) to be used for executive or directors.

Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Vote case-by-case on all other shareholder proposals regarding executive and director pay, taking into account relevant factors, including but not limited to: company performance, pay level and design versus peers, history of compensation concerns or pay-for-performance disconnect, and/or the scope and prescriptive nature of the proposal.

Golden Coffins/Executive Death Benefits

General Recommendation: Generally vote for proposals calling for companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals for which the broad-based employee population is eligible.

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Hold Equity Past Retirement or for a Significant Period of Time

General Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans. The following factors will be taken into account:

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|:---|:---|
| § | The percentage/ratio of net shares required to be retained;  |

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§ The time period required to retain the shares;

§ Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements;

§ Whether the company has any other policies aimed at mitigating risk taking by executives;

§ Executives' actual stock ownership and the degree to which it meets or exceeds the proponent's suggested holding period/retention ratio or the company's existing requirements; and

§ Problematic pay practices, current and past, which may demonstrate a short-term versus long-term focus.

Pay Disparity

General Recommendation: Vote case-by-case on proposals calling for an analysis of the pay disparity between corporate executives and other non-executive employees. The following factors will be considered:

§ The company's current level of disclosure of its executive compensation setting process, including how the company considers pay disparity;

§ If any problematic pay practices or pay-for-performance concerns have been identified at the company; and

§ The level of shareholder support for the company's pay programs.

Generally vote against proposals calling for the company to use the pay disparity analysis or pay ratio in a specific way to set or limit executive pay.

Pay for Performance/Performance-Based Awards

General Recommendation: Vote case-by-case on shareholder proposals requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

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| § | First, vote for shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options, or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a "substantial" portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a meaningful premium to be considered performance-based awards.  |

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|:---|:---|
| § | Second, assess the rigor of the company's performance-based equity program. If the bar set for the performance-based program is too low based on the company's historical or peer group comparison, generally vote for the proposal. Furthermore, if target performance results in an above target payout, vote for the shareholder proposal due to program's poor design. If the company does not disclose the performance metric of the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.  |

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

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Pay for Superior Performance

General Recommendation: Vote case-by-case on shareholder proposals that request the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. These proposals generally include the following principles:

§ Set compensation targets for the plan's annual and long-term incentive pay components at or below the peer group median;

§ Deliver a majority of the plan's target long-term compensation through performance-vested, not simply time-vested, equity awards;

§ Provide the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the plan;

§ Establish performance targets for each plan financial metric relative to the performance of the company's peer companies;

§ Limit payment under the annual and performance-vested long-term incentive components of the plan to when the company's performance on its selected financial performance metrics exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

§ What aspects of the company's annual and long-term equity incentive programs are performance driven?

§ If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates disclosed to shareholders or are they benchmarked against a disclosed peer group?

§ Can shareholders assess the correlation between pay and performance based on the current disclosure?

§ What type of industry and stage of business cycle does the company belong to?

Pre-Arranged Trading Plans (10b5-1 Plans)

General Recommendation: Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

§ Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

§ Amendment or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances, as determined by the board;

§ Request that a certain number of days that must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan;

§ Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

§ An executive may not trade in company stock outside the 10b5-1 Plan;

§ Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive.

Prohibit Outside CEOs from Serving on Compensation Committees

General Recommendation: Generally vote against proposals seeking a policy to prohibit any outside CEO from serving on a company's compensation committee, unless the company has demonstrated problematic pay practices that raise concerns about the performance and composition of the committee.

Recoupment of Incentive or Stock Compensation in Specified Circumstances

General Recommendation: Vote case-by-case on proposals to recoup incentive cash or stock compensation made to senior executives if it is later determined that the figures upon which incentive compensation is earned turn out to have

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been in error, or if the senior executive has breached company policy or has engaged in misconduct that may be significantly detrimental to the company's financial position or reputation, or if the senior executive failed to manage or monitor risks that subsequently led to significant financial or reputational harm to the company. Many companies have adopted policies that permit recoupment in cases where an executive's fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. However, such policies may be narrow given that not all misconduct or negligence may result in significant financial restatements. Misconduct, negligence, or lack of sufficient oversight by senior executives may lead to significant financial loss or reputational damage that may have long-lasting impact.

In considering whether to support such shareholder proposals, ISS will take into consideration the following factors:

§ If the company has adopted a formal recoupment policy;

§ The rigor of the recoupment policy focusing on how and under what circumstances the company may recoup incentive or stock compensation;

§ Whether the company has chronic restatement history or material financial problems;

§ Whether the company's policy substantially addresses the concerns raised by the proponent;

§ Disclosure of recoupment of incentive or stock compensation from senior executives or lack thereof; or

§ Any other relevant factors.

Severance Agreements for Executives/Golden Parachutes

General Recommendation: Vote for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval *prior* to entering into employment contracts.

Vote case-by-case on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

§ The triggering mechanism should be beyond the control of management;

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|:---|:---|
| § | The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs);  |

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§ Change-in-control payments should be double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

Share Buyback Impact on Incentive Program Metrics

General Recommendation: Vote case-by-case on proposals requesting the company exclude the impact of share buybacks from the calculation of incentive program metrics, considering the following factors:

§ The frequency and timing of the company's share buybacks;

§ The use of per-share metrics in incentive plans;

§ The effect of recent buybacks on incentive metric results and payouts; and

§ Whether there is any indication of metric result manipulation.

Supplemental Executive Retirement Plans (SERPs)

General Recommendation: Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

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Generally vote for shareholder proposals requesting to limit the executive benefits provided under the company's supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive's annual salary or those pay elements covered for the general employee population.

Tax Gross-Up Proposals

General Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity

General Recommendation: Vote case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment and/or eliminating accelerated vesting of unvested equity.

The following factors will be considered:

§ The company's current treatment of equity upon employment termination and/or in change-in-control situations (i.e., vesting is double triggered and/or pro rata, does it allow for the assumption of equity by acquiring company, the treatment of performance shares, etc.);

§ Current employment agreements, including potential poor pay practices such as gross-ups embedded in those agreements.

Generally vote for proposals seeking a policy that prohibits automatic acceleration of the vesting of equity awards to senior executives upon a voluntary termination of employment or in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

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6. Routine/Miscellaneous

Adjourn Meeting

General Recommendation: Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.

Vote for proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote against proposals if the wording is too vague or if the proposal includes "other business."

Amend Quorum Requirements

General Recommendation: Vote case-by-case on proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

§ The new quorum threshold requested;

§ The rationale presented for the reduction;

§ The market capitalization of the company (size, inclusion in indices);

§ The company's ownership structure;

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|:---|:---|
| § | Previous voter turnout or attempts to achieve quorum;  |

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| § | Any provisions or commitments to restore quorum to a majority of shares outstanding, should voter turnout improve sufficiently; and  |

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§ Other factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

Amend Minor Bylaws

General Recommendation: Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Change Company Name

General Recommendation: Vote for proposals to change the corporate name unless there is compelling evidence that the change would adversely impact shareholder value.

Change Date, Time, or Location of Annual Meeting

General Recommendation: Vote for management proposals to change the date, time, or location of the annual meeting unless the proposed change is unreasonable.

Vote against shareholder proposals to change the date, time, or location of the annual meeting unless the current scheduling or location is unreasonable.

Other Business

General Recommendation: Vote against proposals to approve other business when it appears as a voting item.

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7. Environmental and Social Issues

Global Approach – E&S-related Proposals

Environmental and social proposals will be reviewed with a focus on how, and to what extent, the issues dealt with in such proposals will directly affect shareholder value, and with a presumption on environmental and social topics that the board's recommendations should generally prevail. In those circumstances where it is widely considered that greater disclosure will directly enhance or protect shareholder value and is reflective of a clearly established reporting standard in the market, the Global Board-Aligned Policy will generally recommend in support of such proposals (*e.g.* proposals requesting greater disclosure of a company's political contributions and/or trade association spending policies and activities). In the absence of a clear determination that environmental and social proposals will have a positive effect on shareholder value or there are proposals that seek information that exceeds a widely endorsed standard in the market or place any burden upon the company beyond a reasonable and clearly established reporting standard in the market, the Global Board-Aligned policy will generally recommend voting against such proposals, or in line with the board's recommendations if different.

Say on Climate (SoC) Management Proposals

General Recommendation: Generally vote with the board's recommendation on management proposals that request shareholders to approve the company's climate transition action plan.<sup>22</sup>

Say on Climate (SoC) Shareholder Proposals

General Recommendation: Generally vote against shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan.

**<sup>22</sup>** Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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8. Mutual Fund Proxies

Election of Directors

General Recommendation: Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes

General Recommendation: For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

Converting Closed-end Fund to Open-end Fund

General Recommendation: Vote case-by-case on conversion proposals, considering the following factors:

§ Past performance as a closed-end fund;

§ Market in which the fund invests;

§ Measures taken by the board to address the discount; and

---

| | |
|:---|:---|
| § | Past shareholder activism, board activity, and votes on related proposals.  |

---

Proxy Contests

General Recommendation: Vote case-by-case on proxy contests, considering the following factors:

§ Past performance relative to its peers;

§ Market in which the fund invests;

§ Measures taken by the board to address the issues;

---

| | |
|:---|:---|
| § | Past shareholder activism, board activity, and votes on related proposals;  |

---

§ Strategy of the incumbents versus the dissidents;

§ Independence of directors;

§ Experience and skills of director candidates;

§ Governance profile of the company;

§ Evidence of management entrenchment.

Investment Advisory Agreements

General Recommendation: Vote case-by-case on investment advisory agreements, considering the following factors:

§ Proposed and current fee schedules;

§ Fund category/investment objective;

§ Performance benchmarks;

§ Share price performance as compared with peers;

§ Resulting fees relative to peers;

§ Assignments (where the advisor undergoes a change of control).

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Approving New Classes or Series of Shares

General Recommendation: Vote for the establishment of new classes or series of shares.

Preferred Stock Proposals

General Recommendation: Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

§ Stated specific financing purpose;

§ Possible dilution for common shares;

§ Whether the shares can be used for antitakeover purposes.

1940 Act Policies

General Recommendation: Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors:

§ Potential competitiveness;

§ Regulatory developments;

§ Current and potential returns; and

§ Current and potential risk.

Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.

Changing a Fundamental Restriction to a Nonfundamental Restriction

General Recommendation: Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

§ The fund's target investments;

§ The reasons given by the fund for the change; and

§ The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Nonfundamental

General Recommendation: Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

Name Change Proposals

General Recommendation: Vote case-by-case on name change proposals, considering the following factors:

§ Political/economic changes in the target market;

§ Consolidation in the target market; and

§ Current asset composition.

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Change in Fund's Subclassification

General Recommendation: Vote case-by-case on changes in a fund's sub-classification, considering the following factors:

§ Potential competitiveness;

§ Current and potential returns;

§ Risk of concentration;

§ Consolidation in target industry.

Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value

General Recommendation: Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV) if:

§ The proposal to allow share issuances below NAV has an expiration date no more than one year from the date shareholders approve the underlying proposal, as required under the Investment Company Act of 1940;

§ The sale is deemed to be in the best interests of shareholders by (1) a majority of the company's independent directors and (2) a majority of the company's directors who have no financial interest in the issuance; and

§ The company has demonstrated responsible past use of share issuances by either:

§ Outperforming peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

§ Providing disclosure that its past share issuances were priced at levels that resulted in only small or moderate discounts to NAV and economic dilution to existing non-participating shareholders.

Disposition of Assets/Termination/Liquidation

General Recommendation: Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors:

§ Strategies employed to salvage the company;

§ The fund's past performance;

§ The terms of the liquidation.

Changes to the Charter Document

General Recommendation: Vote case-by-case on changes to the charter document, considering the following factors:

§ The degree of change implied by the proposal;

§ The efficiencies that could result;

§ The state of incorporation;

§ Regulatory standards and implications.

Vote against any of the following changes:

§ Removal of shareholder approval requirement to reorganize or terminate the trust or any of its series;

§ Removal of shareholder approval requirement for amendments to the new declaration of trust;

§ Removal of shareholder approval requirement to amend the fund's management contract, allowing the contract to be modified by the investment manager and the trust management, as permitted by the 1940 Act;

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§ Allow the trustees to impose other fees in addition to sales charges on investment in a fund, such as deferred sales charges and redemption fees that may be imposed upon redemption of a fund's shares;

§ Removal of shareholder approval requirement to engage in and terminate subadvisory arrangements;

§ Removal of shareholder approval requirement to change the domicile of the fund.

Changing the Domicile of a Fund

General Recommendation: Vote case-by-case on re-incorporations, considering the following factors:

§ Regulations of both states;

§ Required fundamental policies of both states;

§ The increased flexibility available.

Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval

General Recommendation: Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

Distribution Agreements

General Recommendation: Vote case-by-case on distribution agreement proposals, considering the following factors:

§ Fees charged to comparably sized funds with similar objectives;

§ The proposed distributor's reputation and past performance;

§ The competitiveness of the fund in the industry;

§ The terms of the agreement.

Master-Feeder Structure

General Recommendation: Vote for the establishment of a master-feeder structure.

Mergers

General Recommendation: Vote case-by-case on merger proposals, considering the following factors:

§ Resulting fee structure;

§ Performance of both funds;

§ Continuity of management personnel;

§ Changes in corporate governance and their impact on shareholder rights.

Shareholder Proposals for Mutual Funds

Establish Director Ownership Requirement

General Recommendation: Generally vote against shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

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Reimburse Shareholder for Expenses Incurred

General Recommendation: Vote case-by-case on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote for the reimbursement of the proxy solicitation expenses.

Terminate the Investment Advisor

General Recommendation: Vote case-by-case on proposals to terminate the investment advisor, considering the following factors:

§ Performance of the fund's Net Asset Value (NAV);

§ The fund's history of shareholder relations;

§ The performance of other funds under the advisor's management.

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![LOGO](g79608g00k04.jpg)

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Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS' 2,600 employees operate worldwide across 29 global locations in 15 countries. Its approximately 3,400 clients include many of the world's leading institutional investors who rely on ISS' objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS' expertise to help them make informed investment decisions. This document and all of the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the "Information") is the property of Institutional Shareholder Services Inc. (ISS), its subsidiaries, or, in some cases third party suppliers.

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Without limiting any of the foregoing and to the maximum extent permitted by law, in no event shall ISS have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits), or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.© 2022 \| Institutional Shareholder Services and/or its affiliates

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## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  [Fiduciary Proxy Voting Guidelines for Public Plan Sponsors](#appd79608_201) | E-75 |
| [1. Director Elections](#appd79608_202) | E-76 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Voting on Director Nominees in Uncontested Elections](#appd79608_203) | E-76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Independence](#appd79608_204) | E-77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Competence](#appd79608_205) | E-77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Accountability](#appd79608_206) | E-77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Responsiveness](#appd79608_207) | E-81 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Board-Related Proposals](#appd79608_208) | E-86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Diversity](#appd79608_209) | E-86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Ownership Requirements](#appd79608_210) | E-86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board and Committee Size](#appd79608_211) | E-86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limit Term of Office](#appd79608_212) | E-87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appd79608_213) | E-87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Threshold Voting Requirement for Director Elections](#appd79608_214) | E-88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Access to the Proxy](#appd79608_215) | E-88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appd79608_216) | E-89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish an Office of the Board](#appd79608_217) | E-89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Liability Protection and Exculpation](#appd79608_218) | E-89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification](#appd79608_219) | E-89 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access — Voting for Director Nominees in Contested Elections](#appd79608_220) | E-90 |
| [2. Compensation](#appd79608_221) | E-91 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Evaluation of Executive Pay](#appd79608_222) | E-91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation – Management Say-on-Pay Proposals](#appd79608_223) | E-96 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation – Management Say on Pay](#appd79608_224) | E-97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appd79608_225) | E-97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Pay Plans](#appd79608_226) | E-98 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appd79608_227) | E-100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans (ESPPs) - Qualified Plans](#appd79608_228) | E-101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans (ESPPs) – Non-Qualified Plans](#appd79608_229) | E-101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Ownership Plans (ESOPs)](#appd79608_230) | E-102 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [OBRA-Related Compensation Proposals](#appd79608_231) | E-102 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden and Tin Parachutes](#appd79608_232) | E-102 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Director Compensation](#appd79608_233) | E-103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appd79608_234) | E-103 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Compensation](#appd79608_235) | E-103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure of Executive and Director Pay](#appd79608_236) | E-103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limit Executive and Director Pay](#appd79608_237) | E-103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive Perks and Retirement/Death Benefits](#appd79608_238) | E-104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive Holding Periods](#appd79608_239) | E-104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appd79608_240) | E-104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Performance-Based Options](#appd79608_241) | E-104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-up Proposals](#appd79608_242) | E-105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals](#appd79608_243) | E-105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants - Disclosure of Board or Company's Utilization](#appd79608_244) | E-105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appd79608_245) | E-105 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking/Bonus Banking "Plus"](#appd79608_246) | E-105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity](#appd79608_247) | E-105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoup Bonuses](#appd79608_248) | E-105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Link Compensation to Non-Financial Factors](#appd79608_249) | E-106 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pension Plan Income Accounting](#appd79608_250) | E-106 |
| [**3. Auditors**](#appd79608_251) | E-107 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Auditor Independence](#appd79608_252) | E-107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Ratification](#appd79608_253) | E-107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Rotation](#appd79608_254) | E-108 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Indemnification and Limitation of Liability](#appd79608_255) | E-108 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosures Under Section 404 of Sarbanes-Oxley Act](#appd79608_256) | E-109 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adverse Opinions](#appd79608_257) | E-109 |
| [**4. Takeover Defense**](#appd79608_258) | E-110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills](#appd79608_259) | E-110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Poison Pills/Protective Amendments](#appd79608_260) | E-110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appd79608_261) | E-111 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Remove Directors/Fill Vacancies](#appd79608_262) | E-111 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Alter the Size of the Board](#appd79608_263) | E-112 |
| [**5. Shareholder Rights**](#appd79608_264) | E-113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Confidential Voting](#appd79608_265) | E-113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call Special Meetings](#appd79608_266) | E-113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appd79608_267) | E-113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unequal Voting Rights](#appd79608_268) | E-113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Shareholder Vote Requirement to Amend the Charter or Bylaws](#appd79608_269) | E-114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appd79608_270) | E-114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Shareholder Vote Requirement to Approve Mergers](#appd79608_271) | E-115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appd79608_272) | E-115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimbursing Proxy Solicitation Expenses](#appd79608_273) | E-115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Venue](#appd79608_274) | E-115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee-Shifting Bylaws](#appd79608_275) | E-116 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appd79608_276) | E-116 |
| [**6. Mergers & Acquisitions / Corporate Restructurings**](#appd79608_277) | E-117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appd79608_278) | E-117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appd79608_279) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Restructuring](#appd79608_280) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appd79608_281) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appd79608_282) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appd79608_283) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private Transactions (LBOs, Minority Squeezeouts)](#appd79608_284) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing Corporate Name](#appd79608_285) | E-118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Plans of Reorganization (Bankruptcy)](#appd79608_286) | E-119 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appd79608_287) | E-119 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions](#appd79608_288) | E-120 |
| [**7. Capital Structure**](#appd79608_289) | E-121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appd79608_290) | E-121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appd79608_291) | E-122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appd79608_292) | E-122 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appd79608_293) | E-123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appd79608_294) | E-123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjust Par Value of Common Stock](#appd79608_295) | E-124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appd79608_296) | E-124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Debt Restructuring](#appd79608_297a) | E-125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S](#appd79608_298) | E-125 |
| [**8. State of Incorporation**](#appd79608_299) | E-126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting on State Takeover Statutes](#appd79608_300) | E-126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appd79608_301) | E-126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Offshore Reincorporations and Tax Havens](#appd79608_302) | E-126 |
| [**9. Corporate Responsibility & Accountability**](#appd79608_303) | E-128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Social, Environmental and Sustainability Issues](#appd79608_304) | E-128 |
| &nbsp;&nbsp;&nbsp;&nbsp;[I. GENERAL CSR RELATED](#appd79608_305) | E-129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Policy Review and Shareholder Advisory Committees](#appd79608_306) | E-129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [International Operations](#appd79608_307) | E-129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Affirm Political Non-Partisanship](#appd79608_308) | E-129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Contributions, Lobbying Reporting & Disclosure](#appd79608_309) | E-129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Military Sales](#appd79608_310) | E-130 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Operations in Sensitive Regions or Countries](#appd79608_311) | E-130 |
| &nbsp;&nbsp;&nbsp;&nbsp;[II. ENVIRONMENT & CLIMATE CHANGE](#appd79608_312) | E-131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenhouse Gas Emissions](#appd79608_313) | E-131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appd79608_314) | E-132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appd79608_315) | E-132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment in Renewable Energy](#appd79608_316) | E-132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sustainability Reporting and Planning](#appd79608_317) | E-133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in Protected or Sensitive Areas](#appd79608_318) | E-133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hydraulic Fracturing](#appd79608_319) | E-133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recycling Policy](#appd79608_320) | E-134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Endorsement of Ceres Roadmap 2030](#appd79608_321) | E-134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Land Use](#appd79608_322) | E-134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Water Use](#appd79608_323) | E-134 |
| &nbsp;&nbsp;&nbsp;&nbsp;[III. WORKPLACE PRACTICES & HUMAN RIGHTS](#appd79608_324) | E-135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equal Employment Opportunity](#appd79608_325) | E-135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [High-Performance Workplace](#appd79608_326) | E-135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Workplace Safety](#appd79608_327) | E-135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Discrimination in Retirement Benefits](#appd79608_328) | E-136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender, Race/Ethnicity Pay Gaps](#appd79608_329) | E-136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial Equity and/or Civil Rights Audit Guidelines](#appd79608_330) | E-136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sexual Harassment](#appd79608_331) | E-136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mandatory Arbitration](#appd79608_332) | E-137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Lending Reporting and Compliance](#appd79608_333) | E-137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [MacBride Principles](#appd79608_334) | E-137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Contract Supplier Standards](#appd79608_335) | E-137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate and Supplier Codes of Conduct](#appd79608_336) | E-138 |
| &nbsp;&nbsp;&nbsp;&nbsp;[IV. CONSUMER HEALTH & PUBLIC SAFETY](#appd79608_337) | E-138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Phase-out or Label Products Containing Genetically Engineered Ingredients](#appd79608_338) | E-138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tobacco-Related Proposals](#appd79608_339) | E-139 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Toxic Emissions](#appd79608_340) | E-139 |

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|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Toxic Chemicals](#appd79608_341) | E-139 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Nuclear Safety](#appd79608_342) | E-140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Concentrated Area Feeding Operations (CAFOs)](#appd79608_343) | E-140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pharmaceutical Product Reimportation](#appd79608_344) | E-140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pharmaceutical Product Pricing](#appd79608_345) | E-140 |

---

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## Fiduciary Proxy Voting Guidelines for Public Plan Sponsors
Public fund fiduciaries and their investment managers are required to vote proxies solely in the best interest of plan participants and beneficiaries. As fiduciaries, public funds trustees must act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

The execution of proxy-voting rights at shareholder meetings is a required duty of pension fund fiduciaries. The U.S. Department of Labor (DOL) has stated that the fiduciary act of managing plan assets that are shares of corporate stock includes the voting of proxies appurtenant to those shares of stock and that trustees may delegate this duty to an investment manager.**<sup>1</sup>** While public pension plans are not directly subject to the Employee Retirement Income Security Act of 1974 (ERISA), most do generally comply with the position set forth by the U.S. Department of Labor in 1988 with regard to the fiduciary responsibilities governing the voting of shares of stock owned by the plan.

These proxy voting guidelines are designed to help ensure that public funds fulfill all statutory and common law obligations governing proxy voting, with the intent of maximizing the long-term economic benefits of its plan participants, beneficiaries, and citizens of the state in which the fund resides. This includes an obligation to vote proxies in a manner consistent with sound corporate governance and responsible corporate citizenship. Sound corporate governance and responsible corporate practices lead to increased long-term shareholder value.

While these guidelines often provide explicit guidance on how to vote proxies with regard to specific issues that appear on ballot, they are not intended to be exhaustive. Hundreds of issues appear on proxy ballots every year; as such, it is neither practical nor reasonable to fashion voting guidelines and policies which attempt to address every eventuality. Rather, these guidelines are intended to cover the most significant and frequent proxy issues that arise. Each proxy issue should be subject to a rigorous analysis of the economic impact of the issue on the long-term share value. All votes shall be cast solely in the long-term interest of the participants and beneficiaries of the plan.

These proxy voting guidelines address a broad range of issues, including election of directors, executive compensation, auditor ratification, proxy contests, mergers and acquisitions, and tender offer takeover defenses. In addition to governance issues, these guidelines address broader issues of corporate citizenship that can also have a direct impact on corporate performance and important stakeholder interests, including climate risk, job security and wage parity, local economic development and stability, and workplace safety and health issues. In accordance with state laws, the policies take into consideration actions that promote good corporate citizenship through the proxy process.

<sup>1</sup> Most public sector pension plans, regulatory bodies, and professional associations have adopted the views of the U.S. Department of Labor on fiduciary duties related to proxy voting. The Department of Labor's Employee Benefits Security Administration (previously known as the Pension and Welfare Benefits Administration) has stated in opinion letters and an interpretative bulletin that the voting rights related to shares of stock held by pension plans are plans assets. Therefore, according to the Department, "the fiduciary act of managing plan assets which are shares of corporate stock would include the voting of proxies appurtenant to those shares of stock." Sources include: the Department of Labor Opinion Letter (Feb.23, 1988), reprinted in 15 Pens. Rep. (BNA), 391, the Department of Labor Opinion Letter (Jan.23, 1990), reprinted in 17 Pens. Rep. (BNA), 244 and the Interpretative Bulletin, 94-2.

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1. Director Elections

Electing directors is the single most important stock ownership right that shareholders can exercise. By electing directors who share their views, shareholders can help to define performance standards against which management can be held accountable. Public Fund Advisory Services holds directors to a high standard when voting on their election, qualifications, and compensation. Public Fund Advisory Services evaluates directors fairly and objectively, rewarding them for significant contributions and holding them ultimately accountable to shareholders for corporate performance. Institutional investors should use their voting rights in uncontested elections to influence financial performance and corporate strategies for achieving long term shareholder value.

Director accountability, independence and competence have become issues of prime importance to investors given the failings in oversight exposed by the global financial crisis. There is also concern over the environment in the boardrooms of certain markets, where past failures appear to be no impediment to continued or new appointments at major companies and may not be part of the evaluation process at companies in considering whether an individual is, or continues to be, fit for the role and best able to serve shareholders' interests.

Voting on Director Nominees in Uncontested Elections

Votes concerning the entire board of directors and members of key board committees are examined using the following factors:

Board Independence: Without independence from management, the board and/or its committees may be unwilling or unable to effectively set company strategy and scrutinize performance or executive compensation.

Board Competence: Companies should seek a diverse board of directors who can add value to the board through specific skills or expertise and who can devote sufficient time and commitment to serve effectively. While directors should not be constrained by arbitrary limits such as age or term limits, directors who are unable to attend board and committee meetings and/or who are overextended (i.e. serving on too many boards) raise concern on the director's ability to effectively serve in shareholders' best interests.

Board Accountability: Practices that promote accountability include: transparency into a company's governance practices, annual board elections, and providing shareholders the ability to remove problematic directors and to vote on takeover defenses or other charter/bylaw amendments. These practices help reduce the opportunity for management entrenchment.

Board Responsiveness: Directors should be responsive to shareholders, particularly in regard to shareholder proposals that receive a majority vote or management proposals that receive low shareholder support, and to tender offers where a majority of shares are tendered. Boards should also be sufficiently responsive to high withhold/against votes on directors. Furthermore, shareholders should expect directors to devote sufficient time and resources to oversight of the company.

Public Fund Advisory Services Recommendation: Votes on individual director nominees are always made on a case-by-case basis. Specific director nominee withhold/against**<sup>2</sup>** votes can be triggered by one or more of the following factors:

<sup>2</sup> In general, companies with a plurality vote standard use "Withhold" as the valid contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.

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Board Independence

§ Lack of a board that is at least majority independent;

§ Lack of independence on key board committees (i.e. audit, compensation, and nominating committees); or

§ Failure to establish any key board committees (i.e. audit, compensation, or nominating).

Board Competence

§ Directors serving on an excessive number of other boards which could compromise their primary duties of care and loyalty; or

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| | |
|:---|:---|
| § | Attendance of director nominees at board and committee meetings of less than 75 percent in one year without valid reason or explanation.  |

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In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

Gender Diversity

Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company's board. An exception will be made if there was at least one woman on the board at the preceding annual meeting and the board makes a firm commitment to return to a gender-diverse status within a year.

Racial and/or Ethnic Diversity

For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members<sup>3</sup>. An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or ethnic diverse member within a year.

Board Accountability

Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>4</sup>** considered on a case-by-case basis):

Problematic Takeover Defenses

§ The board lacks accountability and oversight due to the presence of problematic governance provisions, coupled with long-term poor corporate performance relative to peers;

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|:---|:---|
| § | If the company has a classified board and a continuing director is responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote, in addition to potential future withhold/against votes on that director, Public Fund Advisory Services may recommend a vote against or withhold votes from any or all of the nominees up for election, with the exception of new nominees**<sup>4</sup>**; or  |

---

<sup>3</sup> Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

<sup>4</sup> A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

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§ The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

Restriction of Binding Shareholder Proposals

Vote against or withhold from members of the governance committee if:

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| | |
|:---|:---|
| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include, but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

---

Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the compensation committee and potentially the full board if:

§ There is an unmitigated misalignment between CEO pay and company performance (see Pay-for-Performance policy);

§ The company maintains problematic pay practices including options backdating, excessive perks and overly generous employment contracts etc.;

§ There is evidence that management/board members are using company stock in hedging activities.

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

Problematic Audit-Related Practices

Performance of audit committee members concerning the approval of excessive non-audit fees, material weaknesses, and/or the lack of auditor ratification upon the proxy ballot;

Vote against or withhold votes from the members of the audit committee when:

§ Consulting (i.e. non-audit) fees paid to the auditor are excessive;

§ Auditor ratification is not included on the proxy ballot;

§ The company receives an adverse opinion on the company's financial statements from its auditor;

§ There is evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm; or

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|:---|:---|
| § | Poor accounting practices such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures, exist. Poor accounting practices may warrant voting against or withholding votes from the full board.  |

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Problematic Pledging of Company Stock

Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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| | |
|:---|:---|
| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

---

§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Unilateral Bylaw/Charter Amendments and Problematic Capital Structures

Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees<sup>4</sup>, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against directors (except new nominees<sup>4</sup>, who should be considered case-by-case) if the board:

§ Classified the board;

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| | |
|:---|:---|
| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

---

§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a fee-shifting provision; or

§ Adopted another provision deemed egregious.

Problematic Governance Structure – Newly public companies

For companies that hold or held their first annual meeting**<sup>5</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees<sup>4</sup>, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

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|:---|:---|
| § | Supermajority vote requirements to amend the bylaws or charter;  |

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§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

Unequal Voting Rights

Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees**<sup>4</sup>**, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>6</sup>**.

Exceptions to this policy will generally be limited to:

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| | |
|:---|:---|
| § | Newly-public companies**<sup>5</sup>** with a sunset provision of no more than seven years from the date of going public;  |

---

§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

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| | |
|:---|:---|
| § | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be de minimis; or  |

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| | |
|:---|:---|
| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

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Management Proposals to Ratify Existing Charter or Bylaw Provisions

Vote against or withhold from directors individually, governance committee members, or the entire board (except new nominees<sup>4</sup>, who should be considered case-by-case), where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Governance Failures

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

§ The presence of problematic governance practices including interlocking directorships, multiple related-party transactions, excessive risk-taking, imprudent use of corporate assets, etc.;

<sup>5</sup> Newly-public companies generally include companies that emerge from bankruptcy, spin-offs, direct listings, and those who complete a traditional initial public offering.

**<sup>6</sup>** This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

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§ Inadequate CEO succession planning, including the absence of an emergency and non-emergency/orderly CEO succession plan;

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|:---|:---|
| § | Material failures of governance, stewardship, risk oversight**<sup>7</sup>**, or fiduciary responsibilities at the company, failure to replace management as appropriate, flagrant or egregious actions related to the director(s)' service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company; or  |

---

§ Chapter 7 bankruptcy, Securities & Exchange Commission (SEC) violations or fines, and criminal investigations by the Department of Justice (DOJ), Government Accounting Office (GAO) or any other federal agency.

Climate Accountability

For companies that are significant greenhouse gas (GHG) emitters, through their operations or value chain**<sup>8</sup>**, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where Public Fund Advisory Services determines that the company is not taking the minimum steps needed to understand, assess, and mitigate risks related to climate change to the company and the larger economy.

Minimum steps to understand and mitigate those risks are considered to be the following. Both minimum criteria will be required to be in compliance:

§ Detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

§ Board governance measures;

§ Corporate strategy;

§ Risk management analyses; and

§ Metrics and targets.

§ Appropriate GHG emissions reduction targets.

At this time "appropriate GHG emissions reductions targets" will be medium-term GHG reduction targets or Net Zero-by-2050 GHG reduction targets for a company's operations (Scope 1) and electricity use (Scope 2). Targets should cover the vast majority of the company's direct emissions.

Board Responsiveness

Vote against or withhold from individual directors, committee members, or the entire board of directors as appropriate if:

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| | |
|:---|:---|
| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the underlying issue(s) that caused the high withhold/against votes;  |

---

§ The board failed to act on takeover offers where the majority of the shareholders tendered their shares; or

§ The board failed to act on a shareholder proposal that received approval by a majority of the shares cast the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year.

Vote case-by-case on compensation committee members (or, potentially, the full board) and the Say-on-Pay proposal if:

§ The company's previous say-on-pay proposal received low levels of investor support, taking into account:

§ The company's response, including: a) disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of

<sup>7</sup> Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant adverse legal judgments or settlements; or hedging of company stock.

<sup>8</sup> Companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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engagements and whether independent directors participated); b) disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition; c) disclosure of specific and meaningful actions taken to address shareholders' concerns; d) other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| | |
|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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| | |
|:---|:---|
| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Discussion

Independence

Board independence from management is of vital importance to a company and its shareholders. Accordingly, Public Fund Advisory Services believes votes should be cast in a manner that will encourage the independence of boards. Independence will be evaluated based upon a number of factors, including: employment by the company or an affiliate in an executive capacity; past or current employment by a firm that is one of the company's paid advisors or consultants; a personal services contract with the company; family relationships of an executive or director of the company; interlocks with other companies on which the company's chair or chief executive officer is also a board member; and service with a non-profit organization that receives significant contributions from the company.

Public Fund Advisory Services Recommendation:

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| | |
|:---|:---|
| § | Generally vote against or withhold votes from non-independent director nominees (executive directors and non-independent, non-executive directors) where the entire board is not at least majority independent.  |

---

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| | |
|:---|:---|
| § | Generally vote against or withhold votes from non-independent director nominees when the nominating, compensation and audit committees are not fully independent.  |

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§ Generally consider directors who have been on the board continually for a period longer than 10 years as non-independent, non-executive directors.

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| | |
|:---|:---|
| § | Vote for shareholder proposals requesting that all key board committees (i.e. audit, compensation and/or nominating) include independent directors exclusively.  |

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| | |
|:---|:---|
| § | Vote for shareholder proposals requesting that the board be comprised of a majority of independent directors.  |

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Non-Independent Chair

Two major components at the top of every public company are the running of the board and the executive responsibility for the running of the company's business. Many institutional investors believe there should be a clear division of responsibilities at the head of the company that will ensure a balance of power and authority, such that no one individual has unfettered powers of decision. When there is no clear division between the executive and board branches of a company, poor executive and/or board actions often go unchecked to the ultimate detriment of shareholders. Since executive compensation is so heavily correlated to the managerial power relationship in the boardroom, the separation of the CEO and chair positions is a critical step in curtailing excessive pay, which ultimately can become a drain on shareholder value.

Arguments have been made that a smaller company and its shareholders can benefit from the full-time attention of a joint chair and CEO. This may be so in select cases, and indeed, using a case-by-case review of circumstances there may be worthy exceptions. But, even in these cases, it is the general view of many institutions that a person should only serve in the position of joint CEO and chair on a temporary basis, and that these positions should be separated following their provisional combination.

Public Fund Advisory Services strongly believes that the potential for conflicts of interest in the board's supervisory and oversight duties trumps any possible corollary benefits that could ensue from a dual CEO/chair scenario. Instead of having an ingrained quid pro quo situation whereby a company has a single leader overseeing both management and the

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boardroom, Public Fund fiduciaries believe that it is the board's implicit duty to assume an impartial and objective role in overseeing the executive team's overall performance. Shareholder interests are placed in jeopardy if the CEO of a company is required to report to a board that she/he also chairs.

Inherent in the chair's job description is the duty to assess the CEO's performance. This objectivity is obviously compromised when a chair is in charge of evaluating her/his own performance or has a past or present affiliation with management. Moreover, the unification of chair and CEO poses a direct threat to the smooth functioning of the entire board process since it is the ultimate responsibility of the chair to set the agenda, facilitate discussion, and make sure that directors are given complete access to information in order to make informed decisions.

Public Fund Advisory Services Recommendation:

§ Generally support shareholder proposals calling for the separation of the CEO and chair positions.

§ Generally support shareholder proposals calling for a non-executive director to serve as chair who is not a former CEO or senior-level executive of the company.

Competence

Excessive Directorships

As new regulations mandate that directors be more engaged and vigilant in protecting shareholder interests or else risk civil and/or criminal sanctions, board members have to devote more time and effort to their oversight duties. Recent surveys of U.S. directors confirm a desire for limiting board memberships, to between three and five seats. In view of the increased demands placed on corporate board members, Public Fund fiduciaries believe that directors who are overextended may be impairing their ability to serve as effective representatives of shareholders. Public Fund Advisory Services will recommend a vote against or withhold from directors serving on an excessive number of other boards, which could compromise their primary duties of care and loyalty.

Public Fund Advisory Services Recommendation: Generally vote against or withhold votes from directors serving on an excessive number of boards. As a general rule, vote against or withhold from director nominees who are:

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| § | CEOs of publicly-traded companies who serve on more than one public boards besides their own. NOTE: Public Fund Advisory Services will recommend a vote against or withhold from overboarded CEO directors only at their outside directorships**<sup>9</sup>** and not at the company in which they presently serve as CEO; or  |

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§ Non-CEO directors who serve on more than four public company boards.

Accountability

Director Performance Evaluation

Many institutional investors believe long-term financial performance and the appropriateness of governance practices should be taken into consideration when determining vote recommendations with regard to directors in uncontested elections. When evaluating whether to recommend a vote against or withhold votes from director nominees, Public Fund Advisory Services will evaluate underperforming companies that exhibit sustained poor performance as measured by total returns to shareholders over a one-, three-, and five-year period.

Public Fund Advisory Services views deficient oversight mechanisms and the lack of board accountability to shareholders especially in the context of sustained poor performance, as problematic. As part of the framework for assessing director performance, Public Fund Advisory Services will also evaluate board accountability and oversight at companies that

<sup>9</sup> Although all of a CEO's subsidiary boards will be counted as separate boards, Public Fund Advisory Services will not recommend a withhold/against vote from the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent, but will do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

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demonstrate sustained underperformance. A governance structure that discourages director accountability may lead to board and management entrenchment. For example, the existence of several anti-takeover provisions\* has the cumulative effect of deterring legitimate tender offers, mergers, and corporate transactions that may have ultimately proved beneficial to shareholders. When a company maintains entrenchment devices, shareholders of poorly performing companies are left with few effective routes to beneficial change.

Public Fund Advisory Services will assess the company's response to the ongoing performance issues, and consider recent board and management changes, board independence, overall governance practices, and other factors that may have an impact on shareholders. If a company exhibits sustained poor performance coupled with a lack of board accountability and oversight, Public Fund Advisory Services' evaluation may also consider the company's operational metrics and other factors as warranted.

\*Problematic provisions include but are not limited to:

§ A classified board structure;

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| § | A supermajority vote requirement;  |

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| § | Either a plurality vote standard in uncontested director elections or a majority vote standard with no plurality carve-out for contested elections;  |

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§ The inability for shareholders to call special meetings;

§ The inability for shareholders to act by written consent;

§ A multi-class structure; and/or

§ A non-shareholder approved poison pill.

Public Fund Advisory Services Recommendation: Vote against or withhold votes from all director nominees if the board lacks accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Sustained poor performance for companies outside the Russell 3000 universe is defined as underperforming peers or index on the basis of one-, three-, and five-year total shareholder returns.

Classified Boards ~ Annual Elections

The ability to elect directors is the single most important use of the shareholder franchise, and all directors should be accountable on an annual basis. Annually elected boards provide the best governance system for accountability to shareholders. A classified board is a board that is divided into separate classes, with directors serving overlapping terms. A company with a classified board usually divides the board into three classes. Under this system, only one class of nominees comes up to shareholder vote at the AGM each year.

As a consequence of these staggered terms, shareholders only have the opportunity to vote on a single director approximately once every three years. A classified board makes it difficult to change control of the board through a proxy contest since it would normally take two years to gain control of a majority of board seats. Under a classified board, the possibility of management entrenchment greatly increases. Classified boards can reduce director accountability by shielding directors, at least for a certain period of time, from the consequences of their actions. Continuing directors who are responsible for a problematic governance issue at the board/committee level would avoid shareholders' reactions to their actions because they would not be up for election in that year. Ultimately, in these cases, the full board should be responsible for the actions of its directors.

Many in management believe that staggered boards provide continuity. Some shareholders believe that in certain cases a staggered board can provide consistency and continuity in regard to decision-making and commitment that may be important to the long-term financial future of the company. Nevertheless, empirical evidence strongly suggests that staggered boards are generally not in the shareholders' best interest. In addition to shielding directors from being held accountable by shareholders on an annual basis, a classified board can entrench management and effectively preclude most takeover bids or proxy contests.

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Public Fund Advisory Services Recommendation:

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| § | Vote against management or shareholder proposals seeking to classify the board when the issue comes up for vote.  |

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| § | Vote for management or shareholder proposals to repeal a company's classified board structure.  |

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| § | If the company has a classified board and a continuing director is responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote, in addition to potential future withhold/against votes on that director, Public Fund Advisory Services may vote against or withhold votes from any or all of the nominees up for election, with the exception of new nominees<sup>4</sup>.  |

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Shareholder Rights Plan (i.e. Poison Pills)

Institutional investors view shareholder rights plans, or poison pills, as among the most onerous of takeover defenses that may serve to entrench management and have a detrimental impact on their long-term share value. While recognizing that boards have a fiduciary duty to use all available means to protect shareholders' interests, as a best governance principle, boards should seek shareholder ratification of a poison pill (or an amendment thereof) within a reasonable period, to ensure that the features of the poison pill support the interests of shareholders and do not merely serve as a management entrenchment device. Boards that fail to do so should be held accountable for ultimately disregarding shareholders' interests. In applying this principle to voting in uncontested director elections, Public Fund Advisory Services considers the term of the pill an important factor, as shorter term pills are generally less onerous as a takeover defense when compared to longer term pills, and may in some cases provide the board with a valuable tool to maximize shareholder value in the event of an opportunistic offer.

Public Fund Advisory Services Recommendation:

Generally vote against or withhold votes from all nominees (except new nominees4, who should be considered on a case-by-case basis) if;

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| § | The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders**<sup>10</sup>**;  |

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§ The board makes a material adverse change to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

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| § | The company has a poison pill with a deadhand or slowhand feature**<sup>11</sup>**.  |

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Vote case-by-case on nominees if the board adopts an initial short-term pillError! Bookmark not defined. (with a term of one year or less) without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

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| § | A commitment to put any renewal to a shareholder vote; and  |

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§ Other factors as relevant.

Responsiveness

Failure to Act on Shareholder Proposals Receiving Majority Support

Majority-supported proposals represent a request for action (usually the removal of an anti-takeover mechanism) by shareholder proponents. Because they are non-binding or precatory in nature, boards may easily disregard them, forcing proponents to either repeat their submissions, take alternative actions, or withdraw their offer altogether.

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Public Fund Advisory Services Recommendation: Generally vote against or withhold from all director nominees at a company that has ignored a shareholder proposal that was approved by a majority of the votes cast at the last annual meeting.

Other Board-Related Proposals

Director Diversity

Gender and ethnic diversity are important components on a company's board. Diversity brings different perspectives to a board that in turn leads to a more varied approach to board issues. Public Fund fiduciaries generally believe that increasing diversity in the boardroom would better reflect a company's workforce, customers, and community and enhance shareholder value.

Public Fund Advisory Services Recommendation:

§ Support proposals asking the board to make greater efforts to search for qualified female and minority candidates for nomination to the board of directors.

§ Support endorsement of a policy of board inclusiveness.

§ Support reporting to shareholders on a company's efforts to increase diversity on their boards.

Stock Ownership Requirements

Corporate directors should own some amount of stock of the companies on which they serve as board members. Stock ownership is a simple method to align the interests of directors with company shareholders. Nevertheless, many highly qualified individuals such as academics and clergy who can offer valuable perspectives in boardrooms may be unable to purchase individual shares of stock. In such a circumstance, the preferred solution is to look at the board nominees individually and take stock ownership into consideration when voting on the merits of each candidate.

Public Fund Advisory Services Recommendation: Generally support shareholder proposals requiring directors to own a minimum amount of company stock, provided these requests afford a carve-out for directors who do not have the financial means to purchase company stock or a grace period within which to own a reasonable amount of stock.

Board and Committee Size

While there is no hard and fast rule among institutional investors as to what may be an optimal board size, there is an acceptable range that companies should strive to meet and not exceed. A board that is too large may function inefficiently. Conversely, a board that is too small may allow the CEO to exert disproportionate influence or may stretch the time requirements of individual directors too thin.

Proposals seeking to set board size will be evaluated on a case-by-case basis. Given that the preponderance of boards in the U.S. range between five and fifteen directors, many institutional investors believe this benchmark is a useful standard for evaluating such proposals.

Public Fund Advisory Services Recommendation:

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| § | Generally vote against any proposal seeking to amend the company's board size to fewer than five seats.  |

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| § | Generally vote against any proposal seeking to amend the company's board size to more than fifteen seats;  |

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| § | Evaluate board size on a case-by-case basis and consider withhold or against votes or other action at companies that have fewer than five directors and more than 15 directors on their board.  |

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Limit Term of Office

Those who support term limits argue that this requirement would bring new ideas and approaches on to a board. While term of office limitations can rid the board of non-performing directors over time, it can also unfairly force experienced and effective directors off the board. When evaluating shareholder proposals on director term limits, consider whether the company's performance has been poor and whether problematic or entrenching governance provisions are in place at the company. Additionally, consider board independence, including whether the board chair is independent.

Public Fund Advisory Services Recommendation: Generally vote against shareholder proposals to limit the tenure of outside directors.

Cumulative Voting

Most corporations provide that shareholders are entitled to cast one vote for each share owned. Under a cumulative voting scheme, the shareholder is permitted to have one vote per share for each director to be elected. Shareholders are permitted to apportion those votes in any manner they wish among the director candidates. Thus, under a cumulative-voting scheme, shareholders have the opportunity to elect a minority representative to a board by cumulating their votes, thereby ensuring minority representation for all sizes of shareholders.

For example, if there is a company with a ten-member board and 500 shares outstanding-the total number of votes that may be cast is 5,000. In this case a shareholder with 51 shares (10.2 percent of the outstanding shares) would be guaranteed one board seat because all votes may be cast for one candidate. Without cumulative voting, anyone controlling 51 percent of shares would control the election of all ten directors.

With the advent and prevalence of majority voting for director elections, shareholders now have greater flexibility in supporting candidates for a company's board of directors. Cumulative voting and majority voting are two different voting mechanisms designed to achieve two different outcomes. While cumulative voting promotes the interests of minority shareholders by allowing them to get some representation on the board, majority voting promotes a democratic election of directors for all shareholders and ensures board accountability in uncontested elections. Though different in philosophic view, cumulative voting and majority voting can work together operationally, with companies electing to use majority voting for uncontested elections and cumulative voting for contested elections to increase accountability and ensure minority representation on the board.

In contested elections, similar to cumulative voting, proxy access allows shareholder access to the ballot without a veto from the nominating committee, but unlike cumulative voting, it also requires majority support to elect such directors.

At controlled companies, where majority insider control would preclude minority shareholders from having any representation on the board, cumulative voting would allow such representation and shareholder proposals for cumulative voting would be supported.

Public Fund Advisory Services Recommendation:

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| § | Generally vote against proposals to eliminate cumulative voting;  |

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| § | Generally vote for proposals to restore or provide for cumulative voting unless:  |

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§ The company has proxy access thereby allowing shareholders to nominate directors to the company's ballot; and

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| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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| § | Vote for proposals for cumulative voting at controlled companies (where insider voting power exceeds 50%).  |

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Majority Threshold Voting Requirement for Director Elections

Shareholders have expressed strong support for precatory resolutions on majority threshold voting since 2005, with a number of proposals receiving majority support from shareholders. Public Fund fiduciaries believe shareholders should have a greater voice in regard to the election of directors and view majority threshold voting as a viable alternative to the current deficiencies of the plurality system in the U.S.

Public Fund Advisory Services Recommendation:

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| § | Generally support reasonably crafted shareholders proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of the plurality standard for electing directors (including binding resolutions requesting that the board amend the company's bylaws), provided the proposal includes a carve-out for a plurality voting standard when there are more director nominees than board seats (e.g. in contested elections).  |

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| § | Public Fund Advisory Services may vote against or withhold votes from members of the board at companies without the carve-out for plurality voting in contested elections, as the use of a majority vote standard can act as an anti-takeover defense in contested elections. (e.g. although the dissident nominees may have received more shares cast, as long as the combination of withhold/against votes and the votes for the management nominees keep the dissident nominees under 50%, the management nominees will win, due to the holdover rules). This clearly contradicts the expressed will of shareholders.  |

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| § | In addition to supporting proposals seeking a majority vote standard in director elections, Public Fund Advisory Services also supports a post-election "director resignation policy" that addresses the situation of holdover directors to accommodate both shareholder proposals and the need for stability and continuity of the board.  |

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Shareholder Access to the Proxy

The current director election process as it exists leaves much to be desired. Companies currently nominate for election only one candidate for each board seat. Shareholders who oppose a candidate have no easy way to do so unless they are willing to undertake the considerable expense of running an independent candidate for the board. The only way for shareholders to register dissent about a certain director candidate is to vote against or "withhold" support from that nominee. But because directors are still largely elected by a plurality (those nominees receiving the most votes win board seats) at a large proportion of firms in the U.S., nominees running unopposed are typically reelected despite shareholder opposition.

Many investors view proxy access as an important shareholder right, one that is complementary to other best-practice corporate governance features. Public Fund Advisory Services is generally supportive of reasonably crafted shareholder proposals advocating for the ability of long-term shareholders to cost-effectively nominate director candidates that represent their interests on management's proxy card. Shareholder proposals that have the potential to result in abuse of the proxy access right by way of facilitating hostile takeovers will generally not be supported.

Public Fund Advisory Services Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions:

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| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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| § | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access.

Generally vote against proposals that are more restrictive than these guidelines.

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CEO Succession Planning

Public Fund Advisory Services Recommendation: Vote for proposals seeking disclosure on a CEO succession planning policy.

Establish an Office of the Board

Public Fund Advisory Services Recommendation: Generally vote for shareholders proposals requesting that the board establish an *Office of the Board of Directors* in order to facilitate direct communication between shareholders and non-management directors, unless the company has effectively demonstrated via public disclosure that it already has an established structure in place.

Director and Officer Liability Protection and Exculpation

Management proposals typically seek shareholder approval to adopt an amendment to the company's charter to eliminate or limit the personal liability of directors to the company and its shareholders for monetary damages for any breach of fiduciary duty to the fullest extent permitted by state law. Charter amendments may also include limited liability wherein a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff. In contrast, shareholder proposals seek to provide for personal monetary liability for fiduciary breaches arising from gross negligence.

Public Fund Advisory Services may support these proposals when the company persuasively argues that such action is necessary to attract and retain directors, but will likely oppose management proposals and support shareholder proposals in order to promote greater accountability.

Public Fund Advisory Services Recommendation: Vote case-by-case, considering the stated rationale for the proposed change, on proposals to limit or eliminate entirely director and officer liability in regard to: (i) breach of the director's fiduciary "duty of loyalty" and "duty of care" to shareholders; (ii) acts or omissions not made in "good faith" or involving intentional misconduct or knowledge of violations under the law; (iii) acts involving the unlawful purchases or redemptions of stock; (iv) payment of unlawful dividends; or (v) use of the position as director for receipt of improper personal benefits.

Director and Officer Indemnification

Indemnification is the payment by a company of the expenses of directors who become involved in litigation as a result of their service to a company. Proposals to indemnify a company's directors differ from those to eliminate or reduce their liability because with indemnification directors may still be liable for an act or omission, but the company will bear the expense. Public Fund fiduciaries may support these proposals when the company persuasively argues that such action is necessary to attract and retain directors, but should generally oppose indemnification when it is being proposed to insulate directors from actions that have already occurred.

Public Fund Advisory Services Recommendation:

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| § | Vote case-by-case, considering the stated rationale for the proposed change, on indemnification proposals that would expand individual coverage beyond ordinary legal expenses to also cover specific acts of negligence that are more serious violations of fiduciary obligation than mere carelessness.  |

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| § | Vote case-by-case, considering the stated rationale for the proposed change, on proposals that would expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for at the discretion of the company's board (i.e., "permissive indemnification") but that previously the company was not required to indemnify.  |

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| § | Vote for those proposals which provide expanded coverage in cases when a director's or officer's legal defense was unsuccessful if: (1) the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and (2) only if the individual's legal expenses would be covered.  |

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Proxy Contests/Proxy Access — Voting for Director Nominees in Contested Elections

Contested elections of directors frequently occur when a board candidate or "dissident slate" seeks election for the purpose of achieving a significant change in corporate policy or control of seats on the board. Competing slates will be evaluated on a case-by-case basis with a number of considerations in mind. These include, but are not limited to, the following: personal qualifications of each candidate; the economic impact of the policies advanced by the dissident slate of nominees; and their expressed and demonstrated commitment to the interests of the shareholders of the company.

Public Fund Advisory Services Recommendation: Votes in a contested election of directors are evaluated on a case-by-case basis with the following seven factors in consideration:

§ Long-term financial performance of the company relative to its industry;

§ Management's track record;

§ Background to the contested election;

§ Nominee qualifications and any compensatory arrangements;

§ Strategic plan of dissident slate and quality of critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates); and

§ Stock ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether there are more candidates than board seats).

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2. Compensation

The housing market collapse and resulting credit crisis resulted in significant erosion of shareholder value, unprecedented levels of market volatility, and a lack of confidence among financial market participants. Many Public Fund trustees have questioned the role of executive compensation in incentivizing inappropriate or excessive risk-taking behavior by executives that could threaten a corporation's long-term viability. Further, generous severance packages and other payments to departing executives of failed institutions have heightened attention on the issue of pay for performance.

Trustees of funds, which have lost significant value in their investments as a result of the financial crisis, have little patience for "pay for failure" and continue to press for the adoption of executive compensation practices aimed at creating and sustaining long-term shareholder value.

Companies have long argued that legally binding executive compensation obligations cannot be modified. The

Capital Purchase Program implemented under the Emergency Economic Stabilization Act of 2008, the "bail out" program for the U.S. financial system, set the tone for executive compensation reform and requires participating firms to accept certain limits and requirements on executive compensation, regardless of existing contractual arrangements. A number of firms agreed to these requirements.

Evolving disclosure requirements have opened a wider window into compensation practices and processes, giving shareholders more opportunity and responsibility to ensure that pay is designed to create and sustain shareholder value. Companies in the U.S. are now required to evaluate and discuss potential risks arising from misguided or misaligned compensation programs. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires advisory shareholder votes on executive compensation (management "Say on Pay"), an advisory vote on the frequency of Say on Pay, as well as a shareholder advisory vote on golden parachute compensation. The advent of "Say on Pay" votes for shareholders in the U.S. has provided a new communication mechanism and impetus for constructive engagement between shareholders and managers/directors on pay issues.

Evaluation of Executive Pay

Public Fund Advisory Services believes that executive pay programs should be fair, competitive, reasonable, and appropriate, and that pay for performance should be a central tenet in executive compensation philosophy. When evaluating executive and director pay programs and practices, Public Fund Advisory Services looks for the following best practice considerations in the design and administration of executive compensation programs:

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| § | **Appropriate pay-for-performance alignment with emphasis on long-term shareholder value:** executive pay practices must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. Evaluating appropriate alignment of pay incentives with shareholder value creation includes taking into consideration, among other factors, the link between pay and performance, the mix between fixed and variable pay, performance goals, and equity-based plan costs.  |

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| § | **Avoiding arrangements that risk "pay for failure":** this includes assessing the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation.  |

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| § | **Independent and effective compensation committee:** oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed) should be promoted.  |

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| § | **Clear, comprehensive compensation disclosures:** shareholders expect companies to provide informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly.  |

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| § | **Avoiding inappropriate pay to non-executive directors:** compensation to outside directors should not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance.  |

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Examples of best pay practices include:

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| § | <u>*Employment contracts*:</u> Companies should enter into employment contracts under limited circumstances for a short time period (e.g., new executive hires for a three-year contract) for limited executives. The contracts should not have automatic renewal feature and should have a specified termination date.  |

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| § | *<u>Severance agreements</u>:* Severance provisions should not be so appealing that they become an incentive for the executive to be terminated. The severance formula should be reasonable and not overly generous to the executive (e.g., use a reasonable severance multiple; use pro-rated target/average historical bonus and not maximum bonus). Failure to renew employment contract, termination under questionable events or for poor performance should not constitute "good reason" for termination with severance payments.  |

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| § | *<u>Change-in-control payments</u>:* Change-in-control payments should be "double-triggered" – i.e. payouts should only made when there is a significant change in company ownership structure, and when there is a loss of employment or substantial change in job duties associated with the change in company ownership structure. Change-in-control provisions should exclude excise tax gross-ups and should not authorize the acceleration of vesting of equity awards upon a change in control unless provided under a double-trigger scenario. Similarly, change in control provisions in equity plans should be double-triggered. A change in control event should not result in an acceleration of vesting of all unvested stock options or lapsing of vesting/performance requirements on restricted stock/performance shares, unless there is a loss of employment or substantial change in job duties.  |

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| § | *<u>Supplemental executive retirement plans (SERPs)</u>:* SERPs should not include sweeteners that can increase the payout value significantly or even exponentially, such as additional years of service credited for pension calculations, or inclusion of variable pay (e.g. bonuses and equity awards) into the formula. Pension formulas should not include extraordinary annual bonuses paid close to the time of retirement and should be based on an average, not the maximum, level of compensation earned.  |

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§ <u>*Deferred compensation*:</u> Above-market returns or guaranteed minimum returns should not be applied on deferred compensation.

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| § | *<u>Disclosure practices</u>:* The Compensation, Discussion and Analysis should be written in plain English, with as little "legalese" as possible and formatted using section headers, bulleted lists, tables and charts where possible to ease reader comprehension. Ultimately, the document should provide detail and rationale regarding compensation, strategy, pay mix, goals/metrics, challenges, competition and pay for performance linkage, etc. in a narrative fashion.  |

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| § | *<u>Responsible use of company stock</u>:* Companies should adopt policies that prohibit executives from speculating in company's stock or using company stock in hedging activities, such as "cashless" collars, forward sales, equity swaps or other similar arrangements. Such behavior undermines the ultimate alignment with long-term shareholders' interests. In addition, the policy should prohibit or discourage the use of company stock as collateral for margin loans, to avoid any potential sudden stock sales (required upon margin calls) that could have a negative impact on the company's stock price.  |

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| § | <u>*Long-term focus*:</u> Executive compensation programs should be designed to support companies' long-term strategic goals. A short-term focus on performance does not necessarily create sustainable shareholder value. Instead, long-term goals may be sacrificed to achieve short-term expectations to the detriment of shareholder value, as evidenced by the financial crisis.  |

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Compensation programs embedding a long-term focus with respect to company goals better align with the long-term interests of shareholders. Granting stock options and restricted stock to executives that vest in five years does not necessarily provide a long-term focus, as executives can sell off the company shares once they vest. However, requiring senior executives to hold company stock until retirement or after retirement can encourage a long-term focus on company performance.

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Pay-For-Performance Evaluation

Stock-based pay is often the main driver for excessive executive compensation, which could be fueled by poor plan design or administration. Therefore, it is important to closely examine any discrepancies between CEO pay and total shareholder returns over a sustained period of time in assessing equity-based compensation. Many investors do not consider standard stock options or time-vested restricted stock to be performance-based. If a company provides performance-based incentives to its executives, the company should provide complete disclosure of the performance measures and goals to allow shareholders to assess the rigor of the performance program. Complete and transparent disclosure enables shareholders to better comprehend the company's pay for performance linkage.

When financial or operational measures are utilized in incentive awards, the achievements related to these measures should ultimately translate into superior shareholder returns in the long-term. The use of non-GAAP financial metrics makes it very challenging for shareholders to ascertain the rigor of the program as shareholders often cannot tell the type of adjustments being made and if the adjustments were made consistently.

Pay-for-performance should be a central tenet in executive compensation philosophy. In evaluating the degree of alignment between the CEO's pay with the company's performance over a sustained period, Public Fund Advisory

Services conducts a pay-for-performance analysis.

With respect to companies in the Russell 3000 or Russell 3000E Indices**<sup>10</sup>**, this analysis considers the following:

1. Peer Group **<sup>11</sup>** Alignment:

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|:---|:---|
| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period.  |

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| § | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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| § | The multiple of the CEO's total pay relative to the peer group median.  |

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2. Absolute Alignment **<sup>12</sup>** – the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, misaligned pay and performance are otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to evaluating how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance- to time-based incentive awards;

§ The overall ratio of performance-based compensation;

§ The completeness of disclosure and rigor of performance goals;

§ The company's peer group benchmarking practices;

§ Actual results of financial/operational metrics, both absolute and relative to peers;

**<sup>10</sup>** The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

**<sup>11</sup>** The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market cap bucket that is reflective of the company's. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

**<sup>12</sup>** Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

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§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

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| § | Realizable pay**<sup>13</sup>** compared to grant pay; and  |

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§ Any other factors deemed relevant.

Problematic Compensation Practices

Poor disclosure, the absence or non-transparency of disclosure and flawed compensation plan design can lead to excessive executive pay practices that are detrimental to shareholders.

Companies are expected to meet a minimum standard of tally sheet disclosure as to allow shareholders to readily assess the total executive pay package, understand the actual linkage between pay and performance, and mitigate misinformation to shareholders. The SEC has issued rules on executive and director compensation that require expansive disclosure and a total compensation figure for each of the named executive officers. Poorly designed executive compensation plans or those lacking in transparency can be reflective of a poorly performing compensation committee.

Executive compensation will continue to be in the spotlight in the ensuing years, particularly when shareholders are expected to have access to more complete information.

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene best practice compensation considerations, including:

§ Problematic practices related to non-performance-based compensation elements;

§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

While not exhaustive, the following list represents certain adverse practices that carry significant weight in this overall consideration, and may lead to negative vote recommendations:

§ Egregious employment contracts:

§ Contracts containing multi-year guarantees for salary increases, non-performance based bonuses, and equity compensation;

§ New CEO with overly generous new-hire package:

§ Excessive "make whole" provisions without sufficient rationale;

§ Any of the problematic pay practices listed in this policy;

§ Abnormally large bonus payouts without justifiable performance linkage or proper disclosure:

§ Includes performance metrics that are changed, canceled, or replaced during the performance period without adequate explanation of the action and the link to performance;

§ Egregious pension/SERP (supplemental executive retirement plan) payouts:

§ Inclusion of additional years of service not worked that result in significant benefits provided in new arrangements;

§ Inclusion of performance-based equity or other long-term awards in the pension calculation;

§ Excessive Perquisites:

§ Perquisites for former and/or retired executives, such as lifetime benefits, car allowances, personal use of corporate aircraft, or other inappropriate arrangements;

§ Extraordinary relocation benefits (including home buyouts);

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| § | Excessive amounts of perquisites compensation;  |

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**<sup>13</sup>** Public Fund Advisory Services research reports include realizable pay for S&P1500 companies. 

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§ Excessive severance and/or change in control provisions:

§ Change in control cash payments exceeding 3 times base salary plus target/average/last paid bonus;

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| § | Arrangements that provide for change-in-control payments without loss of job or substantial diminution of job duties (single-triggered or modified single-triggered - where an executive may voluntarily leave for any reason and still receive the change-in-control severance package) or in connection with a problematic definition of Good Reason;  |

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§ Employment or severance agreements that provide for excise tax gross-ups. Modified gross-ups would be treated in the same manner as full gross-ups;

§ Excessive payments upon an executive's termination in connection with performance failure;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason); and

§ Liberal change in control definition in individual contracts or equity plans which could result in payments to executives without an actual change in control occurring;

§ Tax Reimbursements/Gross-ups: income tax reimbursements on executive perquisites or other payments (e.g., related to personal use of corporate aircraft, executive life insurance, bonus, restricted stock vesting, secular trusts, etc.; see also excise tax gross-ups above);

§ Dividends or dividend equivalents paid on unvested performance shares or units;

§ Executives using company stock in hedging activities, such as "cashless" collars, forward sales, equity swaps, or other similar arrangements;

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| § | Internal pay disparity: Excessive differential between CEO total pay and that of next highest-paid named executive officer (NEO);  |

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§ Repricing or replacing of underwater stock options/stock appreciation rights (SARs) without prior shareholder approval (including cash buyouts, option exchanges, and certain voluntary surrender of underwater options where shares surrendered may subsequently be re-granted);

§ Options backdating;

§ Insufficient executive compensation disclosure by externally- managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible; and

§ Other pay practices that may be deemed problematic in a given circumstance but are not covered in the above categories.

Incentives that may Motivate Excessive Risk-Taking

Assess company policies and disclosure related to compensation that could incentivize excessive risk-taking, for example:

§ Guaranteed bonuses or other abnormally large bonus payouts without justifiable performance linkage or appropriate disclosure;

§ Mega annual equity grants that provide unlimited upside with no downside risk;

§ A single performance metric used for short- and long-term plans;

§ High pay opportunities relative to industry peers;

§ Disproportionate supplemental pensions; or

§ Lucrative severance packages.

Factors that potentially mitigate the impact of risky incentives include rigorous claw-back provisions, robust stock ownership/holding guidelines, and substantive bonus deferral/escrowing programs.

Options Backdating

Options backdating has serious implications and has resulted in financial restatements, delisting of companies, and/or the termination of executives or directors. Public Fund Advisory Services will adopt a case-by-case approach to differentiate companies that had sloppy administration vs. deliberate action or fraud, as well as those companies which have since taken corrective action. Instances in which companies have committed fraud are considered most egregious, and Public Fund Advisory Services will look to them to adopt formal policies to ensure that such practices will not re-occur in the future.

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Public Fund Advisory Services will consider several factors, including, but not limited to, the following:

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

§ Corrective actions taken by the board or compensation committee, such as canceling or repricing backdated options, or recoupment of option gains on backdated grants; and

§ Adoption of a grant policy that prohibits backdating, and creation of a fixed grant schedule or window period for equity grants going forward.

Compensation Committee Communications and Responsiveness

Consider the following factors when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

§ Failure to adequately respond to the company's previous say-on-pay proposal that received a low level of shareholder support, taking into account:

§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Advisory Votes on Executive Compensation – Management Say-on-Pay Proposals

The Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010 mandates advisory votes on executive compensation (aka management "say on pay" or MSOP) for a proxy or consent or authorization for an annual or other meeting of the shareholders that includes required SEC compensation disclosures. This non-binding shareholder vote on compensation must be included in a proxy or consent or authorization at least once every 3 years.

In general, the management say on pay (MSOP) ballot item is the primary focus of voting on executive pay practices – dissatisfaction with compensation practices can be expressed by voting against MSOP rather than voting against or withhold from the compensation committee. However, if there is no MSOP on the ballot, then the negative vote will apply to members of the compensation committee. In addition, in egregious cases, or if the board fails to respond to concerns raised by a prior MSOP proposal, then Public Fund fiduciaries should vote against or withhold votes from compensation committee members (or, if the full board is deemed accountable, all directors). If the negative factors involve equity-based compensation, then a vote against an equity-based plan proposal presented for shareholder approval may be warranted.

Public Fund Advisory Services Recommendation:

§ Evaluate executive pay and practices, as well as certain aspects of outside director compensation on a case-by-case basis.

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| § | Vote against management say on pay (MSOP) proposals if:  |

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§ There is an unmitigated misalignment between CEO pay and company performance (pay for performance);

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§ The company maintains problematic pay practices;

§ The board exhibits poor communication and responsiveness to shareholders; or

§ The board has failed to demonstrate good stewardship of investors' interests regarding executive compensation practices.

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| § | Vote against or withhold from the members of the compensation committee and potentially the full board if:  |

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|:---|:---|
| § | There is no MSOP on the ballot, and an against vote on an MSOP is warranted due to pay for performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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§ The board fails to respond adequately to a previous MSOP proposal that received low levels of shareholder support;

§ The company has practiced or approved problematic pay practices, including option repricing or option backdating; or

§ The situation is egregious.

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|:---|:---|
| § | Vote against an equity plan on the ballot if:  |

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§ A pay for performance misalignment exists, and a significant portion of the CEO's misaligned pay is attributed to non-performance-based equity awards, taking into consideration:

§ Magnitude of pay misalignment;

§ Contribution of non-performance-based equity grants to overall pay; and

§ The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer (NEO) level.

Frequency of Advisory Vote on Executive Compensation – Management Say on Pay

The Dodd-Frank Act, in addition to requiring advisory votes on compensation (aka management "say on pay" or MSOP), requires that each proxy for the first annual or other meeting of the shareholders (that includes required SEC compensation disclosures) occurring after Jan. 21, 2011, include an advisory voting item to determine whether, going forward, the "say on pay" vote by shareholders to approve compensation should occur every one, two, or three years.

Public Fund Advisory Services will recommend a vote for annual advisory votes on compensation. The MSOP is at its essence a communication vehicle, and communication is most useful when it is received in a consistent and timely manner. Support for an annual MSOP vote is merited for many of the same reasons Public Fund Advisory Services supports annual director elections rather than a classified board structure: because this provides the highest level of accountability and direct communication by enabling the MSOP vote to correspond to the majority of the information presented in the accompanying proxy statement for the applicable shareholders' meeting. Having MSOP votes every two or three years, covering all actions occurring between the votes, would make it difficult to create the meaningful and coherent communication that the votes are intended to provide. Under triennial elections, for example, a company would not know whether the shareholder vote references the compensation year being discussed or a previous year, making it more difficult to understand the implications of the vote.

Public Fund Advisory Services Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

This is a proxy item regarding specific advisory votes on "golden parachute" arrangements for Named Executive Officers (NEOs) that is required under The Dodd-Frank Wall Street Reform and Consumer Protection Act. Public Fund Advisory Services places particular emphasis on severance packages that provide inappropriate windfalls and cover certain executive tax liabilities.

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Public Fund Advisory Services Recommendation: Vote case-by-case on proposals to approve the company's golden parachute compensation, consistent with Public Fund Advisory Services' policies on problematic pay practices related to severance packages. Features that may lead to a vote against include:

§ Agreements that include excise tax gross-up provisions;

§ Single- or modified-single-trigger cash severance;

§ Single trigger acceleration of unvested equity, including acceleration of performance-based equity despite the failure to achieve performance measures;

§ Single-trigger vesting of equity based on a definition of change in control that requires only shareholder approval of the transaction (rather than consummation);

§ Potentially excessive severance payments;

§ Recent amendments or actions that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; and

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| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote. Such a construction is problematic from a corporate governance perspective.  |

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In cases where the golden parachute vote is incorporated into a company's separate advisory vote on compensation ("management "say on pay"), Public Fund Advisory Services will evaluate the say on pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity Pay Plans

The theory that stock awards including stock options are beneficial to shareholders because they motivate management and align the interests of investors with those of executives is no longer held sacrosanct. Indeed, a number of academic studies have found that there is limited correlation between executive stock ownership and company performance. Misused stock options can give executives an incentive to inflate their company's earnings, take excessive risks, and make irresponsibly optimistic forecasts in order to keep stock prices high and their paychecks gargantuan.

Therefore, it is vital for shareholders to fully analyze all equity plans that appear on ballot.

Public Fund Advisory Services Recommendation: general, Public Fund Advisory Services evaluates executive and director compensation plans on a case-by-case basis. When evaluating equity-based compensation items on ballot, the following elements will be considered:

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| § | *Dilution*: Vote against plans in which the potential voting power dilution (VPD) of all shares outstanding exceeds fifteen percent.  |

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| § | <u>Full Market Value</u>: Awards must be granted at 100 percent of fair market value on the date of grant. However, in instances when a plan is open to broad-based employee participation and excludes the five most highly compensated employees, Public Fund Advisory Services accepts a 15 percent discount.  |

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| § | <u>Burn Rate</u>: Vote against plans where the company's value-adjusted burn rate exceeds the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index.  |

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| § | <u>Liberal Definition of Change-in-Control</u>: Vote against equity plans if the plan provides for the accelerated vesting of equity awards even though an actual change in control may not occur. Examples of such a definition could include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.  |

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| § | <u>Problematic Pay Practices</u>: Vote against equity plans if the plan is a vehicle for problematic pay practices (e.g. if the plan allows for change-in-control payouts that are single triggered).  |

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| § | <u>Executive Concentration Ratio</u>: Vote against plans where the annual grant rate to the top five executives ("named officers") exceeds one percent of shares outstanding.  |

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| § | *Pay-For-Performance*: Vote against plans where there is a misalignment between CEO pay and the company's performance, or if performance criteria are not disclosed.  |

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| § | <u>Evergreen Features</u>: Vote against plans that reserve a specified percentage of outstanding shares for award each year instead of having a termination date.  |

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| § | <u>Repricing</u>: Vote against plans if the company's policy permits repricing of "underwater" options or if the company has a history of repricing past options.  |

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| § | <u>Loans</u>: Vote against the plan if the plan administrator may provide loans to officers to assist in exercising the awards.  |

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Stock Option Plans

Compensation to executive and other senior level employees should be strongly correlated to sustained performance. Stock options, restricted stock and other forms of non-cash compensation should be performance-based with an eye toward improving long-term corporate value. Well-designed stock option plans can align the interests of executives and shareholders by providing that executives benefit when stock prices rise so that the employees of the company, along with shareholders, prosper together. Likewise, option plans should not allow for the benefits of share price gains without the risk of share price declines. Poorly designed stock option plans can encourage excessive risk-taking behavior and incentivize executives to pursue corporate strategies that promote short-term stock price to the ultimate detriment of long-term shareholder value.

Many plans sponsored by management provide goals so easily attained that executives can realize massive rewards even though shareholder value is not created. Public Fund Advisory Services supports option plans when they provide legitimately challenging performance targets that serve to truly motivate executives in the pursuit of sustained superior performance. Moreover, equity pay plans should be designed in a fashion that ensures executive compensation is veritably performance driven and "at risk" such that executives are penalized (by either reducing or withholding compensation) for failure to meet pre-determined performance hurdles. Public Fund Advisory Services will oppose those plans that offer unreasonable benefits to executives that are not generally available to other shareholders or employees.

Voting Power Dilution (VPD) Calculation

Voting power dilution, or VPD, measures the amount of voting power represented by the number of shares reserved over the life of the plan. Industry norm dictates that ten percent dilution over the life of a ten-year plan is reasonable for most mature companies. Restricted stock plans or stand-alone stock bonus plans that are not coupled with stock option plans can be held to a lower dilution cap.

Voting power dilution may be calculated using the following formula:

A: Shares reserved for this amendment or plan

B: Shares available under this plan and/or continuing plans prior to proposed amendment

C: Shares granted but unexercised under this plan and/or continuing plans

D: All outstanding shares plus any convertible equity, outstanding warrants, or debt

The formula can be applied as follows: A + B + C <br> A + B + C + D

Fair Market Value, Dilution and Repricing

Consideration will be made as to whether the proposed plan is being offered at fair market value or at a discount; whether the plan excessively dilutes the earnings per share of the outstanding shares; and whether the plan gives management the ability to replace or reprice "underwater" options. Repricing is an amendment to a previously granted stock option contract that reduces the option exercise price. Options are "underwater" when their current price is below the current option contract price. Options can also be repriced through cancellations and re-grants. The typical new grant would have a ten-year term, new vesting restrictions, and a lower exercise price reflecting the current lower market price.

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Burn Rate

The annual burn rate is a measure of dilution that illustrates how rapidly a company is deploying shares reserved for equity compensation plans. A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Public Fund Advisory Services will generally oppose plans whose Value-Adjusted Burn Rates exceed the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate is calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Executive Concentration Ratio

In examining stock option awards, restricted stock and other forms of long-term incentives, it is important to consider internal pay equity; that is, the concentration and distribution of equity awards to a company's top five executives ("named officers") as a percentage of overall grants. Public Fund Advisory Services will consider voting against equity compensation plans whose annual grant rate to top executives exceeds fifteen percent of shares granted.

Evergreen Provisions

Public Fund Advisory Services will oppose plans that reserve a specified percentage of outstanding shares for award each year (evergreen plans) instead of having a termination date. Such plans provide for an automatic increase in the shares available for grant with or without limits on an annual basis. Because they represent a transfer of shareholder value and have a dilutive impact on a regular basis, evergreen plans are expensive to shareholders. Evergreen features also minimize the frequency that companies seek shareholder approval in increasing the number of shares available under the plan.

Option Exchange Programs/Repricing Options

Public Fund Advisory Services Recommendation: Vote for shareholder proposals to put option repricings to a shareholder vote.

Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration the following factors:

§ Historic trading patterns: the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing: was the stock price decline beyond management's control?

§ Option vesting: does the new option vest immediately or is there a black-out period?

§ Term of the option: the term should remain the same as that of the replaced option;

§ Exercise price: should be set at fair market or a premium to market;

§ Participants: the plan should be broad-based and executive officers and directors should be excluded;

§ Is this a value-for-value exchange?

§ Are surrendered stock options added back to the plan reserve?

§ Timing--repricing should occur at least one year out from any precipitous drop in company's stock price.

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If the surrendered options are added back to the equity plans for re-issuance, then Public Fund Advisory Services will also take into consideration the impact on the company's equity plans and its three-year average burn rate.

In addition to the above considerations, Public Fund Advisory Services will evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing. Public Fund Advisory Services does not view market deterioration, in and of itself, as an acceptable reason for companies to reprice stock options and/or reset goals under performance plans. Repricing after a recent decline in stock price triggers additional scrutiny and may warrant a vote against the proposal. At a minimum, the decline should not have happened within the past year. Public Fund Advisory Services also considers the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Restricted Stock

Public Fund Advisory Services supports the use of performance-vesting restricted stock as long as the absolute amount of restricted stock being granted is a reasonable proportion of an executive's overall compensation. The best way to align the interests of executives with shareholders is through direct stock holdings, coupled with at-risk variable compensation that is tied to explicit and challenging performance benchmarks. Performance-vesting restricted stock both adds to executives' direct share holdings and incorporates at-risk features.

To reward performance and not job tenure, restricted stock vesting requirements should be performance-based rather than time lapsing. Such plans should explicitly define the performance criteria for awards to senior executives and may include a variety of corporate performance measures in addition to the use of stock price targets. In addition, executives should be required to hold their vested restricted stock as long as they remain employees of the company.

Employee Stock Purchase Plans (ESPPs) - Qualified Plans

Public Fund Advisory Services Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for plans if:

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| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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| § | The number of shares allocated to the plan is ten percent or less of the outstanding shares.  |

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Employee Stock Purchase Plans (ESPPs) – Non-Qualified Plans

Public Fund Advisory Services Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for plans with:

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|:---|:---|
| § | Broad-based participation (i.e. all employees with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);  |

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| § | Limits on employee contribution (a fixed dollar amount or a percentage of base salary);  |

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| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value; and  |

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§ No discount on the stock price on the date of purchase since there is a company matching contribution.

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Employee Stock Ownership Plans (ESOPs)

An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that makes the employees of a company also owners of stock in that company. Recent academic research of the performance of ESOPs in closely held companies found that ESOPs appear to increase overall sales, employment, and sales per employee over what would have been expected absent an ESOP. Studies have also found that companies with an ESOP are also more likely to still be in business several years later, and are more likely to have other retirement oriented benefit plans than comparable non-ESOP companies.

Public Fund Advisory Services Recommendation: Vote for proposals that request shareholder approval in order to implement an ESOP or to increase authorized shares for existing ESOPs except in cases when the number of shares allocated to the ESOP is deemed excessive (i.e. generally greater than five percent of outstanding shares).

OBRA-Related Compensation Proposals

Cash bonus plans can be an important part of an executive's overall pay package, along with stock-based plans tied to long-term total shareholder returns. Section 162(m) of the IRS Code Section limits the deductibility of compensation in excess of $1 million to a named executive officer unless certain prescribed actions are taken including shareholder approval and the establishment of performance goals.

Public Fund Advisory Services Recommendation:

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| § | Generally vote for proposals to approve or amend executive incentive bonus plans if the proposal:  |

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§ Is only to include administrative features;

§ Places a cap on the annual grants any one participant may receive to comply with the provisions of Section 162(m);

§ Adds performance goals to existing compensation plans to comply with the provisions of Section 162(m) unless they are clearly inappropriate; or

§ Covers cash or cash and stock bonus plans that are submitted to shareholders for the purpose of exempting compensation from taxes under the provisions of Section 162(m) if no increase in shares is requested.

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| § | Vote against such proposals if:  |

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| § | If the plan provides for awards to individual participants in excess of $2 million a year;  |

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§ The compensation committee does not fully consist of independent directors as defined by Public Fund Advisory Services' definition of director independence; or

§ The plan contains excessive problematic provisions including lack of rigorous performance measures.

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| | |
|:---|:---|
| § | Vote case-by-case on such proposals if:  |

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§ In addition to seeking 162(m) tax treatment, the amendment may cause the transfer of additional shareholder value to employees (e.*g.*, by requesting additional shares, extending the option term, or expanding the pool of plan participants);

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| | |
|:---|:---|
| § | A company is presenting the plan to shareholders for Section 162(m) favorable tax treatment for the first time after the company's initial public offering (IPO). Perform a full equity plan analysis, including consideration of total shareholder value transfer, burn rate (if applicable), repricing, and liberal change in control. Other factors such as pay-for-performance or problematic pay practices as related to Management Say-on-Pay may be considered if appropriate.  |

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Golden and Tin Parachutes

Golden parachutes are designed to protect the employees of a corporation in the event of a change-in-control. Under most golden parachute agreements, senior level management employees receive a lump sum payout triggered by a change-in-control at usually two to three times their current base salary. The SEC requires disclosure of all golden parachute arrangements in the proxy statement.

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Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote case-by-case on management proposals to ratify or cancel golden parachutes taking into consideration the following factors:  |

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§ Whether the triggering mechanism is beyond the control of management;

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|:---|:---|
| § | Whether the payout amount is based on an excessive severance multiple; and  |

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§ Whether the change-in-control payments are double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure .

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| | |
|:---|:---|
| § | Vote for shareholder proposals to all have golden parachute agreements submitted for shareholder ratification.  |

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Director Compensation

Shareholder Ratification of Director Pay Programs

Public Fund Advisory Services Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The balance of cash vs. equity compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Shareholder Proposals on Compensation

Disclosure of Executive and Director Pay

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals that seek additional disclosure of executive and director pay information, including the preparation of a formal report on executive compensation practices and policies.

Limit Executive and Director Pay

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Generally vote for shareholder proposals that seek to eliminate outside directors' retirement benefits.  |

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|:---|:---|
| § | Vote case-by-case on all other shareholder proposals that seek to limit executive and director pay. This includes shareholder proposals that seek to link executive compensation to customer, employee, or stakeholder satisfaction.  |

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Executive Perks and Retirement/Death Benefits

Public Fund Advisory Services supports enhanced disclosure and shareholder oversight of executive benefits and other in-kind retirement perquisites. For example, compensation devices like executive pensions (SERPs), deferred compensation plans, below-market-rate loans or guaranteed post-retirement consulting fees can amount to significant liabilities to shareholders and it is often difficult for investors to find adequate disclosure of their full terms. Public Fund Advisory Services opposes any perquisite or benefit to executives that exceeds what is generally offered to other company employees. From a shareholder prospective, the cost of these executive entitlements would be better allocated to performance-based forms of executive compensation during their term in office.

Public Fund Advisory Services Recommendation:

Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Generally vote for shareholder proposals calling companies to adopt a policy of discontinuing or obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive. This could come, for example, in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. However, this would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.

Executive Holding Periods

Senior level executives should be required to hold a substantial portion of their equity compensation awards, including shares received from option exercises (e.g. 75% of their after-tax stock option proceeds), while they are employed at a company or even into retirement. Equity compensation awards are intended to align management interests with those of shareholders, and allowing executives to sell these shares while they are employees of the company undermines this purpose. Given the large size of a typical annual equity compensation award, holding requirements that are based on a multiple of cash compensation may be inadequate.

Public Fund Advisory Services Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans while employed or following the termination of their employment.

Pay for Superior Performance

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals that request the board to establish a pay-for-superior performance standard in the company's executive compensation programs for senior executives.

Performance-Based Options

Stock options are intended to align the interests of management with those of shareholders. However, stock option grants without performance-based elements can excessively compensate executives for stock increases due solely to a general stock market rise, rather than improved or superior company stock performance. When option grants reach the hundreds of thousands, a relatively small increase in the share price may permit executives to reap millions of dollars without providing material benefits to shareholders.

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Public Fund Advisory Services advocates for performance-based awards – such as premium-priced or indexed – which encourage executives to outperform peers, certain indices, or the broader market rather than being rewarded for any minimal rise in the share price, which can occur if there are not empirical performance measures incorporated into the structure of the options. Additionally, it should be noted that performance-accelerated vesting and premium priced options allow fixed plan accounting, whereas performance-vested and indexed options entail certain expensing requirements.

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals that seek to provide for performance-based options such as indexed and/or premium priced options.

Tax Gross-up Proposals

Public Fund Advisory Services Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals

Public Fund Advisory Services Recommendation: Generally, vote for shareholder proposals that call for non-binding shareholder ratification of the compensation of the Named Executive Officers and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table.

Compensation Consultants - Disclosure of Board or Company's Utilization

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s) and fees paid.

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

Public Fund Advisory Services Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan.

Bonus Banking/Bonus Banking "Plus"

Public Fund Advisory Services Recommendation: Generally vote for on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees).

Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals seeking a policy requiring termination of employment prior to severance payment, and eliminating accelerated vesting of unvested equity.

Recoup Bonuses

Public Fund Advisory Services Recommendation: Generally vote for proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that the incentive compensation was based upon figures that later turn out to have been in error.

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Link Compensation to Non-Financial Factors

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Generally vote for shareholder proposals seeking disclosure on linking executive pay to non-financial factors.  |

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§ Evaluate shareholder proposals calling for linkage of executive pay to non-financial factors, such as corporate downsizing, customer/employee satisfaction, community involvement, human rights, social and environmental goals and performance, and predatory lending on a case-by-case basis.

Pension Plan Income Accounting

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals to exclude pension plan income in the calculation of earnings used in determining executive bonuses/compensation.

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3. Auditors

Auditors play an integral role in certifying the integrity and reliability of corporate financial statements on which investors rely to gauge the financial well-being of a company and the viability of an investment. The well-documented auditor-facilitated bankruptcies and scandals at several large public companies in recent years underscore the catastrophic consequences that investors can suffer when the audit process breaks down.

Auditor Independence

The wave of accounting scandals over the past decade illuminates the need to ensure auditor independence in the face of consulting services to audit clients. The ratio of non-audit services to total revenues at the large accounting firms grew significantly leading up to the accounting scandals. Public Fund Advisory Services believes the ratio of non-audit fees should make up no more than one-quarter of all fees paid to the auditor so as to properly discourage even the appearance of any undue influence upon an auditor's objectivity.

Under SEC rules, disclosed categories of professional fees paid for audit and non-audit services are as follows: (1) Audit Fees, (2) Audit-Related Fees, (3) Tax Fees, and (4) All Other Fees. Under the reporting requirements, companies are required to describe – in qualitative terms – the types of services provided under the three categories other than Audit Fees. The following fee categories are defined as: A) tax compliance or preparation fees are excluded from our calculations of non-audit fees; and B) fees for consulting services for tax-avoidance strategies and tax shelters will be included in "other fees" and will be considered non-audit fees if the proxy disclosure does not indicate the nature of the tax services. In circumstances where "Other" fees include fees related to significant one-time capital structure events: initial public offerings, bankruptcy emergence, and spin-offs; and the company makes public disclosure of the amount and nature of those fees which are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

As auditors are the backbone upon which a company's financial health is measured, auditor independence is absolutely essential for rendering objective opinions upon which investors then rely. When an auditor is paid excessive consulting fees in addition to fees paid for auditing, the company-auditor relationship is left open to conflicts of interest.

Auditor Ratification

The ratification of auditors is an important component of good governance. In light of the Sarbanes-Oxley Act of 2002 and increased shareholder scrutiny, some companies are opting to take auditor ratification off the ballot. Neglecting to include the ratification of auditors on the proxy takes away the fundamental shareholder right to ratify the company's choice of auditor. Whereas shareholder ratification of auditors was once considered routine by many shareowners, accounting scandals have caused shareholders to be more vigilant about the integrity of the auditors certifying their companies' financial statements. It is now viewed as best practice for companies to place the item on ballot.

Although U.S. companies are not legally required to allow shareholders to ratify their appointment of independent auditors, submission of the audit firm for approval at the annual meeting on an annual basis gives shareholders the means to weigh in on their satisfaction (or lack thereof) of the auditor's independent execution of their duties. Public Fund Advisory Services believes mandatory auditor ratification is in line with sound and transparent corporate governance and remains an important mechanism to ensure the integrity of the auditor's work. In the absence of legislation mandating shareholder ratification of auditors, the failure by a company to present its selection of auditors for shareholder ratification should be discouraged as it undermines good governance and disenfranchises shareholders.

Proposals to ratify auditors is examined for potential conflicts of interest, with particular attention to the fees paid to the auditor, as well as whether the ratification of auditors has been put up for shareholder vote.

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Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to ratify auditors when the amount of audit fees is equal to or greater than three times (75 percent) the amount paid for consulting, unless: i) An auditor has a financial interest in or association with the company, and is therefore not independent; or ii) There is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company's financial position.  |

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| | |
|:---|:---|
| § | Vote against proposals to ratify auditors when the amount of non-audit consulting fees exceeds a quarter of all fees paid to the auditor.  |

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§ Generally support shareholder proposals seeking to limit companies from buying consulting services from their auditor.

Auditor Rotation

Long-term relationships between auditors and their clients can impede auditor independence, objectivity and professional skepticism. Such long-standing relationships foster an undesirable coziness between audit firms and their clients, which can cause the auditors to lose their independence and become less questioning especially where lucrative contracts for the provision of non-audit consulting services are involved. Mandatory auditor rotation is a widely supported safeguard against improper audits and is viewed by many as an effective mechanism for mitigating the potential risks borne by long-term auditor-client relationships.

Proponents of compulsory audit firm rotation contend that rotation policies promote objectivity and independence among auditors and minimize the scope of vested interests developing in the audit. Opponents of audit firm rotation argue that regular re-tendering is a costly practice, likely to reduce audit quality and increase the risk of audit failure in the early years due to the time required to gain cumulative knowledge of an often complex and geographically diverse business. A solution around this apparent negative effect of mandatory rotation is to keep a longer rotation period.

Public Fund Advisory Services recommends that companies not maintain the same audit firm in excess of seven years, and will vote against auditors if their tenure at a company exceeds seven years. A revolving seven-year rotation period allows the auditor to develop cumulative knowledge of a company's business and the effect of changes in the business along with the corresponding changes in its risks, thereby enhancing the quality of the audit and trammeling potential loss of auditor objectivity and independence. Many institutional investors argue that the increased costs associated with compulsory auditor rotation are a lesser evil vis-à-vis the larger evil of the costs to shareholders when the objectionable coziness between clients and long-standing auditors leads to gross erosion of shareholder value.

Public Fund Advisory Services Recommendation: Generally support shareholder proposals to ensure auditor independence through measures such as mandatory auditor rotation (no less than every seven years).

Auditor Indemnification and Limitation of Liability

Indemnification clauses allow auditors to avoid liability for potential damages, including punitive damages. Eliminating concerns about being sued for carelessness could lead to; 1) potential impairment of external auditor independence and impartiality by contractual clauses limiting their liability; and 2) a decrease in the quality and reliability of the audit given the lack of consequence for an inadequate audit.

Given the substantial settlements against auditors in recent years for poor audit practices and the cost of such insurance to the company and its shareholders, there are legitimate concerns over the broader use of indemnification clauses. Such agreements may weaken the objectivity, impartiality and performance of audit firms.

Public Fund Advisory Services believes it is important for shareholders to understand the full risks and implications of these agreements and determine what impact they could have on shareholder value. At the present time, however, due to poor disclosure in this area, it is difficult to identify the existence and extent of limited liability provisions and auditor agreements, and investors lack the information needed to make informed decisions regarding these agreements.

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Without uniform disclosure, it is difficult to consistently apply policy and make informed vote recommendations. As such, Public Fund Advisory Services reviews the use of indemnification clauses and limited liability provisions in auditor agreements on a case-by-case basis, when disclosure is present.

Public Fund Advisory Services Recommendation: Vote against or withhold from audit committee members if there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Disclosures Under Section 404 of Sarbanes-Oxley Act

Section 404 of the Sarbanes-Oxley Act requires that companies document and assess the effectiveness of their internal financial controls. Beginning in 2005, most public companies must obtain annual attestation of the effectiveness of their internal controls over financial reporting from their outside auditors. Companies with significant material weaknesses identified in the Section 404 disclosures potentially have ineffective internal financial reporting controls. This may lead to inaccurate financial statements, which hampers shareholders' ability to make informed investment decisions, and may lead to destruction of public confidence and shareholder value. The audit committee is ultimately responsible for the integrity and reliability of the company's financial information and its system of internal controls.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against or withhold votes from audit committee members under certain circumstances when a material weakness rises to a level of serious concern, if there are chronic internal control issues, or if there is an absence of established effective control mechanisms.  |

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|:---|:---|
| § | Vote against management proposals to ratify auditors if there is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company's financial position.  |

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Adverse Opinions

An Adverse Opinion on the company's financial statements is issued when the auditor determines that the financial statements are materially misstated and, when considered as a whole, do not conform to GAAP. It essentially states that the information contained is materially incorrect, unreliable, and inaccurate in order to assess the company's financial position and results of operations.

Adverse opinions on companies' financial statements are generally very rare because they essentially state that a significant portion of the financial statements are unreliable, and the auditor had no choice but to issue an adverse opinion after a long process of seeking resolution with the company subjected to the audit.

Public Fund Advisory Services Recommendation: Vote against or withhold votes from audit committee members if the company receives an Adverse Opinion on the company's financial statements from its auditors.

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4. Takeover Defense

Poison Pills

Shareholder rights plans, typically known as poison pills, take the form of rights or warrants issued to shareholders and are triggered when a potential acquiring stockholder reaches a certain threshold of ownership. When triggered, poison pills generally allow shareholders to purchase shares from, or sell shares back to, the target company ("flip-in pill") and/or the potential acquirer ("flip-out pill") at a price far out of line with fair market value.

Depending on the type of pill, the triggering event can either transfer wealth from the target company or dilute the equity holdings of current shareholders. Poison pills insulate management from the threat of a change in control and provide the target board with veto power over takeover bids. Because poison pills greatly alter the balance of power between shareholders and management, shareholders should be allowed to make their own evaluation of such plans.

In evaluating management proposals on poison pills, Public Fund Advisory Services considers the company's rationale for adopting the pill and its existing governance structure in determining whether or not the pill appropriately serves in shareholders' best interests. The rationale for adopting the pill should be thoroughly explained by the company. Additionally, Public Fund Advisory Services examines the company's existing governance structure including: board independence, existing takeover defenses, or any problematic governance concerns.

Public Fund Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask a company to submit its poison pill for shareholder ratification.  |

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| § | Vote case-by-case on shareholder proposals to redeem a company's poison pill.  |

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| § | Vote case-by-case on management proposals to ratify a poison pill.  |

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| § | Vote against or withhold from any board where a dead-hand poison pill provision is in place. From a shareholder perspective, there is no justification for a dead-hand provision. Directors of companies with these lethal protective devices should be held fully accountable.  |

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Net Operating Loss (NOL) Poison Pills/Protective Amendments

The financial crisis prompted widespread losses in certain industries. This resulted in previously profitable companies considering the adoption of a poison pill and/or NOL protective amendment to protect their NOL tax assets, which may be lost upon an acquisition of 5 percent of a company's shares.

When evaluating management proposals seeking to adopt NOL pills or protective amendments, the purpose behind the proposal, its terms, and the company's existing governance structure should be taken into account to assess whether the structure actively promotes board entrenchment or adequately protects shareholder rights. While the high estimated tax value of NOLs would typically benefit shareholders, the ownership acquisition limitations contained in an NOL pill/protective amendment coupled with a company's problematic governance structure could serve as an antitakeover device.

Given the low ownership thresholds involved, shareholders want to ensure that such pills/amendments do not remain in effect permanently. Public Fund Advisory Services will closely review whether the pill/amendment contains a sunset provision or a commitment to cause the expiration of the NOL pill/protective amendment upon exhaustion or expiration of the NOLs.

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Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against proposals to adopt a poison pill/ protective amendment for the stated purpose of protecting a company's net operating losses ("NOLs") if the term of the pill/ protective amendment would exceed the shorter of three years and the exhaustion of the NOL.  |

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§ Evaluate management proposals to ratify an NOL pill /adopt an NOL protective amendment if the term of the pill/amendment would be the shorter of three years (or less) and the exhaustion of the NOL on a case-by-case basis considering the following factors;

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|:---|:---|
| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5% and NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing five-percent holder);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Greenmail

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of shares, the practice discriminates against most shareholders. This transferred cash, absent the greenmail payment, could be put to much better use for reinvestment in the company, payment of dividends, or to fund a public share repurchase program.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to adopt an anti-greenmail provision in their charter or bylaws that would thereby restrict a company's ability to make greenmail payments to certain shareholders.  |

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|:---|:---|
| § | Vote case-by-case on all anti-greenmail proposals when they are presented as bundled items with other charter or bylaw amendments.  |

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Shareholder Ability to Remove Directors/Fill Vacancies

Shareholder ability to remove directors, with or without cause, is either prescribed by a state's business corporation law, individual company's articles of incorporation, or its corporate bylaws. Many companies have sought shareholder approval for charter or bylaw amendments that would prohibit the removal of directors except for cause, thus ensuring that directors would retain their directorship for their full-term unless found guilty of self-dealing. By requiring cause to be demonstrated through due process, management insulates the directors from removal even if a director has been performing poorly, not attending meetings, or not acting in the best interests of shareholders.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against proposals that provide that directors may be removed only for cause.  |

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| § | Vote for proposals which seek to restore the authority of shareholders to remove directors with or without cause.  |

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| § | Vote against proposals that provide only continuing directors may elect replacements to fill board vacancies.  |

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| § | Vote for proposals that permit shareholders to elect directors to fill board vacancies.  |

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Shareholder Ability to Alter the Size of the Board

Proposals that would allow management to increase or decrease the size of the board at its own discretion are often used by companies as a takeover defense. Proposals to fix the size of the board at a specific number can prevent management from increasing the board size without shareholder approval when facing a proxy context. By increasing the size of the board, management can make it more difficult for dissidents to gain control of the board. Fixing the size of the board also prevents a reduction in the size of the board as a strategy to oust independent directors. Fixing board size also prevents management from increasing the number of directors in order to dilute the effects of cumulative voting.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals that seek to fix the size of the board within an acceptable range.  |

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|:---|:---|
| § | Vote against proposals that give management the ability to alter the size of the board without shareholder approval.  |

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5. Shareholder Rights

Confidential Voting

The confidential ballot ensures that voters are not subject to real or perceived coercion. In an open voting system, management can determine who has voted against its nominees or proposals before a final vote count. As a result, shareholders can be pressured to vote with management at companies with which they maintain or would like to establish a business relationship.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals that request corporations to adopt confidential voting, the use of independent tabulators, and the use of independent inspectors for an election as long as the proposals include clauses for proxy contests. In the case of a contested election, management is permitted to request that the dissident group honor 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.  |

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|:---|:---|
| § | Vote for management proposals to adopt confidential voting procedures.  |

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Shareholder Ability to Call Special Meetings

Most state corporation statutes allow shareholders to call a special meeting when they want to take action on certain matters that arise between regularly scheduled annual meetings. Sometimes this right applies only if a shareholder or a group of shareholders own a specified percentage of shares, with ten percent being the most common. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against proposals to restrict or prohibit shareholder ability to call special meetings.  |

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|:---|:---|
| § | Generally vote for proposals that remove restrictions on the right of shareholders to act independently of management.  |

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|:---|:---|
| § | Vote against provisions that would require advance notice of more than sixty days.  |

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Shareholder Ability to Act by Written Consent

Consent solicitations allow shareholders to vote on and respond to shareholder and management proposals by mail without having to act at a physical meeting. A consent card is sent by mail for shareholder approval and only requires a signature for action. Some corporate bylaws require supermajority votes for consents, while at others standard annual meeting rules apply. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act by written consent.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against proposals to restrict or prohibit shareholder ability to take action by written consent.  |

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|:---|:---|
| § | Generally vote for proposals to allow or make easier shareholder action by written consent.  |

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Unequal Voting Rights

Incumbent managers are able to use unequal voting rights through the creation of a separate class of shares that has superior voting rights to the common shares of regular shareholders. This separate class of shares with disproportionate voting power allows management to concentrate its power and insulate itself from the wishes of the majority of

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shareholders. Dual class exchange offers involve a transfer of voting rights from one group of shareholders to another group of shareholders typically through the payment of a preferential dividend. A dual class recapitalization plan also establishes two classes of common stock with unequal voting rights, but initially involves an equal distribution of preferential and inferior voting shares to current shareholders.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote for resolutions that seek to maintain or convert to a one-share-one-vote capital structure.  |

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|:---|:---|
| § | Generally vote against requests for the creation or continuation of dual class capital structures or the creation of new or additional super-voting shares.  |

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Supermajority Shareholder Vote Requirement to Amend the Charter or Bylaws

Supermajority shareholder vote requirements for charter or bylaw amendments are often the result of "lock-in" votes, which are the votes required to repeal new provisions to the corporate charter. Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company and its corporate governance provisions. Requiring more than this may entrench managers by blocking actions that are in the best interests of shareholders.

The general lack of credit availability for financially distressed companies has resulted in "rescue" or highly dilutive stock and warrant issuances, which often comprise a majority of the company's voting stock upon conversion. When an investor takes control of the company through the conversion of securities, the new owners often seek statutory amendments, such as adopting written consent, or allowing 50 percent shareholders to call a special meeting, that allow effective control over the company with little or no input from minority shareholders.

In such cases, the existing supermajority vote requirements would serve to protect minority shareholders' interests. The reduction in the vote requirements, when coupled with low quorum requirements (in Nevada and other states) could shift the balance in power away from small shareholders while overly empowering large shareholders.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against management proposals to require a supermajority shareholder vote to approve charter and bylaw amendments.  |

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|:---|:---|
| § | Vote against management proposals seeking to lower supermajority shareholder vote requirements when they accompany management sponsored proposals to also change certain charter or bylaw amendments.  |

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|:---|:---|
| § | Vote for management or shareholder proposals to reduce supermajority vote requirements for charter and bylaw amendments. However, for companies with shareholders who have significant ownership levels, vote on a case-by-case basis, taking into account 1) ownership structure, 2) quorum requirements, and 3) supermajority vote requirements.  |

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Management Proposals to Ratify Existing Charter or Bylaw Provisions

Public Fund Advisory Services Recommendation:

Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against or withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

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§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Supermajority Shareholder Vote Requirement to Approve Mergers

Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company and its corporate governance provisions. Requiring more than this may entrench managers by blocking actions that are in the best interests of shareholders.

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote against management proposals to require a supermajority shareholder vote to approve mergers and other significant business combinations.  |

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|:---|:---|
| § | Vote for shareholder proposals to lower supermajority shareholder vote requirements for mergers and other significant business combinations.  |

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Virtual Shareholder Meetings

Public Fund Advisory Services Recommendation: Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only<sup>14</sup> meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

Reimbursing Proxy Solicitation Expenses

Public Fund Advisory Services Recommendation:

§ Generally support shareholder proposals to reimburse for proxy solicitation expenses.

§ When voting in conjunction with support of a dissident slate, always support the reimbursement of all appropriate proxy solicitation expenses associated with the election.

§ Generally support requests seeking to reimburse a shareholder proponent for all reasonable campaign expenditures for a proposal approved by the majority of shareholders.

Exclusive Venue

Issuers began seeking shareholder approval of exclusive venue charter provisions in 2011 after a court opinion suggested that unilaterally adopted exclusive venue bylaw provisions might not be enforceable. All the exclusive venue proposals to date have sought to make Delaware the exclusive forum for resolution on shareholder disputes.

<sup>14</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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Corporations have defended exclusive forum provisions on the grounds that the Delaware Chancery Court moves cases more quickly than other courts and is presided over by judges who are experienced in corporate law. Firms have also argued that making Delaware the sole forum for lawsuits avoids the possibility of duplicative suits arising out of the same events. A number of shareholder advocates have, however, countered that exclusive venue provisions deprive shareholders of the flexibility to choose the forum in which to assert claims of wrongdoing.

Public Fund Advisory Services Recommendation: Generally vote against management proposals to restrict the venue for shareholder claims by adopting charter or bylaw provisions that seek to establish an exclusive judicial forum.

Fee-Shifting Bylaws

Public Fund Advisory Services Recommendation: Generally vote against bylaws that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., in cases where the plaintiffs are partially successful).

Bundled Proposals

Public Fund Advisory Services Recommendation: Vote case-by-case on bundled or conditional proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

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6. Mergers & Acquisitions / Corporate Restructurings

A number of academic and industry studies have estimated that nearly three quarters of all corporate acquisitions fail to create economically meaningful shareholder value. These studies have also demonstrated that the larger the deal the greater the risk in realizing long-term value for shareholders of the acquiring firm. These risks include integration challenges, over-estimation of expected synergies, incompatible corporate cultures and poor succession planning. Indeed, some studies have found that smaller deals within specialized industries on average outperform "big bet" larger deals by a statistically significant factor.

In analyzing M&A deals, private placements or other transactional related items on proxy, Public Fund Advisory Services performs a well-rounded analysis that seeks to balance all facets of the deal to ascertain whether the proposed acquisition is truly going to generate long-term value for shareholders and enhance the prospects of the ongoing corporation.

Public Fund Advisory Services Recommendation: Votes on mergers and acquisitions are always considered on a case-by-case basis, taking into account the following factors:

§ Impact of the merger on shareholder value;

§ Perspective of ownership (target vs. acquirer) in the deal;

§ Form and mix of payment (i.e. stock, cash, debt, etc.);

§ Fundamental value drivers behind the deal;

§ Anticipated financial and operating benefits realizable through combined synergies;

§ Offer price (cost vs. premium);

§ Change-in-control payments to executive officers;

§ Financial viability of the combined companies as a single entity;

§ Was the deal put together in good faith? What kind of auction setting took place? Were negotiations carried out at arm's length? Was any portion of the process tainted by possible conflicts of interest?

§ Fairness opinion (or lack thereof);

§ Changes in corporate governance and their impact on shareholder rights;

§ What are the potential legal or environmental liability risks associated with the target firm?

§ Impact on community stakeholders and employees in both workforces; and

§ How will the merger adversely affect employee benefits like pensions and health care?

Fair Price Provisions

Fair price provisions were originally designed to specifically defend against the most coercive of takeover devises- the two-tiered, front-end loaded tender offer. In such a hostile takeover, the bidder offers cash for enough shares to gain control of the target. At the same time, the acquirer states that once control has been obtained, the target's remaining shares will be purchased with cash, cash and securities, or only securities. Since the payment offered for the remaining stock is, by design, less valuable than the original offer for the controlling shares, shareholders are forced to sell out early to maximize the value of their shares. Standard fair price provisions require that in the absence of board or shareholder approval of the acquisition the bidder must pay the remaining shareholders the same price for their shares that brought control.

Public Fund Advisory Services Recommendation:

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| § | Vote for fair price proposals as long as the shareholder vote requirement embedded in the provision is no more than a majority of disinterested shares.  |

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| § | Vote for shareholder proposals to lower the shareholder vote requirement in existing fair price provisions.  |

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Appraisal Rights

Rights of appraisal provide shareholders who do not approve of the terms of certain corporate transactions the right to demand a judicial review in order to determine the fair value for their shares. The right of appraisal applies to mergers, sale of corporate assets, and charter amendments that may have a materially adverse effect on the rights of dissenting shareholders.

Public Fund Advisory Services Recommendation: Vote for proposals to restore or provide shareholders with the right of appraisal.

Corporate Restructuring

Public Fund Advisory Services Recommendation: Votes concerning corporate restructuring proposals, including minority squeeze outs, leveraged buyouts, spin-offs, liquidations, and asset sales, are considered on a case-by-case basis.

Spin-offs

Public Fund Advisory Services Recommendation: Vote case-by-case on spin-offs depending on the tax and regulatory advantages, planned use of sale proceeds, market focus, and managerial incentives.

Asset Sales

Public Fund Advisory Services Recommendation: Votes case-by-case on asset sales taking into consideration the impact on the balance sheet/working capital, value received for the asset, and potential elimination of diseconomies.

Liquidations

Public Fund Advisory Services Recommendation: Vote case-by-case on liquidations after reviewing management's efforts to pursue other alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation.

Going Private Transactions (LBOs, Minority Squeezeouts)

Public Fund Advisory Services Recommendation:

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|:---|:---|
| § | Vote case-by-case on going private transactions, taking into account the following: offer price/premium, fairness opinion, how the deal was negotiated, conflicts of interest, other alternatives/offers considered, and non-completion risk.  |

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|:---|:---|
| § | Vote case-by-case on "going dark" transactions, determining whether the transaction enhances shareholder value by taking into consideration whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock), cash-out value, whether the interests of continuing and cashed-out shareholders are balanced, and market reaction to public announcement of transaction.  |

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Changing Corporate Name

Public Fund Advisory Services Recommendation: Vote for changing the corporate name in all instances if proposed and supported by management and the board.

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Plans of Reorganization (Bankruptcy)

The recent financial crisis has placed Chapter 11 bankruptcy reorganizations as a potential alternative for distressed companies. While the number of bankruptcies has risen as evidenced by many firms, including General Motors and Lehman Brothers, the prevalence of these reorganizations can vary year over year due to, among other things, market conditions and a company's ability to sustain its operations. Additionally, the amount of time that lapses between a particular company's entrance into Chapter 11 and its submission of a plan of reorganization varies significantly depending on the complexity, timing, and jurisdiction of the particular case. These plans are often put to a vote of shareholders (in addition to other interested parties), as required by the Bankruptcy Code.

Public Fund Advisory Services Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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|:---|:---|
| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an Official Equity Committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization; and

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

Public Fund Advisory Services Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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|:---|:---|
| § | *Valuation* - Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target, if it is a private entity.  |

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§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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|:---|:---|
| § | *Deal timing* - A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *Negotiations and process* - What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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|:---|:---|
| § | *Conflicts of interest* - How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24 month timeframe.  |

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|:---|:---|
| § | *Voting agreements* - Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights  |

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§ *Governance* - What is the impact of having the SPAC CEO or founder on key committees following the proposed merger

§ *Stakeholder Impact*- impact on community stakeholders and workforce including impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment etc.

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Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions

Public Fund Advisory Services Recommendation: Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ <u>*Length of request*:</u> Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquisition process.

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| § | <u>*Pending transaction(s) or progression of the acquisition process*:</u> Sometimes an initial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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|:---|:---|
| § | <u>*Added incentive for non-redeeming shareholders*:</u> Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redemption at the extension proposal meeting.  |

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§ <u>*Prior extension requests*:</u> Some SPACs request additional time beyond the extension period sought in prior extension requests.

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7. Capital Structure

The management of a corporation's capital structure involves a number of important issues including dividend policy, types of assets, opportunities for growth, ability to finance new projects internally, and the cost of obtaining additional capital. Many financing decisions have a significant impact on shareholder value, particularly when they involve the issuance of additional common stock, preferred stock, or debt.

Common Stock Authorization

State statutes and stock exchanges require shareholder approval for increases in the number of common shares. Corporations increase their supply of common stock for a variety of ordinary business purposes: raising new capital, funding stock compensation programs, business acquisitions, implementation of stock splits, or payment of stock dividends.

Clear justification should accompany all management requests for shareholder approval of increases in authorized common stock. Public Fund Advisory Services supports increases in authorized common stock to fund stock splits that are in shareholders' interests. Dual requests on the same ballot, in which an increase in common stock is requested in tandem with a reverse stock split in which shares are not proportionately reduced may not be in shareholder best interests. Although the reverse stock split may be needed in the face of imminent delisting, there is little justification in effectively approving two increases in common stock on the same ballot.

General Authorization Requests

Public Fund Advisory Services Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes.

Vote for an increase of up to **100** percent of current authorized shares.

Generally vote against proposed increases, even if less than or equal to 100 percent, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases above 100 percent of the current authorized shares when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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Specific Authorization Requests

Public Fund Advisory Services Recommendation: Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support.

Stock Distributions: Splits and Dividends

Stock splits/dividends involve the partitioning of the outstanding shares of a corporation into a larger number of shares, while proportionately decreasing the market price of the stock. Stock splits/dividends do not affect the equity of the company. An understanding of forward and reverse stock splits and stock dividends is relevant because proposals to increase authorized common shares may be tied to the implementation of a planned stock distribution.

Shareholders can effectively cancel a split or dividend if the company does not have sufficient shares to implement a split without an increase in authorized shares.

Public Fund Advisory Services Recommendation: Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the increase in authorized shares is reasonable in accordance with Public Fund Advisory Services' Common Stock Authorization policy.

Reverse Stock Splits

Reverse splits exchange multiple shares for a lesser amount to increase share price. Increasing share price is sometimes necessary to restore a company's share price to a level that will allow it to be traded on the national stock exchanges. In addition, some brokerage houses have a policy of not monitoring or investing in very low priced shares. Reverse stock splits can help maintain stock liquidity.

Evaluation of management proposals to implement a reverse stock split will take into account whether there is a corresponding proportional decrease in authorized shares. Without a corresponding decrease, a reverse stock split is effectively an increase in authorized shares by way of reducing the number of shares outstanding, while leaving the number of authorized shares to be issued at the pre-split level.

Public Fund Advisory Services Recommendation: Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than the company's existing authorization.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting; or

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

Shareholders should only vote for non-proportionate reverse stock splits in the most dire of situations. Companies should provide disclosure of external evidence that a potential delisting is imminent to separate the true emergencies from vague potential risks to shareholders.

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Share Repurchase Programs

Public Fund Advisory Services Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail,

§ The use of buybacks to inappropriately manipulate incentive compensation metrics,

§ Threats to the company's long-term viability, or

§ Other company-specific factors as warranted.

Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Preferred Stock Authorization

Preferred stock is an equity security which has certain features similar to debt instruments- such as fixed dividend payments and seniority of claims to common stock - and usually carries little to no voting rights. The terms of blank check preferred stock give the board of directors the power to issue shares of preferred stock at their discretion with voting, conversion, distribution, and other rights to be determined by the board at time of issue.

General Authorization Requests

Public Fund Advisory Services Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes.

Vote for an increase of up to 100 percent of current authorized shares.

Generally vote against proposed increases, even if less than or equal to 100 percent, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

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| § | If the shares requested are blank check preferred shares that can be used for antitakeover purposes;**<sup>15</sup>**  |

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| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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|:---|:---|
| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they're convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

<sup>15</sup> To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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However, generally vote for proposed increases above 100 percent of the current authorization when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

Specific Authorization Requests

Public Fund Advisory Services Recommendation: Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support

*Blank Check Preferred Stock* 

Blank check preferred stock, with unspecified voting, conversion, dividend, distribution, and other rights, can be used for sound corporate purposes but can also be used as a device to thwart hostile takeovers without shareholder approval.

Public Fund Advisory Services Recommendation:

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| § | Vote against proposals that would authorize the creation of new classes of blank check preferred stock.  |

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| § | Vote against proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose.  |

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|:---|:---|
| § | Vote for proposals to create "declawed" blank check preferred stock (stock that cannot be used as a takeover defense).  |

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|:---|:---|
| § | Vote for requests to require shareholder approval for blank check authorizations.  |

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Adjust Par Value of Common Stock

Stock that has a fixed per share value that is on its certificate is called par value stock. The purpose of par value stock is to establish the maximum responsibility of a stockholder in the event that a corporation becomes insolvent. Proposals to reduce par value come from certain state level requirements for regulatory industries such as banks and other legal requirements relating to the payment of dividends.

Public Fund Advisory Services Recommendation: Vote for management proposals to reduce the par value of common stock.

Preemptive Rights

Preemptive rights permit shareholders to share proportionately in any new issues of stock of the same class. These rights guarantee existing shareholders the first opportunity to purchase shares of new issues of stock in the same class as their own and in the same proportion. The absence of these rights could cause stockholders' interest in a company to be reduced by the sale of additional shares without their knowledge and at prices unfavorable to them. Preemptive rights, however, can make it difficult for corporations to issue large blocks of stock for general corporate purposes.

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Public Fund Advisory Services Recommendation: Vote case-by-case on proposals to create or abolish preemptive rights. In evaluating proposals on preemptive rights, Public Fund Advisory Services looks at the size of a company and the characteristics of its shareholder base.

Debt Restructuring

Public Fund Advisory Services Recommendation:

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| § | Vote case-by-case on proposals regarding debt restructurings.  |

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|:---|:---|
| § | Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.  |

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§ Review 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. The following factors are considered:

§ *<u>Dilution</u>—How* much will the ownership interest of existing shareholders be reduced, and how extreme will dilution to any future earnings be?

§ *<u>Change in Control</u>—Will* the transaction result in a change in control of the company? Are board and committee seats guaranteed? Do standstill provisions and voting agreements exist?

§ *<u>Financial Issues</u>—* company's financial situation, degree of need for capital, use of proceeds, and effect of the financing on the company's cost of capital;

§ *<u>Terms of the offer</u>—discount/premium* in purchase price to investor including any fairness opinion, termination penalties and exit strategy;

§ *Conflict of interest*—arm's length transactions and managerial incentives; and

§ Management's efforts to pursue other alternatives.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

Public Fund Advisory Services Recommendation: For U.S. domestic issuers incorporated outside the U.S. and listed solely on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 10 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

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8. State of Incorporation

Voting on State Takeover Statutes

Public Fund Advisory Services Recommendation: Review 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). Public Fund Advisory Services generally supports opting into stakeholder protection statutes if they provide comprehensive protections for employees and community stakeholders. Public Fund Advisory Services is less supportive of takeover statutes that only serve to protect incumbent management from accountability to shareholders and which negatively influence shareholder value.

Reincorporation Proposals

Public Fund Advisory Services Recommendation: Management or shareholder proposals to change a company's state of incorporation should be evaluated on a case-by-case basis, giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation; and

§ Comparison of corporation laws of original state and destination state.

Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.

Offshore Reincorporations and Tax Havens

For a company that seeks to reincorporate, Public Fund Advisory Services evaluates the merits of the move on a case-by-case basis, taking into consideration the company's strategic rationale for the move, the potential economic ramifications, potential tax benefits, and any corporate governance changes that may impact shareholders. Public Fund Advisory Services believes there are a number of concerns associated with a company looking to reincorporate from the United States to offshore locales such as Bermuda, the Cayman Islands or Panama. With more U.S.-listed companies seeking to move offshore, shareholders are beginning to understand the web of complexities surrounding the legal, tax, and governance implications involved in such a transaction. .

Public Fund Advisory Services Recommendation:

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| § | Vote case-by-case on proposed offshore moves, taking into consideration:  |

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§ Legal recourse for U.S. stockholders of the new company and the enforcement of legal judgments against the company under the U.S. securities laws;

§ The transparency (or lack thereof) of the new locale's legal system;

§ Adoption of any shareholder-unfriendly corporate law provisions;

§ Actual, quantifiable tax benefits associated with foreign incorporation;

§ Potential for accounting manipulations and/or discrepancies;

§ Any pending U.S. legislation concerning offshore companies;

§ Prospects of reputational harm and potential damage to brand name via increased media coverage concerning corporate expatriation.

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| § | Generally vote for shareholder requests calling for "expatriate" companies that are domiciled abroad yet predominantly owned and operated in America to re-domesticate back to a U.S. state jurisdiction.  |

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While a firm's country of incorporation will remain the primary basis for evaluating companies, Public Fund Advisory Services will generally apply its U.S. policies to the extent possible with respect to issuers that file DEF 14As, 10-K annual reports, and 10-Q quarterly reports, and are thus considered domestic issuers by the U.S. Securities and Exchange Commission (SEC). U.S. policies will also apply to companies listed on U.S. exchanges as Foreign Private Issuers (FPIs) and that may be exempt from the disclosure and corporate governance requirements that apply to most companies traded on U.S. exchanges, including a number of SEC rules and stock market listing requirements. Corporations that have reincorporated outside the U.S. have found themselves subject to a combination of governance regulations and best practice standards that may not be entirely compatible with an evaluation framework based solely on the country of incorporation.

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9. Corporate Responsibility & Accountability

Social, Environmental and Sustainability Issues

Public Fund Advisory Services generally supports social, workforce, and environmental shareholder-sponsored resolutions if they seek to create responsible corporate citizens while at the same time attempting to enhance long-term shareholder value. Public Fund Advisory Services typically supports proposals that ask for disclosure reporting of information that is not available outside the company that is not proprietary in nature. Such reporting is particularly most vital when it appears that a company has not adequately addressed shareholder concerns regarding social, workplace, environmental and/or other issues. A determination whether the request is relevant to the company's core business and in-line with industry practice will be made on a case-by-case basis. The proponent of the resolution must make the case that the benefits of additional disclosure outweigh the costs of producing the report.

Public Fund Advisory Services Recommendation: In analyzing social, workplace, environmental, and other related proposals, Public Fund Advisory Services considers the following factors:

§ Whether the proposal itself is well framed and reasonable;

§ Whether adoption of the proposal would have either a positive or negative impact on the company's short-term or long-term share value;

§ Whether the company's analysis and voting recommendation to shareholders is persuasive;

§ The degree to which the company's stated position on the issues could affect its reputation or sales, or leave it vulnerable to boycott or selective purchasing;

§ Whether the subject of the proposal is best left to the discretion of the board;

§ Whether the issues presented in the proposal are being appropriately or effectively dealt with through legislation, government regulation, or company-specific action;

§ The company's approach compared with its peers or any industry standard practices for addressing the issue(s) raised by the proposal;

§ Whether the company has already responded in an appropriate or sufficient manner to the issue(s) raised in the proposal;

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's practices related to the issue(s) raised in the proposal;

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| § | If the proposal requests increased disclosure or greater transparency, whether sufficient information is publicly available to shareholders and whether it would be unduly burdensome for the company to compile and avail the requested information to shareholders in a more comprehensive or amalgamated fashion; and  |

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§ Whether implementation of the proposal would achieve the objectives sought in the proposal.

In general, Public Fund Advisory Services supports proposals that request the company to furnish information helpful to shareholders in evaluating the company's operations from top to bottom. In order to be able to intelligently monitor their investments, shareholders often need information that is best provided by the company in which they have invested on behalf of their end beneficiaries. Qualified requests satisfying the aforementioned criteria usually merit support.

Proposals requesting that the company cease certain actions that the proponent believes are harmful to society or some segment of society will be evaluated on a case-by-case basis. Special attention will be made to the company's legal and ethical obligations, its ability to remain profitable, and potential negative publicity if the company fails to honor the request. A high standard will need to be met by proponents requesting specific action like divesture of a business line or operation, legal remuneration, or withdrawal from certain high-risk markets.

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I. GENERAL CSR RELATED

Special Policy Review and Shareholder Advisory Committees

These resolutions propose the establishment of special committees of the board to address broad corporate policy and provide forums for ongoing dialogue on issues including, but not limited to: shareholder relations, the environment, occupational health and safety, and executive compensation.

Public Fund Advisory Services Recommendation: Support these proposals when they appear to offer a potentially effective method for enhancing shareholder value.

International Operations

The rise of globalization has put increasing importance on the need for U.S. companies to periodically monitor their business operations abroad. As a means to preserve brand integrity and protect against potentially costly litigation and negative public relations, Public Fund Advisory Services generally supports shareholder proposals which call for a report on the company's core business policies and procedures of its operations outside the United States.

Many of the resolutions which address a company's international policies can include: impact of Foreign Direct Investment (FDI) in emerging market economies; corporate safeguards against money laundering; terrorist financing; economic de-stabilization concerns; relationships with international financial institutions (IFIs); and product sales/marketing abroad (i.e., tobacco, pharmaceutical drug pricing).

Public Fund Advisory Services Recommendation: Generally support proposals asking for policy clarification and reporting on international operations that can materially impact the company's short and long-term bottom-line.

Affirm Political Non-Partisanship

Employees should not be put in a position where professional standing and goodwill within the corporation could be jeopardized as a result of political beliefs. Responsible employment practices should protect workers from an environment characterized by political indoctrination or intimidation. Corporations should not devote resources to partisan political activities, nor should they compel their employees to contribute to or support particular causes. Moreover, it is wise for a corporation to maintain a politically neutral stance as to avoid potentially embarrassing conflicts of interests that could negatively impact the company's brand name with consumers.

Public Fund Advisory Services Recommendation: Generally support proposals affirming political non-partisanship within the company.

Political Contributions, Lobbying Reporting & Disclosure

Changes in legislation that governs corporate political giving have, rather than limiting such contributions, increased the complexity of tracking how much money corporations contribute to the political process and where that money ultimately ends up. In January 2010, the U.S. Supreme Court's decision in *Citizens United vs. Federal Election Commission* lifted restrictions on corporate spending in federal elections. A company's involvement in the political process could impact shareholder value if such activities are not properly overseen and managed.

Shareholders have the right to know about corporate political activities, and management's knowledge that such information can be made publicly available should encourage a company's lawful and responsible use of political contributions.

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Moreover, it is critical that shareholders understand the internal controls that are in place at a company to adequately manage political contributions and lobbying practices. Given the significant reputational and financial risk involved in political giving, shareholders should expect management to have the necessary capabilities to monitor and track all monies distributed toward political groups and causes. These internal controls should be fully consistent with Section 404 requirements of the Sarbanes-Oxley Act of 2002.

While political contributions, lobbying and other corporate political activity can benefit the strategic interests of a company, it is important that accountability mechanisms are in place to ensure that monies disbursed in support of political objectives actually generate identifiable returns on shareholder wealth. Such mechanisms serve to insure against the use of shareholder funds in the furtherance of narrow management agendas.

When analyzing the proposals, special consideration will be made if the target company has been the subject of significant controversy stemming from its contributions or political activities, if the company fails to disclose a policy to shareholders that outlines the process by which the company considers its political contributions and lobbying activities, or if the company has recently been involved in significant controversy or litigation related to the company's political contributions or governmental affairs.

Public Fund Advisory Services Recommendation:

§ Support reporting of political and political action committee (PAC) contributions.

§ Support establishment of corporate political contributions guidelines and internal reporting provisions or controls.

§ Generally support shareholder proposals requesting companies to review and report on their political lobbying activities including efforts to influence governmental legislation.

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| § | Vote against shareholder proposals asking to publish in newspapers and public media the company's political contributions as such publications could present significant cost to the company without providing commensurate value to shareholders.  |

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| § | Generally vote case-by-case on proposals requesting comparison of a company's political spending to objectives that can mitigate material risks for the company, such as limiting global warming.  |

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Military Sales

Shareholder proposals from church groups and other community organizations have asked companies for detailed reports on foreign military sales. These proposals often can be created at reasonable cost to the company and contain no proprietary data. Large companies can supply this information without undue burden and provide shareholders with information affecting corporate performance and decision-making.

Public Fund Advisory Services Recommendation:

§ Generally support reports on foreign military sales and economic conversion of facilities and where such reporting will not disclose sensitive information that could impact the company adversely or increase its legal exposure.

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| § | Generally vote against proposals asking a company to develop specific military contracting criteria.  |

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Report on Operations in Sensitive Regions or Countries

Over the past decade, a number of public companies – especially within the extractive sector – have withdrawn from geopolitically sensitive regions as a result of being associated with political controversies involving their host countries (i.e. Myanmar, the Sudan, China, Iran, etc.). Oil and natural gas companies, in particular, continue to be the largest investors in many countries involved in human rights abuse and terrorist activities. As such, these companies become targets of consumer boycotts, public relations backlash and even governmental intervention.

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Public Fund Advisory Services Recommendation:

§ Generally support shareholder proposals to adopt labor standards in connection with involvement in a certain market and other potentially sensitive geopolitical regions.

§ Generally support shareholder proposals seeking a report on operations within a certain market and documentation of costs of continued involvement in a given country or region.

§ Generally support requests for establishment of a board committee to review and report on the reputational risks and legal compliance with U.S. sanctions as a result of the company's continued operations in countries associated with terrorist sponsored activities.

§ Consider shareholder proposals to pull out of a certain market on a case-by-case basis considering factors such as overall cost, FDI exposure, level of disclosure for investors, magnitude of controversy, and the current business focus of the company.

II. ENVIRONMENT & CLIMATE CHANGE

Shareholder proposals addressing environmental and energy concerns have been plentiful in recent years, and generally seek greater disclosure on an issue or seek to improve a company's environmental practices in order to protect the world's natural resources. In addition, some proponents cite the negative financial implications for companies with poor environmental practices, including liabilities associated with site clean-ups and lawsuits, as well as arguments that energy efficient products and clean environmental practices are sustainable business practices that will contribute to long-term shareholder value. Shareholders say the majority of independent atmospheric scientists agree that global warming poses a serious problem to the health and welfare of all countries, citing the findings of the Intergovernmental Panel on Climate Change (IPCC), the world's most authoritative scientific body on the subject. Shareholder proponents argue that companies can report on their greenhouse gas emissions within a few months at reasonable cost.

Greenhouse Gas Emissions

Scientists generally agree that gases released by chemical reactions including the burning of fossil fuels contribute to a "greenhouse effect" that traps the planet's heat. Environmentalists claim that the greenhouse gases produced by the industrial age have caused recent weather crises such as heat waves, rainstorms, melting glaciers, rising sea levels and receding coastlines. With notable exceptions, a number of business leaders have described the rise and fall of global temperatures as naturally occurring phenomena and depicted corporate impact on climate change as minimal.

Shareholder proposals asking a company to issue a report to shareholders – at reasonable cost and omitting proprietary information – on greenhouse gas emissions ask that the report include descriptions of efforts within companies to reduce emissions, their financial exposure and potential liability from operations that contribute to global warming, and their direct or indirect efforts to promote the view that global warming is not a threat. Proponents argue that there is scientific proof that the burning of fossil fuels causes global warming, that future legislation may make companies financially liable for their contributions to global warming, changing market dynamics and consumer preferences may impact demand for fossil fuels, and thus shareholder value, and that a report on the company's role in global warming can be assembled at reasonable cost.

Public Fund Advisory Services Recommendation:

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| § | Generally vote for shareholder proposals calling for a company to commit to reducing its greenhouse gas emissions under a reasonable timeline.  |

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| § | Generally vote for resolutions requesting that a company disclose information on the financial, physical, or regulatory risks related to climate change on its operations and investments, or on how the company identifies, measures, and manages such risks.  |

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Generally vote for proposals requesting a report on greenhouse gas (GHG) emissions from company operations and/or products and operations.

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Say on Climate (SoC) Management Proposals

Public Fund Advisory Services Recommendation: Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan<sup>16</sup>, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

§ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

§ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

§ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions in line with Paris Agreement goals (Scopes 1, 2, and 3 if relevant);

§ Whether the company has sought and received third-party approval that its targets are science-based;

§ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

§ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

§ Whether the company's climate data has received third-party assurance;

§ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

§ Whether there are specific industry decarbonization challenges; and

§ The company's related commitment, disclosure, and performance compared to its industry peers.

Say on Climate (SoC) Shareholder Proposals

Public Fund Advisory Services Recommendation: Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

§ The completeness and rigor of the company's climate-related disclosure;

§ The company's actual GHG emissions performance;

§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Investment in Renewable Energy

Filers of proposals on renewable energy ask companies to increase their investment in renewable energy sources and to work to develop products that rely more on renewable energy sources. Increased use of renewable energy is expected to reduce the negative environmental impact of energy companies. In addition, as supplies of oil and coal exist in the earth in limited quantities, renewable energy sources represent a competitive, and some would even argue essential, long-term business strategy.

Public Fund Advisory Services Recommendation: Generally support shareholder proposals seeking increased investment in renewable energy sources, taking into account whether the terms of the resolution are realistic or overly restrictive for management to pursue.

<sup>16</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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Sustainability Reporting and Planning

The concept of sustainability is commonly understood as meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. Indeed, the term sustainability is complex and poses significant challenges for companies on many levels. Many in the investment community have termed this broader responsibility the "triple bottom line," referring to the triad of performance goals related to economic prosperity, social responsibility and environmental quality. In essence, the concept requires companies to balance the needs and interests of their various stakeholders while operating in a manner that sustains business growth for the long-term, supports local communities and protects the environment and natural capital for future generations.

Reporting and enhanced disclosure addressing sustainable development is important to companies namely because it offers a formal structure for decision making that helps management teams anticipate and address important global trends that can have serious consequences for business and society. Shareholders may request general sustainability reports on a specific location or operation, often requesting that the company detail the environmental, social, legal and other risks and/or potential liabilities of the specific project in question.

A number of companies have begun to report on sustainability issues using established standards in the marketplace. Such reporting focuses on corporate compliance and measurement regarding key economic, environmental, and social performance indicators. As a best practice, companies release annual sustainability reports in conjunction to regular annual statement of operations.

Public Fund Advisory Services Recommendation: Generally support shareholder proposals seeking greater disclosure on the company's environmental and social practices, and/or associated risks and liabilities.

Operations in Protected or Sensitive Areas

Operating in regions protected or established under national or international categorization guidelines, including wildlife refuges, national forests, and International Union for Conservation of Nature and Natural Resources (IUCN) categorized areas, expose companies to increased oversight and the potential for associated risk and controversy. While it is important for a company to have the flexibility to operate in these regions to take advantage of strategic placement or growth, additional disclosure could be an important mitigating factor to address increased risk and oversight. Restrictions to the company's operations, damaging public relations, and costly litigation resulting from failure to comply with the requirements associated with protected or categorized regions could have a significant impact on shareholder value.

Public Fund Advisory Services Recommendation: Generally support shareholder requests for reports outlining potential environmental damage from operations in protected regions, including wildlife refuges, unless the company does not currently have operations or plans to develop operations in these protected regions.

Hydraulic Fracturing

Shareholder proponents have elevated concerns on the use of hydraulic fracturing, an increasingly controversial process in which water, sand, and a mix of chemicals is blasted horizontally into tight layers of shale rock to extract natural gas. As this practice has gained more widespread use, environmentalists have raised concerns that the chemicals mixed with sand and water to aid the fracturing process can contaminate ground water supplies. Proponents of resolutions at companies that employ hydraulic fracturing are also concerned that wastewater produced by the process could overload the waste treatment plants to which it is shipped. Shareholders have asked companies that utilize hydraulic fracturing to report on the environmental impact of the practice and to disclose policies designed to reduce hazards from the process.

Public Fund Advisory Services Recommendation: Vote for requests seeking greater transparency on the practice of hydraulic fracturing and its associated risks.

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Recycling Policy

A number of companies have received proposals to step-up their recycling efforts, with the goal of reducing the company's negative impact on the environment and reducing costs over the long-term.

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals that ask companies to increase their recycling efforts or to adopt a formal recycling policy.

Endorsement of Ceres Roadmap 2030

These resolutions call for the adoption of principles that encourage the company to protect the environment and the safety and health of its employees. The Ceres Roadmap 2030, formulated by Ceres (formerly known as the Coalition for Environmentally Responsible Economies, CERES), require signing companies to address environmental issues, including protection of the biosphere, sustainable use of natural resources, reduction and disposal of wastes, energy conservation, and employee and community risk reduction. A signatory to the Ceres Roadmap 2030 would disclose its efforts in such areas through a standardized report submitted to Ceres and made available to the public.

Public Fund Advisory Services supports proposals that improve a company's public image, reduce exposure to liabilities, and establish standards so that environmentally responsible companies and markets are not at a competitive financial disadvantage.

Public Fund Advisory Services Recommendation:

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| § | Vote for requests asking a company to formally adopt the Ceres Roadmap 2030.  |

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| § | Vote for adoption of reports to shareholders on environmental issues.  |

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Land Use

Many large retail stores and real estate development firms have received criticism over their policies and processes for acquiring and developing land. Often, in such cases, there are organizations that support as well as those that oppose the proposed development.

Many of these requests brought forth by the respective stakeholders raise serious issues that can have a real impact on short-term shareholder value. However in some cases, additional reporting may be duplicative of existing disclosure or may fail to provide added benefit to shareholders commensurate with the associated cost or burden of providing additional information. Some of the companies targeted with such resolutions have been subject to recent litigation, significant fines stemming from their land use practices, and/or recent community boycotts.

Public Fund Advisory Services Recommendation: Generally support shareholder resolutions that request better disclosure of detailed information on a company's policies related to land use or development or compliance with local and national laws and zoning requirements.

Water Use

Shareholders may ask for a company to prepare a report evaluating the business risks linked to water use and impacts on the company's supply chain, including subsidiaries and bottling partners. Such proposals also ask companies to disclose current policies and procedures for mitigating the impact of operations on local communities in areas of water scarcity.

Public Fund Advisory Services Recommendation: Vote for shareholder proposals seeking the preparation of a report on a company's risks linked to water use.

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III. WORKPLACE PRACTICES & HUMAN RIGHTS

Equal Employment Opportunity

These proposals generally request that a company establish a policy of reporting to shareholders its progress with equal opportunity and affirmative action programs. The costs of violating federal laws that prohibit discrimination by corporations are high and can affect corporate earnings.

The Equal Opportunities Employment Commission (EEOC) does not release the company's filings to the public unless it is involved in litigation, and it is difficult to obtain from other sources. Companies need to be sensitive to minority employment issues as the work force becomes increasingly diverse. This information can be provided with little cost to the company and does not create an unreasonable burden on management.

Public Fund Advisory Services Recommendation:

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| § | Vote for proposals calling for action on equal employment opportunity and anti-discrimination.  |

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| § | Vote for proposals requesting legal and regulatory compliance and public reporting related to non-discrimination, affirmative action, workplace health and safety, environmental issues, and labor policies and practices that affect long-term corporate performance.  |

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| § | Vote for proposals advocating for non-discrimination in salary, wages, and all benefits.  |

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High-Performance Workplace

High-performance workplace practices emphasize employee training, participation, and feedback. The concept of a high-performance workplace has been endorsed by the U.S. Department of Labor and refers to a workplace that is designed to provide workers with the information, skills, incentives, and responsibility to make decisions essential for innovation, quality improvement and rapid response to changes in the marketplace. These standards embrace a "what is good for the worker is good for the company" philosophy. Studies have shown that improvement in human resources practices is associated with increases in total return to shareholders. High-performance workplace standards proposals can include linking compensation to social measures such as employee training, morale and safety, environmental performance and workplace lawsuits.

Public Fund Advisory Services Recommendation: Generally support proposals that incorporate high-performance workplace standards.

Workplace Safety

In light of fatal accidents at oil refineries (Tesoro – Anacortes refinery, April 2010; and BP – Texas City refinery, March 2005), the 2010 BP Deepwater Horizon incident in the Gulf of Mexico, and the explosion at Massey Energy's Upper Big Branch mine in 2010, shareholders have sought greater transparency and accountability regarding workplace safety by filing resolutions at a number of corporations.

Public Fund Advisory Services Recommendation: Generally vote for shareholder proposals requesting requests for workplace safety reports, including reports on accident risk reduction efforts.

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Non-Discrimination in Retirement Benefits

A cash balance plan is a defined benefit plan that treats an earned retirement benefit as if it were a credit from a defined contribution plan, but which provides a stated benefit at the end of its term. Because employer contributions to these plans are credited evenly over the life of a plan and not based on a seniority formula, they may reduce payouts to long-term employees who are currently vested in plans.

Cash-balance pension conversions have undergone significant congressional and federal agency scrutiny in the wake of high-profile EEOC complaints on age discrimination and employee anger at several large blue-chip companies. While significant policy reform is unlikely in the short-term, business interests are worried enough that the National Association of Manufacturers and other pro-business lobbies have formed a coalition on Capitol Hill to preserve the essential features of the plans and to overturn an IRS ruling.

Driving the push behind conversions from traditional pension plans to cash-balance plans are the substantial savings that companies generate in the process. Critics point out that this savings is gained at the expense of the most senior employees. Shareholder resolutions may call on corporate boards to establish a committee of outside directors to prepare a report to shareholders on the potential impact of pension-related proposals being considered by national policymakers in reaction to the controversy spawned by the plans.

Public Fund Advisory Services Recommendation: Support proposals calling for a non-discrimination policy with regard to retirement benefits and pension management at a company.

Gender, Race/Ethnicity Pay Gaps

Public Fund Advisory Services Recommendation: Vote case-by-case on requests for reports on a company's pay data by gender or race/ ethnicity, or a report on a company's policies and goals to reduce any gender or race/ethnicity pay gaps, taking into account:

§ The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy on fair and equitable compensation practices;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race, or ethnicity pay gap issues;

§ The company's disclosure regarding gender, race, or ethnicity pay gap policies or initiatives compared to its industry peers; and

§ Local laws regarding categorization of race and/or ethnicity and definitions of ethnic and/or racial minorities.

Racial Equity and/or Civil Rights Audit Guidelines

Public Fund Advisory Services Recommendation: Generally vote for proposals requesting that a company conduct an independent racial equity and/or civil rights audit, considering company disclosures, policies, actions, and engagements.

Sexual Harassment

Public Fund Advisory Services Recommendation: Vote case-by-case on requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment, taking into account:

§ The company's current policies, practices, oversight mechanisms related to preventing workplace sexual harassment;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to workplace sexual harassment issues; and

§ The company's disclosure regarding workplace sexual harassment policies or initiatives compared to its industry peers.

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Mandatory Arbitration

Public Fund Advisory Services Recommendation: Vote case-by-case on requests for a report on a company's use of mandatory arbitration on employment-related claims, taking into account:

§ The company's current policies and practices related to the use of mandatory arbitration agreements on workplace claims;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to the use of mandatory arbitration agreements on workplace claims; and

§ The company's disclosure of its policies and practices related to the use of mandatory arbitration agreements compared to its peers.

Fair Lending Reporting and Compliance

These resolutions call for financial institutions to comply with fair lending laws and statutes while avoiding predatory practices in their sub-prime lending. These predatory practices include: lending to borrowers with inadequate income, who will then default; not reporting on payment performances of borrowers to credit agencies; implying that credit life insurance is necessary to obtain the loan (packing); unnecessarily high fees; refinancing with high additional fees rather than working out a loan that is in arrears (flipping); and high pre-payment fees.

Public Fund Advisory Services Recommendation:

§ Support proposals calling for full compliance with fair-lending laws.

§ Support reporting on overall lending policies and data.

MacBride Principles

These resolutions have called for the adoption of the MacBride Principles for operations located in Northern Ireland. They request companies operating abroad to support the equal employment opportunity policies that apply in facilities they operate domestically. The principles were established to address the sectarian hiring problems between Protestants and Catholics in Northern Ireland. It is well documented that Northern Ireland's Catholic community faced much higher unemployment figures than the Protestant community. In response to this problem, the U.K. government instituted the New Fair Employment Act of 1989 (and subsequent amendments) to address the sectarian hiring problems.

Many companies believe that the Act adequately addresses the problems and that further action, including adoption of the MacBride Principles, only duplicates the efforts already underway. In evaluating a proposal to adopt the MacBride Principles, shareholders must decide whether the principles will cause companies to divest, and therefore worsen the unemployment problem, or whether the principles will promote equal hiring practices. Proponents believe that the Fair Employment Act does not sufficiently address the sectarian hiring problems. They argue that the MacBride Principles serve to stabilize the situation and promote further investment.

Public Fund Advisory Services Recommendation: Support the MacBride Principles for operations in Northern Ireland that request companies to abide by equal employment opportunity policies.

Contract Supplier Standards

These resolutions call for compliance with governmental mandates and corporate policies regarding nondiscrimination, affirmative action, work place safety and health, and other basic labor protections.

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Public Fund Advisory Services Recommendation: Generally support proposals that:

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| § | Seek publication of a "Worker Code of Conduct" to be implemented by the company's foreign suppliers and licensees, requiring they satisfy all applicable labor standards and laws protecting employees' wages, benefits, working conditions, freedom of association, right to collectively bargain, and other rights;  |

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§ Request a report summarizing the company's current practices for enforcement of its Worker Code of Conduct;

§ Seek to establish independent monitoring mechanism in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with the Worker Code of Conduct;

§ Create incentives to encourage suppliers to raise standards rather than terminate contracts;

§ Implement policies for ongoing wage adjustments, ensuring adequate purchasing power and a sustainable living wage for employees of foreign suppliers and licensees;

§ Request public disclosure of contract supplier reviews on a regular basis; and

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| § | Adopt labor standards for foreign and domestic suppliers to ensure that the company will not do business with foreign suppliers that manufacture products for sale in the U.S. using forced or child labor or with suppliers that fail to comply with applicable laws protecting employees' wages and working conditions.  |

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Corporate and Supplier Codes of Conduct

Public Fund Advisory Services generally supports proposals that call for the adoption and/or enforcement of clear principles or codes of conduct relating to countries in which there are systematic violations of human rights. These conditions include the use of slave, child, or prison labor, undemocratically elected governments, widespread reports by human rights advocates, fervent pro-democracy protests, or economic sanctions and boycotts.

Many proposals refer to the seven core conventions, commonly referred to as the "Declaration on Fundamental Principles and Rights At Work," ratified by the International Labor Organization (ILO). The seven conventions fall under four broad categories: i) right to organize and bargain collectively; ii) non-discrimination in employment; iii) abolition of forced labor; and iv) end of child labor. Each member nation of the ILO body is bound to respect and promote these rights to the best of their abilities.

Public Fund Advisory Services Recommendation:

§ Support the principles and codes of conduct relating to company investment and/or operations in countries with patterns of human rights abuses or pertaining to geographic regions experiencing political turmoil (Northern Ireland, Columbia, Burma, former Soviet Union, and China).

§ Support the implementation and reporting on ILO codes of conduct.

§ Support independent monitoring programs in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with Codes.

§ Support requests that a company conduct an assessment of the human rights risks in its operation or in its supply chain, or report on its human rights risk assessment process.

IV. CONSUMER HEALTH & PUBLIC SAFETY

Phase-out or Label Products Containing Genetically Engineered Ingredients

Shareholder activists request companies engaged in the development of genetically modified agricultural products (GMOs) to adopt a policy of not marketing or distributing such products until long term safety testing demonstrates that they are not harmful to humans, animals or the environment. Until further long term testing demonstrates that these products are not harmful, companies in the restaurant, prepared foods and packaging industries are being asked to remove genetically altered ingredients from products they manufacture, distribute or sell, and label such products in the interim. Shareholders are asking supermarket companies to do the same for their own private label brands.

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Public Fund Advisory Services Recommendation:

---

| | |
|:---|:---|
| § | Vote for shareholder proposals to label products that contain genetically engineered products.  |

---

---

| | |
|:---|:---|
| § | Generally vote against proposals calling for a full phase out of product lines containing GMO ingredients.  |

---

Tobacco-Related Proposals

Shareholders file resolutions annually asking that companies with ties to the tobacco industry account for their marketing and distribution strategies, particularly as they impact smoking by young people. While the specific resolutions for shareholder proponents vary from year to year, activist shareholders consistently make the tobacco industry a prominent target. Examples of tobacco proposals include: attempting to link executive compensation with teen smoking rates; the placement of company tobacco products in retail outlets; the impact of second hand smoke; and a review of advertising campaigns and their impact on children and minority groups.

Public Fund Advisory Services Recommendation:

---

| | |
|:---|:---|
| § | Vote for shareholder proposals seeking to limit the sale of tobacco products to minors.  |

---

---

| | |
|:---|:---|
| § | Generally vote against proposals calling for a full phase out of tobacco related product lines.  |

---

Toxic Emissions

Shareholder proposals asking companies to take steps to minimize their emissions of toxic chemicals or release of toxic wastes into the environment can vary greatly. Some focus on reporting on the impact of these chemicals on the communities in which the company operates. Still others ask for a review of the company's efforts to minimize pollution.

Public Fund Advisory Services Recommendation: Vote for shareholder proposals calling on the company to establish a plan to reduce toxic emissions.

Toxic Chemicals

The use of toxic chemicals in cosmetics, consumables, and household products has become a growing issue of concern for shareholders as international regulations on this topic continue to expand, providing increased scrutiny over potentially toxic materials or compounds used or emitted in the conduct of operations or as an ingredient in consumer goods. Shareholders must recognize the impact that changing regulation and consumer expectations could have on shareholder value and should encourage companies to disclose their policies regarding the use or emission of toxic chemicals. Specific considerations should be made for a company's geographic markets and the appearance of historical difficulties with controversy, fines, or litigation, requests for disclosure on the potential financial and legal risk associated with toxic chemicals.

Public Fund Advisory Services Recommendation:

§ Generally support resolutions requesting that a company disclose its policies related to toxic chemicals.

§ Generally support shareholder resolutions requesting that companies evaluate and disclose the potential financial and legal risks associated with utilizing certain chemicals.

§ Consider shareholder proposals requesting companies to substitute or replace existing products on a case-by-case basis, with consideration for applicable regulations and standards in the markets in which the company participates.

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Nuclear Safety

These resolutions are filed at companies that manage nuclear power facilities or produce components for nuclear reactors to request disclosure on the risks to the company associated with these operations, including physical security and the potential for environmental damage. Current reporting requirements for companies that operate nuclear facilities are managed by the Nuclear Regulatory Commission (NRC) and include detailed reports on safety and security that are available to the public.

Public Fund Advisory Services Recommendation: Generally support shareholder resolutions requesting that companies report on risks associated with their nuclear reactor designs and/or the production and interim storage of irradiated fuel rods.

Concentrated Area Feeding Operations (CAFOs)

The level of pollution resulting from CAFOs has drawn increased attention in recent years as certain legal decisions have established the precedent that a company can be held liable for the actions of the contract farms it sources from. Fines and remediation expenses stemming from these cases have been significant and could have a notable impact on the companies' operations and shareholder value.

Public Fund Advisory Services Recommendation: Generally support resolutions requesting that companies report to shareholders on the risks and liabilities associated with concentrated animal feeding operations (CAFOs) unless the company has publicly disclosed guidelines for its corporate and contract farming operations (including compliance monitoring), or if the company does not directly source from CAFOs.

Pharmaceutical Product Reimportation

One of the most visible aspects of the legal and political debate over rising health care costs in the United States can be seen through prescription drug reimportation through Canada. While U.S. and Canadian regulations limit reimportation, several states have taken steps to encourage employees to actively seek less expensive medications through reimportation.

Shareholder action at major pharmaceutical companies has hinged around requesting increased disclosure of the financial and legal risks associated with company policies, or called on companies to change distribution limits to increase product availability in Canada, thereby encouraging product reimportation to the United States. The level of public concern over this issue and associated impact that a poorly developed policy could have on the companies suggest that additional disclosure of company policies related to reimportation could be beneficial to shareholders and generally merits support.

Public Fund Advisory Services Recommendation:

§ Generally support shareholder proposals requesting that companies report on the financial and legal impact of their policies regarding prescription drug reimportation, unless such information is already publicly disclosed.

§ Generally support shareholder proposals requesting that companies adopt specific policies to encourage or not constrain prescription drug reimportation.

Pharmaceutical Product Pricing

Pharmaceutical drug pricing, both within the United States and internationally, has raised many questions of the companies that are responsible for creating and marketing these treatments. Shareholder proponents, activists and even some legislators have called upon drug companies to restrain pricing of prescription drugs.

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The high cost of prescription drugs is a vital issue for senior citizens across the country. Seniors have the greatest need for prescription drugs, accounting for a significant portion of all prescription drug sales, but they often live on fixed incomes and are underinsured.

Proponents note that efforts to reign-in pharmaceutical costs will not negatively impact research and development (R&D) costs and that retail drug prices are consistently higher in the U.S. than in other industrialized nations. Pharmaceutical companies often respond that adopting a formal drug pricing policy could put the company at a competitive disadvantage.

Against the backdrop of the AIDS crisis in Africa, many shareholders have called on companies to address the issue of affordable drugs for the treatment of AIDS, as well as TB and Malaria throughout the developing world. When analyzing such resolutions, consideration should be made of the strategic implications of pricing policies in the market.

Public Fund Advisory Services Recommendation:

§ Proposals asking a company to implement price restraints on its pharmaceutical products will be evaluated on a case-by-case basis, taking into account the following factors:

§ Whether the proposal focuses on a specific drug and region;

§ Whether the economic benefits of providing subsidized drugs (e.g., public goodwill) outweigh the costs in terms of reduced profits, lower R&D spending, and harm to competitiveness;

§ The extent that reduced prices can be offset through the company's marketing expenditures without significantly impacting R&D spending;

§ Whether the company already limits price increases of its products;

§ Whether the company already contributes life-saving pharmaceuticals to the needy and Third World countries; and

§ The extent to which peer companies implement price restraints.

§ Generally support proposals requesting that companies implement specific price restraints for its pharmaceutical products in developing markets or targeting certain population groups.

§ Generally support proposals requesting that companies evaluate their global product pricing strategy, considering the existing level of disclosure on pricing policies, any deviation from established industry pricing norms, and the company's existing philanthropic initiatives.

---

| | |
|:---|:---|
| § | Vote for shareholder proposals that call on companies to develop a policy to provide affordable HIV, AIDS, TB and Malaria drugs to citizens in the developing world.  |

---

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![LOGO](g79608g00k06.jpg)

We empower investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics, and insight.

G E T S T A R T E D W I T H I S S S O L U T I O N S

Email sales@issgovernance.com or visit www.issgovernance.com for more information.

Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS' 2,600 employees operate worldwide across 29 global locations in 15 countries. Its approximately 3,400 clients include many of the world's leading institutional investors who rely on ISS' objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS' expertise to help them make informed investment decisions. This document and all of the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the "Information") is the property of Institutional Shareholder Services Inc. (ISS), its subsidiaries, or, in some cases third party suppliers.

The Information has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), or a promotion or recommendation of, any security, financial product or other investment vehicle or any trading strategy, and ISS does not endorse, approve, or otherwise express any opinion regarding any issuer, securities, financial products or instruments or trading strategies.

The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information.

ISS MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, TIMELINESS, NON-INFRINGEMENT, COMPLETENESS, MERCHANTABILITY, AND FITNESS for A PARTICULAR PURPOSE) WITH RESPECT TO ANY OF THE INFORMATION.

Without limiting any of the foregoing and to the maximum extent permitted by law, in no event shall ISS have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits), or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.

<sup>©</sup> 2023 \| Institutional Shareholder Services and/or its affiliates

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UNITED STATES TAFT-HARTLEY PROXY VOTING GUIDELINES 2023 Policy Recommendations Published January 17, 2023 WWW. ISSGOVERNANCE.COM

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## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  [**Taft-Hartley Advisory Services Proxy Voting Policy Statement and Guidelines**](#appd79608_346) | E-148 |
| [**1. Director Elections**](#appd79608_347) | E-149 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Voting on Director Nominees in Uncontested Elections](#appd79608_348) | E-149 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Independence](#appd79608_349) | E-149 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Competence](#appd79608_350) | E-150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Accountability](#appd79608_351) | E-150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Responsiveness](#appd79608_352) | E-154 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Discussion](#appd79608_353) | E-155 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Board-Related Proposals](#appd79608_354) | E-159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Diversity](#appd79608_355) | E-159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Ownership Requirements](#appd79608_356) | E-159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board and Committee Size](#appd79608_357) | E-159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limit Term of Office](#appd79608_358) | E-160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appd79608_359) | E-160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Threshold Voting Requirement for Director Elections](#appd79608_360) | E-161 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Access](#appd79608_361) | E-161 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appd79608_362) | E-162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish an Office of the Board](#appd79608_363) | E-162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Liability Protection and Exculpation](#appd79608_364) | E-162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification](#appd79608_365) | E-162 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access — Voting for Director Nominees in Contested Elections](#appd79608_366) | E-163 |
| [**2. Compensation**](#appd79608_367) | E-164 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Evaluation of Executive Pay](#appd79608_368) | E-164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-For-Performance Evaluation](#appd79608_369) | E-165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Compensation Practices](#appd79608_370) | E-166 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Committee Communications and Responsiveness](#appd79608_371) | E-169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation – Management Say-on-Pay Proposals](#appd79608_372) | E-169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation – Management Say on Pay](#appd79608_373) | E-170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appd79608_374) | E-170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Pay Plans](#appd79608_375) | E-171 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Option Plans](#appd79608_376) | E-172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting Power Dilution (VPD) Calculation](#appd79608_377) | E-172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Market Value, Dilution and Repricing](#appd79608_378) | E-172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Burn Rate](#appd79608_379) | E-173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive Concentration Ratio](#appd79608_380) | E-173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Evergreen Provisions](#appd79608_381) | E-173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appd79608_382) | E-173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Restricted Stock](#appd79608_383) | E-174 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans (ESPPs) - Qualified Plans](#appd79608_384) | E-174 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans (ESPPs) – Non-Qualified Plans](#appd79608_385) | E-174 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Ownership Plans (ESOPs)](#appd79608_386) | E-174 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [OBRA-Related Compensation Proposals](#appd79608_387) | E-175 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden and Tin Parachutes](#appd79608_388) | E-175 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Director Compensation](#appd79608_389) | E-176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appd79608_390) | E-176 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Compensation](#appd79608_391) | E-176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure of Executive and Director Pay](#appd79608_392) | E-176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limit Executive and Director Pay](#appd79608_393) | E-176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive Perks and Retirement/Death Benefits](#appd79608_394) | E-176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive Holding Periods](#appd79608_395) | E-177 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appd79608_396) | E-177 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Performance-Based Options](#appd79608_397) | E-177 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-up Proposals](#appd79608_398) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals](#appd79608_399) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants - Disclosure of Board or Company's Utilization](#appd79608_400) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appd79608_401) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking/Bonus Banking "Plus"](#appd79608_402) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested](#appd79608_403)<br> [Equity](#appd79608_403) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoup Bonuses](#appd79608_404) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Link Compensation to Non-Financial Factors](#appd79608_405) | E-178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pension Plan Income Accounting](#appd79608_406) | E-179 |
| [**3. Auditors**](#appd79608_407) | E-180 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Auditor Independence](#appd79608_408) | E-180 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Ratification](#appd79608_409) | E-180 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Rotation](#appd79608_410) | E-181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Indemnification and Limitation of Liability](#appd79608_411) | E-181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosures Under Section 404 of Sarbanes-Oxley Act](#appd79608_412) | E-182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adverse Opinions](#appd79608_413) | E-182 |
| [**4. Takeover Defenses**](#appd79608_414) | E-183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills](#appd79608_415) | E-183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Poison Pills/Protective Amendments](#appd79608_416) | E-183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appd79608_417) | E-184 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Remove Directors/Fill Vacancies](#appd79608_418) | E-184 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Alter the Size of the Board](#appd79608_419) | E-184 |
| [**5. Shareholder Rights**](#appd79608_420) | E-186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Confidential Voting](#appd79608_421) | E-186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call Special Meetings](#appd79608_422) | E-186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appd79608_423) | E-186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unequal Voting Rights](#appd79608_424) | E-186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Shareholder Vote Requirement to Amend the Charter or Bylaws](#appd79608_425) | E-187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appd79608_426) | E-187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Shareholder Vote Requirement to Approve Mergers](#appd79608_427) | E-188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appd79608_428) | E-188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimbursing Proxy Solicitation Expenses](#appd79608_429) | E-188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Venue](#appd79608_430) | E-188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee-Shifting Bylaws](#appd79608_431) | E-189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appd79608_432) | E-189 |
| [**6. Mergers & Acquisitions / Corporate Restructurings**](#appd79608_433) | E-189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appd79608_434) | E-190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appd79608_435) | E-190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Restructuring](#appd79608_436) | E-190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appd79608_437) | E-190 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appd79608_438) | E-190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appd79608_439) | E-191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private Transactions (LBOs, Minority Squeezeouts)](#appd79608_440) | E-191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing Corporate Name](#appd79608_441) | E-191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Plans of Reorganization (Bankruptcy)](#appd79608_442) | E-191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appd79608_443) | E-191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs) – Proposals for Extensions](#appd79608_444) | E-192 |
| [7. Capital Structure](#appd79608_445) | E-193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appd79608_446) | E-193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appd79608_447) | E-194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appd79608_448) | E-194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appd79608_449) | E-195 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appd79608_450) | E-195 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjust Par Value of Common Stock](#appd79608_451) | E-196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appd79608_452) | E-196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Debt Restructuring](#appd79608_453) | E-197 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.](#appd79608_454) | E-197 |
| [**8. State of Incorporation**](#appd79608_455) | E-198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting on State Takeover Statutes](#appd79608_456) | E-198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appd79608_457) | E-198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Offshore Reincorporations and Tax Havens](#appd79608_458) | E-198 |
| [**9. Corporate Responsibility & Accountability**](#appd79608_459) | E-200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Social, Environmental and Sustainability Issues](#appd79608_460) | E-200 |
| &nbsp;&nbsp;&nbsp;&nbsp;[I. GENERAL CSR RELATED](#appd79608_461) | E-201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Policy Review and Shareholder Advisory Committees](#appd79608_462) | E-201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [International Operations](#appd79608_463) | E-201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Affirm Political Non-Partisanship](#appd79608_464) | E-201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Contributions, Lobbying Reporting & Disclosure](#appd79608_465) | E-201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Military Sales](#appd79608_466) | E-202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Operations in Sensitive Regions or Countries](#appd79608_467) | E-202 |
| &nbsp;&nbsp;&nbsp;&nbsp;[II. ENVIRONMENT & CLIMATE CHANGE](#appd79608_468) | E-203 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenhouse Gas Emissions](#appd79608_469) | E-203 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appd79608_470) | E-204 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appd79608_471) | E-204 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment in Renewable Energy](#appd79608_472) | E-204 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sustainability Reporting and Planning](#appd79608_473) | E-205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in Protected or Sensitive Areas](#appd79608_474) | E-205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hydraulic Fracturing](#appd79608_475) | E-205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recycling Policy](#appd79608_476) | E-206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Endorsement of Ceres Roadmap 2030](#appd79608_477) | E-206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Land Use](#appd79608_478) | E-206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Water Use](#appd79608_479) | E-206 |
| &nbsp;&nbsp;&nbsp;&nbsp;[III. WORKPLACE PRACTICES & HUMAN RIGHTS](#appd79608_480) | E-207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equal Employment Opportunity](#appd79608_481) | E-207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [High-Performance Workplace](#appd79608_482) | E-207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Workplace Safety](#appd79608_483) | E-207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Discrimination in Retirement Benefits](#appd79608_484) | E-207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender, Race/Ethnicity Pay Gaps](#appd79608_485) | E-208 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial Equity and/or Civil Rights Audit Guidelines](#appd79608_486) | E-208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sexual Harassment](#appd79608_487) | E-208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mandatory Arbitration](#appd79608_488) | E-209 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Lending Reporting and Compliance](#appd79608_489) | E-209 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [MacBride Principles](#appd79608_490) | E-209 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Contract Supplier Standards](#appd79608_491) | E-209 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate and Supplier Codes of Conduct](#appd79608_492) | E-210 |
| &nbsp;&nbsp;&nbsp;&nbsp;[IV. CONSUMER HEALTH & PUBLIC SAFETY](#appd79608_493) | E-210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Phase-out or Label Products Containing Genetically Engineered Ingredients](#appd79608_494) | E-210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tobacco-Related Proposals](#appd79608_495) | E-211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Toxic Emissions](#appd79608_496) | E-211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Toxic Chemicals](#appd79608_497) | E-211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Nuclear Safety](#appd79608_498) | E-211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Concentrated Area Feeding Operations (CAFOs)](#appd79608_499) | E-212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pharmaceutical Product Reimportation](#appd79608_500) | E-212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pharmaceutical Product Pricing](#appd79608_501) | E-212 |

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## Taft-Hartley Advisory Services Proxy Voting Policy Statement and Guidelines
This statement sets forth the proxy voting policy of ISS' Taft-Hartley Advisory Services. The U.S. Department of Labor (DOL) has stated that the fiduciary act of managing plan assets that are shares of corporate stock includes the voting of proxies appurtenant to those shares of stock and that trustees may delegate this duty to an investment manager. ERISA section 3(38) defines an investment manager as any fiduciary who is registered as an investment adviser under the Investment Advisor Act of 1940. ISS is a registered investment adviser under the Investment Advisor Act of 1940.

Taft-Hartley Advisory Services will vote the proxies of its clients solely in the interest of their participants and beneficiaries and for the exclusive purpose of providing benefits to them. The interests of participants and beneficiaries will not be subordinated to unrelated objectives. Taft-Hartley Advisory Services shall act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. When proxies due to Taft-Hartley Advisory Services' clients have not been received, Taft-Hartley Advisory Services will make reasonable efforts to obtain missing proxies. Taft-Hartley Advisory Services is not responsible for voting proxies it does not receive.

Taft-Hartley Advisory Services shall analyze each proxy on a case-by-case basis, informed by the guidelines elaborated below, subject to the requirement that all votes shall be cast solely in the long-term interest of the participants and beneficiaries of the plans. Taft-Hartley Advisory Services does not intend for these guidelines to be exhaustive. Hundreds of issues appear on proxy ballots every year, and it is neither practical nor productive to fashion voting guidelines and policies which attempt to address every eventuality. Rather, Taft-Hartley Advisory Services' guidelines are intended to cover the most significant and frequent proxy issues that arise. Issues not covered by the guidelines shall be voted in the interest of plan participants and beneficiaries of the plan based on a worker-owner view of long-term corporate value. Taft-Hartley Advisory Services shall revise its guidelines as events warrant and will remain in conformity with the AFL-CIO proxy voting policy.

Taft-Hartley Advisory Services shall report annually to its clients on proxy votes cast on their behalf. These proxy voting reports will demonstrate Taft-Hartley Advisory Services' compliance with its responsibilities and will facilitate clients' monitoring of Taft-Hartley Advisory Services. A copy of this *Proxy Voting Policy Statement and Guidelines* is provided to each client at the time Taft-Hartley Advisory Services is retained. Taft-Hartley Advisory Services shall provide its clients with revised copies of this proxy voting policy statement and guidelines whenever significant revisions have been made.

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1. Director Elections

Electing directors is the single most important stock ownership right that shareholders can exercise. By electing directors who share their views, shareholders can help to define performance standards against which management can be held accountable. Taft-Hartley Advisory Services holds directors to a high standard when voting on their election, qualifications, and compensation. Taft-Hartley Advisory Services evaluates directors fairly and objectively, rewarding them for significant contributions and holding them ultimately accountable to shareholders for corporate performance. Institutional investors should use their voting rights in uncontested elections to influence financial performance and corporate strategies for achieving long term shareholder value.

Director accountability, independence and competence have become issues of prime importance to investors given the failings in oversight exposed by the global financial crisis. There is also concern over the environment in the boardrooms of certain markets, where past failures appear to be no impediment to continued or new appointments at major companies and may not be part of the evaluation process at companies in considering whether an individual is, or continues to be, fit for the role and best able to serve shareholders' interests.

Voting on Director Nominees in Uncontested Elections

Votes concerning the entire board of directors and members of key board committees are examined using the following factors:

Board Independence: Without independence from management, the board and/or its committees may be unwilling or unable to effectively set company strategy and scrutinize performance or executive compensation.

Board Competence: Companies should seek a diverse board of directors who can add value to the board through specific skills or expertise and who can devote sufficient time and commitment to serve effectively. While directors should not be constrained by arbitrary limits such as age or term limits, directors who are unable to attend board and committee meetings and/or who are overextended (i.e. serving on too many boards) raise concern on the director's ability to effectively serve in shareholders' best interests.

Board Accountability: Practices that promote accountability include: transparency into a company's governance practices, annual board elections, and providing shareholders the ability to remove problematic directors and to vote on takeover defenses or other charter/bylaw amendments. These practices help reduce the opportunity for management entrenchment.

Board Responsiveness: Directors should be responsive to shareholders, particularly in regard to shareholder proposals that receive a majority vote or management proposals that receive low shareholder support, and to tender offers where a majority of shares are tendered. Boards should also be sufficiently responsive to high withhold/against votes on directors. Furthermore, shareholders should expect directors to devote sufficient time and resources to oversight of the company.

Taft-Hartley Advisory Services Recommendation: Votes on individual director nominees are always made on a case-by-case basis. Specific director nominee withhold/against<sup>1</sup> votes can be triggered by one or more of the following factors:

Board Independence

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|:---|:---|
| § | Lack of a board that is at least two-thirds (67 percent) independent – i.e. where the composition of non-independent board members is in excess of 33 percent of the entire board;  |

---

<sup>1</sup> In general, companies with a plurality vote standard use "Withhold" as the valid contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.

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§ Lack of an independent board chair;

§ Lack of independence on key board committees (i.e. audit, compensation, and nominating committees); or

§ Failure to establish any key board committees (i.e. audit, compensation, or nominating committees).

Board Competence

§ Directors serving on an excessive number of other boards which could compromise their primary duties of care and loyalty; or

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| | |
|:---|:---|
| § | Attendance of director nominees at board and committee meetings of less than 75 percent in one year without valid reason or explanation.  |

---

In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

Gender Diversity

Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company's board. An exception will be made if there was at least one woman on the board at the preceding annual meeting and the board makes a firm commitment to return to a gender-diverse status within a year.

Racial and/or Ethnic Diversity

For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members**<sup>2</sup>**. An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or ethnic diverse member within a year.

Board Accountability

Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>3</sup>** considered on a case-by-case basis):

Problematic Takeover Defenses

§ The board lacks accountability and oversight due to the presence of problematic governance provisions, coupled with long-term poor corporate performance relative to peers;

---

| | |
|:---|:---|
| § | If the company has a classified board and a continuing director is responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote, in addition to potential future withhold/against votes on that director, Taft-Hartley Advisory Services may recommend votes against or withhold votes from any or all of the nominees up for election, with the exception of new nominees**<sup>3</sup>**; or  |

---

§ The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

<sup>2</sup> Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

<sup>3</sup> A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

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Restriction of Binding Shareholder Proposals

Vote against or withhold from members of the governance committee if:

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| | |
|:---|:---|
| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include, but are not limited to: outright prohibition on the submission of binding shareholder proposals, or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

---

Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the compensation committee and potentially the full board if:

§ There is an unmitigated misalignment between CEO pay and company performance (see Pay-for-Performance policy);

§ The company maintains problematic pay practices including options backdating, excessive perks and overly generous employment contracts etc.;

§ There is evidence that management/board members are using company stock in hedging activities;

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

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| | |
|:---|:---|
| § | Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.  |

---

Problematic Audit-Related Practices

Performance of audit committee members concerning the approval of excessive non-audit fees, material weaknesses, and/or the lack of auditor ratification upon the proxy ballot;

Vote against or withhold votes from the members of the audit committee when:

§ Consulting (i.e. non-audit) fees paid to the auditor are excessive;

§ Auditor ratification is not included on the proxy ballot;

§ The company receives an adverse opinion on the company's financial statements from its auditor;

§ There is evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm; or

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| | |
|:---|:---|
| § | Poor accounting practices such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures, exist. Poor accounting practices may warrant voting against or withholding votes from the full board.  |

---

Problematic Pledging of Company Stock

Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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| | |
|:---|:---|
| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

---

§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Unilateral Bylaw/Charter Amendments and Problematic Capital Structures

Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>3</sup>**, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against directors (except new nominees<sup>3</sup>, who should be considered case-by-case) if the board:

§ Classified the board;

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| | |
|:---|:---|
| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

---

§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a fee-shifting provision; or

§ Adopted another provision deemed egregious.

Problematic Governance Structure – Newly public companies

For companies that hold or held their first annual meeting**<sup>4</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>3</sup>**, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

---

| | |
|:---|:---|
| § | Supermajority vote requirements to amend the bylaws or charter;  |

---

§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

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Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

Unequal Voting Rights

Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees**<sup>3</sup>**, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>5</sup>**.

Exceptions to this policy will generally be limited to:

---

| | |
|:---|:---|
| § | Newly-public companies**<sup>4</sup>** with a sunset provision of no more than seven years from the date of going public;  |

---

§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

---

| | |
|:---|:---|
| § | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be *de minimis*; or  |

---

---

| | |
|:---|:---|
| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

---

Management Proposals to Ratify Existing Charter or Bylaw Provisions

Vote against or withhold from directors individually, governance committee members, or the entire board (except new nominees**<sup>3</sup>**, who should be considered case-by-case), where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Governance Failures

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

§ The presence of problematic governance practices including interlocking directorships, multiple related-party transactions, excessive risk-taking, imprudent use of corporate assets, etc.;

§ Inadequate CEO succession planning, including the absence of an emergency and non-emergency/orderly CEO succession plan;

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| | |
|:---|:---|
| § | Material failures of governance, stewardship, risk oversight**<sup>6</sup>**, or fiduciary responsibilities at the company, failure to replace management as appropriate, flagrant or egregious actions related to the director(s)' service on other boards  |

---

<sup>4</sup> Newly-public companies generally include companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

**<sup>5</sup>** This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

<sup>6</sup> Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant adverse legal judgments or settlements; or hedging of company stock.

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that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company; or

§ Chapter 7 bankruptcy, Securities & Exchange Commission (SEC) violations or fines, and criminal investigations by the Department of Justice (DOJ), Government Accounting Office (GAO) or any other federal agency.

Climate Accountability

For companies that are significant greenhouse gas (GHG) emitters, through their operations or value chain**<sup>7</sup>**, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where Taft-Hartley Advisory Services determines that the company is not taking the minimum steps needed to understand, assess, and mitigate risks related to climate change to the company and the larger economy.

Minimum steps to understand and mitigate those risks are considered to be the following. Both minimum criteria will be required to be in alignment with the policy:

§ Detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

§ Board governance measures;

§ Corporate strategy;

§ Risk management analyses; and

§ Metrics and targets.

§ Appropriate GHG emissions reduction targets.

At this time, "appropriate GHG emissions reductions targets" will be medium-term GHG reduction targets or Net Zero-by-2050 GHG reduction targets for a company's operations (Scope 1) and electricity use (Scope 2). Targets should cover the vast majority of the company's direct emissions.

Board Responsiveness

Vote against or withhold from individual directors, committee members, or the entire board of directors as appropriate if:

---

| | |
|:---|:---|
| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the underlying issue(s) that caused the high withhold/against votes;  |

---

§ The board failed to act on takeover offers where the majority of the shareholders tendered their shares; or

§ The board failed to act on a shareholder proposal that received approval by a majority of the shares cast the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year.

Vote case-by-case on compensation committee members (or, potentially, the full board) and the Say-on-Pay proposal if:

§ The company's previous say-on-pay proposal received low levels of investor support, taking into account:

---

| | |
|:---|:---|
| § | The company's response, including: a) disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated); b) disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition; c) disclosure of specific and meaningful actions taken to address shareholders' concerns; d) other recent compensation actions taken by the company;  |

---

§ Whether the issues raised are recurring or isolated;

<sup>7</sup> Companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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§ The company's ownership structure; and

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| | |
|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

---

---

| | |
|:---|:---|
| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

---

Discussion

Independence

Board independence from management is of vital importance to a company and its shareholders. Accordingly, Taft-Hartley Advisory Services believes votes should be cast in a manner that will encourage the independence of boards. Independence will be evaluated based upon a number of factors, including: employment by the company or an affiliate in an executive capacity; tenure on the board, past or current employment by a firm that is one of the company's paid advisors or consultants; a personal services contract with the company; family relationships of an executive or director of the company; interlocks with other companies on which the company's chair or chief executive officer is also a board member; and service with a non-profit organization that receives significant contributions from the company.

Taft-Hartley Advisory Services Recommendation:

---

| | |
|:---|:---|
| § | Generally vote against or withhold votes from non-independent director nominees (executive directors and non-independent, non-executive directors) where the entire board is not at least two-thirds (67 percent) independent.  |

---

---

| | |
|:---|:---|
| § | Generally vote against or withhold votes from non-independent director nominees when the nominating, compensation and audit committees are not fully independent.  |

---

§ Generally consider directors who have been on the board continually for a period longer than 10 years as non-independent, non-executive directors.

---

| | |
|:---|:---|
| § | Vote for shareholder proposals requesting that all key board committees (i.e. audit, compensation and/or nominating) include independent directors exclusively.  |

---

---

| | |
|:---|:---|
| § | Vote for shareholder proposals requesting that the board be comprised of a two-thirds majority of independent directors.  |

---

Non-Independent Chair

Two major components at the top of every public company are the running of the board and the executive responsibility for the running of the company's business. Many institutional investors believe there should be a clear division of responsibilities at the head of the company that will ensure a balance of power and authority, such that no one individual has unfettered powers of decision. When there is no clear division between the executive and board branches of a company, poor executive and/or board actions often go unchecked to the ultimate detriment of shareholders. Since executive compensation is so heavily correlated to the managerial power relationship in the boardroom, the separation of the CEO and chair positions is a critical step in curtailing excessive pay, which ultimately can become a drain on shareholder value.

Arguments have been made that a smaller company and its shareholders can benefit from the full-time attention of a joint chair and CEO. This may be so in select cases, and indeed, using a case-by-case review of circumstances there may be worthy exceptions. But, even in these cases, it is the general view of many institutions that a person should only serve in the position of joint CEO and chair on a temporary basis, and that these positions should be separated following their provisional combination.

Taft-Hartley Advisory Services strongly believes that the potential for conflicts of interest in the board's supervisory and oversight duties trumps any possible corollary benefits that could ensue from a dual CEO/chair scenario. Instead of having an ingrained quid pro quo situation whereby a company has a single leader overseeing both management and the boardroom, Taft-Hartley fiduciaries believe that it is the board's implicit duty to assume an impartial and objective role in overseeing the executive team's overall performance. Shareholder interests are placed in jeopardy if the CEO of a company is required to report to a board that she/he also chairs.

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Inherent in the chair's job description is the duty to assess the CEO's performance. This objectivity is obviously compromised when a chair is in charge of evaluating her/his own performance or has a past or present affiliation with management. Moreover, the unification of chair and CEO poses a direct threat to the smooth functioning of the entire board process since it is the ultimate responsibility of the chair to set the agenda, facilitate discussion, and make sure that directors are given complete access to information in order to make informed decisions.

Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote against or withhold votes from any non-independent director who serves as board chair.  |

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| § | Generally vote against or withhold votes from a CEO who is also serving in the role of chair at the same company.  |

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§ Generally support shareholder proposals calling for the separation of the CEO and chair positions.

§ Generally support shareholder proposals calling for a non-executive director to serve as chair who is not a former CEO or senior-level executive of the company.

Competence

Excessive Directorships

As new regulations mandate that directors be more engaged and vigilant in protecting shareholder interests or else risk civil and/or criminal sanctions, board members have to devote more time and effort to their oversight duties. Recent surveys of U.S. directors confirm a desire for limiting board memberships, to between three and five seats. In view of the increased demands placed on corporate board members, Taft-Hartley fiduciaries believe that directors who are overextended may be impairing their ability to serve as effective representatives of shareholders. Taft-Hartley Advisory Services will recommend a vote against or withhold from directors serving on an excessive number of other boards, which could compromise their primary duties of care and loyalty.

Taft-Hartley Advisory Services Recommendation: Generally vote against or withhold votes from directors serving on an excessive number of boards. As a general rule, vote against or withhold from director nominees who are:

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| § | CEOs of publicly-traded companies who serve on more than one public board besides their own. NOTE: Taft-Hartley Advisory Services will recommend a vote against or withhold from overboarded CEO directors only at their outside directorships**<sup>8</sup>** and not at the company in which they presently serve as CEO; or  |

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§ Non-CEO directors who serve on more than four public company boards.

Accountability

Director Performance Evaluation

Many institutional investors believe long-term financial performance and the appropriateness of governance practices should be taken into consideration when determining vote recommendations with regard to directors in uncontested elections. When evaluating whether to vote against or withhold votes from director nominees, Taft-Hartley Advisory Services will evaluate underperforming companies that exhibit sustained poor performance as measured by total returns to shareholders over a one-, three-, and five-year period.

Taft-Hartley Advisory Services views deficient oversight mechanisms and the lack of board accountability to shareholders especially in the context of sustained poor performance, as problematic. As part of the framework for assessing director

<sup>8</sup> Although all of a CEO's subsidiary boards with publicly-traded common stock will be counted as separate boards, Taft-Hartley Advisory Services will not recommend a withhold/against vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent, but will do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

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performance, Taft-Hartley Advisory Services will also evaluate board accountability and oversight at companies that demonstrate sustained underperformance. A governance structure that discourages director accountability may lead to board and management entrenchment. For example, the existence of several anti-takeover provisions\* has the cumulative effect of deterring legitimate tender offers, mergers, and corporate transactions that may have ultimately proved beneficial to shareholders. When a company maintains entrenchment devices, shareholders of poorly performing companies are left with few effective routes to beneficial change.

Taft-Hartley Advisory Services will assess the company's response to the ongoing performance issues, and consider recent board and management changes, board independence, overall governance practices, and other factors that may have an impact on shareholders. If a company exhibits sustained poor performance coupled with a lack of board accountability and oversight, Taft-Hartley Advisory Services' evaluation may also consider the company's operational metrics and other factors as warranted.

\*Problematic provisions include but are not limited to:

§ A classified board structure;

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| § | A supermajority vote requirement;  |

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| § | Either a plurality vote standard in uncontested director elections or a majority vote standard with no plurality carve-out for contested elections;  |

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§ The inability for shareholders to call special meetings;

§ The inability for shareholders to act by written consent;

§ A multi-class structure; and/or

§ A non-shareholder approved poison pill.

Taft-Hartley Advisory Services Recommendation: Vote against or withhold votes from all director nominees if the board lacks accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Sustained poor performance for companies outside the Russell 3000 universe is defined as underperforming peers or index on the basis of one-, three-, and five-year total shareholder returns.

Classified Boards ~ Annual Elections

The ability to elect directors is the single most important use of the shareholder franchise, and all directors should be accountable on an annual basis. Annually elected boards provide the best governance system for accountability to shareholders. A classified board is a board that is divided into separate classes, with directors serving overlapping terms. A company with a classified board usually divides the board into three classes. Under this system, only one class of nominees comes up to shareholder vote at the AGM each year.

As a consequence of these staggered terms, shareholders only have the opportunity to vote on a single director approximately once every three years. A classified board makes it difficult to change control of the board through a proxy contest since it would normally take two years to gain control of a majority of board seats. Under a classified board, the possibility of management entrenchment greatly increases. Classified boards can reduce director accountability by shielding directors, at least for a certain period of time, from the consequences of their actions. Continuing directors who are responsible for a problematic governance issue at the board/committee level would avoid shareholders' reactions to their actions because they would not be up for election in that year. Ultimately, in these cases, the full board should be responsible for the actions of its directors.

Many in management believe that staggered boards provide continuity. Some shareholders believe that in certain cases a staggered board can provide consistency and continuity in regard to decision-making and commitment that may be important to the long-term financial future of the company. Nevertheless, empirical evidence strongly suggests that staggered boards are generally not in the shareholders' best interest. In addition to shielding directors from being held

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accountable by shareholders on an annual basis, a classified board can entrench management and effectively preclude most takeover bids or proxy contests.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against management or shareholder proposals seeking to classify the board when the issue comes up for vote.  |

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| § | Vote for management or shareholder proposals to repeal a company's classified board structure.  |

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| § | If the company has a classified board and a continuing director is responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote, in addition to potential future withhold/against votes on that director, Taft-Hartley Advisory Services may vote against or withhold votes from any or all of the nominees up for election, with the exception of new nominees3.  |

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Shareholder Rights Plan (i.e. Poison Pills)

Institutional investors view shareholder rights plans, or poison pills, as among the most onerous of takeover defenses that may serve to entrench management and have a detrimental impact on their long-term share value. While recognizing that boards have a fiduciary duty to use all available means to protect shareholders' interests, as a best governance principle, boards should seek shareholder ratification of a poison pill (or an amendment thereof) within a reasonable period, to ensure that the features of the poison pill support the interests of shareholders and do not merely serve as a management entrenchment device. Boards that fail to do so should be held accountable for ultimately disregarding shareholders' interests. In applying this principle to voting in uncontested director elections, Taft-Hartley Advisory Services considers the term of the pill an important factor, as shorter-term pills are generally less onerous as a takeover defense when compared to longer term pills, and may in some cases provide the board with a valuable tool to maximize shareholder value in the event of an opportunistic offer.

Taft-Hartley Advisory Services Recommendation:

Generally vote against or withhold votes from all nominees (except new nominees3, who should be considered on a case-by-case basis) if;

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| § | The company has a poison pill (with a term of over one year) that was not approved by shareholders**<sup>9</sup>**;  |

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§ The board makes a material adverse change to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

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| § | The company has a poison pill with a deadhand or slowhand feature**<sup>10</sup>**.  |

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Vote case-by-case on nominees if the board adopts an initial short-term pill**<sup>10</sup>** (with a term of one year or less) without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

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| § | A commitment to put any renewal to a shareholder vote; and  |

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§ Other factors as relevant.

<sup>9</sup> Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

<sup>10</sup> If a short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, Taft-Hartley Advisory Services will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

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Responsiveness

Failure to Act on Shareholder Proposals Receiving Majority Support

Majority-supported proposals represent a request for action (usually the removal of an anti-takeover mechanism) by shareholder proponents. Because they are non-binding or precatory in nature, boards may easily disregard them, forcing proponents to either repeat their submissions, take alternative actions, or withdraw their offer altogether.

Taft-Hartley Advisory Services Recommendation: Generally vote against or withhold from all director nominees at a company that has ignored a shareholder proposal that was approved by a majority of the votes cast at the last annual meeting.

Other Board-Related Proposals

Director Diversity

Gender and ethnic diversity are important components on a company's board. Diversity brings different perspectives to a board that in turn leads to a more varied approach to board issues. Taft-Hartley fiduciaries generally believe that increasing diversity in the boardroom would better reflect a company's workforce, customers, and community and enhance shareholder value.

Taft-Hartley Advisory Services Recommendation:

§ Support proposals asking the board to make greater efforts to search for qualified female and minority candidates for nomination to the board of directors.

§ Support endorsement of a policy of board inclusiveness.

§ Support reporting to shareholders on a company's efforts to increase diversity on their boards.

Stock Ownership Requirements

Corporate directors should own some amount of stock of the companies on which they serve as board members. Stock ownership is a simple method to align the interests of directors with company shareholders. Nevertheless, many highly qualified individuals such as academics and clergy who can offer valuable perspectives in boardrooms may be unable to purchase individual shares of stock. In such a circumstance, the preferred solution is to look at the board nominees individually and take stock ownership into consideration when voting on the merits of each candidate.

Taft-Hartley Advisory Services Recommendation: Vote against shareholder proposals requiring directors to own a minimum amount of company stock in order to qualify as a director nominee or to remain on the board.

Board and Committee Size

While there is no hard and fast rule among institutional investors as to what may be an optimal board size, there is an acceptable range that companies should strive to meet and not exceed. A board that is too large may function inefficiently. Conversely, a board that is too small may allow the CEO to exert disproportionate influence or may stretch the time requirements of individual directors too thin.

Proposals seeking to set board size will be evaluated on a case-by-case basis. Given that the preponderance of boards in the U.S. range between five and fifteen directors, many institutional investors believe this benchmark is a useful standard for evaluating such proposals.

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Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote against any proposal seeking to amend the company's board size to fewer than five seats.  |

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| § | Generally vote against any proposal seeking to amend the company's board size to more than fifteen seats;  |

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| § | Evaluate board size on a case-by-case basis and consider withhold or against votes or other action at companies that have fewer than five directors and more than 15 directors on their board.  |

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Limit Term of Office

Those who support term limits argue that this requirement would bring new ideas and approaches on to a board. While term of office limitations can rid the board of non-performing directors over time, it can also unfairly force experienced and effective directors off the board. When evaluating shareholder proposals on director term limits, consider whether the company's performance has been poor and whether problematic or entrenching governance provisions are in place at the company. Additionally, consider board independence, including whether the board chair is independent.

Taft-Hartley Advisory Services Recommendation: Generally vote against shareholder proposals to limit the tenure of outside directors.

Cumulative Voting

Most corporations provide that shareholders are entitled to cast one vote for each share owned. Under a cumulative voting scheme, the shareholder is permitted to have one vote per share for each director to be elected. Shareholders are permitted to apportion those votes in any manner they wish among the director candidates. Thus, under a cumulative voting scheme, shareholders have the opportunity to elect a minority representative to a board by cumulating their votes, thereby ensuring minority representation for all sizes of shareholders.

For example, if there is a company with a ten-member board and 500 shares outstanding-the total number of votes that may be cast is 5,000. In this case a shareholder with 51 shares (10.2 percent of the outstanding shares) would be guaranteed one board seat because all votes may be cast for one candidate. Without cumulative voting, anyone controlling 51 percent of shares would control the election of all ten directors.

With the advent and prevalence of majority voting for director elections, shareholders now have greater flexibility in supporting candidates for a company's board of directors. Cumulative voting and majority voting are two different voting mechanisms designed to achieve two different outcomes. While cumulative voting promotes the interests of minority shareholders by allowing them to get some representation on the board, majority voting promotes a democratic election of directors for all shareholders and ensures board accountability in uncontested elections. Though different in philosophic view, cumulative voting and majority voting can work together operationally, with companies electing to use majority voting for uncontested elections and cumulative voting for contested elections to increase accountability and ensure minority representation on the board.

In contested elections, similar to cumulative voting, proxy access allows shareholder access to the ballot without a veto from the nominating committee, but unlike cumulative voting, it also requires majority support to elect such directors.

At controlled companies, where majority insider control would preclude minority shareholders from having any representation on the board, cumulative voting would allow such representation and shareholder proposals for cumulative voting would be supported.

Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote against proposals to eliminate cumulative voting;  |

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| § | Generally vote for proposals to restore or provide for cumulative voting unless:  |

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§ The company has proxy access thereby allowing shareholders to nominate directors to the company's ballot; and

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| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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| § | Vote for proposals for cumulative voting at controlled companies (where insider voting power exceeds 50%).  |

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Majority Threshold Voting Requirement for Director Elections

Shareholders have expressed strong support for precatory resolutions on majority threshold voting since 2005, with a number of proposals receiving majority support from shareholders. Taft-Hartley fiduciaries believe shareholders should have a greater voice in regard to the election of directors and view majority threshold voting as a viable alternative to the current deficiencies of the plurality system in the U.S.

Taft-Hartley Advisory Services Recommendation:

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| § | Generally support reasonably crafted shareholders proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of the plurality standard for electing directors (including binding resolutions requesting that the board amend the company's bylaws), provided the proposal includes a carve-out for a plurality voting standard when there are more director nominees than board seats (e.g. in contested elections).  |

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| § | Taft-Hartley Advisory Services may recommend a vote against or withhold votes from members of the board at companies without the carve-out for plurality voting in contested elections, as the use of a majority vote standard can act as an anti-takeover defense in contested elections. (e.g. although the dissident nominees may have received more shares cast, as long as the combination of withhold/against votes and the votes for the management nominees keep the dissident nominees under 50%, the management nominees will win, due to the holdover rules). This clearly contradicts the expressed will of shareholders.  |

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| § | In addition to supporting proposals seeking a majority vote standard in director elections, Taft-Hartley Advisory Services also support a post-election "director resignation policy" that addresses the situation of holdover directors to accommodate both shareholder proposals and the need for stability and continuity of the board.  |

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Proxy Access

The current director election process as it exists leaves much to be desired. Companies currently nominate for election only one candidate for each board seat. Shareholders who oppose a candidate have no easy way to do so unless they are willing to undertake the considerable expense of running an independent candidate for the board. The only way for shareholders to register dissent about a certain director candidate is to vote against or "withhold" support from that nominee. But because directors are still largely elected by a plurality (those nominees receiving the most votes win board seats) at a large proportion of firms in the U.S., nominees running unopposed are typically reelected despite shareholder opposition.

Many investors view proxy access as an important shareholder right, one that is complementary to other best-practice corporate governance features. Taft-Hartley Advisory Services is generally supportive of reasonably crafted shareholder proposals advocating for the ability of long-term shareholders to cost-effectively nominate director candidates that represent their interests on management's proxy card. Shareholder proposals that have the potential to result in abuse of the proxy access right by way of facilitating hostile takeovers will generally not be supported.

Taft-Hartley Advisory Services Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions:

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| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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| § | Cap: cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access.

Generally vote against proposals that are more restrictive than these guidelines.

CEO Succession Planning

Taft-Hartley Advisory Services Recommendation: Vote for proposals seeking disclosure on a CEO succession planning policy.

Establish an Office of the Board

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholders proposals requesting that the board establish an *Office of the Board of Directors* in order to facilitate direct communication between shareholders and non-management directors, unless the company has effectively demonstrated via public disclosure that it already has an established structure in place.

Director and Officer Liability Protection and Exculpation

Management proposals typically seek shareholder approval to adopt an amendment to the company's charter to eliminate or limit the personal liability of directors to the company and its shareholders for monetary damages for any breach of fiduciary duty to the fullest extent permitted by state law. Charter amendments may also include limited liability wherein a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff. In contrast, shareholder proposals seek to provide for personal monetary liability for fiduciary breaches arising from gross negligence.

Taft-Hartley Advisory Services may support these proposals when the company persuasively argues that such action is necessary to attract and retain directors but will likely oppose management proposals and support shareholder proposals in order to promote greater accountability.

Taft-Hartley Advisory Services Recommendation: Vote case-by-case, considering the stated rationale for the proposed change, on proposals to limit or eliminate entirely director and officer liability in regard to: (i) breach of the director's fiduciary "duty of loyalty" and "duty of care" to shareholders; (ii) acts or omissions not made in "good faith" or involving intentional misconduct or knowledge of violations under the law; (iii) acts involving the unlawful purchases or redemptions of stock; (iv) payment of unlawful dividends; or (v) use of the position as director for receipt of improper personal benefits.

Director and Officer Indemnification

Indemnification is the payment by a company of the expenses of directors who become involved in litigation as a result of their service to a company. Proposals to indemnify a company's directors differ from those to eliminate or reduce their liability because with indemnification directors may still be liable for an act or omission, but the company will bear the expense. Taft-Hartley fiduciaries may support these proposals when the company persuasively argues that such action is necessary to attract and retain directors, but should generally oppose indemnification when it is being proposed to insulate directors from actions that have already occurred.

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Taft-Hartley Advisory Services Recommendation:

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| § | Vote case-by-case, considering the stated rationale for the proposed change, on indemnification proposals that would expand individual coverage beyond ordinary legal expenses to also cover specific acts of negligence that are more serious violations of fiduciary obligation than mere carelessness.  |

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| § | Vote case-by-case, considering the stated rationale for the proposed change, on proposals that would expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for at the discretion of the company's board (i.e., "permissive indemnification") but that previously the company was not required to indemnify.  |

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| § | Vote for those proposals which provide expanded coverage in cases when a director's or officer's legal defense was unsuccessful if: (1) the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and (2) only if the individual's legal expenses would be covered.  |

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Proxy Contests/Proxy Access — Voting for Director Nominees in Contested Elections

Contested elections of directors frequently occur when a board candidate or "dissident slate" seeks election for the purpose of achieving a significant change in corporate policy or control of seats on the board. Competing slates will be evaluated on a case-by-case basis with a number of considerations in mind. These include, but are not limited to, the following: personal qualifications of each candidate; the economic impact of the policies advanced by the dissident slate of nominees; and their expressed and demonstrated commitment to the interests of the shareholders of the company.

Taft-Hartley Advisory Services Recommendation: Votes in a contested election of directors are evaluated on a case-by-case basis with the following seven factors in consideration:

§ Long-term financial performance of the company relative to its industry;

§ Management's track record;

§ Background to the contested election;

§ Nominee qualifications and any compensatory arrangements;

§ Strategic plan of dissident slate and quality of critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates); and

§ Stock ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether there are more candidates than board seats).

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2. Compensation

The housing market collapse and resulting credit crisis resulted in significant erosion of shareholder value, unprecedented levels of market volatility, and a lack of confidence among financial market participants. Many Taft-Hartley trustees have questioned the role of executive compensation in incentivizing inappropriate or excessive risk-taking behavior by executives that could threaten a corporation's long-term viability. Further, generous severance packages and other payments to departing executives of failed institutions have heightened attention on the issue of pay for performance.

Trustees of Taft-Hartley funds, which have lost significant value in their investments as a result of the financial crisis, have little patience for "pay for failure" and continue to press for the adoption of executive compensation practices aimed at creating and sustaining long-term shareholder value.

Companies have long argued that legally binding executive compensation obligations cannot be modified. The Capital Purchase Program implemented under the Emergency Economic Stabilization Act of 2008, the "bail out" program for the U.S. financial system, set the tone for executive compensation reform and requires participating firms to accept certain limits and requirements on executive compensation, regardless of existing contractual arrangements. A number of firms agreed to these requirements.

Evolving disclosure requirements have opened a wider window into compensation practices and processes, giving shareholders more opportunity and responsibility to ensure that pay is designed to create and sustain shareholder value. Companies in the U.S. are now required to evaluate and discuss potential risks arising from misguided or misaligned compensation programs. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires advisory shareholder votes on executive compensation (management "Say on Pay"), an advisory vote on the frequency of Say on Pay, as well as a shareholder advisory vote on golden parachute compensation. The advent of "Say on Pay" votes for shareholders in the U.S. has provided a new communication mechanism and impetus for constructive engagement between shareholders and managers/directors on pay issues.

Evaluation of Executive Pay

Taft-Hartley Advisory Services believes that executive pay programs should be fair, competitive, reasonable, and appropriate, and that pay for performance should be a central tenet in executive compensation philosophy. When evaluating executive and director pay programs and practices, Taft-Hartley Advisory Services looks for the following best practice considerations in the design and administration of executive compensation programs:

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| § | **Appropriate pay-for-performance alignment with emphasis on long-term shareholder value:** executive pay practices must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. Evaluating appropriate alignment of pay incentives with shareholder value creation includes taking into consideration, among other factors, the link between pay and performance, the mix between fixed and variable pay, performance goals, and equity-based plan costs.  |

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| § | **Avoiding arrangements that risk "pay for failure":** this includes assessing the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation.  |

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| § | **Independent and effective compensation committee:** oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed) should be promoted.  |

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| § | **Clear, comprehensive compensation disclosures:** shareholders expect companies to provide informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly.  |

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| § | **Avoiding inappropriate pay to non-executive directors:** compensation to outside directors should not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance.  |

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Examples of best pay practices include:

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| § | *Employment contracts:* Companies should enter into employment contracts under limited circumstances for a short time period (e.g., new executive hires for a three-year contract) for limited executives. The contracts should not have automatic renewal feature and should have a specified termination date.  |

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| § | *Severance agreements:* Severance provisions should not be so appealing that they become an incentive for the executive to be terminated. The severance formula should be reasonable and not overly generous to the executive (e.g., use a reasonable severance multiple; use pro-rated target/average historical bonus and not maximum bonus). Failure to renew employment contract, termination under questionable events or for poor performance should not constitute "good reason" for termination with severance payments.  |

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| § | *Change-in-control payments:* Change-in-control payments should be "double-triggered" – i.e. payouts should only be made when there is a significant change in company ownership structure, and when there is a loss of employment or substantial change in job duties associated with the change in company ownership structure. Change-in-control provisions should exclude excise tax gross-ups and should not authorize the acceleration of vesting of equity awards upon a change in control unless provided under a double-trigger scenario. Similarly, change in control provisions in equity plans should be double-triggered. A change in control event should not result in an acceleration of vesting of all unvested stock options or lapsing of vesting/performance requirements on restricted stock/performance shares, unless there is a loss of employment or substantial change in job duties.  |

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| § | *Supplemental executive retirement plans (SERPs):* SERPs should not include sweeteners that can increase the payout value significantly or even exponentially, such as additional years of service credited for pension calculations, or inclusion of variable pay (e.g. bonuses and equity awards) into the formula. Pension formulas should not include extraordinary annual bonuses paid close to the time of retirement and should be based on an average, not the maximum, level of compensation earned.  |

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§ *Deferred compensation:* Above-market returns or guaranteed minimum returns should not be applied on deferred compensation.

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| § | *Disclosure practices:* The Compensation, Discussion and Analysis should be written in plain English, with as little "legalese" as possible and formatted using section headers, bulleted lists, tables and charts where possible to ease reader comprehension. Ultimately, the document should provide detail and rationale regarding compensation, strategy, pay mix, goals/metrics, challenges, competition and pay for performance linkage, etc. in a narrative fashion.  |

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| § | *Responsible use of company stock:* Companies should adopt policies that prohibit executives from speculating in company's stock or using company stock in hedging activities, such as "cashless" collars, forward sales, equity swaps or other similar arrangements. Such behavior undermines the ultimate alignment with long-term shareholders' interests. In addition, the policy should prohibit or discourage the use of company stock as collateral for margin loans, to avoid any potential sudden stock sales (required upon margin calls) that could have a negative impact on the company's stock price.  |

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| § | *Long-term focus:* Executive compensation programs should be designed to support companies' long-term strategic goals. A short-term focus on performance does not necessarily create sustainable shareholder value. Instead, long-term goals may be sacrificed to achieve short-term expectations to the detriment of shareholder value, as evidenced by the financial crisis.  |

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| § | Compensation programs embedding a long-term focus with respect to company goals better align with the long-term interests of shareholders. Granting stock options and restricted stock to executives that vest in five years does not necessarily provide a long-term focus, as executives can sell off the company shares once they vest. However, requiring senior executives to hold company stock until retirement or after retirement can encourage a long-term focus on company performance.  |

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Pay-For-Performance Evaluation

Stock-based pay is often the main driver for excessive executive compensation, which could be fueled by poor plan design or administration. Therefore, it is important to closely examine any discrepancies between CEO pay and total shareholder returns over a sustained period of time in assessing equity-based compensation. Many investors do not consider standard stock options or time-vested restricted stock to be performance-based. If a company provides performance-based incentives to its executives, the company should provide complete disclosure of the performance measures and goals to

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allow shareholders to assess the rigor of the performance program. Complete and transparent disclosure enables shareholders to better comprehend the company's pay for performance linkage.

When financial or operational measures are utilized in incentive awards, the achievements related to these measures should ultimately translate into superior shareholder returns in the long-term. The use of non-GAAP financial metrics makes it very challenging for shareholders to ascertain the rigor of the program as shareholders often cannot tell the type of adjustments being made and if the adjustments were made consistently.

Pay-for-performance should be a central tenet in executive compensation philosophy. In evaluating the degree of alignment between the CEO's pay with the company's performance over a sustained period, Taft-Hartley Advisory Services conducts a pay-for-performance analysis.

With respect to companies in the Russell 3000 or Russell 3000E Indices**<sup>11</sup>**, this analysis considers the following:

1. Peer Group **<sup>12</sup>** Alignment:

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| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period.  |

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| § | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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| § | The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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2. Absolute Alignment **<sup>13</sup>** – the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, misaligned pay and performance are otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to evaluating how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance- to time-based incentive awards;

§ The overall ratio of performance-based compensation;

§ The completeness of disclosure and rigor of performance goals;

§ The company's peer group benchmarking practices;

§ Actual results of financial/operational metrics, both absolute and relative to peers;

§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

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| § | Realizable pay**<sup>14</sup>** compared to grant pay; and  |

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§ Any other factors deemed relevant.

Problematic Compensation Practices

Poor disclosure, the absence or non-transparency of disclosure and flawed compensation plan design can lead to excessive executive pay practices that are detrimental to shareholders.

<sup>11</sup> The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

<sup>12</sup> The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market cap bucket that is reflective of the company's. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

<sup>13</sup> Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

<sup>14</sup> Taft-Hartley Advisory Services research reports include realizable pay for S&P1500 companies.

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Companies are expected to meet a minimum standard of tally sheet disclosure as to allow shareholders to readily assess the total executive pay package, understand the actual linkage between pay and performance, and mitigate misinformation to shareholders. The SEC has issued rules on executive and director compensation that require expansive disclosure and a total compensation figure for each of the named executive officers. Poorly designed executive compensation plans or those lacking in transparency can be reflective of a poorly performing compensation committee.

Executive compensation will continue to be in the spotlight in the ensuing years, particularly when shareholders are expected to have access to more complete information.

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene best practice compensation considerations, including:

§ Problematic practices related to non-performance-based compensation elements;

§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

While not exhaustive, the following list represents certain adverse practices that carry significant weight in this overall consideration, and may lead to negative vote recommendations:

§ Egregious employment contracts:

§ Contracts containing multi-year guarantees for salary increases, non-performance based bonuses, and equity compensation;

§ New CEO with overly generous new-hire package:

§ Excessive "make whole" provisions without sufficient rationale;

§ Any of the problematic pay practices listed in this policy;

§ Abnormally large bonus payouts without justifiable performance linkage or proper disclosure:

§ Includes performance metrics that are changed, canceled, or replaced during the performance period without adequate explanation of the action and the link to performance;

§ Egregious pension/SERP (supplemental executive retirement plan) payouts:

§ Inclusion of additional years of service not worked that result in significant benefits provided in new arrangements;

§ Inclusion of performance-based equity or other long-term awards in the pension calculation;

§ Excessive Perquisites:

§ Perquisites for former and/or retired executives, such as lifetime benefits, car allowances, personal use of corporate aircraft, or other inappropriate arrangements;

§ Extraordinary relocation benefits (including home buyouts);

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| § | Excessive amounts of perquisites compensation;  |

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§ Excessive severance and/or change in control provisions:

§ Change in control cash payments exceeding 3 times base salary plus target/average/last paid bonus;

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| § | Arrangements that provide for change-in-control payments without loss of job or substantial diminution of job duties (single-triggered or modified single-triggered - where an executive may voluntarily leave for any reason and still receive the change-in-control severance package) or in connection with a problematic Good Reason definition;  |

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§ Employment or severance agreements that provide for excise tax gross-ups. Modified gross-ups would be treated in the same manner as full gross-ups;

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§ Excessive payments upon an executive's termination in connection with performance failure;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason); and

§ Liberal change in control definition in individual contracts or equity plans which could result in payments to executives without an actual change in control occurring;

§ Tax Reimbursements/Gross-ups: income tax reimbursements on executive perquisites or other payments (e.g., related to personal use of corporate aircraft, executive life insurance, bonus, restricted stock vesting, secular trusts, etc.; see also excise tax gross-ups above);

§ Dividends or dividend equivalents paid on unvested performance shares or units;

§ Executives using company stock in hedging activities, such as "cashless" collars, forward sales, equity swaps, or other similar arrangements;

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| § | Internal pay disparity: Excessive differential between CEO total pay and that of next highest-paid named executive officer (NEO);  |

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§ Repricing or replacing of underwater stock options/stock appreciation rights (SARs) without prior shareholder approval (including cash buyouts, option exchanges, and certain voluntary surrender of underwater options where shares surrendered may subsequently be re-granted);

§ Options backdating;

§ Insufficient executive compensation disclosure by externally- managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible; and

§ Other pay practices that may be deemed problematic in a given circumstance but are not covered in the above categories.

Incentives that may Motivate Excessive Risk-Taking

Assess company policies and disclosure related to compensation that could incentivize excessive risk-taking, for example:

§ Guaranteed bonuses or other abnormally large bonus payouts without justifiable performance linkage or appropriate disclosure;

§ Mega annual equity grants that provide unlimited upside with no downside risk;

§ A single performance metric used for short- and long-term plans;

§ High pay opportunities relative to industry peers;

§ Disproportionate supplemental pensions; or

§ Lucrative severance packages.

Factors that potentially mitigate the impact of risky incentives include rigorous claw-back provisions, robust stock ownership/holding guidelines, and substantive bonus deferral/escrowing programs.

Options Backdating

Options backdating has serious implications and has resulted in financial restatements, delisting of companies, and/or the termination of executives or directors. Taft-Hartley Advisory Services will adopt a case-by-case approach to differentiate companies that had sloppy administration vs. deliberate action or fraud, as well as those companies which have since taken corrective action. Instances in which companies have committed fraud are considered most egregious, and Taft-Hartley Advisory Services will look to them to adopt formal policies to ensure that such practices will not re-occur in the future.

Taft-Hartley Advisory Services will consider several factors, including, but not limited to, the following:

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

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§ Corrective actions taken by the board or compensation committee, such as canceling or repricing backdated options, or recoupment of option gains on backdated grants; and

§ Adoption of a grant policy that prohibits backdating, and creation of a fixed grant schedule or window period for equity grants going forward.

Compensation Committee Communications and Responsiveness

Consider the following factors when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

§ Failure to adequately respond to the company's previous say-on-pay proposal that received a low level of shareholder support, taking into account:

§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Advisory Votes on Executive Compensation – Management Say-on-Pay Proposals

The Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010 mandates advisory votes on executive compensation (aka management "say on pay" or MSOP) for a proxy or consent or authorization for an annual or other meeting of the shareholders that includes required SEC compensation disclosures. This non-binding shareholder vote on compensation must be included in a proxy or consent or authorization at least once every 3 years.

In general, the management say on pay (MSOP) ballot item is the primary focus of voting on executive pay practices – dissatisfaction with compensation practices can be expressed by voting against MSOP rather than voting against or withhold from the compensation committee. However, if there is no MSOP on the ballot, then the negative vote will apply to members of the compensation committee. In addition, in egregious cases, or if the board fails to respond to concerns raised by a prior MSOP proposal, then Taft-Hartley fiduciaries should vote against or withhold votes from compensation committee members (or, if the full board is deemed accountable, all directors). If the negative factors involve equity-based compensation, then a vote against an equity-based plan proposal presented for shareholder approval may be warranted.

Taft-Hartley Advisory Services Recommendation:

§ Evaluate executive pay and practices, as well as certain aspects of outside director compensation on a case-by-case basis.

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| § | Vote against management say on pay (MSOP) proposals if:  |

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§ There is an unmitigated misalignment between CEO pay and company performance (pay for performance);

§ The company maintains problematic pay practices;

§ The board exhibits poor communication and responsiveness to shareholders; or

§ The board has failed to demonstrate good stewardship of investors' interests regarding executive compensation practices.

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| § | Vote against or withhold from the members of the compensation committee and potentially the full board if:  |

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| § | There is no MSOP on the ballot, and an against vote on an MSOP is warranted due to pay for performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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§ The board fails to respond adequately to a previous MSOP proposal that received low levels of shareholder support;

§ The company has practiced or approved problematic pay practices, including option repricing or option backdating; or

§ The situation is egregious.

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| § | Vote against an equity plan on the ballot if:  |

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§ A pay for performance misalignment exists, and a significant portion of the CEO's misaligned pay is attributed to non-performance-based equity awards, taking into consideration:

§ Magnitude of pay misalignment;

§ Contribution of non-performance-based equity grants to overall pay; and

§ The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer (NEO) level.

Frequency of Advisory Vote on Executive Compensation – Management Say on Pay

The Dodd-Frank Act, in addition to requiring advisory votes on compensation (aka management "say on pay" or MSOP), requires that each proxy for the first annual or other meeting of the shareholders (that includes required SEC compensation disclosures) occurring after Jan. 21, 2011, include an advisory voting item to determine whether, going forward, the "say on pay" vote by shareholders to approve compensation should occur every one, two, or three years.

Taft-Hartley Advisory Services will recommend a vote for annual advisory votes on compensation. The MSOP is at its essence a communication vehicle, and communication is most useful when it is received in a consistent and timely manner. Support for an annual MSOP vote is merited for many of the same reasons Taft-Hartley Advisory Services supports annual director elections rather than a classified board structure: because this provides the highest level of accountability and direct communication by enabling the MSOP vote to correspond to the majority of the information presented in the accompanying proxy statement for the applicable shareholders' meeting. Having MSOP votes every two or three years, covering all actions occurring between the votes, would make it difficult to create the meaningful and coherent communication that the votes are intended to provide. Under triennial elections, for example, a company would not know whether the shareholder vote references the compensation year being discussed or a previous year, making it more difficult to understand the implications of the vote.

Taft-Hartley Advisory Services Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

This is a proxy item regarding specific advisory votes on "golden parachute" arrangements for Named Executive Officers (NEOs) that is required under The Dodd-Frank Wall Street Reform and Consumer Protection Act. Taft-Hartley Advisory Services places particular emphasis on severance packages that provide inappropriate windfalls and cover certain executive tax liabilities.

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on proposals to approve the company's golden parachute compensation, consistent with Taft-Hartley Advisory Services' policies on problematic pay practices related to severance packages. Features that may lead to a vote against include:

§ Agreements that include excise tax gross-up provisions;

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§ Single- or modified-single-trigger cash severance;

§ Single trigger acceleration of unvested equity, including acceleration of performance-based equity despite the failure to achieve performance measures;

§ Single-trigger vesting of equity based on a definition of change in control that requires only shareholder approval of the transaction (rather than consummation);

§ Potentially excessive severance payments;

§ Recent amendments or actions that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; and

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| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote. Such a construction is problematic from a corporate governance perspective.  |

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In cases where the golden parachute vote is incorporated into a company's separate advisory vote on compensation ("management "say on pay"), Taft-Hartley Advisory Services will evaluate the say on pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity Pay Plans

The theory that stock awards including stock options are beneficial to shareholders because they motivate management and align the interests of investors with those of executives is no longer held sacrosanct. Indeed, a number of academic studies have found that there is limited correlation between executive stock ownership and company performance. Misused stock options can give executives an incentive to inflate their company's earnings, take excessive risks, and make irresponsibly optimistic forecasts in order to keep stock prices high and their paychecks gargantuan.

Therefore, it is vital for shareholders to fully analyze all equity plans that appear on ballot.

Taft-Hartley Advisory Services Recommendation: In general, Taft-Hartley Advisory Services evaluates executive and director compensation plans on a case-by-case basis. When evaluating equity-based compensation items on ballot, the following elements will be considered:

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| § | *Dilution*: Vote against plans in which the potential voting power dilution (VPD) of all shares outstanding exceeds ten percent.  |

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| § | *Full Market Value*: Awards must be granted at 100 percent of fair market value on the date of grant. However, in instances when a plan is open to broad-based employee participation and excludes the five most highly compensated employees, Taft-Hartley Advisory Services accept a 15 percent discount.  |

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| § | Burn Rate: Vote against plans where the company's value-adjusted burn rate exceeds the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index.  |

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| § | *Liberal Definition of Change-in-Control*: Vote against equity plans if the plan provides for the accelerated vesting of equity awards even though an actual change in control may not occur. Examples of such a definition could include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.  |

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| § | *Problematic Pay Practices*: Vote against equity plans if the plan is a vehicle for problematic pay practices (e.g. if the plan allows for change-in-control payouts that are single triggered).  |

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| § | *Executive Concentration Ratio*: Vote against plans where the annual grant rate to the top five executives ("named officers") exceeds one percent of shares outstanding.  |

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| § | *Pay-For-Performance*: Vote against plans where there is a misalignment between CEO pay and the company's performance, or if performance criteria are not disclosed.  |

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| § | *Evergreen Features*: Vote against plans that reserve a specified percentage of outstanding shares for award each year instead of having a termination date.  |

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| § | *Repricing*: Vote against plans if the company's policy permits repricing of "underwater" options or if the company has a history of repricing past options.  |

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| § | *Loans*: Vote against the plan if the plan administrator may provide loans to officers to assist in exercising the awards.  |

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Stock Option Plans

Compensation to executive and other senior level employees should be strongly correlated to sustained performance. Stock options, restricted stock and other forms of non-cash compensation should be performance-based with an eye toward improving long-term corporate value. Well-designed stock option plans can align the interests of executives and shareholders by providing that executives benefit when stock prices rise so that the employees of the company, along with shareholders, prosper together. Likewise, option plans should not allow for the benefits of share price gains without the risk of share price declines. Poorly designed stock option plans can encourage excessive risk-taking behavior and incentivize executives to pursue corporate strategies that promote short-term stock price to the ultimate detriment of long-term shareholder value.

Many plans sponsored by management provide goals so easily attained that executives can realize massive rewards even though shareholder value is not created. Taft-Hartley Advisory Services supports option plans when they provide legitimately challenging performance targets that serve to truly motivate executives in the pursuit of sustained superior performance. Moreover, equity pay plans should be designed in a fashion that ensures executive compensation is veritably performance driven and "at risk" such that executives are penalized (by either reducing or withholding compensation) for failure to meet pre-determined performance hurdles. Taft-Hartley Advisory Services will oppose those plans that offer unreasonable benefits to executives that are not generally available to other shareholders or employees.

Voting Power Dilution (VPD) Calculation

Voting power dilution, or VPD, measures the amount of voting power represented by the number of shares reserved over the life of the plan. Industry norm dictates that ten percent dilution over the life of a ten-year plan is reasonable for most mature companies. Restricted stock plans or stand-alone stock bonus plans that are not coupled with stock option plans can be held to a lower dilution cap.

Voting power dilution may be calculated using the following formula:

A: Shares reserved for this amendment or plan

B: Shares available under this plan and/or continuing plans prior to proposed amendment

C: Shares granted but unexercised under this plan and/or continuing plans

D: All outstanding shares plus any convertible equity, outstanding warrants, or debt

The formula can be applied as follows: A + B + C <br> A + B + C + D

Fair Market Value, Dilution and Repricing

Consideration will be made as to whether the proposed plan is being offered at fair market value or at a discount; whether the plan excessively dilutes the earnings per share of the outstanding shares; and whether the plan gives management the ability to replace or reprice "underwater" options. Repricing is an amendment to a previously granted stock option contract that reduces the option exercise price. Options are "underwater" when their current price is below the current option contract price. Options can also be repriced through cancellations and re-grants. The typical new grant would have a ten-year term, new vesting restrictions, and a lower exercise price reflecting the current lower market price.

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Burn Rate

The annual burn rate is a measure of dilution that illustrates how rapidly a company is deploying shares reserved for equity compensation plans. A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Taft-Hartley Advisory Services will generally oppose plans whose Value-Adjusted Burn Rates exceed the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate is calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Executive Concentration Ratio

In examining stock option awards, restricted stock and other forms of long-term incentives, it is important to consider internal pay equity; that is, the concentration and distribution of equity awards to a company's top five executives ("named officers") as a percentage of overall grants. Taft-Hartley Advisory Services will consider voting against equity compensation plans whose annual grant rate to top executives exceeds one percent of shares outstanding.

Evergreen Provisions

Taft-Hartley Advisory Services will oppose plans that reserve a specified percentage of outstanding shares for award each year (evergreen plans) instead of having a termination date. Such plans provide for an automatic increase in the shares available for grant with or without limits on an annual basis. Because they represent a transfer of shareholder value and have a dilutive impact on a regular basis, evergreen plans are expensive to shareholders. Evergreen features also minimize the frequency that companies seek shareholder approval in increasing the number of shares available under the plan.

Option Exchange Programs/Repricing Options

Taft-Hartley Advisory Services Recommendation: Vote for shareholder proposals to put option repricings to a shareholder vote.

Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration the following factors:

§ Historic trading patterns: the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing: was the stock price decline beyond management's control?

§ Option vesting: does the new option vest immediately or is there a black-out period?

§ Term of the option: the term should remain the same as that of the replaced option;

§ Exercise price: should be set at fair market or a premium to market;

§ Participants: the plan should be broad-based and executive officers and directors must be excluded;

§ Is this a value-for-value exchange?

§ Are surrendered stock options added back to the plan reserve?

§ Timing--repricing should occur at least one year out from any precipitous drop in company's stock price.

If the surrendered options are added back to the equity plans for re-issuance, then Taft-Hartley Advisory Services will also take into consideration the impact on the company's equity plans and its three-year average burn rate.

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In addition to the above considerations, Taft-Hartley Advisory Services will evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing and warrants additional scrutiny. Taft-Hartley Advisory Services does not view market deterioration, in and of itself, as an acceptable reason for companies to reprice stock options and/or reset goals under performance plans. Taft-Hartley Advisory Services also considers the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Restricted Stock

Taft-Hartley Advisory Services supports the use of performance-vesting restricted stock as long as the absolute amount of restricted stock being granted is a reasonable proportion of an executive's overall compensation. The best way to align the interests of executives with shareholders is through direct stock holdings, coupled with at-risk variable compensation that is tied to explicit and challenging performance benchmarks. Performance-vesting restricted stock both adds to executive's direct share holdings and incorporates at-risk features.

To reward performance and not job tenure, restricted stock vesting requirements should be performance-based rather than time lapsing. Such plans should explicitly define the performance criteria for awards to senior executives and may include a variety of corporate performance measures in addition to the use of stock price targets. In addition, executives should be required to hold their vested restricted stock as long as they remain employees of the company.

Employee Stock Purchase Plans (ESPPs) - Qualified Plans

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for plans if:

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| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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| § | The number of shares allocated to the plan is five percent or less of the outstanding shares.  |

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Employee Stock Purchase Plans (ESPPs) – Non-Qualified Plans

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for plans with:

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| § | Broad-based participation (i.e. all employees with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);  |

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| § | Limits on employee contribution (a fixed dollar amount or a percentage of base salary);  |

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| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value; and  |

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§ No discount on the stock price on the date of purchase when there is a company matching contribution.

Employee Stock Ownership Plans (ESOPs)

An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that makes the employees of a company also owners of stock in that company. Recent academic research of the performance of ESOPs in closely held companies found that ESOPs appear to increase overall sales, employment, and sales per employee over what would have been expected absent an ESOP. Studies have also found that companies with an ESOP are also more likely to still be in business several years later, and are more likely to have other retirement oriented benefit plans than comparable non-ESOP companies.

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Taft-Hartley Advisory Services Recommendation: Vote for proposals that request shareholder approval in order to implement an ESOP or to increase authorized shares for existing ESOPs except in cases when the number of shares allocated to the ESOP is deemed excessive (i.e. generally greater than five percent of outstanding shares).

OBRA-Related Compensation Proposals

Cash bonus plans can be an important part of an executive's overall pay package, along with stock-based plans tied to long-term total shareholder returns. Section 162(m) of the IRS Code Section limits the deductibility of compensation in excess of $1 million to a named executive officer unless certain prescribed actions are taken including shareholder approval and the establishment of performance goals.

Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote for proposals to approve or amend executive incentive bonus plans if the proposal:  |

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§ Is only to include administrative features;

§ Places a cap on the annual grants any one participant may receive to comply with the provisions of Section 162(m);

§ Adds performance goals to existing compensation plans to comply with the provisions of Section 162(m) unless they are clearly inappropriate; or

§ Covers cash or cash and stock bonus plans that are submitted to shareholders for the purpose of exempting compensation from taxes under the provisions of Section 162(m) if no increase in shares is requested.

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| § | Vote against such proposals if:  |

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| § | The plan provides for awards to individual participants in excess of $2 million a year;  |

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§ The compensation committee does not fully consist of independent directors as defined by Taft-Hartley Advisory Services' definition of director independence; or

§ The plan contains excessive problematic provisions including lack of rigorous performance measures.

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|:---|:---|
| § | Vote case-by-case on such proposals with respect to equity incentive plans if:  |

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§ In addition to seeking 162(m) tax treatment, the amendment may cause additional voting power dilution to shareholders (*e.g*., by requesting additional shares, extending the option term, or expanding the pool of plan participants);

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|:---|:---|
| § | A company is presenting the plan to shareholders for Section 162(m) favorable tax treatment for the first time after the company's initial public offering (IPO). Perform a full equity plan analysis, including consideration of potential voting power dilution, burn rate (if applicable), repricing, and liberal change in control. Other factors such as pay-for-performance or problematic pay practices as related to Management Say-on-Pay may be considered if appropriate.  |

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Golden and Tin Parachutes

Golden parachutes are designed to protect the employees of a corporation in the event of a change-in-control. Under most golden parachute agreements, senior level management employees receive a lump sum payout triggered by a change-in-control at usually two to three times their current base salary. The SEC requires disclosure of all golden parachute arrangements in the proxy statement.

Taft-Hartley Advisory Services Recommendation:

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|:---|:---|
| § | Vote case-by-case on management proposals to ratify or cancel golden parachutes taking into consideration the following factors:  |

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§ Whether the triggering mechanism is beyond the control of management;

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| § | Whether the payout amount is based on an excessive severance multiple; and  |

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§ Whether the change-in-control payments are double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

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|:---|:---|
| § | Vote for shareholder proposals to all have golden parachute agreements submitted for shareholder ratification.  |

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Director Compensation

Shareholder Ratification of Director Pay Programs

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The balance of cash vs. equity compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Shareholder Proposals on Compensation

Disclosure of Executive and Director Pay

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholder proposals that seek additional disclosure of executive and director pay information, including the preparation of a formal report on executive compensation practices and policies.

Limit Executive and Director Pay

Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote for shareholder proposals that seek to eliminate outside directors' retirement benefits.  |

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|:---|:---|
| § | Vote case-by-case on all other shareholder proposals that seek to limit executive and director pay. This includes shareholder proposals that seek to link executive compensation to customer, employee, or stakeholder satisfaction.  |

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Executive Perks and Retirement/Death Benefits

Taft-Hartley Advisory Services supports enhanced disclosure and shareholder oversight of executive benefits and other in-kind retirement perquisites. For example, compensation devices like executive pensions (SERPs), deferred compensation plans, below-market-rate loans or guaranteed post-retirement consulting fees can amount to significant liabilities to shareholders and it is often difficult for investors to find adequate disclosure of their full terms. Taft-Hartley Advisory Services opposes any perquisite or benefit to executives that exceeds what is generally offered to other company employees. From a shareholder prospective, the cost of these executive entitlements would be better allocated to performance-based forms of executive compensation during their term in office.

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Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.  |

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|:---|:---|
| § | Generally vote for shareholder proposals calling companies to adopt a policy of discontinuing or obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive. This could come, for example, in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. However, this would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.  |

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Executive Holding Periods

Senior level executives should be required to hold a substantial portion of their equity compensation awards, including shares received from option exercises (e.g. 75% of their after-tax stock option proceeds), while they are employed at a company or even into retirement. Equity compensation awards are intended to align management interests with those of shareholders, and allowing executives to sell these shares while they are employees of the company undermines this purpose. Given the large size of a typical annual equity compensation award, holding requirements that are based on a multiple of cash compensation may be inadequate.

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of the net shares acquired through compensation plans while employed or following the termination of their employment.

Pay for Superior Performance

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholder proposals that request the board to establish a pay-for-superior performance standard in the company's executive compensation programs for senior executives.

Performance-Based Options

Stock options are intended to align the interests of management with those of shareholders. However, stock option grants without performance-based elements can excessively compensate executives for stock increases due solely to a general stock market rise, rather than improved or superior company stock performance. When option grants reach the hundreds of thousands, a relatively small increase in the share price may permit executives to reap millions of dollars without providing material benefits to shareholders.

Taft-Hartley Advisory Services advocates for performance-based awards – such as premium-priced or indexed – which encourage executives to outperform peers, certain indices, or the broader market rather than being rewarded for any minimal rise in the share price, which can occur if there are not empirical performance measures incorporated into the structure of the options. Additionally, it should be noted that performance-accelerated vesting and premium priced options allow fixed plan accounting, whereas performance-vested and indexed options entail certain expensing requirements.

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholder proposals that seek to provide for performance-based options such as indexed and/or premium priced options.

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Tax Gross-up Proposals

Taft-Hartley Advisory Services Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals

Taft-Hartley Advisory Services Recommendation: Generally, vote for shareholder proposals that call for non-binding shareholder ratification of the compensation of the Named Executive Officers and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table.

Compensation Consultants - Disclosure of Board or Company's Utilization

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s) and fees paid.

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

Taft-Hartley Advisory Services Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan.

Bonus Banking/Bonus Banking "Plus"

Taft-Hartley Advisory Services Recommendation: Generally vote for on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees).

Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholder proposals seeking a policy requiring termination of employment prior to severance payment, and eliminating accelerated vesting of unvested equity.

Recoup Bonuses

Taft-Hartley Advisory Services Recommendation: Generally vote for proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that the incentive compensation was based upon figures that later turn out to have been in error.

Link Compensation to Non-Financial Factors

Taft-Hartley Advisory Services Recommendation:

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|:---|:---|
| § | Generally vote for shareholder proposals seeking disclosure on linking executive pay to non-financial factors.  |

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§ Evaluate shareholder proposals calling for linkage of executive pay to non-financial factors, such as corporate downsizing, customer/employee satisfaction, community involvement, human rights, social and environmental goals and performance, and predatory lending on a case-by-case basis.

Pension Plan Income Accounting

Taft-Hartley Advisory Services Recommendation: Generally vote for shareholder proposals to exclude pension plan income in the calculation of earnings used in determining executive bonuses/compensation.

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3. Auditors

Auditors play an integral role in certifying the integrity and reliability of corporate financial statements on which investors rely to gauge the financial well-being of a company and the viability of an investment. The well-documented auditor-facilitated bankruptcies and scandals at several large public companies in recent years underscore the catastrophic consequences that investors can suffer when the audit process breaks down.

Auditor Independence

The wave of accounting scandals over the past decade illuminates the need to ensure auditor independence in the face of consulting services to audit clients. The ratio of non-audit services to total revenues at the large accounting firms grew significantly leading up to the accounting scandals. Taft-Hartley Advisory Services believes the ratio of non-audit fees should make up no more than one-quarter of all fees paid to the auditor so as to properly discourage even the appearance of any undue influence upon an auditor's objectivity.

Under SEC rules, disclosed categories of professional fees paid for audit and non-audit services are as follows: (1) Audit Fees, (2) Audit-Related Fees, (3) Tax Fees, and (4) All Other Fees. Under the reporting requirements, companies are required to describe – in qualitative terms – the types of services provided under the three categories other than Audit Fees. The following fee categories are defined as: A) tax compliance or preparation fees are excluded from our calculations of non-audit fees; and B) fees for consulting services for tax-avoidance strategies and tax shelters will be included in "other fees" and will be considered non-audit fees if the proxy disclosure does not indicate the nature of the tax services. In circumstances where "Other" fees include fees related to significant one-time capital structure events: initial public offerings, bankruptcy emergence, and spin-offs; and the company makes public disclosure of the amount and nature of those fees which are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

As auditors are the backbone upon which a company's financial health is measured, auditor independence is absolutely essential for rendering objective opinions upon which investors then rely. When an auditor is paid excessive consulting fees in addition to fees paid for auditing, the company-auditor relationship is left open to conflicts of interest.

Auditor Ratification

The ratification of auditors is an important component of good governance. In light of the Sarbanes-Oxley Act of 2002 and increased shareholder scrutiny, some companies are opting to take auditor ratification off the ballot. Neglecting to include the ratification of auditors on the proxy takes away the fundamental shareholder right to ratify the company's choice of auditor. Whereas shareholder ratification of auditors was once considered routine by many shareowners, accounting scandals have caused shareholders to be more vigilant about the integrity of the auditors certifying their companies' financial statements. It is now viewed as best practice for companies to place the item on ballot.

Although U.S. companies are not legally required to allow shareholders to ratify their appointment of independent auditors, submission of the audit firm for approval at the annual meeting on an annual basis gives shareholders the means to weigh in on their satisfaction (or lack thereof) of the auditor's independent execution of their duties. Taft-Hartley Advisory Services believes mandatory auditor ratification is in line with sound and transparent corporate governance and remains an important mechanism to ensure the integrity of the auditor's work. In the absence of legislation mandating shareholder ratification of auditors, the failure by a company to present its selection of auditors for shareholder ratification should be discouraged as it undermines good governance and disenfranchises shareholders.

Proposals to ratify auditors is examined for potential conflicts of interest, with particular attention to the fees paid to the auditor, as well as whether the ratification of auditors has been put up for shareholder vote.

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Taft-Hartley Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to ratify auditors when the amount of audit fees is equal to or greater than three times (75 percent) the amount paid for consulting, unless: i) An auditor has a financial interest in or association with the company, and is therefore not independent; or ii) There is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company's financial position.  |

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|:---|:---|
| § | Vote against proposals to ratify auditors when the amount of non-audit consulting fees exceeds a quarter of all fees paid to the auditor.  |

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§ Generally support shareholder proposals seeking to limit companies from buying consulting services from their auditor.

Auditor Rotation

Long-term relationships between auditors and their clients can impede auditor independence, objectivity and professional skepticism. Such long-standing relationships foster an undesirable coziness between audit firms and their clients, which can cause the auditors to lose their independence and become less questioning especially where lucrative contracts for the provision of non-audit consulting services are involved. Mandatory auditor rotation is a widely supported safeguard against improper audits and is viewed by many as an effective mechanism for mitigating the potential risks borne by long-term auditor-client relationships.

Proponents of compulsory audit firm rotation contend that rotation policies promote objectivity and independence among auditors and minimize the scope of vested interests developing in the audit. Opponents of audit firm rotation argue that regular re-tendering is a costly practice, likely to reduce audit quality and increase the risk of audit failure in the early years due to the time required to gain cumulative knowledge of an often complex and geographically diverse business. A solution around this apparent negative effect of mandatory rotation is to keep a longer rotation period.

Taft-Hartley Advisory Services recommends that companies not maintain the same audit firm in excess of seven years, and will vote against auditors if their tenure at a company exceeds seven years. A revolving seven-year rotation period allows the auditor to develop cumulative knowledge of a company's business and the effect of changes in the business along with the corresponding changes in its risks, thereby enhancing the quality of the audit and trammeling potential loss of auditor objectivity and independence. Many institutional investors argue that the increased costs associated with compulsory auditor rotation are a lesser evil vis-à-vis the larger evil of the costs to shareholders when the objectionable coziness between clients and long-standing auditors leads to gross erosion of shareholder value.

Taft-Hartley Advisory Services Recommendation: Generally support shareholder proposals to ensure auditor independence through measures such as mandatory auditor rotation (no less than every seven years).

Auditor Indemnification and Limitation of Liability

Indemnification clauses allow auditors to avoid liability for potential damages, including punitive damages. Eliminating concerns about being sued for carelessness could lead to; 1) potential impairment of external auditor independence and impartiality by contractual clauses limiting their liability; and 2) a decrease in the quality and reliability of the audit given the lack of consequence for an inadequate audit.

Given the substantial settlements against auditors in recent years for poor audit practices and the cost of such insurance to the company and its shareholders, there are legitimate concerns over the broader use of indemnification clauses. Such agreements may weaken the objectivity, impartiality and performance of audit firms.

Taft-Hartley Advisory Services believes it is important for shareholders to understand the full risks and implications of these agreements and determine what impact they could have on shareholder value. At the present time, however, due to poor disclosure in this area, it is difficult to identify the existence and extent of limited liability provisions and auditor agreements, and investors lack the information needed to make informed decisions regarding these agreements.

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Without uniform disclosure, it is difficult to consistently apply policy and make informed vote recommendations. As such, Taft-Hartley Advisory Services reviews the use of indemnification clauses and limited liability provisions in auditor agreements on a case-by-case basis, when disclosure is present.

Taft-Hartley Advisory Services Recommendation: Vote against or withhold from audit committee members if there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Disclosures Under Section 404 of Sarbanes-Oxley Act

Section 404 of the Sarbanes-Oxley Act requires that companies document and assess the effectiveness of their internal financial controls. Beginning in 2005, most public companies must obtain annual attestation of the effectiveness of their internal controls over financial reporting from their outside auditors. Companies with significant material weaknesses identified in the Section 404 disclosures potentially have ineffective internal financial reporting controls. This may lead to inaccurate financial statements, which hampers shareholders' ability to make informed investment decisions, and may lead to destruction of public confidence and shareholder value. The audit committee is ultimately responsible for the integrity and reliability of the company's financial information and its system of internal controls.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against or withhold votes from audit committee members under certain circumstances when a material weakness rises to a level of serious concern, if there are chronic internal control issues, or if there is an absence of established effective control mechanisms.  |

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| § | Vote against management proposals to ratify auditors if there is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company's financial position.  |

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Adverse Opinions

An Adverse Opinion on the company's financial statements is issued when the auditor determines that the financial statements are materially misstated and, when considered as a whole, do not conform to GAAP. It essentially states that the information contained is materially incorrect, unreliable, and inaccurate in order to assess the company's financial position and results of operations.

Adverse opinions on companies' financial statements are generally very rare because they essentially state that a significant portion of the financial statements are unreliable and the auditor had no choice but to issue an adverse opinion after a long process of seeking resolution with the company subjected to the audit.

Taft-Hartley Advisory Services Recommendation: Vote against or withhold votes from audit committee members if the company receives an adverse opinion on the company's financial statements from its auditors.

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4. Takeover Defenses

Poison Pills

Shareholder rights plans, typically known as poison pills, take the form of rights or warrants issued to shareholders and are triggered when a potential acquiring stockholder reaches a certain threshold of ownership. When triggered, poison pills generally allow shareholders to purchase shares from, or sell shares back to, the target company ("flip-in pill") and/or the potential acquirer ("flip-out pill") at a price far out of line with fair market value.

Depending on the type of pill, the triggering event can either transfer wealth from the target company or dilute the equity holdings of current shareholders. Poison pills insulate management from the threat of a change in control and provide the target board with veto power over takeover bids. Because poison pills greatly alter the balance of power between shareholders and management, shareholders should be allowed to make their own evaluation of such plans.

In evaluating management proposals on poison pills, Taft-Hartley Advisory Services considers the company's rationale for adopting the pill and its existing governance structure in determining whether or not the pill appropriately serves in shareholders' best interests. The rationale for adopting the pill should be thoroughly explained by the company. Additionally, Taft-Hartley Advisory Services examines the company's existing governance structure including: board independence, existing takeover defenses, or any problematic governance concerns.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask a company to submit its poison pill for shareholder ratification.  |

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| § | Vote case-by-case on shareholder proposals to redeem a company's poison pill.  |

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| § | Vote case-by-case on management proposals to ratify a poison pill.  |

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| § | Vote against or withhold from any board where a dead-hand poison pill provision is in place. From a shareholder perspective, there is no justification for a dead-hand provision. Directors of companies with these lethal protective devices should be held fully accountable.  |

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Net Operating Loss (NOL) Poison Pills/Protective Amendments

The financial crisis prompted widespread losses in certain industries. This resulted in previously profitable companies considering the adoption of a poison pill and/or NOL protective amendment to protect their NOL tax assets, which may be lost upon an acquisition of 5 percent of a company's shares.

When evaluating management proposals seeking to adopt NOL pills or protective amendments, the purpose behind the proposal, its terms, and the company's existing governance structure should be taken into account to assess whether the structure actively promotes board entrenchment or adequately protects shareholder rights. While the high estimated tax value of NOLs would typically benefit shareholders, the ownership acquisition limitations contained in an NOL pill/protective amendment coupled with a company's problematic governance structure could serve as an antitakeover device.

Given the low ownership thresholds involved, shareholders want to ensure that such pills/amendments do not remain in effect permanently. Taft-Hartley Advisory Services will closely review whether the pill/amendment contains a sunset provision or a commitment to cause the expiration of the NOL pill/protective amendment upon exhaustion or expiration of the NOLs.

Taft-Hartley Advisory Services Recommendation:

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|:---|:---|
| § | Vote against proposals to adopt a poison pill/ protective amendment for the stated purpose of protecting a company's net operating losses ("NOLs") if the term of the pill/ protective amendment would exceed the shorter of three years and the exhaustion of the NOL.  |

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§ Evaluate management proposals to ratify an NOL pill /adopt an NOL protective amendment if the term of the pill/amendment would be the shorter of three years (or less) and the exhaustion of the NOL on a case-by-case basis considering the following factors;

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| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5% and NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing five-percent holder);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Greenmail

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of shares, the practice discriminates against most shareholders. This transferred cash, absent the greenmail payment, could be put to much better use for reinvestment in the company, payment of dividends, or to fund a public share repurchase program.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote for proposals to adopt an anti-greenmail provision in their charter or bylaws that would thereby restrict a company's ability to make greenmail payments to certain shareholders.  |

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| § | Vote case-by-case on all anti-greenmail proposals when they are presented as bundled items with other charter or bylaw amendments.  |

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Shareholder Ability to Remove Directors/Fill Vacancies

Shareholder ability to remove directors, with or without cause, is either prescribed by a state's business corporation law, individual company's articles of incorporation, or its corporate bylaws. Many companies have sought shareholder approval for charter or bylaw amendments that would prohibit the removal of directors except for cause, thus ensuring that directors would retain their directorship for their full-term unless found guilty of self-dealing. By requiring cause to be demonstrated through due process, management insulates the directors from removal even if a director has been performing poorly, not attending meetings, or not acting in the best interests of shareholders.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against proposals that provide that directors may be removed only for cause.  |

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| § | Vote for proposals which seek to restore the authority of shareholders to remove directors with or without cause.  |

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| § | Vote against proposals that provide only continuing directors may elect replacements to fill board vacancies.  |

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| § | Vote for proposals that permit shareholders to elect directors to fill board vacancies.  |

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Shareholder Ability to Alter the Size of the Board

Proposals that would allow management to increase or decrease the size of the board at its own discretion are often used by companies as a takeover defense. Proposals to fix the size of the board at a specific number can prevent management from increasing the board size without shareholder approval when facing a proxy context. By increasing the size of the

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board, management can make it more difficult for dissidents to gain control of the board. Fixing the size of the board also prevents a reduction in the size of the board as a strategy to oust independent directors. Fixing board size also prevents management from increasing the number of directors in order to dilute the effects of cumulative voting.

Taft-Hartley Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals that seek to fix the size of the board within an acceptable range.  |

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| § | Vote against proposals that give management the ability to alter the size of the board without shareholder approval.  |

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5. Shareholder Rights

Confidential Voting

The confidential ballot ensures that voters are not subject to real or perceived coercion. In an open voting system, management can determine who has voted against its nominees or proposals before a final vote count. As a result, shareholders can be pressured to vote with management at companies with which they maintain or would like to establish a business relationship.

Taft-Hartley Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals that request corporations to adopt confidential voting, the use of independent tabulators, and the use of independent inspectors for an election as long as the proposals include clauses for proxy contests. In the case of a contested election, management is permitted to request that the dissident group honor 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.  |

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| § | Vote for management proposals to adopt confidential voting procedures.  |

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Shareholder Ability to Call Special Meetings

Most state corporation statutes allow shareholders to call a special meeting when they want to take action on certain matters that arise between regularly scheduled annual meetings. Sometimes this right applies only if a shareholder or a group of shareholders own a specified percentage of shares, with ten percent being the most common. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against proposals to restrict or prohibit shareholder ability to call special meetings.  |

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| § | Generally vote for proposals that remove restrictions on the right of shareholders to act independently of management.  |

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| § | Vote against provisions that would require advance notice of more than sixty days.  |

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Shareholder Ability to Act by Written Consent

Consent solicitations allow shareholders to vote on and respond to shareholder and management proposals by mail without having to act at a physical meeting. A consent card is sent by mail for shareholder approval and only requires a signature for action. Some corporate bylaws require supermajority votes for consents, while at others standard annual meeting rules apply. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act by written consent.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against proposals to restrict or prohibit shareholder ability to take action by written consent.  |

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| § | Generally vote for proposals to allow or make easier shareholder action by written consent.  |

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Unequal Voting Rights

Incumbent managers are able to use unequal voting rights through the creation of a separate class of shares that has superior voting rights to the common shares of regular shareholders. This separate class of shares with disproportionate

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voting power allows management to concentrate its power and insulate itself from the wishes of the majority of shareholders. Dual class exchange offers involve a transfer of voting rights from one group of shareholders to another group of shareholders typically through the payment of a preferential dividend. A dual class recapitalization plan also establishes two classes of common stock with unequal voting rights, but initially involves an equal distribution of preferential and inferior voting shares to current shareholders.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote for resolutions that seek to maintain or convert to a one-share-one-vote capital structure.  |

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| § | Generally vote against requests for the creation or continuation of dual class capital structures or the creation of new or additional super-voting shares.  |

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Supermajority Shareholder Vote Requirement to Amend the Charter or Bylaws

Supermajority shareholder vote requirements for charter or bylaw amendments are often the result of "lock-in" votes, which are the votes required to repeal new provisions to the corporate charter. Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company and its corporate governance provisions. Requiring more than this may entrench managers by blocking actions that are in the best interests of shareholders.

The general lack of credit availability for financially distressed companies has resulted in "rescue" or highly dilutive stock and warrant issuances, which often comprise a majority of the company's voting stock upon conversion. When an investor takes control of the company through the conversion of securities, the new owners often seek statutory amendments, such as adopting written consent, or allowing 50 percent shareholders to call a special meeting, that allow effective control over the company with little or no input from minority shareholders.

In such cases, the existing supermajority vote requirements would serve to protect minority shareholders' interests. The reduction in the vote requirements, when coupled with low quorum requirements (in Nevada and other states) could shift the balance in power away from small shareholders while overly empowering large shareholders.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against management proposals to require a supermajority shareholder vote to approve charter and bylaw amendments.  |

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| § | Vote against management proposals seeking to lower supermajority shareholder vote requirements when they accompany management sponsored proposals to also change certain charter or bylaw amendments.  |

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| § | Vote for management or shareholder proposals to reduce supermajority vote requirements for charter and bylaw amendments. However, for companies with shareholders who have significant ownership levels, vote on a case-by-case basis, taking into account 1) ownership structure, 2) quorum requirements, and 3) supermajority vote requirements.  |

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Management Proposals to Ratify Existing Charter or Bylaw Provisions

Taft-Hartley Advisory Services Recommendation:

Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against or withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

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§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Supermajority Shareholder Vote Requirement to Approve Mergers

Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company and its corporate governance provisions. Requiring more than this may entrench managers by blocking actions that are in the best interests of shareholders.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote against management proposals to require a supermajority shareholder vote to approve mergers and other significant business combinations.  |

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| § | Vote for shareholder proposals to lower supermajority shareholder vote requirements for mergers and other significant business combinations.  |

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Virtual Shareholder Meetings

Taft-Hartley Advisory Services Recommendation: Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only**<sup>15</sup>** meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

Reimbursing Proxy Solicitation Expenses

Taft-Hartley Advisory Services Recommendation:

§ Generally support shareholder proposals to reimburse for proxy solicitation expenses.

§ When voting in conjunction with support of a dissident slate, always support the reimbursement of all appropriate proxy solicitation expenses associated with the election.

§ Generally support requests seeking to reimburse a shareholder proponent for all reasonable campaign expenditures for a proposal approved by the majority of shareholders.

Exclusive Venue

Issuers began seeking shareholder approval of exclusive venue charter provisions in 2011 after a court opinion suggested that unilaterally adopted exclusive venue bylaw provisions might not be enforceable. All the exclusive venue proposals to date have sought to make Delaware the exclusive forum for resolution on shareholder disputes.

<sup>15</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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Corporations have defended exclusive forum provisions on the grounds that the Delaware Chancery Court moves cases more quickly than other courts and is presided over by judges who are experienced in corporate law. Firms have also argued that making Delaware the sole forum for lawsuits avoids the possibility of duplicative suits arising out of the same events. A number of shareholder advocates have, however, countered that exclusive venue provisions deprive shareholders of the flexibility to choose the forum in which to assert claims of wrongdoing.

Taft-Hartley Advisory Services Recommendation: Generally vote against management proposals to restrict the venue for shareholder claims by adopting charter or bylaw provisions that seek to establish an exclusive judicial forum.

Fee-Shifting Bylaws

Taft-Hartley Advisory Services Recommendation: Generally vote against bylaws that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., in cases where the plaintiffs are partially successful).

Bundled Proposals

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on bundled or conditional proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

6. Mergers & Acquisitions / Corporate Restructurings

A number of academic and industry studies have estimated that nearly three quarters of all corporate acquisitions fail to create economically meaningful shareholder value. These studies have also demonstrated that the larger the deal the greater the risk in realizing long-term value for shareholders of the acquiring firm. These risks include integration challenges, over-estimation of expected synergies, incompatible corporate cultures and poor succession planning. Indeed, some studies have found that smaller deals within specialized industries on average outperform "big bet" larger deals by a statistically significant factor.

In analyzing M&A deals, private placements or other transactional related items on proxy, Taft-Hartley Advisory Services performs a well-rounded analysis that seeks to balance all facets of the deal to ascertain whether the proposed acquisition is truly going to generate long-term value for shareholders and enhance the prospects of the ongoing corporation.

Taft-Hartley Advisory Services Recommendation: Votes on mergers and acquisitions are always considered on a case-by-case basis, taking into account the following factors:

§ Impact of the merger on shareholder value;

§ Perspective of ownership (target vs. acquirer) in the deal;

§ Form and mix of payment (i.e. stock, cash, debt, etc.);

§ Fundamental value drivers behind the deal;

§ Anticipated financial and operating benefits realizable through combined synergies;

§ Offer price (cost vs. premium);

§ Change-in-control payments to executive officers;

§ Financial viability of the combined companies as a single entity;

§ Was the deal put together in good faith? What kind of auction setting took place? Were negotiations carried out at arm's length? Was any portion of the process tainted by possible conflicts of interest?

§ Fairness opinion (or lack thereof);

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§ Changes in corporate governance and their impact on shareholder rights;

§ What are the potential legal or environmental liability risks associated with the target firm?

§ Impact on community stakeholders and employees in both workforces; and

§ How will the merger adversely affect employee benefits like pensions and health care?

Fair Price Provisions

Fair price provisions were originally designed to specifically defend against the most coercive of takeover devises- the two-tiered, front-end loaded tender offer. In such a hostile takeover, the bidder offers cash for enough shares to gain control of the target. At the same time, the acquirer states that once control has been obtained, the target's remaining shares will be purchased with cash, cash and securities, or only securities. Since the payment offered for the remaining stock is, by design, less valuable than the original offer for the controlling shares, shareholders are forced to sell out early to maximize the value of their shares. Standard fair price provisions require that in the absence of board or shareholder approval of the acquisition the bidder must pay the remaining shareholders the same price for their shares that brought control.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote for fair price proposals as long as the shareholder vote requirement embedded in the provision is no more than a majority of disinterested shares.  |

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| § | Vote for shareholder proposals to lower the shareholder vote requirement in existing fair price provisions.  |

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Appraisal Rights

Rights of appraisal provide shareholders who do not approve of the terms of certain corporate transactions the right to demand a judicial review in order to determine the fair value for their shares. The right of appraisal applies to mergers, sale of corporate assets, and charter amendments that may have a materially adverse effect on the rights of dissenting shareholders.

Taft-Hartley Advisory Services Recommendation: Vote for proposals to restore or provide shareholders with the right of appraisal.

Corporate Restructuring

Taft-Hartley Advisory Services Recommendation: Votes concerning corporate restructuring proposals, including minority squeeze outs, leveraged buyouts, spin-offs, liquidations, and asset sales, are considered on a case-by-case basis.

Spin-offs

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on spin-offs depending on the tax and regulatory advantages, planned use of sale proceeds, market focus, and managerial incentives.

Asset Sales

Taft-Hartley Advisory Services Recommendation: Votes case-by-case on asset sales taking into consideration the impact on the balance sheet/working capital, value received for the asset, and potential elimination of diseconomies.

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Liquidations

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on liquidations after reviewing management's efforts to pursue other alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation.

Going Private Transactions (LBOs, Minority Squeezeouts)

Taft-Hartley Advisory Services Recommendation:

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| § | Vote case-by-case on going private transactions, taking into account the following: offer price/premium, fairness opinion, how the deal was negotiated, conflicts of interest, other alternatives/offers considered, and non-completion risk.  |

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| § | Vote case-by-case on "going dark" transactions, determining whether the transaction enhances shareholder value by taking into consideration whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock), cash-out value, whether the interests of continuing and cashed-out shareholders are balanced, and market reaction to public announcement of transaction.  |

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Changing Corporate Name

Taft-Hartley Advisory Services Recommendation: Vote for changing the corporate name in all instances if proposed and supported by management and the board.

Plans of Reorganization (Bankruptcy)

The recent financial crisis has placed Chapter 11 bankruptcy reorganizations as a potential alternative for distressed companies. While the number of bankruptcies has risen as evidenced by many firms, including General Motors and Lehman Brothers, the prevalence of these reorganizations can vary year over year due to, among other things, market conditions and a company's ability to sustain its operations. Additionally, the amount of time that lapses between a particular company's entrance into Chapter 11 and its submission of a plan of reorganization varies significantly depending on the complexity, timing, and jurisdiction of the particular case. These plans are often put to a vote of shareholders (in addition to other interested parties), as required by the Bankruptcy Code.

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an official equity committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization; and

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

§ *Valuation* - Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target

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company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target, if it is a private entity.

§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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| § | *Deal timing* - A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *Negotiations and process* - What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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| § | *Conflicts of interest* - How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24 month timeframe.  |

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| § | *Voting agreements* - Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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§ *Governance* - What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

§ *Stakeholder Impact*- impact on community stakeholders and workforce including impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment etc.

Special Purpose Acquisition Corporations (SPACs) – Proposals for Extensions

Taft-Hartley Advisory Services Recommendation: Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ *Length of request*: Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquisition process.

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| § | *Pending transaction(s)* or *progression of the acquisition process:* Sometimes an initial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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| § | *Added incentive for non-redeeming shareholders*: Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redemption at the extension proposal meeting.  |

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§ *Prior extension requests*: Some SPACs request additional time beyond the extension period sought in prior extension requests.

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7. Capital Structure

The management of a corporation's capital structure involves a number of important issues including dividend policy, types of assets, opportunities for growth, ability to finance new projects internally, and the cost of obtaining additional capital. Many financing decisions have a significant impact on shareholder value, particularly when they involve the issuance of additional common stock, preferred stock, or debt.

Common Stock Authorization

State statutes and stock exchanges require shareholder approval for increases in the number of common shares. Corporations increase their supply of common stock for a variety of ordinary business purposes: raising new capital, funding stock compensation programs, business acquisitions, implementation of stock splits, or payment of stock dividends.

Clear justification should accompany all management requests for shareholder approval of increases in authorized common stock. Taft-Hartley Advisory Services supports increases in authorized common stock to fund stock splits that are in shareholders' interests. Dual requests on the same ballot, in which an increase in common stock is requested in tandem with a reverse stock split in which shares are not proportionately reduced may not be in shareholder best interests. Although the reverse stock split may be needed in the face of imminent delisting, there is little justification in effectively approving two increases in common stock on the same ballot.

#### General Authorization Requests
Taft-Hartley Advisory Services Recommendation:

Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes.

Vote for an increase of up to **50** percent of current authorized shares.

Generally vote against proposed increases, even if less than or equal to 50 percent, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases above 50 percent of the current authorized shares when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In or subsequent to the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

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For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

#### Specific Authorization Requests
Taft-Hartley Advisory Services Recommendation: Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support.

Stock Distributions: Splits and Dividends

Stock splits/dividends involve the partitioning of the outstanding shares of a corporation into a larger number of shares, while proportionately decreasing the market price of the stock. Stock splits/dividends do not affect the equity of the company. An understanding of forward and reverse stock splits and stock dividends is relevant because proposals to increase authorized common shares may be tied to the implementation of a planned stock distribution.

Shareholders can effectively cancel a split or dividend if the company does not have sufficient shares to implement a split without an increase in authorized shares.

Taft-Hartley Advisory Services Recommendation: Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the increase in authorized shares is reasonable in accordance with Taft-Hartley Advisory Services' Common Stock Authorization policy.

Reverse Stock Splits

Reverse splits exchange multiple shares for a lesser amount to increase share price. Increasing share price is sometimes necessary to restore a company's share price to a level that will allow it to be traded on the national stock exchanges. In addition, some brokerage houses have a policy of not monitoring or investing in very low priced shares. Reverse stock splits can help maintain stock liquidity.

Evaluation of management proposals to implement a reverse stock split will take into account whether there is a corresponding proportional decrease in authorized shares. Without a corresponding decrease, a reverse stock split is effectively an increase in authorized shares by way of reducing the number of shares outstanding, while leaving the number of authorized shares to be issued at the pre-split level.

Taft-Hartley Advisory Services Recommendation: Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than half of the company's existing authorization.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting; or

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

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Shareholders should only vote for non-proportionate reverse stock splits in the most dire of situations. Companies should provide disclosure of external evidence that a potential delisting is imminent to separate the true emergencies from vague potential risks to shareholders.

Share Repurchase Programs

Taft-Hartley Advisory Services Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail,

§ The use of buybacks to inappropriately manipulate incentive compensation metrics,

§ Threats to the company's long-term viability, or

§ Other company-specific factors as warranted.

Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Preferred Stock Authorization

Preferred stock is an equity security which has certain features similar to debt instruments- such as fixed dividend payments and seniority of claims to common stock - and usually carries little to no voting rights. The terms of blank check preferred stock give the board of directors the power to issue shares of preferred stock at their discretion with voting, conversion, distribution, and other rights to be determined by the board at time of issue.

#### General Authorization Requests
Taft-Hartley Advisory Services Recommendation:

Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes.

Vote for an increase of up to 50 percent of current authorized shares.

Generally vote against proposed increases, even if less than or equal to 50 percent, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

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| § | If the shares requested are blank check preferred shares that can be used for antitakeover purposes;**<sup>16</sup>**  |

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| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they're convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

<sup>16</sup> To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases above 50 percent of the current authorization when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

#### Specific Authorization Requests
Taft-Hartley Advisory Services Recommendation: Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support.

Blank Check Preferred Stock

Blank check preferred stock, with unspecified voting, conversion, dividend, distribution, and other rights, can be used for sound corporate purposes but can also be used as a device to thwart hostile takeovers without shareholder approval.

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| § | Vote against proposals that would authorize the creation of new classes of blank check preferred stock.  |

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| § | Vote against proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose.  |

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| § | Vote for proposals to create "declawed" blank check preferred stock (stock that cannot be used as a takeover defense).  |

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| § | Vote for requests to require shareholder approval for blank check authorizations.  |

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Adjust Par Value of Common Stock

Stock that has a fixed per share value that is on its certificate is called par value stock. The purpose of par value stock is to establish the maximum responsibility of a stockholder in the event that a corporation becomes insolvent. Proposals to reduce par value come from certain state level requirements for regulatory industries such as banks and other legal requirements relating to the payment of dividends.

Taft-Hartley Advisory Services Recommendation: Vote for management proposals to reduce the par value of common stock.

Preemptive Rights

Preemptive rights permit shareholders to share proportionately in any new issues of stock of the same class. These rights guarantee existing shareholders the first opportunity to purchase shares of new issues of stock in the same class as their

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own and in the same proportion. The absence of these rights could cause stockholders' interest in a company to be reduced by the sale of additional shares without their knowledge and at prices unfavorable to them. Preemptive rights, however, can make it difficult for corporations to issue large blocks of stock for general corporate purposes.

**Taft-Hartley Advisory Services Recommendation:** Vote case-by-case on proposals to create or abolish preemptive rights. In evaluating proposals on preemptive rights, Taft-Hartley Advisory Services looks at the size of a company and the characteristics of its shareholder base.

Debt Restructuring

Taft-Hartley Advisory Services Recommendation:

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| § | Vote case-by-case on proposals regarding debt restructurings.  |

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| § | Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.  |

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§ Review 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. The following factors are considered:

§ *Dilution*—How much will the ownership interest of existing shareholders be reduced, and how extreme will dilution to any future earnings be?

§ *Change in Control*—Will the transaction result in a change in control of the company? Are board and committee seats guaranteed? Do standstill provisions and voting agreements exist?

§ *Financial Issues*— company's financial situation, degree of need for capital, use of proceeds, and effect of the financing on the company's cost of capital;

§ *Terms of the offer*—discount/premium in purchase price to investor including any fairness opinion, termination penalties and exit strategy;

§ *Conflict of interest*—arm's length transactions and managerial incentives; and

§ Management's efforts to pursue other alternatives.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

**Taft-Hartley Advisory Services Recommendation:**For U.S. domestic issuers incorporated outside the U.S. and listed solely on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 10 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

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8. State of Incorporation

Voting on State Takeover Statutes

**Taft-Hartley Advisory Services Recommendation:** Review 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). Taft-Hartley Advisory Services generally supports opting into stakeholder protection statutes if they provide comprehensive protections for employees and community stakeholders. Taft-Hartley Advisory Services is less supportive of takeover statutes that only serve to protect incumbent management from accountability to shareholders and which negatively influence shareholder value.

Reincorporation Proposals

**Taft-Hartley Advisory Services Recommendation:** Management or shareholder proposals to change a company's state of incorporation should be evaluated on a case-by-case basis, giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation; and

§ Comparison of corporation laws of original state and destination state.

Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.

Offshore Reincorporations and Tax Havens

For a company that seeks to reincorporate, Taft-Hartley Advisory Services evaluates the merits of the move on a case-by-case basis, taking into consideration the company's strategic rationale for the move, the potential economic ramifications, potential tax benefits, and any corporate governance changes that may impact shareholders. Taft-Hartley Advisory Services believes there are a number of concerns associated with a company looking to reincorporate from the United States to offshore locales such as Bermuda, the Cayman Islands or Panama. With more U.S.-listed companies seeking to move offshore, shareholders are beginning to understand the web of complexities surrounding the legal, tax, and governance implications involved in such a transaction.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote case-by-case on proposed offshore moves, taking into consideration:  |

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§ Legal recourse for U.S. stockholders of the new company and the enforcement of legal judgments against the company under the U.S. securities laws;

§ The transparency (or lack thereof) of the new locale's legal system;

§ Adoption of any shareholder-unfriendly corporate law provisions;

§ Actual, quantifiable tax benefits associated with foreign incorporation;

§ Potential for accounting manipulations and/or discrepancies;

§ Any pending U.S. legislation concerning offshore companies;

§ Prospects of reputational harm and potential damage to brand name via increased media coverage concerning corporate expatriation.

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| § | Generally vote for shareholder requests calling for "expatriate" companies that are domiciled abroad yet predominantly owned and operated in America to re-domesticate back to a U.S. state jurisdiction.  |

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While a firm's country of incorporation will remain the primary basis for evaluating companies, Taft-Hartley Advisory Services will generally apply its U.S. policies to the extent possible with respect to issuers that file DEF 14As, 10-K annual reports, and 10-Q quarterly reports, and are thus considered domestic issuers by the U.S. Securities and Exchange Commission (SEC). U.S. policies will also apply to companies listed on U.S. exchanges as Foreign Private Issuers (FPIs) and that may be exempt from the disclosure and corporate governance requirements that apply to most companies traded on U.S. exchanges, including a number of SEC rules and stock market listing requirements. Corporations that have reincorporated outside the U.S. have found themselves subject to a combination of governance regulations and best practice standards that may not be entirely compatible with an evaluation framework based solely on the country of incorporation.

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9. Corporate Responsibility & Accountability

Social, Environmental and Sustainability Issues

Taft-Hartley Advisory Services generally supports social, workforce, and environmental shareholder-sponsored resolutions if they seek to create responsible corporate citizens while at the same time attempting to enhance long-term shareholder value. Taft-Hartley Advisory Services typically supports proposals that ask for disclosure reporting of information that is not available outside the company that is not proprietary in nature. Such reporting is particularly most vital when it appears that a company has not adequately addressed shareholder concerns regarding social, workplace, environmental and/or other issues. A determination whether the request is relevant to the company's core business and in-line with industry practice will be made on a case-by-case basis. The proponent of the resolution must make the case that the benefits of additional disclosure outweigh the costs of producing the report.

**Taft-Hartley Advisory Services Recommendation:** In analyzing social, workplace, environmental, and other related proposals, Taft-Hartley Advisory Services considers the following factors:

§ Whether the proposal itself is well framed and reasonable;

§ Whether adoption of the proposal would have either a positive or negative impact on the company's short-term or long-term share value;

§ Whether the company's analysis and voting recommendation to shareholders is persuasive;

§ The degree to which the company's stated position on the issues could affect its reputation or sales, or leave it vulnerable to boycott or selective purchasing;

§ Whether the subject of the proposal is best left to the discretion of the board;

§ Whether the issues presented in the proposal are being appropriately or effectively dealt with through legislation, government regulation, or company-specific action;

§ The company's approach compared with its peers or any industry standard practices for addressing the issue(s) raised by the proposal;

§ Whether the company has already responded in an appropriate or sufficient manner to the issue(s) raised in the proposal;

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's practices related to the issue(s) raised in the proposal;

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| § | If the proposal requests increased disclosure or greater transparency, whether sufficient information is publicly available to shareholders and whether it would be unduly burdensome for the company to compile and avail the requested information to shareholders in a more comprehensive or amalgamated fashion; and  |

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§ Whether implementation of the proposal would achieve the objectives sought in the proposal.

In general, Taft-Hartley Advisory Services supports proposals that request the company to furnish information helpful to shareholders in evaluating the company's operations from top to bottom. In order to be able to intelligently monitor their investments, shareholders often need information that is best provided by the company in which they have invested on behalf of their end beneficiaries. Qualified requests satisfying the aforementioned criteria usually merit support.

Proposals requesting that the company cease certain actions that the proponent believes are harmful to society or some segment of society will be evaluated on a case-by-case basis. Special attention will be made to the company's legal and ethical obligations, its ability to remain profitable, and potential negative publicity if the company fails to honor the request. A high standard will need to be met by proponents requesting specific action like divesture of a business line or operation, legal remuneration, or withdrawal from certain high-risk markets.

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I. GENERAL CSR RELATED

Special Policy Review and Shareholder Advisory Committees

These resolutions propose the establishment of special committees of the board to address broad corporate policy and provide forums for ongoing dialogue on issues including, but not limited to: shareholder relations, the environment, occupational health and safety, and executive compensation.

**Taft-Hartley Advisory Services Recommendation:** Support these proposals when they appear to offer a potentially effective method for enhancing shareholder value.

International Operations

The rise of globalization has put increasing importance on the need for U.S. companies to periodically monitor their business operations abroad. As a means to preserve brand integrity and protect against potentially costly litigation and negative public relations, Taft-Hartley Advisory Services generally supports shareholder proposals which call for a report on the company's core business policies and procedures of its operations outside the United States.

Many of the resolutions which address a company's international policies can include: impact of Foreign Direct Investment (FDI) in emerging market economies; corporate safeguards against money laundering; terrorist financing; economic de-stabilization concerns; relationships with international financial institutions (IFIs); and product sales/marketing abroad (i.e., tobacco, pharmaceutical drug pricing).

**Taft-Hartley Advisory Services Recommendation:** Generally support proposals asking for policy clarification and reporting on international operations that can materially impact the company's short and long-term bottom-line.

Affirm Political Non-Partisanship

Employees should not be put in a position where professional standing and goodwill within the corporation could be jeopardized as a result of political beliefs. Responsible employment practices should protect workers from an environment characterized by political indoctrination or intimidation. Corporations should not devote resources to partisan political activities, nor should they compel their employees to contribute to or support particular causes. Moreover, it is wise for a corporation to maintain a politically neutral stance as to avoid potentially embarrassing conflicts of interests that could negatively impact the company's brand name with consumers.

**Taft-Hartley Advisory Services Recommendation:** Generally support proposals affirming political non-partisanship within the company.

Political Contributions, Lobbying Reporting & Disclosure

Changes in legislation that governs corporate political giving have, rather than limiting such contributions, increased the complexity of tracking how much money corporations contribute to the political process and where that money ultimately ends up. In January 2010, the U.S. Supreme Court's decision in *Citizens United vs. Federal Election Commission* lifted restrictions on corporate spending in federal elections. A company's involvement in the political process could impact shareholder value if such activities are not properly overseen and managed.

Shareholders have the right to know about corporate political activities, and management's knowledge that such information can be made publicly available should encourage a company's lawful and responsible use of political contributions.

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Moreover, it is critical that shareholders understand the internal controls that are in place at a company to adequately manage political contributions and lobbying practices. Given the significant reputational and financial risk involved in political giving, shareholders should expect management to have the necessary capabilities to monitor and track all monies distributed toward political groups and causes. These internal controls should be fully consistent with Section 404 requirements of the Sarbanes-Oxley Act of 2002.

While political contributions, lobbying and other corporate political activity can benefit the strategic interests of a company, it is important that accountability mechanisms are in place to ensure that monies disbursed in support of political objectives actually generate identifiable returns on shareholder wealth. Such mechanisms serve to insure against the use of shareholder funds in the furtherance of narrow management agendas.

When analyzing the proposals, special consideration will be made if the target company has been the subject of significant controversy stemming from its contributions or political activities, if the company fails to disclose a policy to shareholders that outlines the process by which the company considers its political contributions and lobbying activities, or if the company has recently been involved in significant controversy or litigation related to the company's political contributions or governmental affairs.

Taft-Hartley Advisory Services Recommendation:

§ Support reporting of political and political action committee (PAC) contributions.

§ Support establishment of corporate political contributions guidelines and internal reporting provisions or controls.

§ Generally support shareholder proposals requesting companies to review and report on their political lobbying activities including efforts to influence governmental legislation.

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| § | Vote against shareholder proposals asking to publish in newspapers and public media the company's political contributions as such publications could present significant cost to the company without providing commensurate value to shareholders.  |

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| § | Generally vote case-by-case on proposals requesting comparison of a company's political spending to objectives that can mitigate material risks for the company, such as limiting global warming.  |

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Military Sales

Shareholder proposals from church groups and other community organizations have asked companies for detailed reports on foreign military sales. These proposals often can be created at reasonable cost to the company and contain no proprietary data. Large companies can supply this information without undue burden and provide shareholders with information affecting corporate performance and decision-making.

Taft-Hartley Advisory Services Recommendation:

§ Generally support reports on foreign military sales and economic conversion of facilities and where such reporting will not disclose sensitive information that could impact the company adversely or increase its legal exposure.

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| § | Generally vote against proposals asking a company to develop specific military contracting criteria.  |

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Report on Operations in Sensitive Regions or Countries

Over the past decade, a number of public companies – especially within the extractive sector – have withdrawn from geopolitically sensitive regions as a result of being associated with political controversies involving their host countries (i.e. Myanmar, the Sudan, China, Iran, etc.). Oil and natural gas companies, in particular, continue to be the largest investors in many countries involved in human rights abuse and terrorist activities. As such, these companies become targets of consumer boycotts, public relations backlash and even governmental intervention.

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Taft-Hartley Advisory Services Recommendation:

§ Generally support shareholder proposals to adopt labor standards in connection with involvement in a certain market and other potentially sensitive geopolitical regions.

§ Generally support shareholder proposals seeking a report on operations within a certain market and documentation of costs of continued involvement in a given country or region.

§ Generally support requests for establishment of a board committee to review and report on the reputational risks and legal compliance with U.S. sanctions as a result of the company's continued operations in countries associated with terrorist sponsored activities.

§ Consider shareholder proposals to pull out of a certain market on a case-by-case basis considering factors such as overall cost, FDI exposure, level of disclosure for investors, magnitude of controversy, and the current business focus of the company.

II. ENVIRONMENT & CLIMATE CHANGE

Shareholder proposals addressing environmental and energy concerns have been plentiful in recent years, and generally seek greater disclosure on an issue or seek to improve a company's environmental practices in order to protect the world's natural resources. In addition, some proponents cite the negative financial implications for companies with poor environmental practices, including liabilities associated with site clean-ups and lawsuits, as well as arguments that energy efficient products and clean environmental practices are sustainable business practices that will contribute to long-term shareholder value. Shareholders say the majority of independent atmospheric scientists agree that global warming poses a serious problem to the health and welfare of all countries, citing the findings of the Intergovernmental Panel on Climate Change (IPCC), the world's most authoritative scientific body on the subject. Shareholder proponents argue that companies can report on their greenhouse gas emissions within a few months at reasonable cost.

Greenhouse Gas Emissions

Scientists generally agree that gases released by chemical reactions including the burning of fossil fuels contribute to a "greenhouse effect" that traps the planet's heat. Environmentalists claim that the greenhouse gases produced by the industrial age have caused recent weather crises such as heat waves, rainstorms, melting glaciers, rising sea levels and receding coastlines. With notable exceptions, a number of business leaders have described the rise and fall of global temperatures as naturally occurring phenomena and depicted corporate impact on climate change as minimal.

Shareholder proposals asking a company to issue a report to shareholders – at reasonable cost and omitting proprietary information – on greenhouse gas emissions ask that the report include descriptions of efforts within companies to reduce emissions, their financial exposure and potential liability from operations that contribute to global warming, and their direct or indirect efforts to promote the view that global warming is not a threat. Proponents argue that there is scientific proof that the burning of fossil fuels causes global warming, that future legislation may make companies financially liable for their contributions to global warming, changing market dynamics and consumer preferences may impact demand for fossil fuels, and thus shareholder value, and that a report on the company's role in global warming can be assembled at reasonable cost.

Taft-Hartley Advisory Services Recommendation:

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| § | Generally vote for shareholder proposals calling for a company to commit to reducing its greenhouse gas emissions under a reasonable timeline.  |

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| § | Generally vote for resolutions requesting that a company disclose information on the financial, physical, or regulatory risks related to climate change on its operations and investments, or on how the company identifies, measures, and manages such risks.  |

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| § | Generally vote for proposals requesting a report on greenhouse gas (GHG) emissions from company operations and/or products and operations.  |

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Say on Climate (SoC) Management Proposals

**Taft-Hartley Advisory Services Recommendation:** Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan**<sup>17</sup>**, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

§ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

§ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

§ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions in line with Paris Agreement goals (Scopes 1, 2, and 3 if relevant);

§ Whether the company has sought and received third-party approval that its targets are science-based;

§ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

§ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

§ Whether the company's climate data has received third-party assurance;

§ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

§ Whether there are specific industry decarbonization challenges; and

§ The company's related commitment, disclosure, and performance compared to its industry peers.

Say on Climate (SoC) Shareholder Proposals

**Taft-Hartley Advisory Services Recommendation:** Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

§ The completeness and rigor of the company's climate-related disclosure;

§ The company's actual GHG emissions performance;

§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Investment in Renewable Energy

Filers of proposals on renewable energy ask companies to increase their investment in renewable energy sources and to work to develop products that rely more on renewable energy sources. Increased use of renewable energy is expected to reduce the negative environmental impact of energy companies. In addition, as supplies of oil and coal exist in the earth in limited quantities, renewable energy sources represent a competitive, and some would even argue essential, long-term business strategy.

**Taft-Hartley Advisory Services Recommendation:** Generally support shareholder proposals seeking increased investment in renewable energy sources, taking into account whether the terms of the resolution are realistic or overly restrictive for management to pursue.

<sup>17</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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Sustainability Reporting and Planning

The concept of sustainability is commonly understood as meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. Indeed, the term sustainability is complex and poses significant challenges for companies on many levels. Many in the investment community have termed this broader responsibility the "triple bottom line," referring to the triad of performance goals related to economic prosperity, social responsibility and environmental quality. In essence, the concept requires companies to balance the needs and interests of their various stakeholders while operating in a manner that sustains business growth for the long-term, supports local communities and protects the environment and natural capital for future generations.

Reporting and enhanced disclosure addressing sustainable development is important to companies namely because it offers a formal structure for decision making that helps management teams anticipate and address important global trends that can have serious consequences for business and society. Shareholders may request general sustainability reports on a specific location or operation, often requesting that the company detail the environmental, social, legal and other risks and/or potential liabilities of the specific project in question.

A number of companies have begun to report on sustainability issues using established standards in the marketplace. Such reporting focuses on corporate compliance and measurement regarding key economic, environmental, and social performance indicators. As a best practice, companies release annual sustainability reports in conjunction to regular annual statement of operations.

**Taft-Hartley Advisory Services Recommendation:** Generally support shareholder proposals seeking greater disclosure on the company's environmental and social practices, and/or associated risks and liabilities.

Operations in Protected or Sensitive Areas

Operating in regions protected or established under national or international categorization guidelines, including wildlife refuges, national forests, and International Union for Conservation of Nature and Natural Resources (IUCN) categorized areas, expose companies to increased oversight and the potential for associated risk and controversy. While it is important for a company to have the flexibility to operate in these regions to take advantage of strategic placement or growth, additional disclosure could be an important mitigating factor to address increased risk and oversight. Restrictions to the company's operations, damaging public relations, and costly litigation resulting from failure to comply with the requirements associated with protected or categorized regions could have a significant impact on shareholder value.

**Taft-Hartley Advisory Services Recommendation:** Generally support shareholder requests for reports outlining potential environmental damage from operations in protected regions, including wildlife refuges, unless the company does not currently have operations or plans to develop operations in these protected regions.

Hydraulic Fracturing

Shareholder proponents have elevated concerns on the use of hydraulic fracturing, an increasingly controversial process in which water, sand, and a mix of chemicals is blasted horizontally into tight layers of shale rock to extract natural gas. As this practice has gained more widespread use, environmentalists have raised concerns that the chemicals mixed with sand and water to aid the fracturing process can contaminate ground water supplies. Proponents of resolutions at companies that employ hydraulic fracturing are also concerned that wastewater produced by the process could overload the waste treatment plants to which it is shipped. Shareholders have asked companies that utilize hydraulic fracturing to report on the environmental impact of the practice and to disclose policies designed to reduce hazards from the process.

**Taft-Hartley Advisory Services Recommendation:** Vote for requests seeking greater transparency on the practice of hydraulic fracturing and its associated risks.

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Recycling Policy

A number of companies have received proposals to step-up their recycling efforts, with the goal of reducing the company's negative impact on the environment and reducing costs over the long-term.

**Taft-Hartley Advisory Services Recommendation:** Generally vote for shareholder proposals that ask companies to increase their recycling efforts or to adopt a formal recycling policy.

Endorsement of Ceres Roadmap 2030

These resolutions call for the adoption of principles that encourage the company to protect the environment and the safety and health of its employees. The Ceres Roadmap 2030, formulated by Ceres (formerly known as the Coalition for Environmentally Responsible Economies, CERES), require signing companies to address environmental issues, including protection of the biosphere, sustainable use of natural resources, reduction and disposal of wastes, energy conservation, and employee and community risk reduction. A signatory to the Ceres Roadmap 2030 would disclose its efforts in such areas through a standardized report submitted to Ceres and made available to the public.

Taft-Hartley Advisory Services supports proposals that improve a company's public image, reduce exposure to liabilities, and establish standards so that environmentally responsible companies and markets are not at a competitive financial disadvantage.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote for requests asking a company to formally adopt the Ceres Roadmap 2030.  |

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| § | Vote for adoption of reports to shareholders on environmental issues.  |

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Land Use

Many large retail stores and real estate development firms have received criticism over their policies and processes for acquiring and developing land. Often, in such cases, there are organizations that support as well as those that oppose the proposed development.

Many of these requests brought forth by the respective stakeholders raise serious issues that can have a real impact on short-term shareholder value. However, in some cases, additional reporting may be duplicative of existing disclosure or may fail to provide added benefit to shareholders commensurate with the associated cost or burden of providing additional information. Some of the companies targeted with such resolutions have been subject to recent litigation, significant fines stemming from their land use practices, and/or recent community boycotts.

**Taft-Hartley Advisory Services Recommendation:** Generally support shareholder resolutions that request better disclosure of detailed information on a company's policies related to land use or development or compliance with local and national laws and zoning requirements.

Water Use

Shareholders may ask for a company to prepare a report evaluating the business risks linked to water use and impacts on the company's supply chain, including subsidiaries and bottling partners. Such proposals also ask companies to disclose current policies and procedures for mitigating the impact of operations on local communities in areas of water scarcity.

**Taft-Hartley Advisory Services Recommendation:** Vote for shareholder proposals seeking the preparation of a report on a company's risks linked to water use.

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III. WORKPLACE PRACTICES & HUMAN RIGHTS

Equal Employment Opportunity

These proposals generally request that a company establish a policy of reporting to shareholders its progress with equal opportunity and affirmative action programs. The costs of violating federal laws that prohibit discrimination by corporations are high and can affect corporate earnings.

The Equal Opportunities Employment Commission (EEOC) does not release the company's filings to the public unless it is involved in litigation, and it is difficult to obtain from other sources. Companies need to be sensitive to minority employment issues as the work force becomes increasingly diverse. This information can be provided with little cost to the company and does not create an unreasonable burden on management.

Taft-Hartley Advisory Services Recommendation:

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| § | Vote for proposals calling for action on equal employment opportunity and anti-discrimination.  |

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| § | Vote for proposals requesting legal and regulatory compliance and public reporting related to non-discrimination, affirmative action, workplace health and safety, environmental issues, and labor policies and practices that affect long-term corporate performance.  |

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| § | Vote for proposals advocating for non-discrimination in salary, wages, and all benefits.  |

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High-Performance Workplace

High-performance workplace practices emphasize employee training, participation, and feedback. The concept of a high-performance workplace has been endorsed by the U.S. Department of Labor and refers to a workplace that is designed to provide workers with the information, skills, incentives, and responsibility to make decisions essential for innovation, quality improvement and rapid response to changes in the marketplace. These standards embrace a "what is good for the worker is good for the company" philosophy. Studies have shown that improvement in human resources practices is associated with increases in total return to shareholders. High-performance workplace standards proposals can include linking compensation to social measures such as employee training, morale and safety, environmental performance and workplace lawsuits.

**Taft-Hartley Advisory Services Recommendation:** Generally support proposals that incorporate high-performance workplace standards.

Workplace Safety

In light of fatal accidents at oil refineries (Tesoro – Anacortes refinery, April 2010; and BP – Texas City refinery, March 2005), the 2010 BP Deepwater Horizon incident in the Gulf of Mexico, and the explosion at Massey Energy's Upper Big Branch mine in 2010, shareholders have sought greater transparency and accountability regarding workplace safety by filing resolutions at a number of corporations.

**Taft-Hartley Advisory Services Recommendation:** Generally vote for shareholder proposals requesting for workplace safety reports, including reports on accident risk reduction efforts.

Non-Discrimination in Retirement Benefits

A cash balance plan is a defined benefit plan that treats an earned retirement benefit as if it were a credit from a defined contribution plan, but which provides a stated benefit at the end of its term. Because employer contributions to these plans are credited evenly over the life of a plan and not based on a seniority formula, they may reduce payouts to long-term employees who are currently vested in plans.

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Cash-balance pension conversions have undergone significant congressional and federal agency scrutiny in the wake of high-profile EEOC complaints on age discrimination and employee anger at several large blue-chip companies. While significant policy reform is unlikely in the short-term, business interests are worried enough that the National Association of Manufacturers and other pro-business lobbies have formed a coalition on Capitol Hill to preserve the essential features of the plans and to overturn an IRS ruling.

Driving the push behind conversions from traditional pension plans to cash-balance plans are the substantial savings that companies generate in the process. Critics point out that this savings is gained at the expense of the most senior employees. Shareholder resolutions may call on corporate boards to establish a committee of outside directors to prepare a report to shareholders on the potential impact of pension-related proposals being considered by national policymakers in reaction to the controversy spawned by the plans.

**Taft-Hartley Advisory Services Recommendation:** Support proposals calling for a non-discrimination policy with regard to retirement benefits and pension management at a company.

Gender, Race/Ethnicity Pay Gaps

**Taft-Hartley Advisory Services Recommendation:** Vote case-by-case on requests for reports on a company's pay data by gender or race/ ethnicity, or a report on a company's policies and goals to reduce any gender or race/ethnicity pay gaps, taking into account:

§ The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy on fair and equitable compensation practices;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race, or ethnicity pay gap issues;

§ The company's disclosure regarding gender, race, or ethnicity pay gap policies or initiatives compared to its industry peers; and

§ Local laws regarding categorization of race and/or ethnicity and definitions of ethnic and/or racial minorities.

Racial Equity and/or Civil Rights Audit Guidelines

**Taft-Hartley Advisory Services Recommendation:** Generally vote for proposals requesting that a company conduct an independent racial equity and/or civil rights audit, considering company disclosures, policies, actions, and engagements.

Sexual Harassment

**Taft-Hartley Advisory Services Recommendation:** Vote case-by-case on requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment, taking into account:

§ The company's current policies, practices, oversight mechanisms related to preventing workplace sexual harassment;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to workplace sexual harassment issues; and

§ The company's disclosure regarding workplace sexual harassment policies or initiatives compared to its industry peers.

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Mandatory Arbitration

**Taft-Hartley Advisory Services Recommendation:** Vote case-by-case on requests for a report on a company's use of mandatory arbitration on employment-related claims, taking into account:

§ The company's current policies and practices related to the use of mandatory arbitration agreements on workplace claims;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to the use of mandatory arbitration agreements on workplace claims; and

§ The company's disclosure of its policies and practices related to the use of mandatory arbitration agreements compared to its peers.

Fair Lending Reporting and Compliance

These resolutions call for financial institutions to comply with fair lending laws and statutes while avoiding predatory practices in their sub-prime lending. These predatory practices include: lending to borrowers with inadequate income, who will then default; not reporting on payment performances of borrowers to credit agencies; implying that credit life insurance is necessary to obtain the loan (packing); unnecessarily high fees; refinancing with high additional fees rather than working out a loan that is in arrears (flipping); and high prepayment fees.

Taft-Hartley Advisory Services Recommendation:

§ Support proposals calling for full compliance with fair-lending laws.

§ Support reporting on overall lending policies and data.

MacBride Principles

These resolutions have called for the adoption of the MacBride Principles for operations located in Northern Ireland. They request companies operating abroad to support the equal employment opportunity policies that apply in facilities they operate domestically. The principles were established to address the sectarian hiring problems between Protestants and Catholics in Northern Ireland. It is well documented that Northern Ireland's Catholic community faced much higher unemployment figures than the Protestant community. In response to this problem, the U.K. government instituted the New Fair Employment Act of 1989 (and subsequent amendments) to address the sectarian hiring problems.

Many companies believe that the Act adequately addresses the problems and that further action, including adoption of the MacBride Principles, only duplicates the efforts already underway. In evaluating a proposal to adopt the MacBride Principles, shareholders must decide whether the principles will cause companies to divest, and therefore worsen the unemployment problem, or whether the principles will promote equal hiring practices. Proponents believe that the Fair Employment Act does not sufficiently address the sectarian hiring problems. They argue that the MacBride Principles serve to stabilize the situation and promote further investment.

**Taft-Hartley Advisory Services Recommendation:** Support the MacBride Principles for operations in Northern Ireland that request that companies abide by equal employment opportunity policies.

Contract Supplier Standards

These resolutions call for compliance with governmental mandates and corporate policies regarding nondiscrimination, affirmative action, work place safety and health, and other basic labor protections.

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**Taft-Hartley Advisory Services Recommendation:** Generally support proposals that:

---

| | |
|:---|:---|
| § | Seek publication of a "Worker Code of Conduct" to be implemented by the company's foreign suppliers and licensees, requiring they satisfy all applicable labor standards and laws protecting employees' wages, benefits, working conditions, freedom of association, right to collectively bargain, and other rights;  |

---

§ Request a report summarizing the company's current practices for enforcement of its Worker Code of Conduct;

§ Seek to establish independent monitoring mechanism in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with the Worker Code of Conduct;

§ Create incentives to encourage suppliers to raise standards rather than terminate contracts;

§ Implement policies for ongoing wage adjustments, ensuring adequate purchasing power and a sustainable living wage for employees of foreign suppliers and licensees;

§ Request public disclosure of contract supplier reviews on a regular basis; and

---

| | |
|:---|:---|
| § | Adopt labor standards for foreign and domestic suppliers to ensure that the company will not do business with foreign suppliers that manufacture products for sale in the U.S. using forced or child labor or with suppliers that fail to comply with applicable laws protecting employees' wages and working conditions.  |

---

Corporate and Supplier Codes of Conduct

Taft-Hartley Advisory Services generally supports proposals that call for the adoption and/or enforcement of clear principles or codes of conduct relating to countries in which there are systematic violations of human rights. These conditions include the use of slave, child, or prison labor, undemocratically elected governments, widespread reports by human rights advocates, fervent pro-democracy protests, or economic sanctions and boycotts.

Many proposals refer to the seven core conventions, commonly referred to as the "Declaration on Fundamental Principles and Rights At Work," ratified by the International Labor Organization (ILO). The seven conventions fall under four broad categories: i) right to organize and bargain collectively; ii) non-discrimination in employment; iii) abolition of forced labor; and iv) end of child labor. Each member nation of the ILO body is bound to respect and promote these rights to the best of their abilities.

Taft-Hartley Advisory Services Recommendation:

§ Support the principles and codes of conduct relating to company investment and/or operations in countries with patterns of human rights abuses or pertaining to geographic regions experiencing political turmoil (Northern Ireland, Columbia, Burma, former Soviet Union, and China).

§ Support the implementation and reporting on ILO codes of conduct.

§ Support independent monitoring programs in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with Codes.

§ Support requests that a company conduct an assessment of the human rights risks in its operation or in its supply chain, or report on its human rights risk assessment process.

IV. CONSUMER HEALTH & PUBLIC SAFETY

Phase-out or Label Products Containing Genetically Engineered Ingredients

Shareholder activists request companies engaged in the development of genetically modified agricultural products (GMOs) to adopt a policy of not marketing or distributing such products until long term safety testing demonstrates that they are not harmful to humans, animals or the environment. Until further long term testing demonstrates that these products are not harmful, companies in the restaurant, prepared foods and packaging industries are being asked to remove genetically altered ingredients from products they manufacture, distribute or sell, and label such products in the interim. Shareholders are asking supermarket companies to do the same for their own private label brands.

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Taft-Hartley Advisory Services Recommendation:

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| | |
|:---|:---|
| § | Vote for shareholder proposals to label products that contain genetically engineered products.  |

---

---

| | |
|:---|:---|
| § | Generally vote against proposals calling for a full phase out of product lines containing GMO ingredients.  |

---

Tobacco-Related Proposals

Shareholders file resolutions annually asking that companies with ties to the tobacco industry account for their marketing and distribution strategies, particularly as they impact smoking by young people. While the specific resolutions for shareholder proponents vary from year to year, activist shareholders consistently make the tobacco industry a prominent target. Examples of tobacco proposals include: attempting to link executive compensation with teen smoking rates; the placement of company tobacco products in retail outlets; the impact of second hand smoke; and a review of advertising campaigns and their impact on children and minority groups.

Taft-Hartley Advisory Services Recommendation:

---

| | |
|:---|:---|
| § | Vote for shareholder proposals seeking to limit the sale of tobacco products to minors.  |

---

---

| | |
|:---|:---|
| § | Generally vote against proposals calling for a full phase out of tobacco related product lines.  |

---

Toxic Emissions

Shareholder proposals asking companies to take steps to minimize their emissions of toxic chemicals or release of toxic wastes into the environment can vary greatly. Some focus on reporting on the impact of these chemicals on the communities in which the company operates. Still others ask for a review of the company's efforts to minimize pollution.

**Taft-Hartley Advisory Services Recommendation:** Vote for shareholder proposals calling on the company to establish a plan to reduce toxic emissions.

Toxic Chemicals

The use of toxic chemicals in cosmetics, consumables, and household products has become a growing issue of concern for shareholders as international regulations on this topic continue to expand, providing increased scrutiny over potentially toxic materials or compounds used or emitted in the conduct of operations or as an ingredient in consumer goods. Shareholders must recognize the impact that changing regulation and consumer expectations could have on shareholder value and should encourage companies to disclose their policies regarding the use or emission of toxic chemicals. Specific considerations should be made for a company's geographic markets and the appearance of historical difficulties with controversy, fines, or litigation, requests for disclosure on the potential financial and legal risk associated with toxic chemicals.

Taft-Hartley Advisory Services Recommendation:

§ Generally support resolutions requesting that a company disclose its policies related to toxic chemicals.

§ Generally support shareholder resolutions requesting that companies evaluate and disclose the potential financial and legal risks associated with utilizing certain chemicals.

§ Consider shareholder proposals requesting companies to substitute or replace existing products on a case-by-case basis, with consideration for applicable regulations and standards in the markets in which the company participates.

Nuclear Safety

These resolutions are filed at companies that manage nuclear power facilities or produce components for nuclear reactors to request disclosure on the risks to the company associated with these operations, including physical security and the

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potential for environmental damage. Current reporting requirements for companies that operate nuclear facilities are managed by the Nuclear Regulatory Commission (NRC) and include detailed reports on safety and security that are available to the public.

**Taft-Hartley Advisory Services Recommendation:** Generally support shareholder resolutions requesting that companies report on risks associated with their nuclear reactor designs and/or the production and interim storage of irradiated fuel rods.

Concentrated Area Feeding Operations (CAFOs)

The level of pollution resulting from CAFOs has drawn increased attention in recent years as certain legal decisions have established the precedent that a company can be held liable for the actions of the contract farms it sources from. Fines and remediation expenses stemming from these cases have been significant and could have a notable impact on the companies' operations and shareholder value.

**Taft-Hartley Advisory Services Recommendation:** Generally support resolutions requesting that companies report to shareholders on the risks and liabilities associated with concentrated animal feeding operations (CAFOs) unless the company has publicly disclosed guidelines for its corporate and contract farming operations (including compliance monitoring), or if the company does not directly source from CAFOs.

Pharmaceutical Product Reimportation

One of the most visible aspects of the legal and political debate over rising health care costs in the United States can be seen through prescription drug reimportation through Canada. While U.S. and Canadian regulations limit reimportation, several states have taken steps to encourage employees to actively seek less expensive medications through reimportation.

Shareholder action at major pharmaceutical companies has hinged around requesting increased disclosure of the financial and legal risks associated with company policies, or called on companies to change distribution limits to increase product availability in Canada, thereby encouraging product reimportation to the United States. The level of public concern over this issue and associated impact that a poorly developed policy could have on the companies suggest that additional disclosure of company policies related to reimportation could be beneficial to shareholders and generally merits support.

Taft-Hartley Advisory Services Recommendation:

§ Generally support shareholder proposals requesting that companies report on the financial and legal impact of their policies regarding prescription drug reimportation, unless such information is already publicly disclosed.

§ Generally support shareholder proposals requesting that companies adopt specific policies to encourage or not constrain prescription drug reimportation.

Pharmaceutical Product Pricing

Pharmaceutical drug pricing, both within the United States and internationally, has raised many questions of the companies that are responsible for creating and marketing these treatments. Shareholder proponents, activists and even some legislators have called upon drug companies to restrain pricing of prescription drugs.

The high cost of prescription drugs is a vital issue for senior citizens across the country. Seniors have the greatest need for prescription drugs, accounting for a significant portion of all prescription drug sales, but they often live on fixed incomes and are underinsured.

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Proponents note that efforts to reign-in pharmaceutical costs will not negatively impact research and development (R&D) costs and that retail drug prices are consistently higher in the U.S. than in other industrialized nations. Pharmaceutical companies often respond that adopting a formal drug pricing policy could put the company at a competitive disadvantage.

Against the backdrop of the AIDS crisis in Africa, many shareholders have called on companies to address the issue of affordable drugs for the treatment of AIDS, as well as TB and Malaria throughout the developing world. When analyzing such resolutions, consideration should be made of the strategic implications of pricing policies in the market.

Taft-Hartley Advisory Services Recommendation:

§ Proposals asking a company to implement price restraints on its pharmaceutical products will be evaluated on a case-by-case basis, taking into account the following factors:

§ Whether the proposal focuses on a specific drug and region;

§ Whether the economic benefits of providing subsidized drugs (e.g., public goodwill) outweigh the costs in terms of reduced profits, lower R&D spending, and harm to competitiveness;

§ The extent that reduced prices can be offset through the company's marketing expenditures without significantly impacting R&D spending;

§ Whether the company already limits price increases of its products;

§ Whether the company already contributes life-saving pharmaceuticals to the needy and Third World countries; and

§ The extent to which peer companies implement price restraints.

§ Generally support proposals requesting that companies implement specific price restraints for its pharmaceutical products in developing markets or targeting certain population groups.

§ Generally support proposals requesting that companies evaluate their global product pricing strategy, considering the existing level of disclosure on pricing policies, any deviation from established industry pricing norms, and the company's existing philanthropic initiatives.

---

| | |
|:---|:---|
| § | Vote for shareholder proposals that call on companies to develop a policy to provide affordable HIV, AIDS, TB and Malaria drugs to citizens in the developing world.  |

---

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Email sales@issgovernance.com or visit www.issgovernance.com for more information.

Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS' 2,600 employees operate worldwide across 29 global locations in 15 countries. Its approximately 3,400 clients include many of the world's leading institutional investors who rely on ISS' objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS' expertise to help them make informed investment decisions. This document and all of the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the "Information") is the property of Institutional Shareholder Services Inc. (ISS), its subsidiaries, or, in some cases third party suppliers.

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![LOGO](g79608g12p83.jpg) U N I T E D S T A T E S CATHOLIC FAITH-BASED PROXY VOTING GUIDELINES 2023 Policy Recommendations Published January 17, 2023 W W W . I S S G O V E R N A N C E . C O M

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## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [**INTRODUCTION**](#appd79608_502) | **E-222** |
| [**1. Board of Directors**](#appd79608_503) | **E-223** |
| &nbsp;&nbsp;&nbsp;&nbsp; [Uncontested Election of Directors](#appd79608_504) | E-224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Accountability](#appd79608_505) | E-224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Takeover Defenses, Capital Structure, and Governance Structure](#appd79608_506) | E-224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Audit-Related Practices](#appd79608_507) | E-227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Compensation Practices](#appd79608_508) | E-227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pledging of Company Stock](#appd79608_509) | E-228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Material Environmental, Social and Governance (ESG) Risk Oversight Failures](#appd79608_510) | E-228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Risk Mitigation and Net Zero](#appd79608_511) | E-228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Responsiveness](#appd79608_512) | E-229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Independence](#appd79608_513) | E-229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Composition](#appd79608_514) | E-230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Diversity](#appd79608_515) | E-230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification of Directors – U.S.](#appd79608_516) | E-231 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Board-Related Management Proposals](#appd79608_517) | E-233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification/Declassification of the Board](#appd79608_518) | E-233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Vote Threshold for Director Elections](#appd79608_519) | E-233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appd79608_520) | E-233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification, Liability Protection, and Exculpation](#appd79608_521) | E-234 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Remove Directors/Fill Vacancies](#appd79608_522) | E-234 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Size](#appd79608_523) | E-235 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appd79608_524) | E-235 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appd79608_525) | E-235 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Board-Related Shareholder Proposals/Initiatives](#appd79608_526) | E-236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access](#appd79608_527) | E-236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Annual Election (Declassification) of the Board](#appd79608_528) | E-236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Threshold Voting Shareholder Proposals](#appd79608_529) | E-236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority of Independent Directors](#appd79608_530) | E-236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establishment of Independent Committees](#appd79608_531) | E-237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independent Board Chair](#appd79608_532) | E-237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establishment of Board Committees](#appd79608_533) | E-237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appd79608_534) | E-237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Policy on Shareholder Engagement](#appd79608_535) | E-238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Access](#appd79608_536) | E-238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appd79608_537) | E-238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appd79608_538) | E-239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Vote No Campaigns](#appd79608_539) | E-239 |
| [**2. Ratification of Auditors**](#appd79608_540) | **E-240** |
| &nbsp;&nbsp;&nbsp;&nbsp; [Auditor-Related Shareholder Proposals](#appd79608_541) | E-240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratify Auditors/Ensure Auditor Independence](#appd79608_542) | E-240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Rotation](#appd79608_543) | E-240 |

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|:---|:---|
| [**3. Takeover Defenses / Shareholder Rights**](#appd79608_544) | E-241 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Takeover Defenses and Shareholder Rights-Related Management Proposals](#appd79608_545) | E-241 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills (Shareholder Rights Plans)](#appd79608_546) | E-241 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Poison Pills/Protective Amendments](#appd79608_547) | E-242 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appd79608_548) | E-243 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Shareholder Vote Requirements](#appd79608_549) | E-243 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call a Special Meeting](#appd79608_550) | E-243 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appd79608_551) | E-244 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advance Notice Requirements for Shareholder Proposals/Nominations](#appd79608_552) | E-244 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appd79608_553) | E-245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appd79608_554) | E-245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Confidential Voting](#appd79608_555) | E-245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Acquisition Provisions](#appd79608_556) | E-246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Cash-Out Provisions](#appd79608_557) | E-246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disgorgement Provisions](#appd79608_558) | E-246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [State Takeover Statutes](#appd79608_559) | E-246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Freeze-Out Provisions](#appd79608_560) | E-246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appd79608_561) | E-247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Bylaws without Shareholder Consent](#appd79608_562) | E-247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Litigation Rights](#appd79608_563) | E-247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Federal Forum Selection Provisions](#appd79608_564) | E-247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Forum Provisions for State Law Matters](#appd79608_565) | E-247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee Shifting](#appd79608_566) | E-248 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Takeover Defenses and Shareholder Rights-Related Shareholder Proposals](#appd79608_567) | E-248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals to put Pill to a Vote and/or Adopt a Pill Policy](#appd79608_568) | E-248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reduce Supermajority Vote Requirements](#appd79608_569) | E-249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Remove Antitakeover Provisions](#appd79608_570) | E-249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimburse Proxy Solicitation Expenses](#appd79608_571) | E-249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appd79608_572) | E-249 |
| [**4. Miscellaneous Governance Provisions**](#appd79608_573) | **E-251** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appd79608_574) | E-251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjourn Meeting](#appd79608_575) | E-251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing Corporate Name](#appd79608_576) | E-251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Quorum Requirements](#appd79608_577) | E-251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Minor Bylaws](#appd79608_578) | E-252 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Other Business](#appd79608_579) | E-252 |
| [**5. Capital Structure**](#appd79608_580) | **E-253** |
| &nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appd79608_581) | E-253 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appd79608_582) | E-253 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appd79608_583) | E-254 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Issue Stock for Use with Rights Plan](#appd79608_584) | E-254 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appd79608_585) | E-254 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appd79608_586) | E-254 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appd79608_587) | E-254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appd79608_588) | E-255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appd79608_589) | E-256 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Blank Check Preferred Stock](#appd79608_590) | E-256 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjustments to Par Value of Common Stock](#appd79608_591) | E-256 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unequal Voting Rights/Dual Class Structure](#appd79608_592) | E-256 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appd79608_593) | E-257 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Debt Restructurings](#appd79608_594) | E-257 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appd79608_595) | E-257 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conversion of Securities](#appd79608_596) | E-258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recapitalization](#appd79608_597) | E-258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tracking Stock](#appd79608_598) | E-258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S](#appd79608_599) | E-258 |
| [**6. Executive and Director Compensation**](#appd79608_600) | **E-259** |
| &nbsp;&nbsp;&nbsp;&nbsp; [Criteria for Evaluating Executive Pay](#appd79608_601) | E-261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Evaluation](#appd79608_602) | E-261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Elements](#appd79608_603) | E-261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay Equity (Quantum) Elements](#appd79608_604) | E-261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices](#appd79608_605) | E-262 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Committee Communications and Responsiveness](#appd79608_606) | E-263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation- Management Proposals (Management Say on Pay)](#appd79608_607) | E-263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation – Management Say on Pay](#appd79608_608) | E-264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appd79608_609) | E-264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity-Based Incentive Plans](#appd79608_610) | E-265 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Value Transfer (SVT)](#appd79608_611) | E-266 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Repricing Provisions](#appd79608_612) | E-267 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Misalignment – Application to Equity Plans](#appd79608_613) | E-267 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Three-Year Value Adjusted Burn Rate](#appd79608_614) | E-267 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liberal Definition of Change-in-Control](#appd79608_615) | E-268 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Compensation Plans](#appd79608_616) | E-268 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))](#appd79608_617) | E-268 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans (ESPPs)](#appd79608_618) | E-269 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Qualified Plans](#appd79608_619) | E-269 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Qualified Plans](#appd79608_620) | E-269 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Ownership Plans (ESOPs)](#appd79608_621) | E-270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appd79608_622) | E-270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Plans in Lieu of Cash](#appd79608_623) | E-271 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Stock Option (TSO) Programs](#appd79608_624) | E-271 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [401(k) Employee Benefit Plans](#appd79608_625) | E-272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements for Executives/Golden Parachutes](#appd79608_626) | E-272 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Director Compensation](#appd79608_627) | E-272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appd79608_628) | E-273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Plans for Non-Employee Directors](#appd79608_629) | E-273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Outside Director Stock Awards/Options in Lieu of Cash](#appd79608_630) | E-273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Employee Director Retirement Plans](#appd79608_631) | E-274 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Compensation](#appd79608_632) | E-274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Increase Disclosure of Executive Compensation](#appd79608_633) | E-274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limit Executive Compensation](#appd79608_634) | E-274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Ownership Requirements](#appd79608_635) | E-274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit/Require Shareholder Approval for Option Repricing](#appd79608_636) | E-275 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements/Golden Parachutes](#appd79608_637) | E-275 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cash Balance Plans](#appd79608_638) | E-275 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Performance-Based Equity Awards](#appd79608_639) | E-275 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appd79608_640) | E-276 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals](#appd79608_641) | E-276 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity](#appd79608_642) | E-277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-up Proposals](#appd79608_643) | E-277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants - Disclosure of Board or Company's Utilization](#appd79608_644) | E-277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden Coffins/Executive Death Benefits](#appd79608_645) | E-277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoup Bonuses](#appd79608_646) | E-277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appd79608_647) | E-278 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking](#appd79608_648) | E-278 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hold Equity Past Retirement or for a Significant Period of Time](#appd79608_649) | E-278 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pre-Arranged Trading Plans (10b5-1 Plans)](#appd79608_650) | E-278 |
| [**7. Mergers and Corporate Restructurings**](#appd79608_651) | **E-279** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers and Acquisitions](#appd79608_652) | E-279 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Reorganization/Restructuring Plans (Bankruptcy)](#appd79608_653) | E-280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appd79608_654) | E-280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions](#appd79608_655) | E-281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appd79608_656) | E-281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Purchases](#appd79608_657) | E-281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appd79608_658) | E-281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appd79608_659) | E-281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Joint Ventures](#appd79608_660) | E-282 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appd79608_661) | E-282 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private/Dark Transactions (LBOs and Minority Squeeze-outs)](#appd79608_662) | E-282 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Private Placements/Warrants/Convertible Debentures](#appd79608_663) | E-282 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Formation of Holding Company](#appd79608_664) | E-283 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Value Maximization Shareholder Proposals](#appd79608_665) | E-283 |
| [**8. Social and Environmental Proposals**](#appd79608_666) | **E-284** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Global Approach](#appd79608_667) | E-284 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Diversity and Equality](#appd79608_668) | E-285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Add Women and Minorities to the Board](#appd79608_669) | E-285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial Equity and/or Civil Rights Audits](#appd79608_670) | E-286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on the Distribution of Stock Options by Gender and Race](#appd79608_671) | E-286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prepare Report/Promote EEOC-Related Activities](#appd79608_672) | E-286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Progress Towards Glass Ceiling Commission Recommendations](#appd79608_673) | E-286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit Discrimination on the Basis of Sexual Orientation or Gender Identity](#appd79608_674) | E-287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on/Eliminate Use of Racial Stereotypes in Advertising](#appd79608_675) | E-287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender, Race, or Ethnicity Pay Gap](#appd79608_676) | E-287 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Labor and Human Rights](#appd79608_677) | E-288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Codes of Conduct and Vendor Standards](#appd79608_678) | E-288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt/Report on MacBride Principles](#appd79608_679) | E-289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Community Impact Assessment/Indigenous Peoples' Rights](#appd79608_680) | E-289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Risks of Outsourcing](#appd79608_681) | E-290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on the Impact of Health Pandemics on Company Operations](#appd79608_682) | E-290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mandatory Arbitration](#appd79608_683) | E-290 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sexual Harassment](#appd79608_684) | E-290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in High Risk Markets](#appd79608_685) | E-290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports on Operations in Burma/Myanmar](#appd79608_686) | E-291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports on Operations in China](#appd79608_687) | E-291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Product Sales to Repressive Regimes](#appd79608_688) | E-292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Internet Privacy/Censorship and Data Security](#appd79608_689) | E-292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure on Plant Closings](#appd79608_690) | E-293 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Climate Change](#appd79608_691) | E-293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appd79608_692) | E-293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appd79608_693) | E-294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Change/Greenhouse Gas Emissions](#appd79608_694) | E-294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Invest in Clean/Renewable Energy](#appd79608_695) | E-294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Energy Efficiency](#appd79608_696) | E-295 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Environment](#appd79608_697) | E-295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Environmental/Sustainability Reports](#appd79608_698) | E-295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in Environmentally Sensitive Areas](#appd79608_699) | E-296 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Canadian Oil Sands](#appd79608_700) | E-296 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Arctic National Wildlife Refuge](#appd79608_701) | E-296 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hydraulic Fracturing](#appd79608_702) | E-297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Phase Out Chlorine-Based Chemicals](#appd79608_703) | E-297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Land Procurement and Development](#appd79608_704) | E-297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on the Sustainability of Concentrated Area Feeding Operations (CAFO)](#appd79608_705) | E-297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt a Comprehensive Recycling Policy](#appd79608_706) | E-298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Nuclear Energy](#appd79608_707) | E-298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Water Use](#appd79608_708) | E-298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Kyoto Protocol Compliance](#appd79608_709) | E-298 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Health and Safety](#appd79608_710) | E-299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Toxic Materials](#appd79608_711) | E-299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Product Safety](#appd79608_712) | E-299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Workplace/Facility Safety](#appd79608_713) | E-299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Handgun Safety Initiatives](#appd79608_714) | E-299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Phase-out or Label Products Containing Genetically Engineered Ingredients](#appd79608_715) | E-300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tobacco-related Proposals](#appd79608_716) | E-300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Policy/Report on Drug Pricing](#appd79608_717) | E-301 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Government and Military](#appd79608_718) | E-301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prepare Report to Renounce Future Landmine Production](#appd79608_719) | E-301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prepare Report on Foreign Military Sales](#appd79608_720) | E-302 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Depleted Uranium/Nuclear Weapons](#appd79608_721) | E-302 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Ethical Criteria for Weapons Contracts](#appd79608_722) | E-302 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Animal Welfare](#appd79608_723) | E-302 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Rights/Testing](#appd79608_724) | E-302 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Political and Charitable Giving](#appd79608_725) | E-303 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Lobbying Efforts](#appd79608_726) | E-303 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Contributions/Non-Partisanship](#appd79608_727) | E-303 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Charitable Contributions](#appd79608_728) | E-304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Expenditures and Lobbying Congruency](#appd79608_729) | E-304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure on Prior Government Service](#appd79608_730) | E-304 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; [Consumer Lending and Economic Development](#appd79608_731) | E-305 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Policy/Report on Predatory Lending Practices](#appd79608_732) | E-305 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure on Credit in Developing Countries (LDCs) or Forgive LDC Debt](#appd79608_733) | E-305 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Community Investing](#appd79608_734) | E-305 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Miscellaneous](#appd79608_735) | E-306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adult Entertainment](#appd79608_736) | E-306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Abortion/Right to Life Issues](#appd79608_737) | E-306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Anti-Social Proposals](#appd79608_738) | E-306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Violence and Adult Themes in Video Games](#appd79608_739) | E-306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Link Compensation to Non-Financial Factors](#appd79608_740) | E-307 |
| [**9. Mutual Fund Proxies**](#appd79608_741) | **E-308** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Election of Trustees and Directors](#appd79608_742) | E-308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes](#appd79608_743) | E-308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Advisory Agreement](#appd79608_744) | E-308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing a Fundamental Restriction to a Non-fundamental Restriction](#appd79608_745) | E-308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Fundamental Investment Objective to Non-fundamental](#appd79608_746) | E-308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Distribution Agreements](#appd79608_747) | E-309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Approving New Classes or Series of Shares](#appd79608_748) | E-309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Convert Closed-end Fund to Open-end Fund](#appd79608_749) | E-309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests](#appd79608_750) | E-309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Proposals](#appd79608_751) | E-310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers](#appd79608_752) | E-310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Business Development Companies – Authorization to Sell Shares of Common Stock at a Price below Net Asset Value](#appd79608_753) | E-310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change in Fund's Subclassification](#appd79608_754) | E-310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing the Domicile of a Fund](#appd79608_755) | E-310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disposition of Assets/Termination/Liquidation](#appd79608_756) | E-310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval](#appd79608_757) | E-311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Name Change Proposals](#appd79608_758) | E-311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [1940 Act Policies](#appd79608_759) | E-311 |

---

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## INTRODUCTION
ISS' Catholic Advisory Services division recognizes that faith-based and other socially responsible investors have dual objectives: financial and social. Religious and socially responsible investors invest for economic gain, as do all investors, but they also require that companies in which they invest conduct their business in a socially and environmentally responsible manner.

The dual objectives carry through to proxy voting activity, after the security selection process is completed. In voting their shares, faith-based socially responsible institutional shareholders are concerned not only with sustainable economic returns to shareholders and good corporate governance, but also with the ethical behavior of corporations and the social and environmental impact of their actions.

Catholic Advisory Services has, therefore, developed faith-based proxy voting guidelines for Catholic and other Christian religious institutions that are consistent with the objectives of socially responsible shareholders as well as the teachings of Catholicism and Christianity as a whole. On matters of social and environmental impact, the guidelines seek to reflect a broad consensus of the faith-based socially responsible investing community. Generally, we take as our frame of reference policies and proposals promulgated by the Catholic Bishops' Pastoral on economics, the Socially Responsible Investment Guidelines adopted by the Bishops, and the policies developed by members of the Interfaith Center on Corporate Responsibility (ICCR).

On matters of corporate governance, executive compensation, and corporate structure, these faith-based proxy voting guidelines are based on a commitment to create and preserve economic value and to advance principles of best practice corporate governance and shareholder rights, consistent with responsibilities to society and the environment as a whole.

The guidelines provide an overview of Catholic Advisory Services' faith-based proxy voting policy for Catholic and other Christian denomination institutions. We note there may be cases in which the final vote recommendation varies from the vote guideline due to the fact that we closely examine the merits of each proposal and consider relevant information and company-specific circumstances in arriving at our decisions. These guidelines are revised on an annual basis to take into account emerging issues and trends on environmental, social and corporate governance topics, as well as the evolution of market standards, regulatory changes and client feedback.

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1. Board of Directors

A corporation's board of directors sits at the apogee of the corporate governance system. Though they normally delegate responsibility for the management of the business to the senior executives they select and oversee, directors bear ultimate responsibility for the conduct of the corporation's business. The role of directors in publicly held corporations has undergone considerable change in recent years. Once derided as rubber stamps for management, directors of public corporations today are expected to serve as effective guardians of shareholders' interests.

Voting on directors and board-related issues is the most important use of the shareholder franchise, not simply a routine proxy item. Although uncontested director elections do not present alternative nominees from whom to choose, a high percentage of opposition votes is an expression of shareholder dissatisfaction and should be sufficient to elicit a meaningful response from management.

The role and responsibilities of directors has increasingly been the subject of much discussion and debate, given the current economic climate and the difficulties many companies now face in their respective markets. Influential organizations, including the American Law Institute, the American Bar Association, the National Association of Corporate Directors, and the Business Roundtable have issued reports and recommendations regarding the duties and accountability of corporate boards. Both mainstream and alternative media outlets have highlighted the numerous gaps within risk oversight of company boards and individual directors, and many institutional investors, in response, have capitalized on their rights as stakeholders to prompt changes. Corporations have taken notice, implementing many of the reforms championed by their shareholders.

Although differences of opinion remain, a fairly strong consensus has emerged on a number of key issues. It is widely agreed that the board's most important responsibility is to ensure that the corporation is managed in the shareholders' best long-term economic interest. This will often require boards to consider the impact of their actions on other constituencies, including employees, customers, local communities, and the environment.

§ The board's principal functions are widely agreed to consist of the following:

§ To select, evaluate, and if necessary, replace management, including the chief executive officer;

§ To review and approve major strategies and financial objectives;

§ To advise management on significant issues;

§ To assure that effective controls are in place to safeguard corporate assets, manage risk, and comply with the law; and

§ To nominate directors and otherwise ensure that the board functions effectively.

Boards are expected to have a majority of directors independent of management. The independent directors are expected to organize much of the board's work, even if the chief executive officer also serves as Chair of the board. Key committees of the board are expected to be entirely independent of management. It is expected that boards will engage in critical self-evaluation of themselves and of individual members. Individual directors, in turn, are expected to devote significant amounts of time to their duties, to limit the number of directorships they accept, and to own a meaningful amount of stock in companies on whose boards they serve. Directors are ultimately responsible to the corporation's shareholders. The most direct expression of this responsibility is the requirement that directors be elected to their positions by the shareholders. Shareholders are also asked to vote on a number of other matters regarding the role, structure, and composition of the board. Catholic Advisory Services classifies directors as either executive, non-independent non-executive, or independent directors.

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Uncontested Election of Directors

Four broad principles apply when determining votes on director nominees:

1. *Board Accountability*: Accountability refers to the promotion of transparency into a company's governance practices and annual board elections and the provision to shareholders the ability to remove problematic directors and to vote on takeover defenses or other charter/bylaw amendments. These practices help reduce the opportunity for management entrenchment.

2. *Board Responsiveness*: Directors should be responsive to shareholders, particularly in regard to shareholder proposals that receive a majority vote or management proposals that receive significant opposition and to tender offers where a majority of shares are tendered. Furthermore, shareholders should expect directors to devote sufficient time and resources to oversight of the company.

3. *Director Independence*: Without independence from management, the board may be unwilling or unable to effectively set company strategy and scrutinize performance or executive compensation.

4. *Director Diversity/Competence*: Companies should seek a diverse board of directors who can add value to the board through their specific skills or expertise and who can devote sufficient time and commitment to serve effectively. Boards should be of a size appropriate to accommodate diversity, expertise, and independence, while ensuring active and collaborative participation by all members. Boards should be sufficiently diverse to ensure consideration of a wide range of perspectives.

**Catholic Advisory Services Recommendation:** Generally vote for director nominees, except under the following circumstances (with new nominees<sup>1</sup> considered on a case-by-case basis):

Board Accountability

Vote against**<sup>2</sup>** or withhold from the entire board of directors (except new nominees, who should be considered case-by-case) for the following:

Problematic Takeover Defenses, Capital Structure, and Governance Structure

**Classified Board Structure:** The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election. All appropriate nominees (except new) may be held accountable.

**Removal of Shareholder Discretion on Classified Boards:** The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

<sup>1</sup> A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

<sup>2</sup> In general, companies with a plurality vote standard use "Withhold" as the contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.

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**Director Performance Evaluation:** The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted. Problematic provisions include but are not limited to:

§ A classified board structure;

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| § | A supermajority vote requirements;  |

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| § | Either a plurality vote standard in uncontested director elections, or a majority vote standard in contested elections;  |

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§ The inability of shareholders to call special meetings;

§ The inability of shareholders to act by written consent;

§ A multi-class capital structure; and/or

§ A non-shareholder approved poison pill.

Poison Pills: Generally vote against or withhold from all nominees (except new nominees, who should be considered case-by-case) if:

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| § | The company has a poison pill with a deadhand or slowhand feature**<sup>3</sup>**;  |

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§ The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

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| § | The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders**<sup>4</sup>** feature.  |

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Vote case-by-case on nominees if the board adopts an initial short-term pill**.** (with a term of one year or less) without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

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| § | A commitment to put any renewal to a shareholder vote; and  |

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§ Other factors as relevant.

**Unilateral Bylaw/Charter Amendments:** Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

<sup>3</sup> If a short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, Catholic Advisory Services will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

<sup>4</sup> Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

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Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against directors (except new nominees, who should be considered case-by-case) if the board:

§ Classified the board;

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| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

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§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a fee-shifting provision; or

§ Adopted another provision deemed egregious.

**Problematic Governance Structure:** For companies that hold or held their first annual meeting**<sup>5</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

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| § | Supermajority vote requirements to amend the bylaws or charter;  |

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§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

**Unequal Voting Rights:** Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>6</sup>**.

Exceptions to this policy will generally be limited to:

§ Newly-public companies with a sunset provision of no more than seven years from the date of going public;

§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

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| § | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be *de minimis*; or  |

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| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

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**Management Proposals to Ratify Existing Charter or Bylaw Provisions:** Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

<sup>5</sup> Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

<sup>6</sup> This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

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§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

**Restricting Binding Shareholder Proposals:** Generally vote against or withhold from the members of the governance committee if:

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| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

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Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Problematic Audit-Related Practices

Vote against/withhold from the members of the audit committee if:

§ The non-audit fees paid to the auditor are excessive (see discussion under "Auditor Ratification);

§ The company receives an adverse opinion on the company's financial statements from its auditor; or

§ There is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Vote case-by-case on members of the audit committee and potentially the full board if:

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| § | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company's efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted.  |

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Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item, or, in egregious situations, vote against/withhold from members of the compensation committee and potentially the full board if:

§ There is an unmitigated misalignment between CEO pay and company performance (<u>pay for performance</u>);

§ The company maintains significant <u>problematic pay practices</u>;

§ The board exhibits a significant level of <u>poor communication and responsiveness</u> to shareholders;

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

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Problematic Pledging of Company Stock

Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

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§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Material Environmental, Social and Governance (ESG) Risk Oversight Failures

Vote against/withhold from directors individually, committee members, or potentially the entire board, due to:

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| § | Material failures of governance, stewardship, risk oversight**<sup>7</sup>**, or fiduciary responsibilities at the company, including failure to adequately guard against or manage ESG risks;  |

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§ A lack of sustainability reporting in the company's public documents and/or website in conjunction with a failure to adequately manage or mitigate environmental, social and governance (ESG) risks;

§ Failure to replace management as appropriate; or

§ Egregious actions related to a director's service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

Climate Risk Mitigation and Net Zero

For companies that are significant GHG emitters**<sup>8</sup>**, through its operations or value chain, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where Catholic Advisory Services determines that the company is not taking the minimum steps needed to be aligned with a Net Zero by 2050 trajectory.

For **2023**, minimum steps needed to be considered to be aligned with a Net Zero by 2050 trajectory are (all minimum criteria will be required to be in alignment with policy):

§ The company has detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

§ Board governance measures;

§ Corporate strategy;

§ Risk management analyses; and

§ Metrics and targets.

§ The company has declared a Net Zero target by 2050 or sooner and the target includes scope 1, 2, and relevant scope 3 emissions.

§ The company has set a medium-term target for reducing its GHG emissions.

<sup>7</sup> Examples of failure of risk oversight include, but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant environmental incidents including spills and pollution; large scale or repeat workplace fatalities or injuries; significant adverse legal judgments or settlements; or hedging of company stock.

<sup>8</sup> For 2023, companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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Expectations about what constitutes "minimum steps needed to be aligned with a Net Zero by 2050 trajectory" will increase over time.

Board Responsiveness

**Catholic Advisory Services Recommendation:** Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

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| § | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:  |

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| § | Disclosed outreach efforts by the board to shareholders in the wake of the vote;  |

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§ Rationale provided in the proxy statement for the level of implementation;

§ The subject matter of the proposal;

§ The level of support for and opposition to the resolution in past meetings;

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| § | Actions taken by the board in response to the majority vote and its engagement with shareholders;  |

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§ The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and

§ Other factors as appropriate.

§ The board failed to act on takeover offers where the majority of shares are tendered;

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| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote.  |

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**Catholic Advisory Services Recommendation:** Vote case-by-case on compensation committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

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| § | The company's previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Director Independence

Vote against/withhold from the entire board if the full board is less than majority independent.

Vote against/withhold from non-independent directors (Executive Directors and Non-Independent Non-Executive Directors per the Classification of Directors) when:

§ The non-independent director serves on the audit, compensation, or nominating committee;

§ The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or

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§ The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee.

Board Composition

**Attendance at Board and Committee Meetings:** Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>9</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

§ Medical issues/illness;

§ Family emergencies; and

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| § | If the director's total service was three meetings or fewer and the director missed only one meeting.  |

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In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

**Overboarded Directors:** Vote against or withhold from individual directors who:

§ Sit on more than five public company boards; or

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| § | Are CEOs of public companies who sit on the boards of more than two public companies besides their own— withhold only at their outside boards**<sup>10</sup>**.  |

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Board Diversity

**Catholic Advisory Services Recommendation:** Generally vote against or withhold from incumbent nominees if:

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| § | The board is not comprised of at 40 percent underrepresented gender identities**<sup>11</sup>**; or  |

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| § | The board is not comprised of at least 20 percent racially or ethnically diverse directors.  |

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Vote against or withhold from other directors on a case-by-case basis.

<sup>9</sup> Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

<sup>10</sup> Although all of a CEO's subsidiary boards will be counted as separate boards, Catholic Advisory Services will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent, but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

**<sup>11</sup>** Underrepresented gender identities include directors who identify as women or as non-binary. 

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Classification of Directors – U.S.

1. **Executive Director** 

1.1. Current officer **<sup>i</sup>** of the company or one of its affiliates **<sup>ii</sup>**.

2. **Non-Independent Non-Executive Director** 

<u>Board Identification</u> 

2.1. Director identified as not independent by board.

<u>Controlling/Significant Shareholder</u> 

2.2. Beneficial owner of more than 50 percent of the company's voting power (this may be aggregated if voting power is distributed among more than one member of a group).

<u>Current Employment at Company or Related Company</u> 

2.3. Non-officer employee of the firm (including employee representatives).

2.4. Officer **<sup>i</sup>**, former officer, or general or limited partner of a joint venture or partnership with the company.

<u>Former Employment</u> 

2.5. Former CEO of the company **<sup>iii,iv</sup>**.

2.6. Former non-CEO officer **<sup>i</sup>** of the company, or an affiliate **<sup>ii</sup>** within the past five years.

2.7. Former officer **<sup>i</sup>** of an acquired company within the past five years **<sup>iv</sup>**.

2.8. Officer **<sup>i</sup>** of a former parent or predecessor firm at the time the company was sold or split off within the past five years.

2.9. Former interim officer if the service was longer than 18 months. If the service was between 12 and 18 months an assessment of the interim officer's employment agreement will be made **<sup>v</sup>**.

<u>Family Members</u> 

2.10. Immediate family member **<sup>vi</sup>** of a current or former officer **<sup>i</sup>** of the company or its affiliates **<sup>ii</sup>** within the last five years.

2.11. Immediate family member **<sup>vi</sup>** of a current employee of company or its affiliates **<sup>ii</sup>** where additional factors raise concern (which may include, but are not limited to, the following: a director related to numerous employees; the company or its affiliates employ relatives of numerous board members; or a non-Section 16 officer in a key strategic role).

<u>Professional, Transactional, and Charitable Relationships</u> 

2.12. Director who (or whose immediate family member **<sup>vi</sup>**) currently provides professional services **<sup>vii</sup>** in excess of $10,000 per year to: the company, an affiliate **<sup>ii</sup>**, or an individual officer of the company or an affiliate; or who is (or whose immediate family member **<sup>vi</sup>** is) a partner, employee, or controlling shareholder of an organization which provides the services.

2.13. Director who (or whose immediate family member **<sup>vi</sup>**) currently has any material transactional relationship **<sup>viii</sup>** with the company or its affiliates **<sup>ii</sup>**; or who is (or whose immediate family member **<sup>vi</sup>** is) a partner in, or a controlling shareholder or an executive officer of, an organization which has the material transactional relationship **<sup>viii</sup>** (excluding investments in the company through a private placement).

2.14. Director who (or whose immediate family member **<sup>vi</sup>** is) a trustee, director, or employee of a charitable or non-profit organization that receives material grants or endowments **<sup>viii</sup>** from the company or its affiliates **<sup>ii</sup>**.

<u>Other Relationships</u> 

2.15. Party to a voting agreement **<sup>ix</sup>** to vote in line with management on proposals being brought to shareholder vote.

2.16. Has (or an immediate family member **<sup>vi</sup>** has) an interlocking relationship as defined by the SEC involving members of the board of directors or its compensation committee **<sup>x</sup>**.

2.17. Founder **<sup>xi</sup>** of the company but not currently an employee.

2.18. Director with pay comparable to Named Executive Officers.

2.19. Any material **<sup>xii</sup>** relationship with the company.

3. **Independent Director** 

3.1. No material **<sup>xii</sup>** connection to the company other than a board seat.

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#### Footnotes:
<sup>i</sup> The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes: the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will generally be classified as a Non-Independent Non-Executive Director under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation exceeding $10,000 per year for serving in that capacity, then the director will be classified as an Independent Director.

*<sup>ii</sup>* "Affiliate" includes a subsidiary, sibling company, or parent company. Catholic Advisory Services uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

*<sup>iii</sup>* Includes any former CEO of the company prior to the company's initial public offering (IPO).

*<sup>iv</sup>* When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, Catholic Advisory Services will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

*<sup>v</sup>* Catholic Advisory Services will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. Catholic Advisory Services will also consider if a formal search process was under way for a full-time officer at the time.

*<sup>vi</sup>* "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

*<sup>vii</sup>* Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include, but are not limited to the following: investment banking/financial advisory services; commercial banking (beyond deposit services); investment services; insurance services; accounting/audit services; consulting services; marketing services; legal services; property management services; realtor services; lobbying services; executive search services; and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services; IT tech support services; educational services; and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

*<sup>viii</sup>* A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity exceeding the greater of $200,000 or 5 percent of the recipient's gross revenues, in the case of a company which follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, in the case of a company which follows NYSE listing standards. In the case of a company which follows neither of the preceding standards, Catholic Advisory Services will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

*<sup>ix</sup>* Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as Independent Directors if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

*<sup>x</sup>* Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

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<sup>xi</sup> The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, Catholic Advisory Services may deem him or her an Independent Director.

<sup>xii</sup> For purposes of Catholic Advisory Services' director independence classification, "material" will be defined as a standard of relationship (financial, personal or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Board-Related Management Proposals

Classification/Declassification of the Board

Under a classified board structure only one class of directors would stand for election each year, and the directors in each class would generally serve three-year terms. Although staggered boards can provide continuity for companies at the board level, there are also a number of downsides to the structure. First, a classified board can also be used to entrench management and effectively preclude most takeover bids or proxy contests. Board classification forces dissidents and would-be acquirers to negotiate with the incumbent board, which has the authority to decide on offers without a shareholder vote. In addition, when a board is classified, it is difficult to remove individual members for either poor attendance or poor performance; shareholders would only have the chance to vote on a given director every third year when he or she comes up for election. The classified board structure can also limit shareholders' ability to withhold votes from inside directors that sit on key board committee, or to withhold votes from an entire board slate to protest the lack of board diversity. According to ISS' 2012 Board Practices study, the number of S&P 500 companies with classified boards has continued to fall. In 2015, only 17 percent of S&P 500 companies maintained staggered boards, compared to 2 percent in 2014, 30 percent in 2013, 41 percent in 2009 and 53 percent in 2005. While we recognize that there are some advantages to classified boards, based on the latest studies on classified boards, the fact that classified boards can make it more difficult for shareholders to remove individual directors, and the fact that classified boards can be used as an antitakeover device, Catholic Advisory Services recommends against the adoption of classified boards.

Catholic Advisory Services Recommendation:

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| § | Vote for proposals to repeal classified boards and to elect all directors annually.  |

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| § | Vote against proposals to classify (stagger) the board of directors.  |

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Majority Vote Threshold for Director Elections

Catholic Advisory Services Recommendation: Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections.

Vote against if no carve-out for plurality in contested elections is included.

Cumulative Voting

Most corporations provide that shareholders are entitled to cast one vote for each share owned. Under a cumulative voting scheme the shareholder is permitted to have one vote per share for each director to be elected. Shareholders are permitted to apportion those votes in any manner they wish among the director candidates. Shareholders have the opportunity to elect a minority representative to a board through cumulative voting, thereby ensuring representation for all sizes of shareholders. For example, if there is a company with a ten-member board and 500 shares outstanding—the total number of votes that may be cast is 5,000. In this case a shareholder with 51 shares (10.2 percent of the outstanding shares) would be guaranteed one board seat because all votes may be cast for one candidate.

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Catholic Advisory Services Recommendation: Generally vote against management proposals to eliminate cumulative voting, and for shareholder proposals to restore or provide for cumulative voting unless:

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| § | The company has proxy access**<sup>12</sup>**, thereby allowing shareholders to nominate directors to the company's ballot; and  |

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| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

Director and Officer Indemnification, Liability Protection, and Exculpation

Catholic Advisory Services Recommendation: Vote case-by-case on proposals on director and officer indemnification, liability protection, and exculpation<sup>13</sup>.

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of care.

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of loyalty.

§ Expand coverage beyond just legal expenses to liability for acts that are more serious violations of fiduciary obligation than mere carelessness.

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| § | Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (*i.e.*, "permissive indemnification"), but that previously the company was not required to indemnify.  |

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Vote for those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

§ If the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and

If only the individual's legal expenses would be covered.

Shareholder Ability to Remove Directors/Fill Vacancies

Shareholder ability to remove directors, with or without cause, is either prescribed by a state's business corporation law, an individual company's articles of incorporation, or its bylaws. Many companies have sought shareholder approval for charter or bylaw amendments that would prohibit the removal of directors except for cause, thus ensuring that directors would retain their directorship for their full-term unless found guilty of self-dealing. By requiring cause to be demonstrated through due process, management insulates the directors from removal even if a director has been performing poorly, not attending meetings, or not acting in the best interests of shareholders.

Catholic Advisory Services Recommendation:

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| § | Vote against proposals that provide that directors may be removed only for cause.  |

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<sup>12</sup> A proxy access right that meets the recommended guidelines.

<sup>13</sup> **Indemnification**: the condition of being secured against loss or damage. **Limited liability**: a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation**: to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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| § | Vote for proposals to restore shareholder ability to remove directors with or without cause.  |

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| § | Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies.  |

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| § | Vote for proposals that permit shareholders to elect directors to fill board vacancies.  |

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Board Size

Proposals which would allow management to increase or decrease the size of the board at its own discretion are often used by companies as a takeover defense. Catholic Advisory Services supports management proposals to fix the size of the board at a specific number, thus preventing management, when facing a proxy contest, from increasing the board size without shareholder approval. By increasing the size of the board, management can make it more difficult for dissidents to gain control of the board. Fixing the size of the board also prevents a reduction in the size of the board as a strategy to oust independent directors. Fixing board size also prevents management from increasing the number of directors in order to dilute the effects of cumulative voting.

Catholic Advisory Services Recommendation:

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| § | Vote for proposals that seek to fix the size of the board.  |

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| § | Vote case-by-case on proposals that seek to change the size or range of the board.  |

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| § | Vote against proposals that give management the ability to alter the size of the board outside of a specific range without shareholder approval.  |

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Establish/Amend Nominee Qualifications

Catholic Advisory Services Recommendation: Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on how reasonable the criteria are and to what degree they may preclude dissident nominees from joining the board.

Board Refreshment

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

**Term/Tenure Limits**

Catholic Advisory Services Recommendation: Vote case-by-case on management proposals regarding director term/tenure limits, considering:

§ The rationale provided for adoption of the term/tenure limit;

§ The robustness of the company's board evaluation process;

§ Whether the limit is of sufficient length to allow for a broad range of director tenures;

§ Whether the limit would disadvantage independent directors compared to non-independent directors; and

§ Whether the board will impose the limit evenly, and not have the ability to waive it in a discriminatory manner.

**Age Limits**

Catholic Advisory Services Recommendation: Generally vote against management proposal to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

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Board-Related Shareholder Proposals/Initiatives

Proxy Contests/Proxy Access

Contested elections of directors frequently occur when a board candidate or slate runs for the purpose of seeking a significant change in corporate policy or control. Competing slates will be evaluated based upon the personal qualifications of the candidates, the economic impact of the policies that they advance, and their expressed and demonstrated commitment to the interests of all shareholders.

Catholic Advisory Services Recommendation: Votes in a contested election of directors are evaluated on a case-by-case basis, considering the following factors:

§ Long-term financial performance of the target company relative to its industry;

§ Management's track record;

§ Background to the proxy contest;

§ Qualifications of director nominees (both slates);

§ Strategic plan of dissident slate and quality of critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates);

§ Stock ownership positions; and

§ Impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether or not there are more candidates than board seats).

Annual Election (Declassification) of the Board

Catholic Advisory Services Recommendation: Vote for shareholder proposals to repeal classified (staggered) boards and to elect all directors annually.

Vote against proposals to classify the board.

Majority Threshold Voting Shareholder Proposals

A majority vote standard requires that for directors to be elected (or re-elected) to serve on the company's board they must receive support from holders of a majority of shares voted. Shareholders have expressed strong support for shareholder proposals on majority threshold voting. Catholic Advisory Services believes shareholders should have a greater voice in the election of directors and believes majority threshold voting represents a viable alternative to the plurality system in the U.S. Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

Catholic Advisory Services Recommendation: Vote for precatory and binding resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

Majority of Independent Directors

Catholic Advisory Services believes that a board independent from management is of vital importance to a company and its shareholders. Accordingly, Catholic Advisory Services will cast votes in a manner that shall encourage the independence of boards.

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Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by Catholic Advisory Services' definition of independence (See Classification of Directors).  |

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| § | Vote for shareholder proposals to strengthen the definition of independence for board directors.  |

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Establishment of Independent Committees

Most corporate governance experts agree that the key board committees (audit, compensation, and nominating/corporate governance) of a corporation should include only independent directors. The independence of key committees has been encouraged by regulation. Catholic Advisory Services believes that initiatives to increase the independent representation of these committees or to require that these committees be independent should be supported.

Catholic Advisory Services Recommendation: Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors.

Independent Board Chair

One of the principle functions of the board is to monitor and evaluate the performance of the CEO. The chairperson's duty to oversee management is obviously compromised when he or she is required to monitor himself or herself; or when he or she is a non-independent director. Generally Catholic Advisory Services recommends a vote for shareholder proposals that would require that the position of board chair be held by an individual with no materials ties to the company other than their board seat.

Catholic Advisory Services Recommendation: Vote for shareholder proposals that would require the board chair to be independent of management.

Establishment of Board Committees

Catholic Advisory Services Recommendation: Generally vote for shareholder proposals to establish a new board committee to address broad corporate policy topics or to provide a forum for ongoing dialogue on issues such as the environment, human or labor rights, shareholder relations, occupational health and safety etc. when the formation of such committees appears to be a potentially effective method of protecting or enhancing shareholder value. In evaluating such proposals, the following factors will be considered:

§ Existing oversight mechanisms (including current committee structure) regarding the issue for which board oversight is sought;

§ Level of disclosure regarding the issue for which board oversight is sought;

§ Company performance related to the issue for which board oversight is sought;

§ Board committee structure compared to that of other companies in its industry sector; and

§ The scope and structure of the proposal.

Establish/Amend Nominee Qualifications

Catholic Advisory Services Recommendation: Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and to what degree they may preclude dissident nominees from joining the board.

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Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and to what degree they may preclude dissident nominees from joining the board.

Vote case-by-case on shareholder resolutions seeking a director nominee candidate who possesses a particular subject matter expertise, considering:

§ The company's board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers;

§ The company's existing board and management oversight mechanisms regarding the issue for which board oversight is sought;

§ The company's disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies; and

§ The scope and structure of the proposal.

Board Policy on Shareholder Engagement

Catholic Advisory Services Recommendation: Vote for shareholders proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

§ Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board;

§ Effectively disclosed information with respect to this structure to its shareholders;

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| § | The company has not ignored majority-supported shareholder proposals or a majority withhold vote on a director nominee; and  |

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§ The company has an independent chair or a lead director (according to <u>Catholic Advisory Services' definition</u>). This individual must be made available for periodic consultation and direct communication with major shareholders.

Proxy Access

Catholic Advisory Services Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions:

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| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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| § | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access.

Generally vote against proposals that are more restrictive than these guidelines.

Board Refreshment

#### Term/Tenure Limits
Supporters of term limits argue that this requirement would bring new ideas and approaches to a board. However, we prefer to look at directors and their contributions to the board individually rather than impose a strict rule.

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Catholic Advisory Services Recommendation: Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:

§ The scope of the shareholder proposal; and

§ Evidence of problematic issues at the company combined with, or exacerbated by, a lack of board refreshment.

#### Age Limits
Catholic Advisory Services Recommendation: Generally vote against shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

CEO Succession Planning

Catholic Advisory Services Recommendation: Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering at a minimum, the following factors:

§ The reasonableness/scope of the request; and

§ The company's existing disclosure on its current CEO succession planning process.

Vote No Campaigns

Catholic Advisory Services Recommendation: In cases where companies are targeted in connection with public "vote no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

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2. Ratification of Auditors

Annual election of the outside accountants is best practice standard. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders. A Blue Ribbon Commission report concluded that audit committees must improve their current level of oversight of independent accountants. Given the rash of accounting misdeeds that were not detected by audit panels or auditors, shareholder ratification is an essential step in restoring investor confidence. Shareholders should have the right to weigh in on the choice of the audit firm, and all companies should put ratification on the ballot of their annual meeting. Special consideration will be given when non-audit fees exceed audit fees, as high non-audit fees can compromise the independence of the auditor. Catholic Advisory Services will also monitor both auditor tenure and whether auditor ratification has been pulled from the ballot.

Catholic Advisory Services Recommendation: Vote for proposals to ratify auditors, unless any of the following apply:

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| § | The non-audit fees paid represent 25 percent or more of the total fees paid to the auditor;  |

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§ An auditor has a financial interest in or association with the company, and is therefore not independent;

§ There is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company's financial position; or

§ Poor accounting practices are identified that rise to a serious level of concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures.

Auditor-Related Shareholder Proposals

Ratify Auditors/Ensure Auditor Independence

These shareholder proposals request that the board allow shareholders to ratify the company's auditor at each annual meeting. Annual ratification of the outside accountants is standard practice. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders.

Given the rash of accounting irregularities that were not detected by audit panels or auditors, shareholder ratification is an essential step in restoring investor confidence. Catholic Advisory Services believes that shareholders should have the ability to ratify the auditor on an annual basis.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to allow shareholders to vote on auditor ratification.  |

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| § | Vote for proposals that ask a company to adopt a policy on auditor independence.  |

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| § | Vote for proposals that seek to limit the non-audit services provided by the company's auditor.  |

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Auditor Rotation

To minimize any conflict of interest that may rise between the company and its auditor, Catholic Advisory Services supports the rotation of auditors. Currently, SEC rules provide that partners should be rotated every five years. However, Catholic Advisory Services also believes that the long tenure of audit firms at U.S. companies can be problematic.

Catholic Advisory Services Recommendation: Vote for shareholder proposals to rotate company's auditor every five years or more. Catholic Advisory Services believes that proposing a rotation period less than five years is unreasonably restrictive and may negatively affect audit quality and service while increasing expense.

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3. Takeover Defenses / Shareholder Rights

Corporate takeover attempts come in various guises. Usually, a would-be acquirer makes a direct offer to the board of directors of a targeted corporation. The bidder may offer to purchase the company for cash and/or stock. If the board approves the offer, a friendly transaction is completed and presented to shareholders for approval. If, however, the board of directors rejects the bid, the acquirer can make a tender offer for the shares directly to the targeted corporation's shareholders. Such offers are referred to as hostile tender bids.

Not wishing to wait until they are subjects of hostile takeover attempts, many corporations have adopted antitakeover measures designed to deter unfriendly bids or buy time. The most common defenses are the shareholders rights protection plan, also known as the poison pill, and charter amendments that create barriers to acceptance of hostile bids. In the U.S., poison pills do not require shareholder approval. However, shareholders must approve charter amendments, such as classified boards or supermajority vote requirements. In brief, the very existence of defensive measures can foreclose the possibility of tenders and hence, opportunities to premium prices for shareholders.

Anti-takeover statutes generally increase management's potential for insulating itself and warding off hostile takeovers that may be beneficial to shareholders. While it may be true that some boards use such devices to obtain higher bids and to enhance shareholder value, it is more likely that such provisions are used to entrench management. The majority of historical evidence on individual corporate anti-takeover measures indicates that heavily insulated companies generally realize lower returns than those having managements that are more accountable to shareholders and the market. The evidence also suggests that when states adopt their own anti-takeover devices, or endorse those employed by firms, shareholder returns are harmed. Moreover, the body of evidence appears to indicate that companies in states with the strongest anti-takeover laws experience lower returns than they would absent such statutes.

Takeover Defenses and Shareholder Rights-Related Management Proposals

Poison Pills (Shareholder Rights Plans)

Poison pills are corporate-sponsored financial devices that, when triggered by potential acquirers, do one or more of the following: 1) dilute the acquirer's equity holdings in the target company; 2) dilute the acquirer's voting interests in the target company; or 3) dilute the acquirer's equity holdings in the post-merger company. Poison pills generally allow shareholders to purchase shares from, or sell shares back to, the target company (flip-in pill) and/or the potential acquirer (flip-out pill) at a price far out of line with fair market value. Depending on the type of pill, the triggering event can either transfer wealth from the target company or dilute the equity holdings of current shareholders. Poison pills insulate management from the threat of a change in control and provide the target board with veto power over takeover bids. Because poison pills greatly alter the balance of power between shareholders and management, shareholders should be allowed to make their own evaluation of such plans.

Catholic Advisory Services Recommendation: Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

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| § | No lower than a 20 percent trigger, flip-in or flip-over provision;  |

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§ A term of no more than three years;

§ No deadhand, slowhand, no-hand or similar feature that limits the ability of a future board to redeem the pill;

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| § | Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill; and  |

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| § | In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.  |

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Net Operating Loss (NOL) Poison Pills/Protective Amendments

The financial crisis has prompted widespread losses in certain industries. This has resulted in previously profitable companies considering the adoption of a poison pill and/or NOL protective amendment to protect their NOL tax assets, which may be lost upon an acquisition of 5 percent of a company's shares.

When evaluating management proposals seeking to adopt NOL pills or protective amendments, the purpose behind the proposal, its terms, and the company's existing governance structure should be taken into account to assess whether the structure actively promotes board entrenchment or adequately protects shareholder rights. While Catholic Advisory Services acknowledges the high estimated tax value of NOLs, which benefit shareholders, the ownership acquisition limitations contained in an NOL pill/protective amendment coupled with a company's problematic governance structure could serve as an antitakeover device.

Given the fact that shareholders will want to ensure that such an amendment does not remain in effect permanently, Catholic Advisory Services will also closely review whether the pill/amendment contains a sunset provision or a commitment to cause the expiration of the NOL pill/protective amendment upon exhaustion or expiration of the NOLs.

Catholic Advisory Services Recommendation: Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses ("NOLs") if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5%);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses ("NOLs") if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing five-percent holder);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL);

§ The company's existing governance structure including; board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns;

§ Any other factors that may be applicable.

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Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions

Catholic Advisory Services Recommendation: Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Supermajority Shareholder Vote Requirements

Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change at a company.

Catholic Advisory Services Recommendation:

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| § | Vote for proposals to reduce supermajority shareholder vote requirements for charter amendments, mergers and other significant business combinations. For companies with shareholder(s) who own a significant amount of company stock, vote case-by-case, taking into account: a) ownership structure; b) quorum requirements; and c) supermajority vote requirements.  |

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| § | Vote against proposals to require a supermajority shareholder vote for charter amendments, mergers and other significant business combinations.  |

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Shareholder Ability to Call a Special Meeting

Most state corporation statutes allow shareholders to call a special meeting when they want to take action on certain matters that arise between regularly scheduled annual meetings. Sometimes this right applies only if a shareholder or a group of shareholders own a specified percentage of shares, with 10 percent being the most common. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.

Catholic Advisory Services Recommendation:

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| § | Vote for proposals that provide shareholders with the ability to call special meetings taking into account: a) shareholders' current right to call special meetings; b) minimum ownership threshold necessary to call special meetings (10% preferred); c) the inclusion of exclusionary or prohibitive language; d) investor ownership structure; and e) shareholder support of and management's response to previous shareholder proposals.  |

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| § | Vote against proposals to restrict or prohibit shareholders' ability to call special meetings.  |

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Shareholder Ability to Act by Written Consent

Consent solicitations allow shareholders to vote on and respond to shareholder and management proposals by mail without having to act at a physical meeting. A consent card is sent by mail for shareholder approval and only requires a signature for action. Some corporate bylaws require supermajority votes for consents while at others, standard annual meeting rules apply. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.

Catholic Advisory Services Recommendation:

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| § | Generally vote against proposals to restrict or prohibit shareholders' ability to take action by written consent.  |

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| § | Vote for proposals to allow or facilitate shareholder action by written consent, taking into consideration: a) shareholders' current right to act by written consent; b) consent threshold; c) the inclusion of exclusionary or prohibitive language; d) Investor ownership structure; and e) shareholder support of and management's response to previous shareholder proposals.  |

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| § | Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions; a) an unfettered**<sup>14</sup>** right for shareholders to call special meetings at a 10 percent threshold; b) a majority vote standard in uncontested director elections; c) no non-shareholder-approved pill, and; d) an annually elected board.  |

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Advance Notice Requirements for Shareholder Proposals/Nominations

In 2008, the Delaware courts handed down two decisions, which, read together, indicate a judicial move toward a narrower interpretation of companies' advance notice bylaws. These recent court decisions have encouraged companies to take a closer look at their bylaw provisions to ensure that broad language does not provide loopholes for activist investors. Specifically, companies are including language designed to provide more detailed advance notice provisions and to ensure full disclosure of economic and voting interests in a shareholder's notice of proposals, including derivatives and hedged positions.

Catholic Advisory Services Recommendation: Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/ nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120 day window). The submittal window is the period under which a shareholder must file their proposals/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

<sup>14</sup> "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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Fair Price Provisions

Fair price provisions were originally designed to specifically defend against the most coercive of takeover devises, the two-tiered, front-end loaded tender offer. In such a hostile takeover, the bidder offers cash for enough shares to gain control of the target. At the same time the acquirer states that once control has been obtained, the target's remaining shares will be purchased with cash, cash and securities or only securities. Since the payment offered for the remaining stock is, by design less valuable than the original offer for the controlling shares, shareholders are forced to sell out early to maximize their value. Standard fair price provisions require that, absent board or shareholder approval of the acquisition, the bidder must pay the remaining shareholders the same price for their shares that brought control.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote case-by-case on proposals to adopt fair price provisions evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.  |

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|:---|:---|
| § | Generally, vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.  |

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Greenmail

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of shares, the practice discriminates against most shareholders. This transferred cash, absent the greenmail payment, could be put to much better use for reinvestment in the company, payment of dividends, or to fund a public share repurchase program.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to adopt antigreenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.  |

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§ Review on a case-by-case basis antigreenmail proposals when they are bundled with other charter or bylaw amendments.

Confidential Voting

Confidential voting, or voting by secret ballot, is one of the key structural issues in the proxy system. It ensures that all votes are based on the merits of proposals and cast in the best interests of fiduciary clients and pension plan beneficiaries. In a confidential voting system, only vote tabulators and inspectors of election may examine individual proxies and ballots; management and shareholders are given only vote totals. In an open voting system, management can determine who has voted against its nominees or proposals and then re-solicit those votes before the final vote count. As a result, shareholders can be pressured to vote with management at companies with which they maintain, or would like to establish, a business relationship. Confidential voting also protects employee shareholders from retaliation. Shares held by employee stock ownership plans, for example, are important votes that are typically voted by employees.

**Catholic Advisory Services Recommendation:** Vote for management proposals to adopt confidential voting.

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Control Share Acquisition Provisions

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.  |

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|:---|:---|
| § | Vote against proposals to amend the charter to include control share acquisition provisions.  |

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|:---|:---|
| § | Vote for proposals to restore voting rights to the control shares.  |

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Control Share Cash-Out Provisions

Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

**Catholic Advisory Services Recommendation:** Vote for proposals to opt out of control share cash-out statutes.

Disgorgement Provisions

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

**Catholic Advisory Services Recommendation:** Vote for proposals to opt out of state disgorgement provisions.

State Takeover Statutes

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to opt in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freezeout provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, antigreenmail provisions, and disgorgement provisions).

Vote for opting into stakeholder protection statutes if they provide comprehensive protections for employees and community stakeholders. Catholic Advisory Services would be less supportive of takeover statutes that only serve to protect incumbent management from accountability to shareholders and which negatively influence shareholder value.

Freeze-Out Provisions

Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

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**Catholic Advisory Services Recommendation:** Vote for proposals to opt out of state freeze-out provisions.

Reincorporation Proposals

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to change a company's state of incorporation giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation;

§ Comparison of corporation laws of original state and destination state.

Reincorporations into "tax havens" will be given special consideration.

While a firm's country of incorporation will remain the primary basis for evaluating companies, Catholic Advisory Services will generally apply U.S. policies to the extent possible with respect to issuers that file DEF 14As, 10-K annual reports, and 10-Q quarterly reports, and are thus considered domestic issuers by the U.S. Securities and Exchange Commission (SEC). Corporations that have reincorporated outside the U.S. have found themselves subject to a combination of governance regulations and best practice standards that may not be entirely compatible with an evaluation framework based solely on country of incorporation.

Amend Bylaws without Shareholder Consent

**Catholic Advisory Services Recommendation:** Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote for proposals giving the board the ability to amend the bylaws in addition to shareholders.

Shareholder Litigation Rights

Federal Forum Selection Provisions

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

Catholic Advisory Services Recommendation: Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Exclusive Forum Provisions for State Law Matters

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

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**Catholic Advisory Services Recommendation:** Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

§ The company's stated rationale for adopting such a provision;

§ Disclosure of past harm from duplicative shareholder lawsuits in more than one forum;

§ The breadth of application of the charter or bylaw provision, including the types of lawsuits to which it would apply and the definition of key terms; and

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|:---|:---|
| § | Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the charter or the bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections.  |

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Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Fee Shifting

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

**Catholic Advisory Services Recommendation:** Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the Unilateral Bylaw/Charter Amendments policy.

Takeover Defenses and Shareholder Rights-Related Shareholder Proposals

Shareholder Proposals to put Pill to a Vote and/or Adopt a Pill Policy

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: 1) a shareholder approved poison pill in place; or 2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

§ Shareholders have approved the adoption of the plan; or

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|:---|:---|
| § | The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e., the "fiduciary out" provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.  |

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If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

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Reduce Supermajority Vote Requirements

Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals to lower supermajority shareholder vote requirements for charter and bylaw amendments.  |

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|:---|:---|
| § | Vote for shareholder proposals to lower supermajority shareholder vote requirements for mergers and other significant business combinations.  |

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Remove Antitakeover Provisions

There are numerous antitakeover mechanisms available to corporations that can make takeovers prohibitively expensive for a bidder or at least guarantee that all shareholders are treated equally. The debate over antitakeover devices centers on whether these devices enhance or detract from shareholder value. One theory argues that a company's board, when armed with these takeover protections, may use them as negotiating tools to obtain a higher premium for shareholders. The opposing view maintains that managements afforded such protection are more likely to become entrenched than to actively pursue the best interests of shareholders. Such takeover defenses also serve as obstacles to the normal functioning of the marketplace which, when operating efficiently, should replace incapable and poorly performing managements.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals that seek to remove antitakeover provisions.

Reimburse Proxy Solicitation Expenses

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to reimburse proxy solicitation expenses. When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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|:---|:---|
| § | The election of fewer than 50 percent of the directors to be elected is contested in the election;  |

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§ One or more of the dissident's candidates is elected;

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|:---|:---|
| § | Shareholders are not permitted to cumulate their votes for directors;  |

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§ The election occurred, and the expenses were incurred, after the adoption of this bylaw.

Virtual Shareholder Meetings

**Catholic Advisory Services Recommendation:** Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only**<sup>15</sup>** meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

<sup>15</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

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4. Miscellaneous Governance Provisions

Bundled Proposals

**Catholic Advisory Services Recommendation:** Review on a case-by-case basis bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances where the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

Adjourn Meeting

Companies may ask shareholders to adjourn a meeting in order to solicit more votes. Generally, shareholders already have enough information to make their vote decisions. Once their votes have been cast, there is no justification for spending more money to continue pressing shareholders for more votes.

#### Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.  |

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|:---|:---|
| § | Vote for proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote against proposals if the wording is too vague or if the proposal includes "other business."  |

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Changing Corporate Name

Proposals to change a company's name are generally routine matters. Generally, the name change reflects a change in corporate direction or the result of a merger agreement.

**Catholic Advisory Services Recommendation:** Vote for changing the corporate name unless there is compelling evidence that the change would adversely affect shareholder value.

Amend Quorum Requirements

**Catholic Advisory Services Recommendation:** Vote against proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

§ The new quorum threshold requested;

§ The rationale presented for the reduction;

§ The market capitalization of the company (size, inclusion in indices);

§ The company's ownership structure;

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| § | Previous voter turnout or attempts to achieve quorum;  |

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| § | Any provisions or commitments to restore quorum to a majority of shares outstanding, should voter turnout improve sufficiently; and  |

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§ Other factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

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Amend Minor Bylaws

**Catholic Advisory Services Recommendation:** Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Other Business

Other business proposals are routine items to allow shareholders to raise other issues and discuss them at the meeting. Only issues that may be legally discussed at meetings may be raised under this authority. However, shareholders cannot know the content of these issues so they are generally not supported.

**Catholic Advisory Services Recommendation:** Generally vote against other business proposals.

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5. Capital Structure

The equity in a corporate enterprise (that is, the residual value of the company's assets after the payment of all debts) belongs to the shareholders. Equity securities may be employed, or manipulated, in a manner that will ultimately enhance or detract from shareholder value. As such, certain actions undertaken by management in relation to a company's capital structure can be of considerable significance to shareholders. Changes in capitalization usually require shareholder approval or ratification.

Common Stock Authorization

State statutes and stock exchanges require shareholder approval for increases in the number of common shares. Corporations increase their supply of common stock for a variety of ordinary business purposes: raising new capital, funding stock compensation programs, business acquisitions, and implementation of stock splits or payment of stock dividends.

General Authorization Requests

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used:

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| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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Specific Authorization Requests

**Catholic Advisory Services Recommendation:** Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Issue Stock for Use with Rights Plan

**Catholic Advisory Services Recommendation:** Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder approved shareholder rights plan (poison pill).

Stock Distributions: Splits and Dividends

**Catholic Advisory Services Recommendation:** Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in accordance with Catholic Advisory Services' Common Stock Authorization policy.

Reverse Stock Splits

Reverse splits exchange multiple shares for a lesser amount to increase share price. Increasing share price is sometimes necessary to restore a company's share price to a level that will allow it to be traded on the national stock exchanges. In addition, some brokerage houses have a policy of not monitoring or investing in very low priced shares. Reverse stock splits help maintain stock liquidity.

**Catholic Advisory Services Recommendation:** Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with Catholic Advisory Services' Common Stock Authorization policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting;

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

Preferred Stock Authorization

Preferred stock is an equity security which has certain features similar to debt instruments, such as fixed dividend payments, seniority of claims to common stock, and in most cases no voting rights. The terms of blank check

preferred stock give the board of directors the power to issue shares of preferred stock at their discretion—with voting rights, conversion, distribution and other rights to be determined by the board at time of issue. Blank check preferred

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stock can be used for sound corporate purposes, but could be used as a device to thwart hostile takeovers without shareholder approval.

General Authorization Requests

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are used for general corporate services:

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|:---|:---|
| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

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|:---|:---|
| § | If no preferred shares are currently issued and outstanding, vote against the request, unless the company discloses a specific use for the shares.  |

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Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

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|:---|:---|
| § | If the shares requested are blank check preferred shares that can be used for antitakeover purposes;**<sup>16</sup>**  |

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|:---|:---|
| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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|:---|:---|
| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they're convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

<sup>16</sup> To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

Specific Authorization Requests

**Catholic Advisory Services Recommendation:** Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Blank Check Preferred Stock

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|:---|:---|
| § | Vote against proposals that would authorize the creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights ("blank check" preferred stock).  |

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|:---|:---|
| § | Vote against proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose.  |

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|:---|:---|
| § | Vote for proposals to create "declawed" blank check preferred stock (stock that cannot be used as a takeover defense).  |

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|:---|:---|
| § | Vote for requests to require shareholder approval for blank check authorizations.  |

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Adjustments to Par Value of Common Stock

Stock that has a fixed per share value that is on its certificate is called par value stock. The purpose of par value stock is to establish the maximum responsibility of a stockholder in the event that a corporation becomes insolvent. Proposals to reduce par value come from certain state level requirements for regulated industries such as banks, and other legal requirements relating to the payment of dividends.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.  |

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|:---|:---|
| § | Vote for management proposals to eliminate par value.  |

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Unequal Voting Rights/Dual Class Structure

Incumbent managers use unequal voting rights with the voting rights of their common shares superior to other shareholders in order to concentrate their power and insulate themselves from the wishes of the majority of shareholders. Dual class exchange offers involve a transfer of voting rights from one group of shareholders to another group of shareholders typically through the payment of a preferential dividend. A dual class recapitalization also establishes two classes of common stock with unequal voting rights, but initially involves an equal distribution of preferential and inferior voting shares to current shareholders.

**Catholic Advisory Services Recommendation:** Generally vote against proposals to create a new class of common stock unless:

§ The company discloses a compelling rationale for the dual-class capital structure, including: a) the company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or b) the new class of shares will be transitory;

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§ The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term;

§ The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.

Preemptive Rights

Preemptive rights permit shareholders to share proportionately in any new issues of stock of the same class. These rights guarantee existing shareholders the first opportunity to purchase shares of new issues of stock in the same class as their own and in the same proportion. The absence of these rights could cause stockholders' interest in a company to be reduced by the sale of additional shares without their knowledge and at prices unfavorable to them. Preemptive rights, however, can make it difficult for corporations to issue large blocks of stock for general corporate purposes. Both corporations and shareholders benefit when corporations are able to arrange issues without preemptive rights that do not result in a substantial transfer of control.

**Catholic Advisory Services Recommendation:** Review on a case-by-case basis proposals to create or abolish preemptive rights. In evaluating proposals on preemptive rights, we look at the size of a company, the characteristics of its shareholder base and the liquidity of the stock.

Debt Restructurings

Proposals to increase common and/or preferred shares and to issue shares as part of a debt-restructuring plan will be analyzed considering the following issues:

§ *Dilution*: How much will the ownership interest of existing shareholders be reduced, and how extreme will dilution to any future earnings be?

§ *Change in Control*: Will the transaction result in a change in control/management at the company? Are board and committee seats guaranteed? Do standstill provisions and voting agreements exist? Is veto power over certain corporate actions in place?

§ *Financial Issues*: company's financial situation, degree of need for capital, use of proceeds, and effect of the financing on the company's cost of capital;

§ *Terms of the offer*: discount/premium in purchase price to investor including any fairness opinion, termination penalties and exit strategy;

§ *Conflict of interest*: arm's length transactions and managerial incentives;

§ *<u>Management's efforts to pursue other alternatives</u>.*

Catholic Advisory Services Recommendation:

§ Review on a case-by-case basis proposals regarding debt restructurings.

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| § | Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.  |

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Share Repurchase Programs

**Catholic Advisory Services Recommendation:** For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail,

§ The use of buybacks to inappropriately manipulate incentive compensation metrics,

§ Threats to the company's long-term viability, or

§ Other company-specific factors as warranted.

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Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Conversion of Securities

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals regarding conversion of securities, taking into account the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Recapitalization

**Catholic Advisory Services Recommendation:** Vote case-by-case on recapitalizations (reclassifications of securities), taking into account:

§ Whether the capital structure is simplified;

§ Liquidity is enhanced;

§ Fairness of conversion terms;

§ Impact on voting power and dividends;

§ Reasons for the reclassification;

§ Conflicts of interest;

§ Other alternatives considered.

Tracking Stock

**Catholic Advisory Services Recommendation:** Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

§ Adverse governance changes;

§ Excessive increases in authorized capital stock;

§ Unfair method of distribution;

§ Diminution of voting rights;

§ Adverse conversion features;

§ Negative impact on stock option plans;

§ Alternatives such as spin-offs.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

**Catholic Advisory Services Recommendation:** For U.S. domestic issuers incorporated outside the U.S. and listed <u>solely</u> on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

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6. Executive and Director Compensation

The global financial crisis resulted in significant erosion of shareholder value and highlighted the need for greater assurance that executive compensation is principally performance-based, fair, reasonable, and not designed in a manner that would incentivize excessive risk-taking by managements. The financial crisis raised questions about the role of pay incentives in influencing executive behavior and motivating inappropriate or excessive risk-taking that could threaten a corporation's long-term viability. The safety lapses that led to the disastrous explosions at BP's Deepwater Horizon oil rig and Massey Energy's Upper Big Branch mine, and the resulting unprecedented losses in shareholder value; a) underscore the importance of incorporating meaningful economic incentives around social and environmental considerations in compensation program design, and b) exemplify the costly liabilities of failing to do so.

Evolving disclosure requirements have opened a wider window into compensation practices and processes, giving shareholders more opportunity and responsibility to ensure that pay is designed to create and sustain value. Companies in the U.S. are now required to evaluate and discuss potential risks arising from misguided or misaligned compensation programs. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires advisory shareholder votes on executive compensation (management "say on pay"), an advisory vote on the frequency of say on pay, as well as a shareholder advisory vote on golden parachute compensation. The advent of "say on pay" votes for shareholders in the U.S. has provided a new communication mechanism and impetus for constructive engagement between shareholders and managers/directors on pay issues.

The socially responsible investing community contends that corporations should be held accountable for their actions and decisions, including those around executive compensation. Catholic Advisory Services believes that executive pay programs should be fair, competitive, reasonable, and create appropriate incentives, and that pay for performance should be a central tenet in executive compensation philosophy. Most investors expect corporations to adhere to certain best practice pay considerations in designing and administering executive and director compensation programs, including:

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| § | *Appropriate pay-for-performance alignment with emphasis on long-term shareholder value*: executive pay practices must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. Evaluating appropriate alignment of pay incentives with shareholder value creation includes taking into consideration, among other factors, the link between pay and performance, the mix between fixed and variable pay, equity-based plan costs, and performance goals - including goals tied to social and environmental considerations.  |

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| § | *Avoiding arrangements that risk "pay for failure"*: this includes assessing the appropriateness of long or indefinite contracts, excessive severance packages, guaranteed compensation, and practices or policies that fail to adequately mitigate against or address environmental, social and governance failures.  |

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| § | *Independent and effective compensation committees*: oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed) should be promoted.  |

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§ *Clear and comprehensive compensation disclosures*: shareholders expect companies to provide informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly.

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| § | *Avoiding inappropriate pay to non-executive directors*: compensation to outside directors should not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance. At the market level, this may incorporate a variety of generally accepted best practices.  |

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A non-exhaustive list of best pay practices includes:

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| § | *<u>Employment contracts</u>:* Companies should enter into employment contracts under limited circumstances for a short time period (e.g., new executive hires for a three-year contract) for limited executives. The contracts should not have automatic renewal feature and should have a specified termination date.  |

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§ *<u>Severance agreements</u>:* Severance provisions should not be so appealing that it becomes an incentive for the executive to be terminated. Severance provisions should exclude excise tax gross-up. The severance formula should

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be reasonable and not overly generous to the executive (e.g., severance multiples of 1X, 2X, or 3X and use pro-rated target/average historical bonus and not maximum bonus). Failure to renew employment contract, termination under questionable events, or poor performance should not be considered as appropriate reasons for severance payments.

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| § | *<u>Change-in-control payments</u>:* Change-in-control payments should only be made when there is a significant change in company ownership structure, and when there is a loss of employment or substantial change in job duties associated with the change in company ownership structure ("double-triggered"). Change-in-control provisions should exclude excise tax gross-up and eliminate the acceleration of vesting of equity awards upon a change in control unless provided under a double-trigger scenario. Similarly, change in control provisions in equity plans should be double-triggered. A change in control event should not result in an acceleration of vesting of all unvested stock options or removal of vesting/performance requirements on restricted stock/performance shares, unless there is a loss of employment or substantial change in job duties.  |

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| § | *<u>Supplemental executive retirement plans (SERPs)</u>:* SERPS should not include sweeteners that can increase the SERP value significantly or even exponentially, such as additional years of service credited for pension calculation, inclusion of variable pay (e.g. bonuses and equity awards) into the formula. Pension formula should not include extraordinary annual bonuses paid close to retirement years, and should be based on the average, not the maximum level of compensation earned.  |

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§ *<u>Deferred compensation</u>:* Above-market returns or guaranteed minimum returns should not be applied on deferred compensation.

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| § | *<u>Disclosure practices</u>:* The Compensation Discussion & Analysis should be written in plain English, with as little "legalese" as possible and formatted using section headers, bulleted lists, tables, and charts where possible to ease reader comprehension. Ultimately, the document should provide detail and rationale regarding compensation, strategy, pay mix, goals/metrics, challenges, competition and pay for performance linkage, etc. in a narrative fashion.  |

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| § | *<u>Responsible use of company stock</u>:* Companies should adopt policies that prohibit executives from speculating in company's stock or using company stock in hedging activities, such as "cashless" collars, forward sales, equity swaps or other similar arrangements. Such behavior undermines the ultimate alignment with long-term shareholders' interests. In addition, the policy should prohibit or discourage the use of company stock as collateral for margin loans, to avoid any potential sudden stock sales (required upon margin calls), that could have a negative impact on the company's stock price.  |

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| § | *<u>Long-term focus</u>:* Executive compensation programs should be designed to support companies' long-term strategic goals. A short-term focus on performance does not necessarily create sustainable shareholder value, since long-term goals may be sacrificed to achieve short-term expectations. Compensation programs embedding a long-term focus with respect to company goals better align with the long-term interests of shareholders. Granting stock options and restricted stock to executives that vest in five years do not necessarily provide a long-term focus, as executives can sell the company shares once they vest. However, requiring senior executives to hold company stock until they retire can encourage a long-term focus on company performance.  |

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Criteria for Evaluating Executive Pay

Pay-for-Performance Evaluation

Catholic Advisory Services conducts a five-part pay analysis to evaluate the degree of alignment between the CEO's pay with the company's performance over a sustained period. From a shareholders' perspective, performance is predominantly gauged by the company's stock performance over time. Even when financial, non-financial or operational measures are utilized in incentive awards, the achievement related to these measures should ultimately translate into superior shareholder returns in the long-term. With respect to companies in the S&P1500, Russell 3000 index or Russel 3000E Indices<sup>17</sup> , this analysis considers the following:

Pay-for-Performance Elements

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| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period,**<sup>18</sup>** and the rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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| § | Absolute Alignment: The absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years –*i.e.*, the difference between the trend in annual pay changes and the trend in annualized TSR during the period.**<sup>19</sup>**  |

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§ Equity Pay Mix: The ratio of the CEO's performance- vs. time-based equity awards.

Pay Equity (Quantum) Elements

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| § | Multiple of Median: The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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| § | Internal Pay Disparity: The multiple of the CEO's total pay relative to other named executive officers (NEOs) –*i.e.*, an excessive differential between CEO total pay and that of the next highest-paid NEO as well as CEO total pay relative to the average NEO pay.  |

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If the above pay-for-performance analysis demonstrates unsatisfactory long-term pay-for-performance alignment or, in the case of non-Russell 3000 index companies, misaligned pay and performance are otherwise suggested, the following qualitative factors will be evaluated to determine how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance-based compensation to overall compensation, including whether any relevant social or environmental factors are a component of performance-contingent pay elements;

§ The presence of significant environmental, social or governance (ESG) controversies that have the potential to pose material risks to the company and its shareholders;

§ Any downward discretion applied to executive compensation on the basis of a failure to achieve performance goals, including ESG performance objectives;

§ The completeness of disclosure and rigor of performance goals;

§ The company's peer group benchmarking practices;

§ Actual results of financial/non-financial and operational metrics, such as growth in revenue, profit, cash flow, workplace safety, environmental performance, etc., both absolute and relative to peers;

§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

<sup>17</sup> The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

<sup>18</sup> The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group and company's selected peers' GICS industry group with size constraints, via a process designed to select peers that are closest to the subject company in terms of revenue/assets and industry and also within a market cap bucket that is reflective of the company's.

<sup>19</sup> Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

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§ Realizable pay compared to grant pay; and

§ Any other factors deemed relevant.

Problematic Pay Practices

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

§ Problematic practices related to non-performance-based compensation elements;

§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

§ Repricing or replacing of underwater stock options/SARs without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);

§ Extraordinary perquisites or tax gross-ups);

§ New or materially amended agreements that provide for:

§ Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus);

§ CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition;

§ CIC excise tax gross-up entitlements (including "modified" gross-ups);

§ Multi-year guaranteed awards that are not at risk due to rigorous performance conditions;

§ Liberal CIC definition combined with any single-trigger CIC benefits;

§ Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason);

§ E&S Incentives: A lack of any LTI and STI performance metrics and/or a lack of disclosure on LTI and STI performance metrics related to E&S criteria.

§ Any other provision or practice deemed to be egregious and present a significant risk to investors.

The above examples are not an exhaustive list. Please refer to the <u>U.S. Compensation Policies FAQ</u> document for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

#### Options Backdating
The following factors should be examined on a case-by-case basis to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud, as well as those instances in which companies that subsequently took corrective action. Cases where companies have committed fraud are considered most egregious.

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

§ Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants;

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§ Adoption of a grant policy that prohibits backdating, and creates a fixed grant schedule or window period for equity grants in the future.

Compensation Committee Communications and Responsiveness

Consider the following factors on a case-by-case basis when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

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| § | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Advisory Votes on Executive Compensation- Management Proposals (Management Say on Pay)

The Dodd-Frank Act mandates advisory votes on executive compensation (Say on Pay) for a proxy or consent or authorization for an annual or other meeting of the shareholders that includes required SEC compensation disclosures. This non-binding shareholder vote on compensation must be included in a proxy or consent or authorization at least once every three years.

In general, the Say on Pay ballot item is the primary focus of voting on executive pay practices – dissatisfaction with compensation practices can be expressed by voting against the Say on Pay proposal rather than voting against or withhold from the compensation committee. However, if there is no Say on Pay on the ballot, then the negative vote will apply to members of the compensation committee. In addition, in egregious cases, or if the board fails to respond to concerns raised by a prior Say on Pay proposal, then Catholic Advisory Services will recommend vote against or withhold votes from compensation committee members (or, if the full board is deemed accountable, all directors). If the negative factors involve equity-based compensation, then a vote against an equity-based plan proposal presented for shareholder approval may be appropriate. In evaluating Say on Pay proposals, Catholic Advisory Services will also assess to what degree social and environmental considerations are incorporated into compensation programs and executive pay decision-making – to the extent that proxy statement Compensation Discussion and Analysis (CD&A) disclosures permit.

**Catholic Advisory Services Recommendation:** Evaluate executive pay and practices, as well as certain aspects of outside director compensation on a case-by-case basis.

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| § | Vote against management Say on Pay ("SOP") proposals if:  |

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§ There is an unmitigated misalignment between CEO pay and company performance (pay-for-performance);

§ The company maintains problematic pay practices;

§ The board exhibits a significant level of poor communication and responsiveness to shareholders.

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| § | Vote against or withhold from the members of the Compensation Committee and potentially the full board if:  |

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| § | There is no SOP on the ballot, and an against vote on an SOP is warranted due to pay-for-performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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| § | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast;  |

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§ The company has recently practiced or approved problematic pay practices, such as option repricing or option backdating; or

§ The situation is egregious.

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| § | Vote against an equity plan on the ballot if:  |

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§ A pay for performance misalignment exists, and a significant portion of the CEO's misaligned pay is attributed to non-performance-based equity awards, taking into consideration:

§ Magnitude of pay misalignment;

§ Contribution of non-performance-based equity grants to overall pay; and

§ The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer (NEO) level.

Frequency of Advisory Vote on Executive Compensation – Management Say on Pay

The Dodd-Frank Act, in addition to requiring advisory votes on compensation, requires that each proxy for the first annual or other meeting of the shareholders (that includes required SEC compensation disclosures) occurring after Jan. 21, 2011, include an advisory voting item to determine whether, going forward, the "say on pay" vote by shareholders to approve compensation should occur every one, two, or three years.

Catholic Advisory Services will recommend a vote for annual advisory votes on compensation. The SOP is at its essence a communication vehicle, and communication is most useful when it is received in a consistent and timely manner. Catholic Advisory Services supports an annual SOP vote for many of the same reasons it supports annual director elections rather than a classified board structure: because this provides the highest level of accountability and direct communication by enabling the SOP vote to correspond to the majority of the information presented in the accompanying proxy statement for the applicable shareholders' meeting. Having SOP votes every two or three years, covering all actions occurring between the votes, would make it difficult to create the meaningful and coherent communication that the votes are intended to provide. Under triennial elections, for example, a company would not know whether the shareholder vote references the compensation year being discussed or a previous year, making it more difficult to understand the implications of the vote.

**Catholic Advisory Services Recommendation:** Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

This is a proxy item regarding specific advisory votes on "golden parachute" arrangements for Named Executive Officers (NEOs) that is required under The Dodd-Frank Wall Street Reform and Consumer Protection Act. Catholic Advisory Services places particular focus on severance packages that provide inappropriate windfalls and cover certain tax liabilities of executives.

**Catholic Advisory Services Recommendation:** Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers rather than focusing primarily on new or extended arrangements.

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Features that may result in an against recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

§ Single- or modified-single-trigger cash severance;

§ Single-trigger acceleration of unvested equity awards;

§ Full acceleration of equity awards granted shortly before the change in control;

§ Acceleration of performance awards above the target level of performance without compelling rationale;

§ Excessive cash severance (>3x base salary and bonus);

§ Excise tax gross-ups triggered and payable;

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| § | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or  |

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§ Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or

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| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote.  |

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Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation ("management "say on pay"), Catholic Advisory Services will evaluate the "say on pay" proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity-Based Incentive Plans

As executive pay levels continue to soar, non-salary compensation remains one of the most sensitive and visible corporate governance issues. The financial crisis raised questions about the role of pay incentives in influencing executive behavior, including their appetite for risk-taking. Although shareholders may have little say about how much the CEO is paid in salary and bonus, they do have a major voice in approving stock incentive plans.

Stock-based plans can transfer significant amounts of wealth from shareholders to executives and directors and are among the most economically significant issues that shareholders are entitled to vote on. Rightly, the cost of these plans must be in line with the anticipated benefits to shareholders. Clearly, reasonable limits must be set on dilution as well as administrative authority. In addition, shareholders must consider the necessity of the various pay programs and examine the appropriateness of award types. Consequently, the pros and cons of these proposals necessitate a case-by-case evaluation.

Factors that increase the cost (or have the potential to increase the cost) of plans to shareholders include: excessive dilution, options awarded at below-market discounts, permissive policies on pyramiding, restricted stock giveaways that reward tenure rather than results, sales of shares on concessionary terms, blank-check authority for administering committees, option repricing or option replacements, accelerated vesting of awards in the event of defined changes in corporate control, stand-alone stock appreciation rights, loans or other forms of assistance, or evidence of improvident award policies.

Positive plan features that can offset costly features include: plans with modest dilution potential (i.e. appreciably below double-digit levels), bars to pyramiding and related safeguards for investor interests. Also favorable are performance programs with a duration of two or more years, bonus schemes that pay off in non-dilutive, fully deductible cash, 401K and other thrift or profit sharing plans, and tax-favored employee stock purchase plans. In general, we believe that stock plans should afford incentives, not sure-fire, risk-free rewards.

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**Catholic Advisory Services Recommendation:** Vote case-by-case on certain equity-based compensation plans<sup>20</sup> depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars:

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| § | **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:  |

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§ SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and

§ SVT based only on new shares requested plus shares remaining for future grants.

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| § | **Plan Features:**  |

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§ Quality of disclosure around vesting upon a change in control (CIC);

§ Discretionary vesting authority;

§ Liberal share recycling on various award types;

§ Lack of minimum vesting period for grants made under the plan;

§ Dividends payable prior to award vesting.

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| § | **Grant Practices:**  |

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§ The company's three year burn rate relative to its industry/market cap peers;

§ Vesting requirements in CEO's recent equity grants (3-year look-back);

§ The estimated duration of the plan based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years;

§ The proportion of the CEO's most recent equity grants/awards subject to performance conditions;

§ Whether the company maintains a sufficient claw-back policy;

§ Whether the company maintains sufficient post exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following ("overriding factors") apply:

§ Awards may vest in connection with a liberal change-of-control definition;

§ The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies -- or by not prohibiting it when the company has a history of repricing – for non-listed companies);

§ The plan is a vehicle for problematic pay practices or a pay-for-performance disconnect; or

§ The plan is excessively dilutive to shareholders' holdings;

§ The plan contains an evergreen (automatic share replenishment) feature; or

§ Any other plan features are determined to have a significant negative impact on shareholder interests.

Each of these factors is described below.

Generally vote against equity plans if the cost is unreasonable. For non-employee director plans, vote for the plan if certain factors are met.

FURTHER INFORMATION ON CERTAIN EPSC FACTORS:

Shareholder Value Transfer (SVT)

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full value awards), the assumption is made that all awards to be granted will be the most expensive types. See discussion of specific types of awards.

<sup>20</sup> Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors.

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Except for proposals subject to Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size and cash compensation into the industry cap equations to arrive at the company's benchmark.<sup>21</sup>

Repricing Provisions

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" includes the ability to do any of the following:

§ Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs;

§ Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs;

§ The cancellation of underwater options in exchange for stock awards; or

§ Cash buyouts of underwater options.

While the above cover most types of repricing, Catholic Advisory Services may view other provisions as akin to repricing depending on the facts and circumstances.

Also, vote against or withhold from members of the compensation committee who approved repricing (as defined above or otherwise determined by Catholic Advisory Services) without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans that do not expressly prohibit repricing or cash buyout of underwater options without shareholder approval if the company has a history of repricing/buyouts without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Pay-for-Performance Misalignment – Application to Equity Plans

If the equity plan on the ballot is a vehicle for <u>problematic pay practices</u>, vote against the plan.

Catholic Advisory Services may recommend a vote against the equity plan if the plan is determined to be a vehicle for pay-for-performance misalignment. Considerations in voting against the equity plan may include, but are not limited to:

§ Severity of the pay-for-performance misalignment;

§ Whether problematic equity grant practices are driving the misalignment; and/or

§ Whether equity plan awards have been heavily concentrated to the CEO and/or the other NEOs.

Three-Year Value Adjusted Burn Rate

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks will be calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

<sup>21</sup> For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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The Value-Adjusted Burn Rate will be calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Liberal Definition of Change-in-Control

Generally vote against equity plans if the plan provides for the acceleration of vesting of equity awards even though an actual change in control may not occur. Examples of such a definition could include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

Other Compensation Plans

Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))

Cash bonus plans can be an important part of an executive's overall pay package, along with stock-based plans tied to long-term total shareholder returns. Over the long term, stock prices are an excellent indicator of management performance. However, other factors, such as economic conditions and investor reaction to the stock market in general and certain industries in particular, can greatly impact the company's stock price. As a result, a cash bonus plan can effectively reward individual performance and the achievement of business unit objectives that are independent of short-term market share price fluctuations.

Catholic Advisory Services Recommendation: Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Addresses administrative features only; or

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| § | Seeks approval for Section 162(m) purposes <u>only</u>, and the plan administering committee consists entirely of independent directors, per Catholic Advisory Services' Classification of Directors. Note that if the company is presenting the plan to shareholders for the first time after the company's initial public offering (IPO), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).  |

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Vote against proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent directors, per Catholic Advisory Services' Classification of Directors.

Vote case-by-case on all other proposals to amend <u>cash</u> incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes.

Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

§ If the proposal requests additional shares and/or the amendments may potentially increase the transfer of shareholder value to employees, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments.

§ If the plan is being presented to shareholders for the first time (including after the company's IPO), whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments.

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| § | If there is no request for additional shares and the amendments are not deemed to potentially increase the transfer of shareholder value to employees, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown for informational purposes.  |

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In the first two case-by-case evaluation scenarios, the EPSC evaluation/score is the more heavily weighted consideration.

Employee Stock Purchase Plans (ESPPs)

Employee stock purchase plans enable employees to become shareholders, which gives them a stake in the company's growth. However, purchase plans are beneficial only when they are well balanced and in the best interests of all shareholders. From a shareholder's perspective, plans with offering periods of 27 months or less are preferable. Plans with longer offering periods remove too much of the market risk and could give participants excessive discounts on their stock purchases that are not offered to other shareholders.

Qualified Plans

Qualified employee stock purchase plans qualify for favorable tax treatment under Section 423 of the Internal Revenue Code. Such plans must be broad-based, permitting all full-time employees to participate. Some companies also permit part-time staff to participate. Qualified ESPPs must be expensed under SFAS 123 unless the plan meets the following conditions; a) purchase discount is 5 percent or below; b) all employees can participate in the program; and 3) no look-back feature in the program. Therefore, some companies offer nonqualified ESPPs.

Catholic Advisory Services Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

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| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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| § | The number of shares allocated to the plan is ten percent or less of the outstanding shares.  |

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Vote against qualified employee stock purchase plans where any of the following apply:

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| § | Purchase price is less than 85 percent of fair market value; or  |

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§ Offering period is greater than 27 months; or

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| § | The number of shares allocated to the plan is more than ten percent of the outstanding shares.  |

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Non-Qualified Plans

For nonqualified ESPPs, companies provide a match to employees' contributions instead of a discount in stock price. Also, limits are placed on employees' contributions. Some companies provide a maximum dollar value for the year and others specify the limits in terms of a percent of base salary, excluding bonus or commissions. For plans that do not qualify under Section 423 of the Internal Revenue Code, a plan participant will not recognize income by participating in the plan, but will recognize ordinary compensation income for federal income tax purposes at the time of the purchase.

Catholic Advisory Services Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

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| § | Broad-based participation (i.e., all employees of the company with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);  |

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| § | Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;  |

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| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value;  |

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§ No discount on the stock price on the date of purchase since there is a company matching contribution.

Vote against nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the matching contribution or effective discount exceeds the above, Catholic Advisory Services may evaluate the SVT cost of the plan as part of the assessment.

Employee Stock Ownership Plans (ESOPs)

An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that makes the employees of a company also owners of stock in that company. The plans are designed to defer a portion of current employee income for retirement purposes.

The primary difference between ESOPs and other employee benefit plans is that ESOPs invest primarily in the securities of the employee's company. In addition, an ESOP must be created for the benefit of non-management level employees and administered by a trust that cannot discriminate in favor of highly paid personnel.

Academic research of the performance of ESOPs in closely held companies found that ESOPs appear to increase overall sales, employment, and sales per employee over what would have been expected absent an ESOP. Studies have also found that companies with an ESOP are also more likely to still be in business several years later, and are more likely to have other retirement oriented benefit plans than comparable non-ESOP companies.

Catholic Advisory Services Recommendation: Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

Option Exchange Programs/Repricing Options

Catholic Advisory Services Recommendation: Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

§ Historic trading patterns – the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing – was the stock price decline beyond management's control?

§ Is this a value-for-value exchange?

§ Are surrendered stock options added back to the plan reserve?

§ Timing--repricing should occur at least one year out from any precipitous drop in company's stock price;

§ Option vesting – does the new option vest immediately or is there a black-out period?

§ Term of the option – the term should remain the same as that of the replaced option;

§ Exercise price – should be set at fair market or a premium to market;

§ Participants – executive officers and directors must be excluded.

If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing and warrants additional scrutiny. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting

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schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

Stock Plans in Lieu of Cash

Catholic Advisory Services Recommendation:

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| § | Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.  |

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| § | Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.  |

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| § | Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, Catholic Advisory Services will not make any adjustments to carve out the in-lieu-of cash compensation.  |

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Transfer Stock Option (TSO) Programs

Catholic Advisory Services Recommendation:

**One-time Transfers:** Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote case-by-case on one-time transfers. Vote for if:

§ Executive officers and non-employee directors are excluded from participating;

§ Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models;

§ There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

**Ongoing TSO program:** Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

§ Eligibility;

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| § | Vesting;  |

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§ Bid-price;

§ Term of options;

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| § | Cost of the program and impact of the TSOs on company's total option expense; and  |

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§ Option repricing policy.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

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401(k) Employee Benefit Plans

The 401(k) plan is one of the most popular employee benefit plans among U.S. companies. A 401(k) plan is any qualified plan under Section 401(k) of the Internal Revenue Code that contains a cash or deferred arrangement. In its simplest form, an employee can elect to have a portion of his salary invested in a 401(k) plan before any income taxes are assessed. The money can only be withdrawn before retirement under penalty. However, because the money contributed to the plan is withdrawn before taxes (reducing the employee's income tax), a properly planned 401(k) plan will enable an employee to make larger contributions to a 401(k) plan than to a savings plan, and still take the same amount home.

Catholic Advisory Services Recommendation: Vote for proposals to implement a 401(k) savings plan for employees.

Severance Agreements for Executives/Golden Parachutes

Catholic Advisory Services Recommendation: Vote on a case-by-case basis on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

§ The triggering mechanism should be beyond the control of management;

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| § | The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs;  |

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§ Change-in-control payments should be double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

Director Compensation

The board's legal charge of fulfilling its fiduciary obligations of loyalty and care is put to the ultimate test through the task of the board setting its own compensation. Directors themselves oversee the process for evaluating board performance and establishing pay packages for board members.

Shareholders provide limited oversight of directors by electing individuals who are primarily selected by the board, or a board nominating committee, and by voting on stock-based plans for directors designed by the board compensation committee. Additionally, shareholders may submit and vote on their own resolutions seeking to limit or restructure director pay. While the cost of compensating non-employee directors is small in absolute terms, compared to the cost of compensating executives, it is still a critical aspect of a company's overall corporate governance structure.

Overall, director pay levels are rising in part because of the new forms of pay in use at many companies, as well as because of the increased responsibilities arising from the 2002 Sarbanes-Oxley Act requirements. In addition to an annual retainer fee, many companies also pay fees for attending board and committee meetings, fees for chairing a committee, or a retainer fee for chairing a committee.

Director compensation packages should be designed to provide value to directors for their contribution. Given that many directors are high-level executives whose personal income levels are generally high, cash compensation may hold little appeal. Stock-based incentives on the other hand reinforce the directors' role of protecting and enhancing shareholder value. The stock-based component of director compensation should be large enough to ensure that when faced with a situation in which the interests of shareholders and management differ, the board will have a financial incentive to think as a shareholder. Additionally, many companies have instituted equity ownership programs for directors. Catholic Advisory Services recommends that directors receive stock grants equal to three times of their annual retainer, as it is a reasonable starting point for companies of all sizes and industries. A vesting schedule for director grants helps directors to meet the stock ownership guidelines and maintains their long-term interests in the firm.

Director compensation packages should also be designed to attract and retain competent directors who are willing to risk becoming a defendant in a lawsuit and suffer potentially adverse publicity if the company runs into financial difficulties or is mismanaged.

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Shareholder Ratification of Director Pay Programs

Catholic Advisory Services Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Equity Plans for Non-Employee Directors

Stock-based plans may take on a variety of forms including: grants of stock or options, including: discretionary grants, formula based grants, and one-time awards; stock-based awards in lieu of all or some portion of the cash retainer and/or other fees; and deferred stock plans allowing payment of retainer and/or meeting fees to be taken in stock, the payment of which is postponed to some future time, typically retirement or termination of directorship.

Catholic Advisory Services Recommendation: Vote case-by-case on compensation plans for non-employee directors, based on:

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| § | The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants;  |

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§ The company's three year burn rate relative to its industry/market cap peers; and

§ The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).

On occasion, director stock plans that set aside a relatively small number of shares will exceed the plan cost or burn rate benchmark when combined with employee or executive stock compensation plans. In such cases, vote for the plan if all of the following qualitative factors in the board's compensation are met and disclosed in the proxy statement:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines with a minimum of three times the annual cash retainer;

§ Equity award vesting schedules;

§ The presence of problematic pay practices relating to director compensation;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Outside Director Stock Awards/Options in Lieu of Cash

These proposals seek to pay outside directors a portion of their compensation in stock rather than cash. By doing this, a director's interest may be more closely aligned with those of shareholders.

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Catholic Advisory Services Recommendation: Vote for proposals that seek to pay outside directors a portion of their compensation in stock rather than cash.

Non-Employee Director Retirement Plans

Catholic Advisory Services Recommendation:

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| § | Vote against retirement plans for non-employee directors.  |

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| § | Vote for shareholder proposals to eliminate retirement plans for non-employee directors.  |

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Shareholder Proposals on Compensation

Increase Disclosure of Executive Compensation

The SEC requires that companies disclose, in their proxy statements, the salaries of the top five corporate executives (who make at least $100,000 a year). Companies also disclose their compensation practices and details of their stock-based compensation plans. While this level of disclosure is helpful, it does not always provide a comprehensive picture of the company's compensation practices. For shareholders to make informed decisions on compensation levels, they need to have clear, concise information at their disposal. Increased disclosure will help ensure that management: (1) has legitimate reasons for setting specific pay levels; and (2) is held accountable for its actions.

Catholic Advisory Services Recommendation: Vote for shareholder proposals seeking increased disclosure on executive compensation issues including the preparation of a formal report on executive compensation practices and policies.

Limit Executive Compensation

Proposals that seek to limit executive or director compensation usually focus on the absolute dollar figure of the compensation or focus on the ratio of compensation between the executives and the average worker of a specific company. Proponents argue that the exponential growth of executive salaries is not in the best interests of shareholders, especially when that pay is exorbitant when compared to the compensation of other workers.

Catholic Advisory Services Recommendation:

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| § | Vote for proposals to prepare reports seeking to compare the wages of a company's lowest paid worker to the highest paid workers.  |

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| § | Vote case-by-case on proposals that seek to establish a fixed ratio between the company's lowest paid workers and the highest paid workers.  |

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Stock Ownership Requirements

Corporate directors should own some amount of stock of the companies on which they serve as board members. Stock ownership is a simple method to align the interests of directors with company shareholders. Nevertheless, many highly qualified individuals such as academics and clergy who can offer valuable perspectives in boardrooms may be unable to purchase individual shares of stock. In such a circumstance, the preferred solution is to look at the board nominees individually and take stock ownership into consideration when voting on the merits of each candidate.

Catholic Advisory Services Recommendation: Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

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Prohibit/Require Shareholder Approval for Option Repricing

Repricing involves the reduction of the original exercise price of a stock option after the fall in share price. Catholic Advisory Services does not support repricing since it undermines the incentive purpose of the plan. The use of options as an incentive means that employees must bear the same risks as shareholders in holding these options. Shareholder resolutions calling on companies to abandon the practice of repricing or to submit repricings to a shareholder vote will be supported.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking to limit repricing.  |

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| § | Vote for shareholder proposals asking the company to have option repricings submitted for shareholder ratification.  |

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Severance Agreements/Golden Parachutes

Golden parachutes are designed to protect the employees of a corporation in the event of a change in control. With Golden Parachutes senior level management employees receive a payout during a change in control at usually two to three times base salary.

Catholic Advisory Services Recommendation: Vote for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts.

Cash Balance Plans

A cash balance plan is a defined benefit plan that treats an earned retirement benefit as if it was a credit from a defined contribution plan, but which provides a stated benefit at the end of its term. Because employer contributions to these plans are credited evenly over the life of a plan, and not based on a seniority formula they may reduce payouts to long-term employees who are currently vested in plans.

Cash-balance pension conversions have undergone congressional and federal agency scrutiny following high-profile EEOC complaints on age discrimination and employee anger at companies like IBM. While significant change is unlikely in the short-tm, business interests were concerned enough that the National Association of Manufacturers and other business lobbies formed a Capitol Hill coalition to preserve the essential features of the plans and to overturn a IRS ruling. Driving the push behind conversions from traditional pension plans to cash-balance plans are the substantial savings that companies generate in the process. Critics point out that these savings are gained at the expense of the most senior employees. Resolutions call on corporate boards to establish a committee of outside directors to prepare a report to shareholders on the potential impact of pension-related proposals now being considered by national policymakers in reaction to the controversy spawned by the plans.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals calling for non-discrimination in retirement benefits.  |

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| § | Vote for shareholder proposals asking a company to give employees the option of electing to participate in either a cash balance plan or in a defined benefit plan.  |

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Performance-Based Equity Awards

Catholic Advisory Services supports compensating executives at a reasonable rate and believes that executive compensation should be strongly correlated to performance. Catholic Advisory Services supports equity awards that provide challenging performance objectives and serve to motivate executives to superior performance and as performance-contingent stock options as a significant component of compensation.

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Catholic Advisory Services Recommendation: Vote case-by-case on shareholder proposal requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

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| § | First, vote for shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a "substantial" portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a meaningful premium to be considered performance-based awards.  |

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| § | Second, assess the rigor of the company's performance-based equity program. If the bar set for the performance-based program is too low based on the company's historical or peer group comparison, generally vote for the proposal. Furthermore, if target performance results in an above target payout, vote for the shareholder proposal due to program's poor design. If the company does not disclose the performance metric of the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.  |

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

Pay for Superior Performance

Catholic Advisory Services Recommendation: Generally vote for shareholder proposals based on a case-by-case analysis that requests the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. The proposal has the following principles:

§ Sets compensation targets for the Plan's annual and long-term incentive pay components at or below the peer group median;

§ Delivers a majority of the Plan's target long-term compensation through performance-vested, not simply time-vested, equity awards;

§ Provides the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the plan;

§ Establishes performance targets for each plan financial metric relative to the performance of the company's peer companies;

§ Limits payment under the annual and performance-vested long-term incentive components of the plan to when the company's performance on its selected financial performance metrics exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

§ What aspects of the company's annual and long-term equity incentive programs are performance driven?

§ If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates disclosed to shareholders or are they benchmarked against a disclosed peer group?

§ Can shareholders assess the correlation between pay and performance based on the current disclosure?

§ What type of industry and stage of business cycle does the company belong to?

Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals

Catholic Advisory Services Recommendation: Generally, vote for shareholder proposals that call for non-binding shareholder ratification of the compensation of the Named Executive Officers and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table.

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Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity

Catholic Advisory Services Recommendation: Generally vote for proposals seeking a policy that prohibits acceleration of the vesting of equity awards to senior executives in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

Vote on a case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment, and eliminating accelerated vesting of unvested equity. The following factors will be taken into regarding this policy:

§ The company's current treatment of equity in change-of-control situations (i.e. is it double triggered, does it allow for the assumption of equity by acquiring company, the treatment of performance shares;

§ Current employment agreements, including potential problematic pay practices such as gross-ups embedded in those agreements.

Tax Gross-up Proposals

Catholic Advisory Services Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

Compensation Consultants - Disclosure of Board or Company's Utilization

Catholic Advisory Services Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s) and fees paid.

Golden Coffins/Executive Death Benefits

Catholic Advisory Services Recommendation: Generally vote for proposals calling companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.

Recoup Bonuses

Catholic Advisory Services Recommendation: Vote on a case-by-case on proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that the figures upon which incentive compensation is earned later turn out to have been in error. This is line with the clawback provision in the Troubled Asset Relief Program. Many companies have adopted policies that permit recoupment in cases where fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. The following will be taken into consideration:

§ If the company has adopted a formal recoupment bonus policy;

§ If the company has chronic restatement history or material financial problems;

§ If the company's policy substantially addresses the concerns raised by the proponent.

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Adopt Anti-Hedging/Pledging/Speculative Investments Policy

Catholic Advisory Services Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

Bonus Banking

Catholic Advisory Services Recommendation: Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

§ The company's past practices regarding equity and cash compensation;

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| § | Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and  |

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§ Whether the company has a rigorous claw-back policy in place.

Hold Equity Past Retirement or for a Significant Period of Time

Catholic Advisory Services Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans. The following factors will be taken into account:

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| § | The percentage/ratio of net shares required to be retained;  |

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§ The time period required to retain the shares;

§ Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements;

§ Whether the company has any other policies aimed at mitigating risk taking by executives;

§ Executives' actual stock ownership and the degree to which it meets or exceeds the proponent's suggested holding period/retention ratio or the company's existing requirements; and

§ Problematic pay practices, current and past, which may demonstrate a short-term versus long-term focus.

Pre-Arranged Trading Plans (10b5-1 Plans)

Catholic Advisory Services Recommendation: Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

§ Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

§ Amendment or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances, as determined by the board;

§ Request that a certain number of days that must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan;

§ Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

§ An executive may not trade in company stock outside the 10b5-1 Plan;

§ Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive.

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7. Mergers and Corporate Restructurings

A merger occurs when one corporation is absorbed into another and ceases to exist. The surviving company gains all the rights, privileges, powers, duties, obligations and liabilities of the merged corporation. The shareholders of the absorbed company receive stock or securities of the surviving company or other consideration as provided by the plan of merger. Mergers, consolidations, share exchanges, and sale of assets are friendly in nature, which is to say that both sides have agreed to the combination or acquisition of assets.

Shareholder approval for an acquiring company is generally not required under state law or stock exchange regulations unless the acquisition is in the form of a stock transaction which would result in the issue of 20 percent or more of the acquirer's outstanding shares or voting power, or unless the two entities involved require that shareholders approve the deal. Under most state laws, however, a target company must submit merger agreements to a shareholder vote. Shareholder approval is required in the formation of a consolidated corporation.

Mergers and Acquisitions

M&A analyses are inherently a balance of competing factors. Bright line rules are difficult if not impossible to apply to a world where every deal is different. Ultimately, the question for shareholders (both of the acquirer and the target) is the following: Is the valuation fair? Shareholders of the acquirer may be concerned that the deal values the target too highly. Shareholders of the target may be concerned that the deal undervalues their interests.

Vote recommendation will be based on primarily an analysis of shareholder value, which itself can be affected by ancillary factors such as the negotiation process. The importance of other factors, including corporate governance and social and environmental considerations however, should not fail to be recognized.

Catholic Advisory Services Recommendation: Votes on mergers and acquisitions are considered on a case-by-case basis. A review and evaluation of the merits and drawbacks of the proposed transaction is conducted, balancing various and sometimes countervailing factors including:

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| § | *Valuation*: Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction and strategic rationale;  |

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§ *Market reaction*: How has the market responded to the proposed deal? A negative market reaction *should cause closer scrutiny of a deal;*

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| § | *<u>Strategic rationale</u>: Does the deal make sense strategically? From where is the value derived? Cost and* revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions;  |

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§ *Negotiations and process*: Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable?

§ *Conflicts of interest*: Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders?

§ *Governance*: Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction?

§ *Stakeholder impact*: Impact on community stakeholders and workforce including impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment etc.

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Corporate Reorganization/Restructuring Plans (Bankruptcy)

The recent financial crisis has placed Chapter 11 bankruptcy reorganizations as a potential alternative for distressed companies. While the number of bankruptcies has risen over the past year as evidenced by many firms, including General Motors and Lehman Brothers, the prevalence of these reorganizations can vary year over year due to, among other things, market conditions and a company's ability to sustain its operations. Additionally, the amount of time that lapses between a particular company's entrance into Chapter 11 and its submission of a plan of reorganization varies significantly depending on the complexity, timing, and jurisdiction of the particular case. These plans are often put to a vote of shareholders (in addition to other interested parties), as required by the Bankruptcy Code.

Catholic Advisory Services Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an official equity committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization;

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

Catholic Advisory Services Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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| § | *Valuation*: Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target, if it is a private entity.  |

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§ *Market reaction*: How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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| § | *Deal timing*: A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *Negotiations and process*: What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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| § | *Conflicts of interest*: How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24 month timeframe.  |

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| § | *Voting agreements*: Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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§ *Governance*: What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

§ *Stakeholder Impact*: Impact on community stakeholders and workforce including impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment etc.

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Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions

Catholic Advisory Services Recommendation: Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ *Length of request*: Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquistion process.

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| § | <u>*Pending transaction(s)* or *progression of the acquisition process*</u>*:* Sometimes an intial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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| § | *Added incentive for non-redeeming shareholders*: Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.  |

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§ *Prior extension requests*: Some SPACs request additional time beyond the extension period sought in prior extension requests.

Spin-offs

Catholic Advisory Services Recommendation: Votes on spin-offs should be considered on a case-by-case basis depending on the tax and regulatory advantages, planned use of sale proceeds, valuation of spinoff, fairness opinion, benefits to the parent company, conflicts of interest, managerial incentives, corporate governance changes, changes in the capital structure.

Asset Purchases

Catholic Advisory Services Recommendation: Votes on asset purchase proposals should be made on a case-by-case after considering the purchase price, fairness opinion, financial and strategic benefits, how the deal was negotiated, conflicts of interest, other alternatives for the business, non-completion risk.

Asset Sales

Catholic Advisory Services Recommendation: Votes on asset sales should be made on a case-by-case basis after considering the impact on the balance sheet/working capital, value received for the asset, potential elimination of diseconomies, anticipated financial and operating benefits, anticipated use of funds, fairness opinion, how the deal was negotiated, and conflicts of interest.

Liquidations

Catholic Advisory Services Recommendation: Votes on liquidations should be made on a case-by-case basis after reviewing management's efforts to pursue other alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation. Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

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Joint Ventures

Catholic Advisory Services Recommendation: Vote case-by-case on proposals to form joint ventures, taking into account percentage of assets/business contributed, percentage ownership, financial and strategic benefits, governance structure, conflicts of interest, other alternatives and non-completion risk.

Appraisal Rights

Rights of appraisal provide shareholders who do not approve of the terms of certain corporate transactions the right to demand a judicial review in order to determine the fair value for their shares. The right of appraisal generally applies to mergers, sales of essentially all assets of the corporation, and charter amendments that may have a materially adverse effect on the rights of dissenting shareholders.

Catholic Advisory Services Recommendation: Vote for proposals to restore, or provide shareholders with, rights of appraisal.

Going Private/Dark Transactions (LBOs and Minority Squeeze-outs)

Catholic Advisory Services Recommendation: Vote case-by-case on going private transactions, taking into account the following: offer price/premium, fairness opinion, how the deal was negotiated, conflicts of interest, other alternatives/offers considered, and non-completion risk.

Vote case-by-case on "going dark" transactions, determining whether the transaction enhances shareholder value by taking into consideration:

§ Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock);

§ Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:

§ Are all shareholders able to participate in the transaction?

§ Will there be a liquid market for remaining shareholders following the transaction?

§ Does the company have strong corporate governance?

§ Will insiders reap the gains of control following the proposed transaction?

§ Does the state of incorporation have laws requiring continued reporting that may benefit shareholders?

Private Placements/Warrants/Convertible Debentures

Catholic Advisory Services Recommendation: Vote case-by-case on proposals regarding private placements taking into consideration:

§ Dilution to existing shareholders' position.

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| § | The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion.  |

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§ Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; conversion features; termination penalties; exit strategy.

§ The terms of the offer should be weighed against the alternatives of the company and in light of company's financial issues.

§ When evaluating the magnitude of a private placement discount or premium, Catholic Advisory Services will consider whether it is affected by liquidity, due diligence, control and monitoring issues, capital scarcity, information asymmetry and anticipation of future performance.

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| § | Financial issues include but are not limited to examining the following: a) company's financial situation; b) degree of need for capital; c) use of proceeds; d) effect of the financing on the company's cost of capital; e) current and proposed cash burn rate; and f) going concern viability and the state of the capital and credit markets.  |

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| § | Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives. A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger or sale of part or all of the company.  |

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§ Control issues including: a) Change in management; b) change in control; c) guaranteed board and committee seats; d) standstill provisions; e) voting agreements; f) veto power over certain corporate actions.

§ Minority versus majority ownership and corresponding minority discount or majority control premium

§ Conflicts of interest

§ Conflicts of interest should be viewed from the perspective of the company and the investor.

§ Were the terms of the transaction negotiated at arm's-length? Are managerial incentives aligned with shareholder interests?

§ Market reaction

§ The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one day impact on the unaffected stock price.

Vote for the private placement if it is expected that the company will file for bankruptcy if the transaction is not approved.

Formation of Holding Company

Catholic Advisory Services Recommendation:

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| § | Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration: a) the reasons for the change; b) any financial or tax benefits; c) regulatory benefits; d) increases in capital structure; and e) changes to the articles of incorporation or bylaws of the company.  |

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| § | Vote against the formation of a holding company, absent compelling financial reasons to support the transaction, if the transaction would include either: a) increases in common or preferred stock in excess of the allowable maximum; or b) adverse changes in shareholder rights.  |

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Value Maximization Shareholder Proposals

Catholic Advisory Services Recommendation: Vote case-by-case on shareholder proposals seeking to maximize shareholder value by hiring a financial advisor to explore strategic alternatives, selling the company or liquidating the company and distributing the proceeds to shareholders. These proposals should be evaluated based on the following factors:

§ Prolonged poor performance with no turnaround in sight;

§ Signs of entrenched board and management;

§ Strategic plan in place for improving value;

§ Likelihood of receiving reasonable value in a sale or dissolution;

§ Whether company is actively exploring its strategic options, including retaining a financial advisor.

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8. Social and Environmental Proposals

Socially responsible shareholder resolutions are receiving a great deal more attention from institutional shareholders today than they have in the past. In addition to the moral and ethical considerations intrinsic to many of these proposals, there is a growing recognition of their potential impact on the economic performance of the company. Among the reasons for this change are:

§ The number and variety of shareholder resolutions on social and environmental issues has increased;

§ Many of the sponsors and supporters of these resolutions are large institutional shareholders with significant holdings, and therefore, greater direct influence on the outcomes;

§ The proposals are more sophisticated – better written, more focused, and more sensitive to the feasibility of implementation;

§ Investors now understand that a company's response to social and environmental issues can have serious economic consequences for the company and its shareholders.

Global Approach

Catholic Advisory Services Recommendation: Generally vote for social and environmental shareholder proposals that promote good corporate citizens while enhancing long-term shareholder and stakeholder value. Vote for disclosure reports that seek additional information particularly when it appears companies have not adequately addressed shareholders' social, and environmental concerns. In determining vote recommendations on shareholder social, workforce, and environmental proposals, Catholic Advisory Services will analyze the following factors:

§ Whether the proposal itself is well framed and reasonable;

§ Whether adoption of the proposal would have either a positive or negative impact on the company's short-term or long-term share value;

§ Whether the company's analysis and voting recommendation to shareholders is persuasive;

§ The degree to which the company's stated position on the issues could affect its reputation or sales, or leave it vulnerable to boycott or selective purchasing;

§ Whether the subject of the proposal is best left to the discretion of the board;

§ Whether the issues presented in the proposal are best dealt with through legislation, government regulation, or company-specific action;

§ The company's approach compared with its peers or any industry standard practices for addressing the issue(s) raised by the proposal;

§ Whether the company has already responded in an appropriate or sufficient manner to the issue(s) raised in the proposal;

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's environmental or social practices;

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| § | If the proposal requests increased disclosure or greater transparency, whether sufficient information is publicly available to shareholders and whether it would be unduly burdensome for the company to compile and avail the requested information to shareholders in a more comprehensive or amalgamated fashion;  |

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§ Whether implementation of the proposal would achieve the objectives sought in the proposal.

In general, Catholic Advisory Services supports proposals that request the company to furnish information helpful to shareholders in evaluating the company's operations. In order to be able to intelligently monitor their investments, shareholders often need information best provided by the company in which they have invested. Requests to report such information will merit support. Requests to establish special committees of the board to address broad corporate policy and provide forums for ongoing dialogue on issues including, but not limited to shareholder relations, the environment, human rights, occupational health and safety, and executive compensation, will generally be supported, particularly when they appear to offer a potentially effective method for enhancing shareholder value. We will closely evaluate proposals

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that ask the company to cease certain actions that the proponent believes are harmful to society or some segment of society with special attention to the company's legal and ethical obligations, its ability to remain profitable, and potential negative publicity if the company fails to honor the request. Catholic Advisory Services supports shareholder proposals that improve the company's public image, and reduce exposure to liabilities.

Diversity and Equality

Significant progress has been made in recent years in the advancement of women and racial minorities in the workplace and the establishment of greater protections against discriminatory practices in the workplace. In the U.S, there are many civil rights laws that are enforced by the Equal Employment Opportunity Commission. The Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex and nationality. However, discrimination on the basis of race, gender, religion, nationality, and sexual preference continues. The SEC's revised disclosure rules now require information on how boards factor diversity into the director nomination process, as well as disclosure on how the board assesses the effectiveness of its diversity policy. Shareholder proposals on diversity may target a company's board nomination procedures or seek greater disclosure on a company's programs and procedures on increasing the diversity of its workforce, and make reference to one or more of the following points:

§ Violations of workplace anti-discrimination laws lead to expensive litigation and damaged corporate reputations that are not in the best interests of shareholders;

§ Employers already prepare employee diversity reports for the EEOC, so preparing a similar report to shareholders can be done at minimal cost;

§ The presence of women, ethnic minorities and union members in workforce and customer pools gives companies with diversified boards a practical advantage over their competitors as a result of their unique perspectives;

§ Efforts to include women, minorities and union representatives on corporate boards can be made at reasonable costs;

§ Reports can be prepared "at reasonable expense" describing efforts to encourage diversified representation on their boards;

§ Board diversification increases the pool of the company's potential investors because more and more investors are favoring companies with diverse boards;

§ A commitment to diversity in the workforce can lead to superior financial returns.

Add Women and Minorities to the Board

Board diversification proposals ask companies to put systems in place to increase the representation of women, racial minorities, union members or other underrepresented minority groups on boards of directors. In prior years, board diversification proposals requested that companies nominate board members from certain constituencies, appoint special committees to recommend underrepresented classes of board members, establish board positions reserved for representatives of certain groups, or simply "make greater efforts" to nominate women and ethnic minorities to their boards.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask the company to take steps to nominate more women and racial minorities to the board.  |

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| § | Vote for shareholder proposals asking for reports on board diversity.  |

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| § | Vote for shareholder proposals asking companies to adopt nomination charters or amend existing charters to include reasonable language addressing diversity.  |

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Racial Equity and/or Civil Rights Audits

Catholic Advisory Services Recommendation: Generally vote for proposals requesting that a company conduct an independent racial equity and/or civil rights audit, considering company disclosures, policies, actions, and engagements.

Report on the Distribution of Stock Options by Gender and Race

Companies have received requests from shareholders to prepare reports documenting the distribution of the stock options and restricted stock awards by race and gender of the recipient. Proponents of these proposals argue that, in the future, there will be a shift toward basing racial and gender discrimination suits on the distribution of corporate wealth through stock options. The appearance of these proposals is also in response to the nationwide wage gap and under representation of minorities and women at the highest levels of compensation.

Catholic Advisory Services Recommendation: Vote for shareholder proposals asking companies to report on the distribution of stock options by race and gender of the recipient.

Prepare Report/Promote EEOC-Related Activities

Filers of proposals on this issue generally ask a company to make available, at reasonable cost and omitting proprietary information, data the company includes in its annual report to the Equal Employment Opportunity Commission (EEOC) outlining the make-up of its workforce by race, gender and position. Shareholders also ask companies to report on any efforts they are making to advance the representation of women and ethnic minorities in jobs in which they have been historically underrepresented, such as sales and management. The costs of violating federal laws that prohibit discrimination by corporations are high and can affect corporate earnings. The Equal Opportunities Employment Commission does not release the companies' filings to the public, unless it is involved in litigation, and this information is difficult to obtain from other sources. Companies need to be sensitive to minority employment issues as the new evolving work force becomes increasingly diverse. This information can be provided with little cost to the company and does not create an unreasonable burden on management.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask the company to report on its diversity and/or affirmative action programs.  |

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| § | Vote for shareholder proposals calling for legal and regulatory compliance and public reporting related to non-discrimination, affirmative action, workplace health and safety, and labor policies and practices that effect long-term corporate performance.  |

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| § | Vote for shareholder proposals requesting nondiscrimination in salary, wages and all benefits.  |

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| § | Vote for shareholder proposals calling for action on equal employment opportunity and antidiscrimination.  |

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Report on Progress Towards Glass Ceiling Commission Recommendations

In November 1995, the Glass Ceiling Commission (Commission), a bipartisan panel of leaders from business and government, issued a report describing "an unseen yet unbreachable barrier that keeps women and minorities from rising to the upper rungs of the corporate ladder." The Commission recommended that companies take practical steps to rectify this disparity, such as including diversity goals in business plans, committing to affirmative action for qualified employees and initiating family-friendly labor policies. Shareholders have submitted proposals asking companies to report on progress made toward the Commission's recommendations.

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Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask the company to report on its progress against the Glass Ceiling  |

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§ Commission's recommendations.

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| § | Vote for shareholder proposals seeking to eliminate the "glass ceiling" for women and minority employees.  |

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Prohibit Discrimination on the Basis of Sexual Orientation or Gender Identity

Federal law does not ban workplace discrimination against gay and lesbian employees, and only some states have enacted workplace protections for these employees. Although an increasing number of U.S. companies have explicitly banned discrimination on the basis of sexual orientation or gender identity in their equal employment opportunity (EEO) statements, many still do not. Shareholder proponents and other activist groups concerned with gay and lesbian rights, such as the Human Rights Campaign (HRC) and the Pride Foundation, have targeted U.S. companies that do not specifically restrict discrimination on the basis of sexual orientation in their EEO statements. Shareholder proposals on this topic ask companies to change the language of their EEO statements in order to put in place anti-discrimination protection for their gay and lesbian employees. In addition, proposals may seek disclosure on a company's general initiatives to create a workplace free of discrimination on the basis of sexual orientation, including reference to such items as support of gay and lesbian employee groups, diversity training that addresses sexual orientation, and non-medical benefits to domestic partners of gay and lesbian employees.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to include language in EEO statements specifically barring discrimination on the basis of sexual orientation or gender identity.  |

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| § | Vote for shareholder proposals seeking reports on a company's initiatives to create a workplace free of discrimination on the basis of sexual orientation or gender identity.  |

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| § | Vote against shareholder proposals that seek to eliminate protection already afforded to gay and lesbian employees.  |

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Report on/Eliminate Use of Racial Stereotypes in Advertising

Many companies continue to use racial stereotypes or images perceived as racially insensitive in their advertising campaigns. Filers of shareholder proposals on this topic often request companies to give more careful consideration to the symbols and images that are used to promote the company.

Catholic Advisory Services Recommendation: Vote for shareholder proposals seeking more careful consideration of using racial stereotypes in advertising campaigns, including preparation of a report on this issue.

Gender, Race, or Ethnicity Pay Gap

Over the past several years, shareholders have filed resolutions requesting that companies report whether a gender, race, or ethnicity pay gap exists, and if so, what measures are being taken to eliminate the gap. While primarily filed at technology firms, in 2017, the resolutions were also filed at firms in the financial services, insurance, healthcare, and telecommunication sectors. Proponents are expected to continue this campaign by engaging companies and filing shareholder proposals on this issue.

Catholic Advisory Services Recommendation: Vote for requests for reports on a company's pay data by gender, race, or ethnicity, or a report on a company's policies and goals to reduce any gender, race, or ethinicity pay gap.

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Labor and Human Rights

Investors, international human rights groups, and labor advocacy groups have long been making attempts to safeguard worker rights in the international marketplace. In instances where companies themselves operate factories in developing countries for example, these advocates have asked that the companies adopt global corporate standards that guarantee sustainable wages and safe working conditions for their workers abroad. Companies that contract out portions of their manufacturing operations to foreign companies have been asked to ensure that the products they receive from those contractors have not been made using forced labor, child labor, or sweatshop labor. These companies are asked to adopt formal vendor standards that, among other things, include some sort of monitoring mechanism. Globalization, relocation of production overseas, and widespread use of subcontractors and vendors, often make it difficult to obtain a complete picture of a company's labor practices in global markets. Recent deadly accidents at factories, notably in Bangladesh and in Pakistan, have continued to intensify these concerns. Many investors believe that companies would benefit from adopting a human rights policy based on the Universal Declaration of Human Rights and the International Labour Organization's Core Labor Standards. Efforts that seek greater disclosure on a company's global labor practices, including its supply chain, and that seek to establish minimum standards for a company's operations will be supported. In addition, requests for independent monitoring of overseas operations will be supported.

Catholic Advisory Services generally supports proposals that call for the adoption and/or enforcement of principles or codes relating to countries in which there are systematic violations of human rights; such as the use of slave, child, or prison labor; a government that is illegitimate; or there is a call by human rights advocates, pro-democracy organizations, or legitimately-elected representatives for economic sanctions. The use of child, sweatshop, or forced labor is unethical and can damage corporate reputations. Poor labor practices can lead to litigation against the company, which can be costly and time consuming.

Codes of Conduct and Vendor Standards

In recent years, an increasing number of shareholder proposals have been submitted that pertain to the adoption of codes of conduct or provision, greater disclosure on a company's international workplace standards, or that request human rights risk assessment. Companies have been asked to adopt a number of different types of codes, including a workplace code of conduct, standards for international business operations, human rights standards, International Labour Organization (ILO) standards and the SA 8000 principles. The ILO is an independent agency of the United Nations which consists of 187 member nations represented by workers, employers, and governments. The ILO's general mandate is to promote a decent workplace for all individuals. The ILO sets international labor standards in the form of its conventions and then monitors compliance with the standards. The seven conventions of the ILO fall under four broad categories: Right to organize and bargain collectively, Nondiscrimination in employment, Abolition of forced labor, and End of child labor. Each of the 187 member-nations of the ILO is bound to respect and promote these rights to the best of their abilities. SA 8000 is a set of labor standards, based on the principles of the ILO conventions and other human rights conventions, and covers eight workplace conditions, including: child labor, forced labor, health and safety, freedom of association and the right to collective bargaining, discrimination, disciplinary practices, working hours and compensation. The Global Sullivan Principles are a set of guidelines that support economic, social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to implement human rights standards and workplace codes of conduct.  |

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| § | Vote for shareholder proposals calling for the implementation and reporting on ILO codes of conduct, SA 8000 Standards, or the Global Sullivan Principles.  |

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| § | Vote for shareholder proposals that call for the adoption of principles or codes of conduct relating to company investments in countries with patterns of human rights abuses (e.g. Northern Ireland, Burma, former Soviet Union, and China).  |

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| § | Vote for shareholder proposals that call for independent monitoring programs in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with codes.  |

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| § | Vote for shareholder proposals that seek publication of a "Code of Conduct" by the company's foreign suppliers and licensees, requiring that they satisfy all applicable standards and laws protecting employees' wages, benefits, working conditions, freedom of association, and other rights.  |

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| § | Vote for proposals requesting that a company conduct an assessment of the human rights risks in its operations or in its supply chain, or report on its human rights risk assessment process.  |

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| § | Vote for shareholder proposals seeking reports on, or the adoption of, vendor standards including: reporting on incentives to encourage suppliers to raise standards rather than terminate contracts and providing public disclosure of contract supplier reviews on a regular basis.  |

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| § | Vote for shareholder proposals to adopt labor standards for foreign and domestic suppliers to ensure that the company will not do business with foreign suppliers that manufacture products for sale in the U.S. using forced labor, child labor, or that fail to comply with applicable laws protecting employee's wages and working conditions.  |

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Adopt/Report on MacBride Principles

These resolutions have called for the adoption of the MacBride Principles for operations located in Northern Ireland. They request companies operating abroad to support the equal employment opportunity policies that apply in facilities they operate domestically. The principles were established to address the sectarian hiring problems between Protestants and Catholics in Northern Ireland. It is well documented that Northern Ireland's Catholic community faced much higher unemployment figures than the Protestant community. In response to this problem, the U.K. government instituted the New Fair Employment Act of 1989 (and subsequent amendments) to address the sectarian hiring problems.

Many companies believe that the Act adequately addresses the problems and that further action, including adoption of the MacBride Principles, only duplicates the efforts already underway. In evaluating a proposal to adopt the MacBride Principles, shareholders must decide whether the principles will cause companies to divest, and therefore worsen the unemployment problem, or whether the principles will promote equal hiring practices. Proponents believe that the Fair Employment Act does not sufficiently address the sectarian hiring problems. They argue that the MacBride Principles serve to stabilize the situation and promote further investment.

Catholic Advisory Services Recommendation: Vote for shareholder proposals to report on or implement the MacBride Principles.

Community Impact Assessment/Indigenous Peoples' Rights

In recent years, a number of U.S. public companies have found their operations or expansion plans in conflict with local indigenous groups. In order to improve their standing with indigenous groups and decrease any negative publicity companies may face, some concerned shareholders have sought reports requesting that companies review their obligations, actions and presence on these groups. Some have also requested these companies adopt policies based on the Draft UN Declaration on the Rights of Indigenous Peoples and the Organization of American States' (OAS) American Declaration on rights of Indigenous Peoples. Some companies, such as Starbucks, have reached agreements with local governments to ensure better business practices for products produced by indigenous groups. Shareholders, concerned with the negative impact that the company's operations may have on the indigenous people's land and community, have sought reports detailing the impact of the company's actions and presence on these groups.

Catholic Advisory Services Recommendation: Vote for shareholder proposals asking to prepare reports on a company's environmental and health impact on communities.

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Report on Risks of Outsourcing

Consumer interest in keeping costs low through comparison shopping, coupled with breakthroughs in productivity have prompted companies to look for methods of increasing profit margins while keeping prices competitive. Through a practice known as off-shoring, the outsourcing or moving of manufacturing and service operations to foreign markets with lower labor costs, companies have found one method where the perceived savings potential is quite substantial. Shareholder opponents of outsourcing argue that there may be long-term consequences to offshore outsourcing that outweigh short-term benefits such as backlash from a public already sensitive to off-shoring, security risks from information technology development overseas, and diminished employee morale. Shareholder proposals addressing outsourcing ask that companies prepare a report to shareholders evaluating the risk to the company's brand name and reputation in the U.S. from outsourcing and off-shoring of manufacturing and service work to other countries.

Catholic Advisory Services Recommendation: Vote for shareholders proposals asking companies to report on the risks associated with outsourcing or off-shoring.

Report on the Impact of Health Pandemics on Company Operations

Sub-Saharan Africa is the most affected region in the world with regard to the HIV/AIDS pandemic. With limited access to antiretroviral treatment for HIV/AIDS, the increasing death toll is expected to have profound social, political and economic impact on that region and the companies or industries with operations in Sub-Saharan Africa. In the past, shareholder proposals asked companies to develop policies to provide affordable HIV/AIDS, malaria, and tuberculosis drugs in third-world countries. However, in recent years, shareholders have changed their tactic, asking instead for reports on the impact of these pandemics on company operations, including both pharmaceutical and non-pharmaceutical companies operating in high-risk areas. This change is consistent with the general shift in shareholder proposals towards risk assessment and mitigation.

Catholic Advisory Services Recommendation: Vote for shareholder proposals asking for companies to report on the impact of pandemics, such as HIV/AIDS, malaria, and tuberculosis, on their business strategies.

Mandatory Arbitration

Catholic Advisory Services Recommendation: Generally vote for requests for a report on a company's use of mandatory arbitration on employment-related claims.

Sexual Harassment

Catholic Advisory Services Recommendation: Generally vote for requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment.

Operations in High Risk Markets

In recent years, shareholder advocates and human rights organizations have highlighted concerns associated with companies operating in regions that are politically unstable, including state sponsors of terror. The U.S. government has active trade sanction regimes in place against a number of countries, including Cuba, Iran, North Korea, Sudan, and Syria, among others. These sanctions are enforced by the Office of Foreign Assets Control, which is part of the U.S. Department of the Treasury. However, these countries do not comprise an exhaustive list of countries considered to be high-risk markets.

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Shareholder proponents have filed resolutions addressing a variety of concerns around how investments and operations in high-risk regions may support, or be perceived to support, potentially oppressive governments. Proponents contend that operations in these countries may lead to potential reputational, regulatory, and/or supply chain risks as a result of operational disruptions. Concerned shareholders have requested investment withdrawals or cessation of operations in high-risk markets as well as reports on operations in high-risk markets. Such reports may seek additional disclosure from companies on criteria employed for investing in, continuing to operate in, and withdrawing from specific countries.

Depending on the country's human rights record, investors have also asked companies to refrain from commencing new projects in the country of concern until improvements are made. In addition, investors have sought greater disclosure on the nature of a company's involvement in the country and on the impact of their involvement or operations.

Catholic Advisory Services Recommendation: Vote for requests for a review of and a report outlining the company's potential financial and reputation risks associated with operations in "high-risk" markets, such as a terrorism-sponsoring state or otherwise, taking into account:

§ The nature, purpose, and scope of the operations and business involved that could be affected by social or political disruption;

§ Current disclosure of applicable risk assessment(s) and risk management procedures;

§ Compliance with U.S. sanctions and laws;

§ Consideration of other international policies, standards, and laws;

§ Whether the company has been recently involved in significant controversies or violations in "high-risk" markets.

Reports on Operations in Burma/Myanmar

Since the early 1960s, Burma (also known as Myanmar) has been ruled by a military dictatorship that has been condemned for human rights abuses, including slave labor, torture, rape and murder. Many companies have pulled out of Burma over the past decade given the controversy surrounding involvement in the country. Oil companies continue be the largest investors in Burma and therefore are the usual targets of shareholder proposals on this topic. However, proposals have also been filed at other companies, including financial companies, for their involvement in the country.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to adopt labor standards in connection with involvement in Burma.  |

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| § | Vote for shareholder proposals seeking reports on Burmese operations and reports on costs of continued involvement in the country.  |

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| § | Vote shareholder proposals to pull out of Burma on a case-by-case basis.  |

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Reports on Operations in China

Documented human rights abuses in China continue to raise concerns among investors, specifically with respect to alleged use of prison and child labor in manufacturing. Reports have identified U.S. companies with direct or indirect ties to companies controlled by the Chinese military, the People's Liberation Army (PLA), and hence links to prison labor. The U.S. Business Principles for Human Rights of Workers in China may help a company with operations in China avoid being blacklisted by U.S. states and municipalities, many of whom have limited their contracts with companies that fail to adopt similar principles in other countries recognized for committing gross human rights violations.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals requesting more disclosure on a company's involvement in China  |

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| § | Vote case-by-case on shareholder proposals that ask a company to terminate a project or investment in China.  |

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Product Sales to Repressive Regimes

Certain Internet technology companies have been accused of assisting repressive governments in violating human rights through the knowing misuse of their hardware and software. Human rights groups have accused companies such as Yahoo!, Cisco, Google, and Microsoft of allowing the Chinese government to censor and track down dissenting voices on the internet.

Catholic Advisory Services Recommendation:

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| § | Vote case-by-case on shareholder proposals requesting that companies cease product sales to repressive regimes that can be used to violate human rights.  |

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| § | Vote for proposals to report on company efforts to reduce the likelihood of product abuses in this manner.  |

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Internet Privacy/Censorship and Data Security

Information technology sector companies have been at the center of shareholder advocacy campaigns regarding concerns over Internet service companies and technology providers' alleged cooperation with potentially repressive regimes, notably the Chinese government. Shareholder proposals, submitted at Yahoo!, Google, Microsoft, and Cisco, among others, asked companies to take steps to stop abetting repression and censorship of the Internet and/or review their human rights policies taking this issue into consideration. Resolution sponsors generally argue that the Chinese government is using IT company technologies to track, monitor, identify, and, ultimately, suppress political dissent. In the view of proponents, this process of surveillance and associated suppression violates internationally accepted norms outlined in the U.N. Universal Declaration of Human Rights.

While early shareholder resolutions on Internet issues focused on censorship by repressive regimes and net neutrality, proponents have recently raised concerns regarding privacy and data security in the wake of increased breaches that result in the misuse of personal information. On Oct. 13, 2011, the Securities and Exchange Commission (SEC) issued a guidance document about the disclosure obligations relating to cybersecurity risks and cyber incidents. In the document, the SEC references the negative consequences that are associated with cyber-attacks, such as: remediation costs, including those required to repair relationships with customers and clients; increased cyber-security protection costs; lost revenues from unauthorized use of the information or missed opportunities to attract clients; litigation; and reputational damage. The document says that while the federal securities laws do not explicitly require disclosure of cybersecurity risks and incidents, some disclosure requirements may impose an obligation on the company to disclose such information and provides scenarios where disclosure may be required. A 2013 study by the Ponemon Institute found that the median annualized cost of cyber-attacks for the 60 organizations studied was $11.6 million. The study also found that the number of successful cyber-attacks among the 60 companies increased by 18 percent between 2012 and 2013, from 102 successful attacks on average per week to 122.

More recently, data security has been the focus of media outlets and a public concern. During the 2013 holiday shopping season, Target, Neiman Marcus, and other retailers were the targets of hackers looking to steal credit card numbers. It is estimated that as many as 40 million customer credit and debit card accounts were stolen at Target alone. These incidents preceded what many people consider the largest data security breach in the United States. In June 2013, major media outlets began releasing information about leaked classified documents disclosed by Edward Snowden, an NSA contractor. The documents revealed a government-run Internet and telephone surveillance program aimed at collecting metadata. As part of this operation, the government is said to have obtained from major U.S. telecommunications companies the call records of their customers.

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Catholic Advisory Services Recommendation: Vote for resolutions requesting the disclosure and implementation of Internet privacy and censorship policies and procedures considering:

§ The level of disclosure of policies and procedures relating to privacy, freedom of speech, Internet censorship, and government monitoring of the Internet;

§ Engagement in dialogue with governments and/or relevant groups with respect to the Internet and the free flow of information;

§ The scope of business involvement and of investment in markets that maintain government censorship or monitoring of the Internet;

§ The market-specific laws or regulations applicable to Internet censorship or monitoring that may be imposed on the company; and

§ The level of controversy or litigation related to the company's international human rights policies and procedures.

Disclosure on Plant Closings

Shareholders have asked that companies contemplating plant closures consider the impact of such closings on employees and the community, especially when such plan closures involve a community's largest employers. Catholic Advisory Services usually recommends voting for greater disclosure of plant closing criteria. In cases where it can be shown that companies have been proactive and responsible in adopting these criteria, Catholic Advisory Services recommends against the proposal.

Catholic Advisory Services Recommendation: Vote for shareholder proposals seeking greater disclosure on plant closing criteria if the company has not provided such information.

Climate Change

Say on Climate (SoC) Management Proposals

Catholic Advisory Services Recommendation: Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan**<sup>22</sup>**, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

§ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

§ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

§ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions (Scopes 1, 2, and 3 if relevant);

§ Whether the company has sought and received third-party approval that its targets are science-based;

§ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

§ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

§ Whether the company's climate data has received third-party assurance;

§ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

§ Whether there are specific industry decarbonization challenges; and

§ The company's related commitment, disclosure, and performance compared to its industry peers.

<sup>22</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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Say on Climate (SoC) Shareholder Proposals

Catholic Advisory Services Recommendation: Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

§ The completeness and rigor of the company's climate-related disclosure;

§ The company's actual GHG emissions performance;

§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Climate Change/Greenhouse Gas Emissions

Climate change has emerged as the most significant environmental threat to the planet to date. Scientists generally agree that gases released by chemical reactions including the burning of fossil fuels contribute to a "greenhouse effect" that traps the planet's heat. Environmentalists claim that the Greenhouse Gases(GHG) produced by the industrial age have caused recent weather crises such as heat waves, rainstorms, melting glaciers, rising sea levels and receding coastlines. Climate change skeptics have described the rise and fall of global temperatures as naturally occurring phenomena and depicted human impact on climate change as minimal. Shareholder proposals requesting companies to issue a report to shareholders, "at reasonable cost and omitting proprietary information," on greenhouse gas emissions ask that the report include descriptions of corporate efforts to reduce emissions, companies' financial exposure and potential liability from operations that contribute to global warming, their direct or indirect efforts to promote the view that global warming is not a threat, and their goals in reducing these emissions from their operations. Shareholder proponents argue that there is scientific proof that the burning of fossil fuels causes global warming, that future legislation may make companies financially liable for their contributions to global warming, and that a report on the company's role in global warming can be assembled at reasonable cost.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking information on the financial, physical, or regulatory risks it faces related to climate change- on its operations and investments, or on how the company identifies, measures, and manage such risks.  |

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| § | Vote for shareholder proposals calling for the reduction of GHG or adoption of GHG goals in products and operations.  |

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| § | Vote for shareholder proposals seeking reports on responses to regulatory and public pressures surrounding climate change, and for disclosure of research that aided in setting company policies around climate change.  |

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| § | Vote for shareholder proposals requesting reports on greenhouse gas emissions from companies' operations and/or products.  |

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Invest in Clean/Renewable Energy

Filers of proposals on renewable energy ask companies to increase their investment in renewable energy sources and to work to develop products that rely more on renewable energy sources. Increased use of renewable energy will reduce the negative environmental impact of energy companies. In addition, as supplies of oil and coal exist in the earth in limited quantities, renewable energy sources represent a competitive, and some would argue essential, long-term business strategy.

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Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking the preparation of a report on a company's activities related to the development of renewable energy sources.  |

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| § | Vote for shareholder proposals seeking increased investment in renewable energy sources unless the terms of the resolution are overly restrictive.  |

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Energy Efficiency

Reducing the negative impact to the environment can be done through the use of more energy efficient practices and products. Shareholders propose that corporations should have energy efficient manufacturing processes and should market more energy efficient products. This can be done by utilizing renewable energy sources that are cost-competitive and by implementing energy efficient operations.

Catholic Advisory Services Recommendation: Vote for shareholder proposals requesting a report on company energy efficiency policies and/or goals.

Environment

Proposals addressing environmental and energy concerns are plentiful, and generally seek greater disclosure on a particular issue or seek to improve a company's environmental practices in order to protect the world's natural resources. In addition, some proponents cite the negative financial implications for companies with poor environmental practices, including liabilities associated with site clean-ups and lawsuits, as well as arguments that energy efficient products and clean environmental practices are sustainable business practices that will contribute to long-term shareholder value. Shareholders proponents point out that the majority of independent atmospheric scientists agree that global warming poses a serious problem to the health and welfare of our planet, citing the findings of the Intergovernmental Panel on Climate Change. Shareholder activists argue that companies can report on their greenhouse gas emissions within a few months at reasonable cost. The general trend indicates a movement towards encouraging companies to have proactive environmental policies, focusing on maximizing the efficient use of non-renewable resources and minimizing threats of harm to human health or the environment.

Environmental/Sustainability Reports

Shareholders may request general environmental disclosures or reports on a specific location/operation, often requesting that the company detail the environmental risks and potential liabilities of a specific project. Increasingly, companies have begun reporting on environmental and sustainability issues using the Global Reporting Initiative (GRI) standards. The GRI was established in 1997 with the mission of developing globally applicable guidelines for reporting on economic, environmental, and social performance. The GRI was developed by Ceres (formerly known as the Coalition for Environmentally Responsible Economies) in partnership with the United Nations Environment Programme (UNEP).

Ceres was formed in the wake of the March 1989 Exxon Valdez oil spill, when a consortium of investors, environmental groups, and religious organizations drafted what were originally named the Valdez Principles. Later named the Ceres Principles, and now branded the Ceres Roadmap 2030, corporate signatories of the Ceres Roadmap 2030 pledge to institute accountability mechanisms that integrate sustainability considerations into core business systems and decision-making on topics such as governance, stakeholder engagement and disclosure. Signatories also pledge to build systems across a corporation's value chain to enable ongoing improvements in three priority environmental and social impact areas (Climate Change, Natural Resources, and Human Rights).

The Equator Principles are the financial industry's benchmark for determining, assessing and managing social and environmental risk in project financing. First launched in June 2003, the Principles were ultimately adopted by over

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forty financial institutions over a three-year implementation period. Since its adoption, the Principles have undergone a number of revisions, expanding the use of performance standards and signatory banks' banks' commitments to social responsibility, including human rights, climate change, and transparency. The fourth iteration of the Principles was launched in November 2019, incorporating amendments and new commitment to human rights, climate change, Indigenous Peoples and biodiversity related topics. Financial institutions adopt these principles to ensure that the projects they finance are developed in a socially responsible manner and reflect sound environmental management practices. As of 2019, 101 financial institutions have officially adopted the Equator Principles.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking greater disclosure on the company's environmental and social practices, and/or associated risks and liabilities.  |

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| § | Vote for shareholder proposals asking companies to report in accordance with the Global Reporting Initiative (GRI).  |

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| § | Vote for shareholder proposals seeking the preparation of sustainability reports.  |

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| § | Vote for shareholder proposals to study or implement the Ceres Roadmap 2030.  |

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| § | Vote for shareholder proposals to study or implement the Equator Principles.  |

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Operations in Environmentally Sensitive Areas

Canadian Oil Sands

Proposals asking for a report on oil sands operations in the Athabasca region of Alberta, Canada have appeared at a number of oil and gas companies. Alberta's oil sands contain a reserve largely thought to be one of the world's largest potential energy sources. Rising oil sands production in Alberta has been paralleled with concerns from a variety of stakeholders—including environmental groups, local residents, and shareholders—regarding the environmental impacts of the complicated extraction and upgrading processes required to convert oil sands into a synthetic crude oil. The high viscosity of bitumen makes its extraction a challenging and resource-intensive process; the most common extraction technique involves pumping steam into the oil sands to lower the viscosity of bitumen in order to pump it to the surface.

One of the most prominent issues concerning oil sands is the large volume of greenhouse gases (GHG) associated with production. Oil sands are by far one of the most energy-intensive forms of oil production, releasing three times more GHG emissions from production than conventional oil.

Shareholders have kept up pressure on the issue of potential long-term risks to companies posed by the environmental, social, and economic challenges associated with Canadian oil sands operations. Resolutions on the topic have focused on requesting greater transparency on the ramifications of oil sands development projects.

Arctic National Wildlife Refuge

The Arctic National Wildlife Refuge (ANWR) is a federally protected wilderness along Alaska's North Slope. In the past, legislation proposed in both the House and Senate that, if passed, would allow a portion of this area to be leased to private companies for development and production of oil, has been witnessed. Oil companies have expressed an interest in bidding for these leases given the opportunity. In response, shareholder activists have filed resolutions asking these companies to cancel any plans to drill in the ANWR and cease their lobbying efforts to open the area for drilling. Proponents of shareholder proposals on this issue argue that the Coastal Plain section of the ANWR is the most environmentally sensitive area of the refuge, that the majority of Alaska's North Slope that is not federally designated wilderness already provides the oil industry with sufficient resources for oil production, and that advocates of drilling in ANWR overstate the benefit to be derived from opening the wilderness to oil production. Those in favor of opening the area up to drilling note that only a small portion of ANWR would be considered for exploration, and if drilling were to take place, it would be on less than one percent of the entire area, that modern technology reduces the environmental impact of oil drilling on both the land and surrounding wildlife, and that oil production in ANWR would have considerable benefit to company shareholders, Alaskans, and the United States as a whole.

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Catholic Advisory Services Recommendation:

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| § | Vote for requests for reports on potential environmental damage as a result of company operations in protected regions.  |

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| § | Vote for shareholder proposals asking companies to prepare reports or adopt policies on operations that include mining, drilling or logging in environmentally sensitive areas.  |

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| § | Vote for shareholder proposals seeking to curb or reduce the sale of products manufactured from materials extracted from environmentally sensitive areas such as old growth forests.  |

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Hydraulic Fracturing

Shareholder proponents have elevated concerns on the use of hydraulic fracturing, an increasingly controversial process in which water, sand, and a mix of chemicals are blasted horizontally into tight layers of shale rock to extract natural gas. As this practice has gained more widespread use, environmentalists have raised concerns that the chemicals mixed with sand and water to aid the fracturing process can contaminate ground water supplies. Proponents of resolutions at companies that employ hydraulic fracturing are also concerned that wastewater produced by the process could overload the waste treatment plants to which it is shipped. Shareholders have asked companies that utilize hydraulic fracturing to report on the environmental impact of the practice and to disclose policies aimed at reducing hazards from the process.

**Catholic Advisory Services Recommendation:** Vote for requests seeking greater transparency on the practice of hydraulic fracturing and its associated risks.

Phase Out Chlorine-Based Chemicals

The Environmental Protection Agency (EPA) identified chlorine bleaching of pulp and paper as a major source of dioxin, a known human carcinogen linked to have negative effects to humans and animals. A number of shareholder proposals have been filed in recent years asking companies to report on the possible phase-out of chlorine bleaching in the production of paper because of the practice's negative environmental impact.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to prepare a report on the phase-out of chlorine bleaching in paper production.  |

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| § | Vote on a case-by-case basis on shareholder proposals asking companies to cease or phase-out the use of chlorine bleaching.  |

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Land Procurement and Development

Certain real estate developers including big-box large retailers have received criticism over their processes for acquiring and developing land. Given a 2005 Supreme Court decision allowing for the usage of eminent domain laws in the U.S. to take land from property-owners for tax generating purposes, as well as certain controversies outside of the U.S. with land procurement, some shareholders would like assurances that companies are acting ethically and with local stakeholders in mind.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals requesting that companies report on or adopt policies for land procurement and utilize the policies in their decision-making.

Report on the Sustainability of Concentrated Area Feeding Operations (CAFO)

The potential environmental impact on water, aquatic ecosystems, and local areas from odor and chemical discharges from CAFOs has led to lawsuits and EPA regulations. Certain shareholders have asked companies to provide additional details on their CAFOs in addition to those with which the companies contract to raise their livestock.

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**Catholic Advisory Services Recommendation:** Vote for requests that companies report on the sustainability and the environmental impacts of both company-owned and contract livestock operations.

Adopt a Comprehensive Recycling Policy

A number of companies have received proposals to step-up their recycling efforts, with the goal of reducing the company's negative impact on the environment and reducing costs over the long-term.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals requesting the preparation of a report on the company's recycling efforts.  |

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| § | Vote for shareholder proposals that ask companies to increase their recycling efforts or to adopt a formal recycling policy.  |

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Nuclear Energy

Nuclear power continues to be a controversial method of producing electricity. Opponents of nuclear energy are primarily concerned with serious accidents and the related negative human health consequences, and with the difficulties involved in nuclear waste storage.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking the preparation of a report on a company's nuclear energy procedures.  |

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| § | Vote case-by-case on proposals that ask the company to cease the production of nuclear power.  |

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Water Use

Shareholders may ask for a company to prepare a report evaluating the business risks linked to water use and impacts on the company's supply chain, including subsidiaries and bottling partners. Such proposals also ask companies to disclose current policies and procedures for mitigating the impact of operations on local communities in areas of water scarcity.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking the preparation of a report on a company's risks linked to water use.  |

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| § | Vote for resolutions requesting companies to promote the "human right to water" as articulated by the United Nations.  |

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| § | Vote for shareholder proposals requesting that companies report on or adopt policies for water use that incorporate social and environmental factors.  |

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Kyoto Protocol Compliance

With the Kyoto Protocol operational as of February 2005, ratifying countries have agreed to reduce their emissions of carbon dioxide and five other greenhouse gases. While some signatories have yet to release specific details of corporate regulations, the impact on multinationals operating in Kyoto-compliant countries is anticipated to be significant.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals asking companies to review and report on how companies will meet GHG reduction targets of the Kyoto-compliant countries in which they operate.

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Health and Safety

Toxic Materials

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking companies to report on policies and activities to ensure product safety.  |

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| § | Vote for shareholder proposals asking companies to disclose annual expenditures relating to the promotion and/or environmental cleanup of toxins.  |

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| § | Vote for shareholder proposals asking companies to report on the feasibility of removing, or substituting with safer alternatives, all "harmful" ingredients used in company products.  |

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Product Safety

Catholic Advisory Services Recommendation:

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| § | Generally vote for proposals requesting the company to report on or adopt consumer product safety policies and initiatives.  |

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| § | Generally vote for proposals requesting the study, adoption and/or implementation of consumer product safety programs in the company's supply chain.  |

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Workplace/Facility Safety

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals requesting workplace safety reports, including reports on accident risk reduction efforts.  |

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| § | Vote shareholder proposals requesting companies report on or implement procedures associated with their operations and/or facilities on a case-by-case basis.  |

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Report on Handgun Safety Initiatives

Shareholders may ask for a company to report on policies and procedures that are aimed at curtailing the incidence of gun violence. Such a report may include: implementation of the company's contract instruction to distributors not to sell the company's weapons at gun shows or through pawn shops; recalls or retro-fits of products with safety-related defects causing death or serious injury to consumers, as well as development of systems to identify and remedy these defects; names and descriptions of products that are developed or are being developed for a combination of higher caliber/maximum capacity and greater conceal-ability; and the company's involvement in promotion campaigns that could be construed as aimed at children. The Sandy Hook Principles were established to commemorate the victims of gun violence and to encourage positive corporate behavior in response to the proliferation of gun violence in America.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking the company to report on its efforts to promote handgun safety.  |

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| § | Vote for shareholder proposals asking the company to stop the sale of handguns and accessories.  |

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Phase-out or Label Products Containing Genetically Engineered Ingredients

Shareholders have asked companies engaged in the development of genetically modified agricultural products to adopt a policy of not marketing or distributing such products until "long term safety testing" demonstrates that they are not harmful to humans, animals or the environment. Until further long term testing demonstrates that these products are not harmful, companies in the restaurant and prepared foods industries have been asked to remove genetically altered ingredients from products they manufacture or sell, and label such products in the interim. Shareholders have also asked supermarket companies to do the same for their own private label brands.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to label products that contain genetically engineered products or products from cloned animals.  |

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| § | Vote for shareholder proposals that ask the company to phase out the use of genetically engineered ingredients in their products.  |

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| § | Vote for shareholder proposals that ask the company to report on the use of genetically engineered organisms in their products.  |

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| § | Vote for shareholder proposals asking for reports on the financial, legal, and operational risks posed by the use of genetically engineered organisms.  |

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Tobacco-related Proposals

Under the pressure of ongoing litigation and negative media attention, tobacco companies and even non-tobacco companies with ties to the industry have received an assortment of shareholder proposals seeking increased responsibility and social consciousness from tobacco companies and as well as firms affiliated with the tobacco industry.

While the specific resolutions for shareholder proponents vary from year to year, activist shareholders consistently make the tobacco industry a prominent target. Examples of shareholder proposals focused on tobacco include: warnings on the risks of tobacco smoke and smoking-related diseases, attempting to link executive compensation with reductions in teen smoking rates, the placement of company tobacco products in retail outlets, a review of advertising campaigns and their impact on children and minority groups, prohibiting non-tobacco companies from entering into contracts with tobacco companies, and requesting restaurant operators maintain smoke-free restaurants.

In June 2009, the Family Smoking Prevention and Tobacco Control Act was signed into law, giving the FDA authority to regulate the tobacco industry for the first time, including the power to block or approve new products as well as the nicotine and other content in existing tobacco products. This legislation empowers the imposition of a ban on tobacco advertising within 1,000 feet of schools and playgrounds, require FDA-approved graphic warning labels that occupy 50 percent of the space on each package of cigarettes.

In September 2009, the FDA issued a ban on the sale of flavored cigarettes, exercising its regulatory power in a major way over tobacco for the first time under the new law. The ban affected tobacco products with chocolate, vanilla, clove, and other similar flavors.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking to limit the sale of tobacco products to children.  |

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| § | Vote for shareholder proposals asking producers of tobacco product components (such as filters, adhesives, flavorings, and paper products) to halt sales to tobacco companies.  |

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| § | Vote for shareholder proposals that ask restaurants to adopt smoke-free policies and that ask tobacco companies to support smoke-free legislation.  |

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W W W . I S S G O V E R N A N C E . C O M E-300 86 of 98

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| § | Vote for shareholder proposals seeking a report on a tobacco company's advertising approach.  |

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| § | Vote for shareholder proposals at insurance companies to cease investment in tobacco companies.  |

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| § | Vote for proposals at producers of cigarette components calling for a report outlining the risks and potential liabilities of the production of these components.  |

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| § | Vote for proposals calling for tobacco companies to cease the production of tobacco products.  |

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| § | Vote for shareholder proposals asking companies to stop all advertising, marketing and sale of cigarettes using the terms "light," "ultra-light," "mild," and other similar words and/or colors.  |

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| § | Vote for shareholder proposals asking companies to increase health warnings on cigarette smoking. (i.e.: information for pregnant women, "Canadian Style" warnings, filter safety).  |

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Adopt Policy/Report on Drug Pricing

Pharmaceutical drug pricing, both within the United States and internationally, has raised many questions of the companies that are responsible for creating and marketing these treatments. Shareholder proponents, activists and even some legislators have called upon drug companies to restrain pricing of prescription drugs.

The high cost of prescription drugs is a vital issue for senior citizens across the country. Seniors have the greatest need for prescription drugs, accounting for a significant portion of all prescription drug sales, but they often live on fixed incomes and are underinsured.

Proponents note that efforts to reign-in pharmaceutical costs will not negatively impact research and development (R&D) costs and that retail drug prices are consistently higher in the U.S. than in other industrialized nations. Pharmaceutical companies often respond that adopting a formal drug pricing policy could put the company at a competitive disadvantage.

Against the backdrop of the AIDS crisis in Africa, many shareholders have called on companies to address the issue of affordable drugs for the treatment of AIDS, as well as tuberculosis and malaria throughout the developing world. When analyzing such resolutions, consideration should be made of the strategic implications of pricing policies in the market.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals to prepare a report on drug pricing.  |

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|:---|:---|
| § | Vote for shareholder proposals to adopt a formal policy on drug pricing.  |

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| § | Vote for shareholder proposals that call on companies to develop a policy to provide affordable HIV, AIDS, tuberculosis, and malaria drugs in third-world nations.  |

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| § | Vote for proposals asking for reports on the economic effects and legal risks of limiting pharmaceutical products to Canada or certain wholesalers.  |

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| § | Vote case-by-case proposals requesting that companies adopt policies not to constrain prescription drug re-importation by limiting supplies to foreign markets.  |

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Government and Military

Weapons-related proposals may target handguns, landmines, defense contracting, or sale of weapons to foreign governments.

Prepare Report to Renounce Future Landmine Production

Although very few companies currently produce landmines, some companies continue to have links to landmine production or produce components that are used to make landmines. Shareholders have asked companies to renounce the future development of landmines or their components, or to prepare a report on the feasibility of such a renouncement.

W W W . I S S G O V E R N A N C E . C O M E-301 87 of 98

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**Catholic Advisory Services Recommendation:** Vote for shareholder proposals seeking a report on the renouncement of future landmine production.

Prepare Report on Foreign Military Sales

Shareholders have filed proxy resolutions asking companies to account for their policies surrounding the sale of military equipment to foreign governments. The proposals can take various forms. One resolution simply calls on companies to report on their foreign military sales, provide information on military product exports, disclose the company's basis for determining whether those sales should be made, and any procedures used to market or negotiate those sales. Another resolution calls for companies to report on "offsets" e.g. guarantee of new jobs in the purchasing country and technology transfers. Offsets involve a commitment by military contractors and the U.S. government to direct benefits back to a foreign government as a condition of a military sale.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals to report on foreign military sales or offset agreements.  |

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| § | Vote case-by-case on proposals that call for outright restrictions on foreign military sales.  |

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Depleted Uranium/Nuclear Weapons

Depleted uranium is the less radioactive uranium that is left behind after enriched uranium is produced for nuclear reactor fuel and fissile material for nuclear weapons. The main difference is that depleted uranium contains at least three times less U-235 than natural uranium. However, it is still weakly radioactive. Shareholders want reports on companies' policies, procedures and involvement in the said substance and nuclear weapons.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals requesting a report on involvement, policies, and procedures related to depleted uranium and nuclear weapons.

Adopt Ethical Criteria for Weapons Contracts

Shareholders have requested that companies review their code of conduct and statements of ethical criteria for military production-related contract bids, awards, and execution to incorporate environmental factors and sustainability issues related to the contract bidding process. Sustainability is a business model that requires companies to balance the needs and interests of various stakeholders while concurrently sustaining their businesses, communities, and the environment for future generations.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals asking companies to review and amend, if necessary, the company's code of conduct and statements of ethical criteria for military production-related contract bids, awards and execution.

Animal Welfare

Animal Rights/Testing

Shareholders and animal rights groups, including People for the Ethical Treatment of Animals (PETA), may file resolutions calling for the end to painful and unnecessary animal testing on laboratory animals by companies developing products for the cosmetics and medical supply industry. Since advanced testing methods now produce many reliable results without the use of live animals, Catholic Advisory Services generally supports proposals on this issue. In cases where it can be determined that alternative testing methods are unreliable or are required by law, Catholic Advisory Services recommends voting against such proposals. Other resolutions call for the adoption of animal welfare standards that would ensure humane treatment of animals on vendors' farms and slaughter houses. Catholic Advisory Services will generally vote in favor of such resolutions.

W W W . I S S G O V E R N A N C E . C O M E-302 88 of 98

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Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals that seek to limit unnecessary animal testing where alternative testing methods are feasible or not barred by law.  |

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| § | Vote for shareholder proposals that ask companies to adopt or/and report on company animal welfare standards or animal-related risks.  |

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| § | Vote for shareholder proposals asking companies to report on the operational costs and liabilities associated with selling animals.  |

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| § | Vote for shareholder proposals to eliminate cruel product testing methods.  |

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| § | Vote for shareholder proposals that seek to monitor, limit, report, or eliminate the outsourcing of animal testing to overseas laboratories.  |

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| § | Vote for shareholder proposals to adopt or adhere to a public animal welfare policy at both company and contracted laboratory levels.  |

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| § | Vote for shareholder proposals to evaluate, adopt, or require suppliers to adopt Controlled Atmosphere Killing (CAK) slaughter methods.  |

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Political and Charitable Giving

Lobbying Efforts

Shareholders have asked companies to report on their lobbying efforts on proposed legislation or to refute established scientific research regarding climate change, the health effects of smoking, fuel efficiency standards etc. Proponents have pointed to potential legislation on climate change, the lethargic pace of improvements in fuel efficiency standards in the U.S. automotive industry, and the highly litigious nature surrounding the tobacco industry as rationales for greater transparency on corporate lobbying practices that would shed light on whether companies are acting in the best long-term interests of their shareholders. Proponents of lobbying resolutions typically request enhanced disclosure of lobbying policies and expenditures, including a report on the policies and procedures related to lobbying, amounts used for various types of lobbying, and any membership or payments to a tax-exempt organization that writes and endorses model legislation.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking companies to review and report on their lobbying activities, including efforts to challenge scientific research and influence governmental legislation.  |

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| § | Vote for proposals requesting information on a company's lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures.  |

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Political Contributions/Non-Partisanship

As evidenced by the U.S. Supreme Court's January 2010 decision in *Citizens United vs. Federal Election Commission* that lifted restrictions on corporate spending in federal elections, changes in legislation that governs corporate political giving have, rather than limiting such contributions, increased the potential for corporate contributions to the political process and the complexity of tracking such contributions.

Proponents of political spending resolutions generally call for enhanced disclosure of political contributions, including a report on the policies and procedures for corporate political campaign contributions and trade association expenditures, the respective amounts of such donations using company funds, or an assessment of the impacts of such contributions on the firm's image, sales and profitability. Shareholder advocates of these proposals are concerned with the lack of transparency on political giving and the increasing involvement and influence of corporations in the political process.

W W W . I S S G O V E R N A N C E . C O M E-303 89 of 98

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Catholic Advisory Services Recommendation:

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| § | Vote for proposals calling for a company to disclose political and trade association contributions, unless the terms of the proposal are unduly restrictive.  |

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| § | Vote for proposals calling for a company to maintain a policy of political non-partisanship.  |

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| § | Vote against proposals asking a company to refrain from making any political contributions.  |

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Charitable Contributions

Shareholder proponents of charitable-contributions related resolutions may seek greater disclosure on a company's charitable donations including dollar amounts, sponsorships, and policies on corporate philanthropy. Catholic Advisory Services is generally supportive of increased transparency around corporate charitable giving. However, some resolutions extend beyond mere disclosure requests and attempt to influence or restrict companies' contributions to specific types of beneficiaries in a manner that furthers particular objectives supported by the proposal sponsors. Catholic Advisory Services believes that management is better positioned to decide what criteria are appropriate for making corporate charitable contributions. Also, some of the proposals may require companies to poll their shareholders as part of the grant-making process. Since majority of companies generally have thousands of shareholders, contacting, confirming, and processing each individual opinion and/or consent would be a burdensome and expensive exercise.

Catholic Advisory Services Recommendation:

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| § | Generally vote for shareholder resolutions seeking enhanced transparency on corporate philanthropy.  |

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| § | Vote against shareholder proposals imposing charitable giving criteria or requiring shareholder ratification of grants.  |

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| § | Vote against shareholder proposals requesting that companies prohibit charitable contributions.  |

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Political Expenditures and Lobbying Congruency

**Catholic Advisory Services Recommendation:** Generally vote for proposals requesting greater disclosure of a company's alignment of political contributions, lobbying, and electioneering spending with a company's publicly stated values and policies, unless the terms of the proposal are unduly restrictive. Additionally, Catholic Advisory Services will consider whether:

§ The company's policies, management, board oversight, governance processes, and level of disclosure related to direct political contributions, lobbying activities, and payments to trade associations, political action committees, or other groups that may be used for political purposes;

§ The company's disclosure regarding: the reasons for its support of candidates for public offices; the reasons for support of and participation in trade associations or other groups that may make political contributions; and other political activities;

§ Any incongruencies identified between a company's direct and indirect political expenditures and its publicly stated values and priorities;

§ Recent significant controversies related to the company's direct and indirect lobbying, political contributions, or political activities.

Disclosure on Prior Government Service

Shareholders have asked companies to disclose the identity of any senior executive and/or other high-level employee, consultant, lobbyist, attorney, or investment banker who has served in government. Although the movement of individuals between government and the private sector may benefit both, the potential also exists for conflicts of interest, especially in industries that have extensive dealings with government agencies.

W W W . I S S G O V E R N A N C E . C O M E-304 90 of 98

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**Catholic Advisory Services Recommendation:** Vote for shareholder proposals calling for the disclosure of prior government service of the company's key executives.

Consumer Lending and Economic Development

Adopt Policy/Report on Predatory Lending Practices

Predatory lending involves charging excessive fees to subprime borrowers without adequate disclosure. More specifically, predatory lending includes misleading subprime borrowers about the terms of a loan, charging excessive fees that are folded into the body of a refinancing loan, including life insurance policies or other unnecessary additions to a mortgage, or lending to homeowners with insufficient income to cover loan payments.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals seeking the development of a policy or preparation of a report to guard against predatory lending practices.

Disclosure on Credit in Developing Countries (LDCs) or Forgive LDC Debt

Shareholders have asked banks and other financial services firms to develop and disclose lending policies for less developed countries. Proponents are concerned that, without such policies, lending to developing countries may contribute to the outflow of capital, the inefficient use of capital, and corruption, all of which increase the risk of loan loss. In the interest of promoting improved LDC lending practices and responsible loan disclosure, Catholic Advisory Services generally supports voting for such proposals. In cases where it can be determined that companies have been proactive and responsible in developing policies, Catholic Advisory Services may recommend a vote against the proposal's adoption. Catholic Advisory Services usually opposes proposals that call for outright loan forgiveness; such action represents an unacceptable loss to lending institutions and their shareholders.

Catholic Advisory Services may support such proposals at banks that have failed to make reasonable provisions for non-performing loans as a means to encourage a change in policy.

Catholic Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking for disclosure on lending practices in developing countries, unless the company has demonstrated a clear proactive record on the issue.  |

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| § | Vote against shareholder proposals asking banks to forgive loans outright.  |

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| § | Vote case-by-case on shareholder proposals asking for loan forgiveness at banks that have failed to make reasonable provisions for non-performing loans.  |

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| § | Vote for proposals to restructure and extend the terms of non-performing loans.  |

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Community Investing

Shareholders may ask for a company to prepare a report addressing the company's community investing efforts.

Such proposals also ask companies to review their policies regarding their investments in different communities.

**Catholic Advisory Services Recommendation:**Vote for proposals that seek a policy review or report addressing the company's community investing efforts.

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Miscellaneous

Adult Entertainment

Traditionally, there have not been many proposals filed in the area of adult entertainment. However, with the consolidation of the communications industry, a number of large companies have ended up with ownership of cable companies. These cable companies may offer their customers access to pay-per-view programming or channels intended for adult audiences. Proponents of shareholder proposals on this issue ask cable companies and companies with interests in cable companies to assess the costs and benefits of continuing to distribute sexually-explicit content, including the potential negative impact on the company's image.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals that seek a review of the company's involvement with pornography.

Abortion/Right to Life Issues

Shareholder proposals pertaining to abortion and right to life issues are rare. However, in the past shareholders have asked companies to stop manufacturing abortifacient drugs; to separate abortifacient drug operations from other operations; or to discontinue acute-care or physician management practices that involve support for abortion services.

**Catholic Advisory Services Recommendation:** Vote on shareholder proposals that address right to life issues in a manner consistent with the teachings of the Catholic Church on abortion and right to life issues.

Anti-Social Proposals

A number of 'anti-social' shareholder proposals have been filed at companies requesting increased disclosure. While these proposals' requests are very similar to those submitted by shareholder advocates within traditional socially responsible investor circles, the underlying motives for filing the proposals appear to be very different. In addition to charitable contribution proposals, anti-social proposals addressing climate change, sustainability, and conflicts of interest may be seen at shareholder meetings. Despite implicitly different motivations in some of these proposals, the underlying requests for increased disclosure, in some cases, may be worth shareholder support.

Catholic Advisory Services Recommendation:

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| § | Vote against shareholder proposals that do not seek to ultimately advance the goals of the social investment community.  |

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| § | Vote case-by-case on anti-social shareholder proposals seeking a review or report on the company's charitable contributions.  |

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Violence and Adult Themes in Video Games

Perceptions of increased sex and violence in video games have led certain shareholders to question the availability of adult-themed content to children and teens. The Entertainment Software Ratings Board, which provides ratings for video games, has classified approximately 34 percent of the total games it reviews as either Teen, Mature, or Adults Only.

**Catholic Advisory Services Recommendation:** Vote for shareholder proposals asking for reports on company policies related to the sale of mature-rated video games to children and teens.

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Link Compensation to Non-Financial Factors

Proponents of these proposals feel that social and environmental criteria should be factored into the formulas used in determining executive compensation packages. The shareholder sponsors of the resolutions look to companies to review current compensation practices and to include social or environmental performance criteria such as accounting for "poor corporate citizenship" and meeting environmental or workplace safety objectives and metrics when evaluating executive compensation. Some of the non-financial criteria that proponents of these resolutions seek to be incorporated in compensation program design include workplace safety, environmental stewardship, or diversity and customer/employee satisfaction – as part of a written policy used to align compensation with performance on non-financial factors alongside financial criteria.

Proponents believe that factors such as poor environmental performance, workplace lawsuits, etc. could have a significant adverse impact on a company's financial performance if not proactively and adequately addressed, and that these factors *should* be considered along with traditional financial considerations when determining executive pay. The significant stock price declines and massive losses in shareholder value stemming from the BP Deepwater Horizon oil rig disaster and the tragic explosion at Massey Energy's Upper Big Branch mine that killed 29 employees is a sobering reminder of the need to have the right management incentives in place to ensure that social and environmental risks are actively managed and mitigated against. Given the proliferation of derivative lawsuits targeted at firms such as Halliburton, Transocean and Cameron International that were suppliers to or partners with BP in a capacity that ignored safety considerations or that contributed to the economic and ecological disaster, investors are increasingly mindful of the far-reaching implications that exposure to social or environmental risks could have on shareholder value at portfolio companies.

Catholic Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals calling for linkage of executive pay to non-financial factors including performance against social and environmental goals, customer/employee satisfaction, corporate downsizing, community involvement, human rights, or predatory lending.  |

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| § | Vote for shareholder proposals seeking reports on linking executive pay to non-financial factors.  |

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W W W . I S S G O V E R N A N C E . C O M E-307 93 of 98

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9. Mutual Fund Proxies

Election of Trustees and Directors

**Catholic Advisory Services Recommendation:** Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes

**Catholic Advisory Services Recommendation:** For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

Investment Advisory Agreement

An investment advisory agreement is an agreement between a mutual fund and its financial advisor under which the financial advisor provides investment advice to the fund in return for a fee based on the fund's net asset size.

**Catholic Advisory Services Recommendation:** Votes on investment advisory agreements should be evaluated on a case-by-case basis, considering the following factors:

§ Proposed and current fee schedules;

§ Fund category/investment objective;

§ Performance benchmarks;

§ Share price performance as compared with peers;

§ Resulting fees relative to peers;

§ Assignments (where the advisor undergoes a change of control).

Changing a Fundamental Restriction to a Non-fundamental Restriction

Fundamental investment restrictions are limitations within a fund's articles of incorporation that limit the investment practices of the particular fund.

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

§ The fund's target investments;

§ The reasons given by the fund for the change; and

§ The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Non-fundamental

**Catholic Advisory Services Recommendation:** Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

W W W . I S S G O V E R N A N C E . C O M E-308 94 of 98

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![LOGO](g79608g00k10.jpg)

Distribution Agreements

Distribution agreements are agreements between a fund and its distributor which provide that the distributor is paid a fee to promote the sale of the fund's shares.

**Catholic Advisory Services Recommendation:** Vote case-by-case on distribution agreement proposals, considering the following factors:

§ Fees charged to comparably sized funds with similar objectives;

§ The proposed distributor's reputation and past performance;

§ The competitiveness of the fund in the industry; and

§ The terms of the agreement.

Approving New Classes or Series of Shares

**Catholic Advisory Services Recommendation:** Vote for the establishment of new classes or series of shares.

Convert Closed-end Fund to Open-end Fund

Although approval of these proposals would eliminate the discount at which the fund's shares trade. The costs associated with converting the fund, in addition to the potential risks to long-term shareholder value, outweigh the potential benefits of the conversion.

**Catholic Advisory Services Recommendation:** Vote case-by-case on conversion proposals, considering the following factors:

§ Past performance as a closed-end fund;

§ Market in which the fund invests;

§ Measures taken by the board to address the discount; and

---

| | |
|:---|:---|
| § | Past shareholder activism, board activity, and votes on related proposals.  |

---

Proxy Contests

**Catholic Advisory Services Recommendation:** Vote case-by-case on proxy contests, considering the following factors:

§ Past performance relative to its peers;

§ Market in which fund invests;

§ Measures taken by the board to address the issues;

---

| | |
|:---|:---|
| § | Past shareholder activism, board activity, and votes on related proposals;  |

---

§ Strategy of the incumbents versus the dissidents;

§ Independence of directors;

§ Experience and skills of director candidates;

§ Governance profile of the company;

§ Evidence of management entrenchment.

W W W . I S S G O V E R N A N C E . C O M E-309 95 of 98

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![LOGO](g79608g00k10.jpg)

Preferred Stock Proposals

Catholic Advisory Services Recommendation: Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

§ Stated specific financing purpose;

§ Possible dilution for common shares;

§ Whether the shares can be used for antitakeover purposes.

Mergers

**Catholic Advisory Services Recommendation:** Vote case-by-case on merger proposals, considering the following factors:

§ Resulting fee structure;

§ Performance of both funds;

§ Continuity of management personnel; and

§ Changes in corporate governance and their impact on shareholder rights.

Business Development Companies – Authorization to Sell Shares of Common Stock at a Price below Net Asset Value

**Catholic Advisory Services Recommendation:** Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV) if:

§ The proposal to allow share issuances below NAV has an expiration date that is less than one year from the date shareholders approve the underlying proposal, as required under the Investment Company Act of 1940;

§ A majority of the independent directors who have no financial interest in the sale have made a determination as to whether such sale would be in the best interests of the company and its shareholders prior to selling shares below NAV; and

§ The company has demonstrated responsible past use of share issuances by either:

§ Outperforming peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

§ Providing disclosure that its past share issuances were priced at levels that resulted in only small or moderate discounts to NAV and economic dilution to existing non-participating shareholders.

Change in Fund's Subclassification

**Catholic Advisory Services Recommendation:** Vote case-by-case on changes in a fund's sub-classification, considering the following factors: a) potential competitiveness; b) current and potential returns; c) risk of concentration; d) consolidation in target industry.

Changing the Domicile of a Fund

**Catholic Advisory Services Recommendation:** Vote case-by-case on re-incorporations, considering the following factors: a) regulations of both states; b) required fundamental policies of both states; c) the increased flexibility available.

Disposition of Assets/Termination/Liquidation

**Catholic Advisory Services Recommendation:** Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors: a) strategies employed to salvage the company; b) the fund's past performance; c) the terms of the liquidation.

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![LOGO](g79608g00k10.jpg)

Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval

**Catholic Advisory Services Recommendation:** Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

Name Change Proposals

**Catholic Advisory Services Recommendation:** Vote case-by-case on name change proposals, considering the following factors: a) political/economic changes in the target market; b) consolidation in the target market; and c) current asset composition.

1940 Act Policies

Catholic Advisory Services Recommendation:

---

| | |
|:---|:---|
| § | Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors: a) potential competitiveness; b) regulatory developments; c) current and potential returns; and d) current and potential risk.  |

---

---

| | |
|:---|:---|
| § | Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.  |

---

W W W . I S S G O V E R N A N C E . C O M E-311 97 of 98

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![LOGO](g79608g00k10.jpg)

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W W W . I S S G O V E R N A N C E . C O M E-312 98 of 98

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![LOGO](g79608g20e50.jpg)

U N I T E D S T A T E S SRI PROXY VOTING GUIDELINES 2023 Policy Recommendations Published January 17, 2023 W W W . I S S G O V E R N A N C E . C O M

------

![LOGO](g79608g00k12.jpg)

## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  [INTRODUCTION](#appd79608_760) | E-321 |
| [1. Board of Directors](#appd79608_761) | E-322 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Uncontested Election of Directors](#appd79608_762) | E-322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Accountability](#appd79608_763) | E-323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Takeover Defenses, Capital Structure, and Governance Structures](#appd79608_764) | E-323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Audit-Related Practices](#appd79608_765) | E-326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Compensation Practices](#appd79608_766) | E-326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pledging of Company Stock](#appd79608_767) | E-327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Material Environmental, Social and Governance (ESG) Risk Oversight Failures](#appd79608_768) | E-327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Risk Mitigation and Net Zero](#appd79608_769) | E-327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Responsiveness](#appd79608_770) | E-328 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Independence](#appd79608_771) | E-328 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Composition](#appd79608_772) | E-329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Diversity](#appd79608_773) | E-329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification of Directors – U.S.](#appd79608_774) | E-330 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Board-Related Management Proposals](#appd79608_775) | E-332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification/Declassification of the Board](#appd79608_776) | E-332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Vote Threshold for Director Elections](#appd79608_777) | E-332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appd79608_778) | E-332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification, Liability Protection, and Exculpation](#appd79608_779) | E-333 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Remove Directors/Fill Vacancies](#appd79608_780) | E-333 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Size](#appd79608_781) | E-334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appd79608_782) | E-334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appd79608_783) | E-334 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Board-Related Shareholder Proposals/Initiatives](#appd79608_784) | E-335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access](#appd79608_785) | E-335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Annual Election (Declassification) of the Board](#appd79608_786) | E-335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Threshold Voting Shareholder Proposals](#appd79608_787) | E-335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority of Independent Directors](#appd79608_788) | E-336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establishment of Independent Committees](#appd79608_789) | E-336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independent Board Chair](#appd79608_790) | E-336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establishment of Board Committees](#appd79608_791) | E-336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appd79608_792) | E-336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Policy on Shareholder Engagement](#appd79608_793) | E-337 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Access](#appd79608_794) | E-337 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appd79608_795) | E-337 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appd79608_796) | E-338 |

---

W W W . I S S G O V E R N A N C E . C O M E-314 2 of 98

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![LOGO](g79608g00k12.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Vote No Campaigns](#appd79608_797) | E-338 |
| [2. Ratification of Auditors](#appd79608_798) | E-339 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Auditor-Related Shareholder Proposals](#appd79608_799) | E-339 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratify Auditors/Ensure Auditor Independence](#appd79608_800) | E-339 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Rotation](#appd79608_801) | E-339 |
| [3. Takeover Defenses / Shareholder Rights](#appd79608_802) | E-340 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Takeover Defenses and Shareholder Rights-Related Management Proposals](#appd79608_803) | E-340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills (Shareholder Rights Plans)](#appd79608_804) | E-340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Poison Pills/Protective Amendments](#appd79608_805) | E-341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appd79608_806) | E-342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Shareholder Vote Requirements](#appd79608_807) | E-342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call a Special Meeting](#appd79608_808) | E-342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appd79608_809) | E-343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advance Notice Requirements for Shareholder Proposals/Nominations](#appd79608_810) | E-343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appd79608_811) | E-344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appd79608_812) | E-344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Confidential Voting](#appd79608_813) | E-344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Acquisition Provisions](#appd79608_814) | E-345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Cash-Out Provisions](#appd79608_815) | E-345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disgorgement Provisions](#appd79608_816) | E-345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [State Takeover Statutes](#appd79608_817) | E-345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Freeze-Out Provisions](#appd79608_818) | E-345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appd79608_819) | E-346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Bylaws without Shareholder Consent](#appd79608_820) | E-346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Litigation Rights](#appd79608_821) | E-346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Federal Forum Selection Provisions](#appd79608_822) | E-346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Forum Provisions for State Law Matters](#appd79608_823) | E-346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee Shifting](#appd79608_824) | E-347 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Takeover Defenses and Shareholder Rights-Related Shareholder Proposals](#appd79608_825) | E-347 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals to put Pill to a Vote and/or Adopt a Pill Policy](#appd79608_826) | E-347 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reduce Supermajority Vote Requirements](#appd79608_827) | E-347 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Remove Antitakeover Provisions](#appd79608_828) | E-348 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimburse Proxy Solicitation Expenses](#appd79608_829) | E-348 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appd79608_830) | E-348 |
| [4. Miscellaneous Governance Provisions](#appd79608_831) | E-349 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appd79608_832) | E-349 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjourn Meeting](#appd79608_833) | E-349 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing Corporate Name](#appd79608_834) | E-349 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Quorum Requirements](#appd79608_835) | E-349 |

---

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![LOGO](g79608g00k12.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Minor Bylaws](#appd79608_836) | E-350 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Other Business](#appd79608_837) | E-350 |
| [5. Capital Structure](#appd79608_838) | E-351 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appd79608_839) | E-351 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appd79608_840) | E-351 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appd79608_841) | E-352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Issue Stock for Use with Rights Plan](#appd79608_842) | E-352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appd79608_843) | E-352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appd79608_844) | E-352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appd79608_845) | E-352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appd79608_846) | E-353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appd79608_847) | E-354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Blank Check Preferred Stock](#appd79608_848) | E-354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjustments to Par Value of Common Stock](#appd79608_849) | E-354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unequal Voting Rights/Dual Class Structure](#appd79608_850) | E-354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appd79608_851) | E-355 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Debt Restructurings](#appd79608_852) | E-355 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appd79608_853) | E-355 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conversion of Securities](#appd79608_854) | E-356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recapitalization](#appd79608_855) | E-356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tracking Stock](#appd79608_856) | E-356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S](#appd79608_857) | E-356 |
| [6. Executive and Director Compensation](#appd79608_858) | E-357 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Criteria for Evaluating Executive Pay](#appd79608_859) | E-359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Evaluation](#appd79608_860) | E-359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Elements](#appd79608_861) | E-359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay Equity (Quantum) Elements](#appd79608_862) | E-359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices](#appd79608_863) | E-360 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Incentives that may Motivate Excessive Risk-Taking](#appd79608_864) | E-360 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Options Backdating](#appd79608_865) | E-361 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Communications and Responsiveness](#appd79608_866) | E-361 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation – Management Say-on-Pay Proposals](#appd79608_867) | E-361 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation – Management Say on Pay](#appd79608_868) | E-362 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appd79608_869) | E-362 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity-Based Incentive Plans](#appd79608_870) | E-363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Value Transfer (SVT)](#appd79608_871) | E-364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Repricing Provisions](#appd79608_872) | E-365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Misalignment – Application to Equity Plans](#appd79608_873) | E-365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Three-Year Value Adjusted Burn Rate](#appd79608_874) | E-365 |

---

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![LOGO](g79608g00k12.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liberal Definition of Change-in-Control](#appd79608_875) | E-366 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Compensation Plans](#appd79608_876) | E-366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))](#appd79608_877) | E-366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans (ESPPs)](#appd79608_878) | E-367 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Qualified Plans](#appd79608_879) | E-367 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Qualified Plans](#appd79608_880) | E-367 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Ownership Plans (ESOPs)](#appd79608_881) | E-368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appd79608_882) | E-368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Plans in Lieu of Cash](#appd79608_883) | E-369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Stock Option (TSO) Programs](#appd79608_884) | E-369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [401(k) Employee Benefit Plans](#appd79608_885) | E-370 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements for Executives/Golden Parachutes](#appd79608_886) | E-370 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Director Compensation](#appd79608_887) | E-370 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appd79608_888) | E-371 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Plans for Non-Employee Directors](#appd79608_889) | E-371 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Outside Director Stock Awards/Options in Lieu of Cash](#appd79608_890) | E-372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Retirement Plans](#appd79608_891) | E-372 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Compensation](#appd79608_892) | E-372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Increase Disclosure of Executive Compensation](#appd79608_893) | E-372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limit Executive Compensation](#appd79608_894) | E-372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Ownership Requirements](#appd79608_895) | E-373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit/Require Shareholder Approval for Option Repricing](#appd79608_896) | E-373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements/Golden Parachutes](#appd79608_897) | E-373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cash Balance Plans](#appd79608_898) | E-373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Performance-Based Equity Awards](#appd79608_899) | E-374 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appd79608_900) | E-374 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals](#appd79608_901) | E-375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity](#appd79608_902) | E-375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-up Proposals](#appd79608_903) | E-375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants—Disclosure of Board or Company's Utilization](#appd79608_904) | E-375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden Coffins/Executive Death Benefits](#appd79608_905) | E-375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoup Bonuses](#appd79608_906) | E-376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appd79608_907) | E-376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking](#appd79608_908) | E-376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hold Equity Past Retirement or for a Significant Period of Time](#appd79608_909) | E-376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Deductible Compensation](#appd79608_910) | E-376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pre-Arranged Trading Plans (10b5-1 Plans)](#appd79608_911) | E-377 |

---

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| | |
|:---|:---|
| [7. Mergers and Corporate Restructurings](#appd79608_912) | E-378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers and Acquisitions](#appd79608_913) | E-378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Reorganization/Restructuring Plans (Bankruptcy)](#appd79608_914) | E-379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appd79608_915) | E-379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs) – Proposals for Extensions](#appd79608_916) | E-380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appd79608_917) | E-380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Purchases](#appd79608_918) | E-380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appd79608_919) | E-380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appd79608_920) | E-380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Joint Ventures](#appd79608_921) | E-380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appd79608_922) | E-381 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private/Dark Transactions (Leveraged buyouts and Minority Squeeze-outs)](#appd79608_923) | E-381 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Private Placements/Warrants/Convertible Debentures](#appd79608_924) | E-381 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Formation of Holding Company](#appd79608_925) | E-382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Value Maximization Shareholder Proposals](#appd79608_926) | E-382 |
| [8. Social and Environmental Proposals](#appd79608_927) | E-383 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Diversity and Equality](#appd79608_928) | E-384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Add Women and Minorities to the Board](#appd79608_929) | E-384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial Equity and/or Civil Rights Audits](#appd79608_930) | E-384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on the Distribution of Stock Options by Gender and Race](#appd79608_931) | E-384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prepare Report/Promote EEOC-Related Activities](#appd79608_932) | E-385 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Progress Towards Glass Ceiling Commission Recommendations](#appd79608_933) | E-385 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit Discrimination on the Basis of Sexual Orientation or Gender Identity](#appd79608_934) | E-385 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on/Eliminate Use of Racial Stereotypes in Advertising](#appd79608_935) | E-386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender, Race, or Ethnicity Pay Gap](#appd79608_936) | E-386 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Labor and Human Rights](#appd79608_937) | E-386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Codes of Conduct and Vendor Standards](#appd79608_938) | E-387 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt/Report on MacBride Principles](#appd79608_939) | E-387 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Community Impact Assessment/Indigenous Peoples' Rights](#appd79608_940) | E-388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Risks of Outsourcing](#appd79608_941) | E-388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on the Impact of Health Pandemics on Company Operations](#appd79608_942) | E-388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mandatory Arbitration](#appd79608_943) | E-389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sexual Harassment](#appd79608_944) | E-389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in High Risk Markets](#appd79608_945) | E-389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports on Operations in Burma/Myanmar](#appd79608_946) | E-390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports on Operations in China](#appd79608_947) | E-390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Product Sales to Repressive Regimes](#appd79608_948) | E-390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Internet Privacy/Censorship and Data Security](#appd79608_949) | E-390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure on Plant Closings](#appd79608_950) | E-391 |

---

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; [Climate Change](#appd79608_951) | E-392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appd79608_952) | E-392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appd79608_953) | E-392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Change/Greenhouse Gas Emissions](#appd79608_954) | E-392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Invest in Clean/Renewable Energy](#appd79608_955) | E-393 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Energy Efficiency](#appd79608_956) | E-393 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Environment](#appd79608_957) | E-393 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Environmental/Sustainability Reports](#appd79608_958) | E-394 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in Environmentally Sensitive Areas](#appd79608_959) | E-394 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Canadian Oil Sands](#appd79608_960) | E-394 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Arctic National Wildlife Refuge](#appd79608_961) | E-395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hydraulic Fracturing](#appd79608_962) | E-395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Phase Out Chlorine-Based Chemicals](#appd79608_963) | E-395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Land Procurement and Development](#appd79608_964) | E-396 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on the Sustainability of Concentrated Area Feeding Operations (CAFO)](#appd79608_965) | E-396 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt a Comprehensive Recycling Policy](#appd79608_966) | E-396 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Nuclear Energy](#appd79608_967) | E-396 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Water Use](#appd79608_968) | E-397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Kyoto Protocol Compliance](#appd79608_969) | E-397 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Health and Safety](#appd79608_970) | E-397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Toxic Materials](#appd79608_971) | E-397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Product Safety](#appd79608_972) | E-397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Workplace/Facility Safety](#appd79608_973) | E-397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Report on Handgun Safety Initiatives](#appd79608_974) | E-398 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Phase-out or Label Products Containing Genetically Engineered Ingredients](#appd79608_975) | E-398 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tobacco-related Proposals](#appd79608_976) | E-398 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Policy/Report on Drug Pricing](#appd79608_977) | E-399 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Government and Military](#appd79608_978) | E-400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prepare Report to Renounce Future Landmine Production](#appd79608_979) | E-400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prepare Report on Foreign Military Sales](#appd79608_980) | E-400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Depleted Uranium/Nuclear Weapons](#appd79608_981) | E-400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Ethical Criteria for Weapons Contracts](#appd79608_982) | E-400 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Animal Welfare](#appd79608_983) | E-401 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Rights/Testing](#appd79608_984) | E-401 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Political and Charitable Giving](#appd79608_985) | E-401 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Lobbying Efforts](#appd79608_986) | E-401 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Contributions/Non-Partisanship](#appd79608_987) | E-402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Expenditures and Lobbying Congruency](#appd79608_988) | E-402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Charitable Contributions](#appd79608_989) | E-402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure on Prior Government Service](#appd79608_990) | E-403 |

---

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; [Consumer Lending and Economic Development](#appd79608_991) | E-403 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Policy/Report on Predatory Lending Practices](#appd79608_992) | E-403 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure on Credit in Developing Countries (LDCs) or Forgive LDC Debt](#appd79608_993) | E-403 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Community Investing](#appd79608_994) | E-404 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Miscellaneous](#appd79608_995) | E-404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adult Entertainment](#appd79608_996) | E-404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Abortion/Right to Life Issues](#appd79608_997) | E-404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Anti-Social Proposals](#appd79608_998) | E-404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Violence and Adult Themes in Video Games](#appd79608_999) | E-405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Link Compensation to Non-Financial Factors](#appd79608_1000) | E-405 |
| [9. Mutual Fund Proxies](#appd79608_1001) | E-406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Election of Trustees and Directors](#appd79608_1002) | E-406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes](#appd79608_1003) | E-406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Advisory Agreement](#appd79608_1004) | E-406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing a Fundamental Restriction to a Non-fundamental Restriction](#appd79608_1005) | E-406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Fundamental Investment Objective to Non-fundamental](#appd79608_1006) | E-406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Distribution Agreements](#appd79608_1007) | E-407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Approving New Classes or Series of Shares](#appd79608_1008) | E-407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Convert Closed-end Fund to Open-end Fund](#appd79608_1009) | E-407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests](#appd79608_1010) | E-407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Proposals](#appd79608_1011) | E-407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers](#appd79608_1012) | E-408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Business Development Companies – Authorization to Sell Shares of Common Stock at a Price below Net Asset Value](#appd79608_1013) | E-408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change in Fund's Subclassification](#appd79608_1014) | E-408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing the Domicile of a Fund](#appd79608_1015) | E-408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disposition of Assets/Termination/Liquidation](#appd79608_1016) | E-408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval](#appd79608_1017) | E-408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Name Change Proposals](#appd79608_1018) | E-409 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [1940 Act Policies](#appd79608_1019) | E-409 |

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## INTRODUCTION
ISS' Social Advisory Services division recognizes that socially responsible investors have dual objectives: financial and social. Socially responsible investors invest for economic gain, as do all investors, but they also require that the companies in which they invest conduct their business in a socially and environmentally responsible manner.

These dual objectives carry through to socially responsible investors' proxy voting activity once the security selection process is completed. In voting their shares, socially responsible institutional shareholders are concerned not only with sustainable economic returns to shareholders and good corporate governance but also with the ethical behavior of corporations and the social and environmental impact of their actions.

Social Advisory Services has, therefore, developed proxy voting guidelines that are consistent with the dual objectives of socially responsible shareholders. On matters of social and environmental import, the guidelines seek to reflect a broad consensus of the socially responsible investing community. Generally, we take as our frame of reference policies that have been developed by groups such as the Interfaith Center on Corporate Responsibility, the General Board of Pension and Health Benefits of the United Methodist Church, Domini Social Investments, and other leading church shareholders and socially responsible mutual fund companies. Additionally, we incorporate the active ownership and investment philosophies of leading globally recognized initiatives such as the United Nations Environment Programme Finance Initiative (UNEP FI), the United Nations Principles for Responsible Investment (UNPRI), the United Nations Global Compact, and environmental and social European Union Directives.

On matters of corporate governance, executive compensation, and corporate structure, Social Advisory Services guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance consistent with responsibilities to society as a whole.

The guidelines provide an overview of how Social Advisory Services recommends that its clients vote. We note that there may be cases in which the final vote recommendation on a particular company varies from the vote guideline due to the fact that we closely examine the merits of each proposal and consider relevant information and company-specific circumstances in arriving at our decisions. Where Social Advisory Services acts as voting agent for its clients, it follows each client's voting policy, which may differ in some cases from the policies outlined in this document. Social Advisory Services updates its guidelines on an annual basis to take into account emerging issues and trends on environmental, social, and corporate governance topics, in addition to evolving market standards, regulatory changes, and client feedback.

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1. Board of Directors

A corporation's board of directors sits at the apogee of the corporate governance system. Though they normally delegate responsibility for the management of the business to the senior executives they select and oversee, directors bear ultimate responsibility for the conduct of the corporation's business. The role of directors in publicly held corporations has undergone considerable change in recent years. Once derided as rubber stamps for management, directors of public corporations today are expected to serve as effective guardians of shareholders' interests.

Voting on directors and board-related issues is the most important use of the shareholder franchise, not simply a routine proxy item. Although uncontested director elections do not present alternative nominees from whom to choose, a high percentage of opposition votes is an expression of shareholder dissatisfaction and should be sufficient to elicit a meaningful response from management.

The role and responsibilities of directors has increasingly been the subject of much discussion and debate, given the current economic climate and the difficulties many companies now face in their respective markets. Influential organizations, including the American Law Institute, the American Bar Association, the National Association of Corporate Directors, and the Business Roundtable have issued reports and recommendations regarding the duties and accountability of corporate boards. Both mainstream and alternative media outlets have highlighted the numerous gaps within risk oversight of company boards and individual directors, and many institutional investors, in response, have capitalized on their rights as stakeholders to prompt changes. Corporations have taken notice, implementing many of the reforms championed by their shareholders.

Although differences of opinion remain, a fairly strong consensus has emerged on a number of key issues. It is widely agreed that the board's most important responsibility is to ensure that the corporation is managed in the shareholders' best long-term economic interest. This will often require boards to consider the impact of their actions on other constituencies, including employees, customers, local communities, and the environment.

§ The board's principal functions are widely agreed to consist of the following:

§ To select, evaluate, and if necessary, replace management, including the chief executive officer;

§ To review and approve major strategies and financial objectives;

§ To advise management on significant issues;

§ To assure that effective controls are in place to safeguard corporate assets, manage risk, and comply with the law; and

§ To nominate directors and otherwise ensure that the board functions effectively.

Boards are expected to have a majority of directors independent of management. The independent directors are expected to organize much of the board's work, even if the chief executive officer also serves as Chairman of the board. Key committees of the board are expected to be entirely independent of management. It is expected that boards will engage in critical self-evaluation of themselves and of individual members. Individual directors, in turn, are expected to devote significant amounts of time to their duties, to limit the number of directorships they accept, and to own a meaningful amount of stock in companies on whose boards they serve. Directors are ultimately responsible to the corporation's shareholders. The most direct expression of this responsibility is the requirement that directors be elected to their positions by the shareholders. Shareholders are also asked to vote on a number of other matters regarding the role, structure, and composition of the board. Social Advisory Services classifies directors as either executive, non-independent non-executive, or independent directors.

Uncontested Election of Directors

Four broad principles apply when determining votes on director nominees:

1. *Board Accountability*: Accountability refers to the promotion of transparency into a company's governance practices and annual board elections and the provision to shareholders the ability to remove problematic directors and to vote

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on takeover defenses or other charter/bylaw amendments. These practices help reduce the opportunity for management entrenchment.

2. *Board Responsiveness*: Directors should be responsive to shareholders, particularly in regard to shareholder proposals that receive a majority vote or management proposals that receive significant opposition and to tender offers where a majority of shares are tendered. Furthermore, shareholders should expect directors to devote sufficient time and resources to oversight of the company.

3. *Director Independence*: Without independence from management, the board may be unwilling or unable to effectively set company strategy and scrutinize performance or executive compensation.

4. *Director Diversity/Competence*: Companies should seek a diverse board of directors who can add value to the board through their specific skills or expertise and who can devote sufficient time and commitment to serve effectively. Boards should be of a size appropriate to accommodate diversity, expertise, and independence, while ensuring active and collaborative participation by all members. Boards should be sufficiently diverse to ensure consideration of a wide range of perspectives.

Social Advisory Services Recommendation: Generally vote for director nominees, except under the following circumstances (with new nominees<sup>1</sup> considered on a case-by-case basis):

Board Accountability

Vote against or withhold from the entire board of directors (except new nominees, who should be considered case-by-case) for the following:

Problematic Takeover Defenses, Capital Structure, and Governance Structures

Classified Board Structure: The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant an against/withhold recommendation is not up for election. All appropriate nominees (except new) may be held accountable**.**

Removal of Shareholder Discretion on Classified Boards: The company has opted into, or failed to opt out of, state laws requiring a classified board structure**.**

Director Performance Evaluation: The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted.

Problematic provisions include but are not limited to a classified board structure, supermajority vote requirements, a majority vote standard for director elections with no carve out for contested elections, inability for shareholders to call special meetings or act by written consent, a multi-class capital structure, and/or a non-shareholder approved poison pill.

<sup>1</sup> A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question. 

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Poison Pills: Generally vote against or withhold from all nominees (except new nominees<sup>1</sup>, **who** should be considered case-by-case) if:

§ The company has a poison pill with a deadhand or slowhand feature<sup>2</sup>;

§ The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

§ The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders<sup>3</sup>.

Vote case-by-case on nominees if the board adopts an initial short-term pill**<sup>2</sup>** (with a term of one year or less) without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

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| | |
|:---|:---|
| § | A commitment to put any renewal to a shareholder vote; and  |

---

§ Other factors as relevant.

Unilateral Bylaw/Charter Amendments: Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders. Considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against (except new nominees, who should be considered case-by-case) if the directors:

§ Classified the board;

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|:---|:---|
| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

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§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a fee-shifting provision; or

§ Adopted another provision deemed egregious.

**<sup>2</sup>** If the short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, Social Advisory Services will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption. 

**<sup>3</sup>** Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient. 

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Problematic Governance Structure: For companies that hold or held their first annual meeting<sup>4</sup> of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

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|:---|:---|
| § | Supermajority vote requirements to amend the bylaws or charter;  |

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§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

Unequal Voting Rights: Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees<sup>1</sup>, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights<sup>5</sup>.

Exceptions to this policy will generally be limited to:

§ Newly-public companies<sup>6</sup> with a sunset provision of no more than seven years from the date of going public;

§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

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| § | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be *de minimis*; or  |

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| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

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Management Proposals to Ratify Existing Charter or Bylaw Provisions: Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

<sup>4</sup> Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

<sup>5</sup> This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

<sup>6</sup> Newly-public companies generally include companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

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Restricting Binding Shareholder Proposals: Generally vote against or withhold from the members of the governance committee if:

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|:---|:---|
| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

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Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Problematic Audit-Related Practices

Vote against/withhold from the members of the audit committee if:

§ The non-audit fees paid to the auditor are excessive (see discussion under "Auditor Ratification);

§ The company receives an adverse opinion on the company's financial statements from its auditor; or

§ There is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Vote case-by-case on members of the audit committee and potentially the full board if:

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| § | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company's efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted.  |

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Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item, or, in egregious situations, vote against/withhold from members of the compensation committee and potentially the full board if:

§ There is a significant misalignment between CEO pay and company performance (pay-for-performance);

§ The company maintains significant problematic pay practices including options backdating, excessive perks and overly generous employment contracts etc.;

§ The board exhibits a significant level of poor communication and responsiveness to shareholders;

§ The company reprices underwater options for stock, cash, or other consideration without prior shareholder approval, even if allowed in the firm's equity plan;

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

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Problematic Pledging of Company Stock

Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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|:---|:---|
| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

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§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Material Environmental, Social and Governance (ESG) Risk Oversight Failures

Vote against/withhold from directors individually, committee members, or potentially the entire board, due to:

§ Material failures of governance, stewardship, risk oversight<sup>7</sup>, or fiduciary responsibilities at the company, including failure to adequately guard against or manage ESG risks;

§ A lack of sustainability reporting in the company's public documents and/or website in conjunction with a failure to adequately manage or mitigate environmental, social and governance (ESG) risks;

§ Failure to replace management as appropriate; or

§ Egregious actions related to the director(s)' service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

Climate Risk Mitigation and Net Zero

For companies that are significant GHG emitters<sup>8</sup>, through its operations or value chain, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where Social Advisory Services determines that the company is not taking the minimum steps needed to be aligned with a Net Zero by 2050 trajectory.

For **2023**, minimum steps needed to be considered to be aligned with a Net Zero by 2050 trajectory are (all minimum criteria will be required to be in alignment with policy):

§ The company has detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

§ Board governance measures;

§ Corporate strategy;

§ Risk management analyses; and

§ Metrics and targets.

§ The company has declared a Net Zero target by 2050 or sooner and the target includes scope 1, 2, and relevant scope 3 emissions.

§ The company has set a medium-term target for reducing its GHG emissions.

<sup>7</sup> Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant environmental incidents including spills and pollution; large scale or repeat workplace fatalities or injuries; significant adverse legal judgments or settlements; or hedging of company stock.

<sup>8</sup> For 2023, companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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Expectations about what constitutes "minimum steps needed to be aligned with a Net Zero by 2050 trajectory" will increase over time.

Board Responsiveness

Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

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|:---|:---|
| § | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:  |

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|:---|:---|
| § | Disclosed outreach efforts by the board to shareholders in the wake of the vote;  |

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§ Rationale provided in the proxy statement for the level of implementation;

§ The subject matter of the proposal;

§ The level of support for and opposition to the resolution in past meetings;

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|:---|:---|
| § | Actions taken by the board in response to the majority vote and its engagement with shareholders;  |

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§ The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and

§ Other factors as appropriate.

§ The board failed to act on takeover offers where the majority of shares are tendered;

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|:---|:---|
| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote.  |

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Vote case-by-case on compensation Committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

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|:---|:---|
| § | The company's previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated); 

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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|:---|:---|
| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Director Independence

Vote against/withhold from the entire board if the full board is less than majority independent.

Vote against/withhold from non-independent directors (executive directors and non-independent non-executive directors per the Categorization of Directors) when:

§ The non-independent director serves on the audit, compensation, or nominating committee;

§ The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or

§ The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee.

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Composition

**Attendance at Board and Committee Meetings:** Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>9</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

§ Medical issues/illness;

§ Family emergencies; and

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|:---|:---|
| § | If the director's total service was three meetings or fewer and the director missed only one meeting.  |

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In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

**Overboarded Directors:** Vote against or withhold from individual directors who:

§ Sit on more than five public company boards; or

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|:---|:---|
| § | Are CEOs of public companies who sit on the boards of more than two public companies besides their own— withhold only at their outside boards**<sup>10</sup>**.  |

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Board Diversity

**Social Advisory Services Recommendation:** Generally vote against or withhold from incumbent nominating committee members if:

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|:---|:---|
| § | The board is not comprised of at least 40 percent underrepresented gender identities**<sup>11</sup>**; or  |

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| § | The board is not comprised of at least 20 percent racially or ethnically diverse directors.  |

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Vote against or withhold from other directors on a case-by-case basis.

<sup>9</sup> Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

<sup>10</sup> Although all of a CEO's subsidiary boards will be counted as separate boards, Social Advisory Services will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent, but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

<sup>11</sup> Underrepresented gender identities include directors who identify as women or as non-binary.

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Classification of Directors – U.S.

1. **Executive Director** 

1.1. Current officer **<sup>i</sup>** of the company or one of its affiliates **<sup>ii</sup>**.

2. **Non-Independent Non-Executive Director** 

<u>Board Identification</u> 

2.1. Director identified as not independent by board.

<u>Controlling/Significant Shareholder</u> 

2.2. Beneficial owner of more than 50 percent of the company's voting power (this may be aggregated if voting power is distributed among more than one member of a group).

<u>Current Employment at Company or Related Company</u> 

2.3. Non-officer employee of the firm (including employee representatives).

2.4. Officer **<sup>i</sup>**, former officer, or general or limited partner of a joint venture or partnership with the company.

<u>Former Employment</u> 

2.5. Former CEO of the company **<sup>iii,iv</sup>**.

2.6. Former non-CEO officer **<sup>i</sup>** of the company or an affiliate **<sup>ii</sup>** within the past five years.

2.7. Former officer **<sup>i</sup>** of an acquired company within the past five years **<sup>iv</sup>**.

2.8. Officer **<sup>i</sup>** of a former parent or predecessor firm at the time the company was sold or split off within the past five years.

2.9. Former interim officer if the service was longer than 18 months. If the service was between 12 and 18 months an assessment of the interim officer's employment agreement will be made **<sup>v</sup>**.

<u>Family Members</u> 

2.10. Immediate family member **<sup>vi</sup>** of a current or former officer **<sup>i</sup>** of the company or its affiliates **<sup>ii</sup>** within the last five years.

2.11. Immediate family member **<sup>vi</sup>** of a current employee of company or its affiliates **<sup>ii</sup>** where additional factors raise concern (which may include, but are not limited to, the following: a director related to numerous employees; the company or its affiliates employ relatives of numerous board members; or a non-Section 16 officer in a key strategic role).

<u>Professional, Transactional, and Charitable Relationships</u> 

2.12. Director who (or whose immediate family member **<sup>vi</sup>**) currently provides professional services **<sup>vii</sup>** in excess of $10,000 per year to: the company, an affiliate **<sup>ii</sup>**, or an individual officer of the company or an affiliate; or who is (or whose immediate family member **<sup>vi</sup>** is) a partner, employee, or controlling shareholder of an organization which provides the services.

2.13. Director who (or whose immediate family member **<sup>vi</sup>**) currently has any material transactional relationship **<sup>viii</sup>** with the company or its affiliates **<sup>ii</sup>**; or who is (or whose immediate family member **<sup>vi</sup>** is) a partner in, or a controlling shareholder or an executive officer of, an organization which has the material transactional relationship **<sup>viii</sup>** (excluding investments in the company through a private placement).

2.14. Director who (or whose immediate family member **<sup>vi</sup>**) is a trustee, director, or employee of a charitable or non-profit organization that receives material grants or endowments **<sup>viii</sup>** from the company or its affiliates **<sup>ii</sup>**.

<u>Other Relationships</u> 

2.15. Party to a voting agreement **<sup>ix</sup>** to vote in line with management on proposals being brought to shareholder vote.

2.16. Has (or an immediate family member **<sup>vi</sup>** has) an interlocking relationship as defined by the SEC involving members of the board of directors or its compensation committee **<sup>x</sup>**.

2.17. Founder **<sup>xi</sup>** of the company but not currently an employee.

2.18. Director with pay comparable to Named Executive Officers.

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2.19. Any material **<sup>xii</sup>** relationship with the company.

3. **Independent Director** 

3.1. No material **<sup>xii</sup>** connection to the company other than a board seat.

#### Footnotes:
**<sup>i</sup>** The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes: the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will generally be classified as a Non-Independent Non-Executive Director under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation exceeding $10,000 per year for serving in that capacity, then the director will be classified as an Independent Director.

ii "Affiliate" includes a subsidiary, sibling company, or parent company. Social Advisory Services uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

**<sup>iii</sup>** Includes any former CEO of the company prior to the company's initial public offering (IPO).

**<sup>iv</sup>** When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, Social Advisory Services will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

**<sup>v</sup>** Social Advisory Services will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. Social Advisory Services will also consider if a formal search process was under way for a full-time officer at the time.

**<sup>vi</sup>** "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

**<sup>vii</sup>** Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include, but are not limited to the following: investment banking/financial advisory services; commercial banking (beyond deposit services); investment services; insurance services; accounting/audit services; consulting services; marketing services; legal services; property management services; realtor services; lobbying services; executive search services; and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services; IT tech support services; educational services; and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

**<sup>viii</sup>** A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity exceeding the greater of $200,000 or 5 percent of the recipient's gross revenues, in the case of a company which follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, in the case of a company which follows NYSE listing standards. In the case of a company which follows neither of the preceding standards, Social Advisory Services will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

**<sup>ix</sup>** Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as independent directors if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

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**<sup>x</sup>** Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

**<sup>xi</sup>** The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, Social Advisory Services may deem him or her an independent outsider.

**<sup>xii</sup>** For purposes of Social Advisory Services' director independence classification, "material" will be defined as a standard of relationship (financial, personal or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Board-Related Management Proposals

Classification/Declassification of the Board

Under a classified board structure only one class of directors would stand for election each year, and the directors in each class would generally serve three-year terms. Although staggered boards can provide continuity for companies at the board level, there are also a number of downsides to the structure. First, a classified board can also be used to entrench management and effectively preclude most takeover bids or proxy contests. Board classification forces dissidents and would-be acquirers to negotiate with the incumbent board, which has the authority to decide on offers without a shareholder vote. In addition, when a board is classified, it is difficult to remove individual members for either poor attendance or poor performance; shareholders would only have the chance to vote on a given director every third year when he or she comes up for election. The classified board structure can also limit shareholders' ability to withhold votes from inside directors that sit on key board committee, or to withhold votes from an entire board slate to protest the lack of board diversity. According to ISS' 2012 Board Practices study, the number of S&P 500 companies with classified boards has continued to fall. In 2015, only 17 percent of S&P 500 companies maintained staggered boards, compared to 25 percent in 2014, 30 percent in 2013, and 39 percent in 2010. While we recognize that there are some advantages to classified boards, based on the latest studies on classified boards, the fact that classified boards can make it more difficult for shareholders to remove individual directors, and the fact that classified boards can be used as an antitakeover device, Social Advisory Services recommends against the adoption of classified boards.

Social Advisory Services Recommendation:

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| § | Vote for proposals to repeal classified boards and to elect all directors annually.  |

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| § | Vote against proposals to classify (stagger) the board of directors.  |

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Majority Vote Threshold for Director Elections

**Social Advisory Services Recommendation:** Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections.

Vote against if no carve-out for plurality in contested elections is included.

Cumulative Voting

Most corporations provide that shareholders are entitled to cast one vote for each share owned. Under a cumulative voting scheme the shareholder is permitted to have one vote per share for each director to be elected. Shareholders are permitted to apportion those votes in any manner they wish among the director candidates. Shareholders have the opportunity to elect a minority representative to a board through cumulative voting, thereby ensuring representation for all sizes of shareholders. For example, if there is a company with a ten-member board and 500 shares outstanding—the total number of votes that may be cast is 5,000. In this case a shareholder with 51 shares (10.2 percent of the outstanding shares) would be guaranteed one board seat because all votes may be cast for one candidate.

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**Social Advisory Services Recommendation:** Generally vote against management proposals to eliminate cumulative voting, and for shareholder proposals to restore or provide for cumulative voting unless:

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| § | The company has proxy access**<sup>12</sup>**, thereby allowing shareholders to nominate directors to the company's ballot; and  |

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| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

Director and Officer Indemnification, Liability Protection, and Exculpation

**Social Advisory Services Recommendation:** Vote case-by-case on proposals on director and officer indemnification, liability protection, and exculpation<sup>13</sup>.

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of care.

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of loyalty.

§ Expand coverage beyond just legal expenses to liability for acts that are more serious violations of fiduciary obligation than mere carelessness.

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| § | Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (*i.e.*, "permissive indemnification"), but that previously the company was not required to indemnify.  |

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Vote for those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

§ If the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and

§ If only the individual's legal expenses would be covered.

Shareholder Ability to Remove Directors/Fill Vacancies

Shareholder ability to remove directors, with or without cause, is either prescribed by a state's business corporation law, an individual company's articles of incorporation, or its bylaws. Many companies have sought shareholder approval for charter or bylaw amendments that would prohibit the removal of directors except for cause, thus ensuring that directors would retain their directorship for their full-term unless found guilty of self-dealing. By requiring cause to be demonstrated through due process, management insulates the directors from removal even if a director has been performing poorly, not attending meetings, or not acting in the best interests of shareholders.

<sup>12</sup> A proxy access right that meets the recommended guidelines.

<sup>13</sup> **Indemnification**: the condition of being secured against loss or damage.

**Limited liability**: a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation**: to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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Social Advisory Services Recommendation:

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| § | Vote against proposals that provide that directors may be removed only for cause.  |

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|:---|:---|
| § | Vote for proposals to restore shareholder ability to remove directors with or without cause.  |

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| § | Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies.  |

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| § | Vote for proposals that permit shareholders to elect directors to fill board vacancies.  |

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Board Size

Proposals which would allow management to increase or decrease the size of the board at its own discretion are often used by companies as a takeover defense. Social Advisory Services supports management proposals to fix the size of the board at a specific number, thus preventing management, when facing a proxy contest, from increasing the board size without shareholder approval. By increasing the size of the board, management can make it more difficult for dissidents to gain control of the board. Fixing the size of the board also prevents a reduction in the size of the board as a strategy to oust independent directors. Fixing board size also prevents management from increasing the number of directors in order to dilute the effects of cumulative voting.

Social Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals that seek to fix the size of the board.  |

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|:---|:---|
| § | Vote case-by-case on proposals that seek to change the size or range of the board.  |

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|:---|:---|
| § | Vote against proposals that give management the ability to alter the size of the board outside of a specific range without shareholder approval.  |

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Establish/Amend Nominee Qualifications

**Social Advisory Services Recommendation:** Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on how reasonable the criteria are and to what degree they may preclude dissident nominees from joining the board.

Board Refreshment

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

#### Term/Tenure Limits
**Social Advisory Services Recommendation:** Vote case-by-case on management proposals regarding director term/tenure limits, considering:

§ The rationale provided for adoption of the term/tenure limit;

§ The robustness of the company's board evaluation process;

§ Whether the limit is of sufficient length to allow for a broad range of director tenures;

§ Whether the limit would disadvantage independent directors compared to non-independent directors; and

§ Whether the board will impose the limit evenly, and not have the ability to waive it in a discriminatory manner.

#### Age Limits
**Social Advisory Services Recommendation:** Generally vote against management proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

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Board-Related Shareholder Proposals/Initiatives

Proxy Contests/Proxy Access

Contested elections of directors frequently occur when a board candidate or slate runs for the purpose of seeking a significant change in corporate policy or control. Competing slates will be evaluated based upon the personal qualifications of the candidates, the economic impact of the policies that they advance, and their expressed and demonstrated commitment to the interests of all shareholders.

**Social Advisory Services Recommendation:** Votes in a contested election of directors are evaluated on a case-by-case basis, considering the following factors:

§ Long-term financial performance of the target company relative to its industry;

§ Management's track record;

§ Background to the proxy contest;

§ Qualifications of director nominees (both slates);

§ Strategic plan of dissident slate and quality of critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates);

§ Stock ownership positions; and

§ Impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether or not there are more candidates than board seats).

Annual Election (Declassification) of the Board

**Social Advisory Services Recommendation:** Vote for shareholder proposals to repeal classified (staggered) boards and to elect all directors annually.

Vote against proposals to classify the board.

Majority Threshold Voting Shareholder Proposals

A majority vote standard requires that for directors to be elected (or re-elected) to serve on the company's board they must receive support from holders of a majority of shares voted. Shareholders have expressed strong support for shareholder proposals on majority threshold voting. Social Advisory Services believes shareholders should have a greater voice in the election of directors and believes majority threshold voting represents a viable alternative to the plurality system in the U.S. Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

**Social Advisory Services Recommendation:** Vote for precatory and binding resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

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Majority of Independent Directors

Social Advisory Services believes that a board independent from management is of vital importance to a company and its shareholders. Accordingly, Social Advisory Services will cast votes in a manner that shall encourage the independence of boards.

Social Advisory Services Recommendation:

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|:---|:---|
| § | Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by Social Advisory Services' definition of independence.  |

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|:---|:---|
| § | Vote for shareholder proposals to strengthen the definition of independence for board directors.  |

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Establishment of Independent Committees

Most corporate governance experts agree that the key board committees (audit, compensation, and nominating/corporate governance) of a corporation should include only independent directors. The independence of key committees has been encouraged by regulation. Social Advisory Services believes that initiatives to increase the independent representation of these committees or to require that these committees be independent should be supported.

**Social Advisory Services Recommendation:** Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors.

Independent Board Chair

One of the principle functions of the board is to monitor and evaluate the performance of the CEO. The chairperson's duty to oversee management is obviously compromised when he or she is required to monitor himself or herself. Generally Social Advisory Services recommends a vote for shareholder proposals that would require that the position of board chair be held by an individual with no materials ties to the company other than their board seat.

**Social Advisory Services Recommendation:** Vote for shareholder proposals that would require the board chair to be independent of management.

Establishment of Board Committees

**Social Advisory Services Recommendation:** Generally vote for shareholder proposals to establish a new board committee to address broad corporate policy topics or to provide a forum for ongoing dialogue on issues such as the environment, human or labor rights, shareholder relations, occupational health and safety etc. when the formation of such committees appears to be a potentially effective method of protecting or enhancing shareholder value. In evaluating such proposals, the following factors will be considered:

§ Existing oversight mechanisms (including current committee structure) regarding the issue for which board oversight is sought;

§ Level of disclosure regarding the issue for which board oversight is sought;

§ Company performance related to the issue for which board oversight is sought;

§ Board committee structure compared to that of other companies in its industry sector; and

§ The scope and structure of the proposal.

Establish/Amend Nominee Qualifications

**Social Advisory Services Recommendation:** Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and to what degree they may preclude dissident nominees from joining the board.

Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and to what degree they may preclude dissident nominees from joining the board.

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Vote case-by-case on shareholder resolutions seeking a director nominee candidate who possesses a particular subject matter expertise, considering:

§ The company's board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers;

§ The company's existing board and management oversight mechanisms regarding the issue for which board oversight is sought;

§ The company's disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies; and

§ The scope and structure of the proposal.

Board Policy on Shareholder Engagement

**Social Advisory Services Recommendation:** Vote for shareholders proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

§ Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board;

§ Effectively disclosed information with respect to this structure to its shareholders;

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|:---|:---|
| § | The company has not ignored majority-supported shareholder proposals or a majority withhold vote on a director nominee; and  |

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§ The company has an independent chairman or a lead director (according to Social Advisory Services' definition). This individual must be made available for periodic consultation and direct communication with major shareholders.

Proxy Access

Social Advisory Services supports proxy access as an important shareholder right, one that is complementary to other best-practice corporate governance features. However, in the absence of a uniform standard, proposals to enact proxy access may vary widely; as such, a case-by-case approach will be undertaken in evaluating these proposals.

**Social Advisory Services Recommendation:** Generally vote for management and shareholder proposals for proxy access with the following provisions:

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|:---|:---|
| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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|:---|:---|
| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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|:---|:---|
| § | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access.

Generally vote against proposals that are more restrictive than these guidelines.

Board Refreshment

#### Term/Tenure Limits
Supporters of term limits argue that this requirement would bring new ideas and approaches to a board. However, we prefer to look at directors and their contributions to the board individually rather than impose a strict rule.

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**Social Advisory Services Recommendation:** Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:

§ The scope of the shareholder proposal; and

§ Evidence of problematic issues at the company combined with, or exacerbated by, a lack of board refreshment.

#### Age Limits
**Social Advisory Services Recommendation:** Generally vote against shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

CEO Succession Planning

**Social Advisory Services Recommendation:** Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering at a minimum, the following factors:

§ The reasonableness/scope of the request; and

§ The company's existing disclosure on its current CEO succession planning process.

Vote No Campaigns

**Social Advisory Services Recommendation:** In cases where companies are targeted in connection with public "vote no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

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2. Ratification of Auditors

Annual election of the outside accountants is best practice standard. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders. A Blue Ribbon Commission report concluded that audit committees must improve their current level of oversight of independent accountants. Given the rash of accounting misdeeds that were not detected by audit panels or auditors, shareholder ratification is an essential step in restoring investor confidence. Shareholders should have the right to weigh in on the choice of the audit firm, and all companies should put ratification on the ballot of their annual meeting. Special consideration will be given when non-audit fees exceed audit fees, as high non-audit fees can compromise the independence of the auditor. Social Advisory Services will also monitor both auditor tenure and whether auditor ratification has been pulled from the ballot.

**Social Advisory Services Recommendation:** Vote for proposals to ratify auditors, unless any of the following apply:

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|:---|:---|
| § | The non-audit fees paid represent 25 percent or more of the total fees paid to the auditor;  |

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§ An auditor has a financial interest in or association with the company, and is therefore not independent;

§ There is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company's financial position; or

§ Poor accounting practices are identified that rise to a serious level of concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures.

Auditor-Related Shareholder Proposals

Ratify Auditors/Ensure Auditor Independence

These shareholder proposals request that the board allow shareholders to ratify the company's auditor at each annual meeting. Annual ratification of the outside accountants is standard practice. While it is recognized that the company is in the best position to evaluate the competence of the outside accountants, we believe that outside accountants must ultimately be accountable to shareholders.

Given the rash of accounting irregularities that were not detected by audit panels or auditors, shareholder ratification is an essential step in restoring investor confidence. Social Advisory Services believes that shareholders should have the ability to ratify the auditor on an annual basis.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to allow shareholders to vote on auditor ratification.  |

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| § | Vote for proposals that ask a company to adopt a policy on auditor independence.  |

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| § | Vote for proposals that seek to limit the non-audit services provided by the company's auditor.  |

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Auditor Rotation

To minimize any conflict of interest that may rise between the company and its auditor, Social Advisory Services supports the rotation of auditors. Currently, SEC rules provide that partners should be rotated every five years. However, Social Advisory Services also believes that the long tenure of audit firms at U.S. companies can be problematic.

**Social Advisory Services Recommendation:** Vote for shareholder proposals to rotate company's auditor every five years or more. Social Advisory Services believes that proposing a rotation period less than five years is unreasonably restrictive and may negatively affect audit quality and service while increasing expense.

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3. Takeover Defenses / Shareholder Rights

Corporate takeover attempts come in various guises. Usually, a would-be acquirer makes a direct offer to the board of directors of a targeted corporation. The bidder may offer to purchase the company for cash and/or stock. If the board approves the offer, a friendly transaction is completed and presented to shareholders for approval. If, however, the board of directors rejects the bid, the acquirer can make a tender offer for the shares directly to the targeted corporation's shareholders. Such offers are referred to as hostile tender bids.

Not wishing to wait until they are subjects of hostile takeover attempts, many corporations have adopted antitakeover measures designed to deter unfriendly bids or buy time. The most common defenses are the shareholders rights protection plan, also known as the poison pill, and charter amendments that create barriers to acceptance of hostile bids. In the U.S., poison pills do not require shareholder approval. However, shareholders must approve charter amendments, such as classified boards or supermajority vote requirements. In brief, the very existence of defensive measures can foreclose the possibility of tenders and hence, opportunities to premium prices for shareholders.

Anti-takeover statutes generally increase management's potential for insulating itself and warding off hostile takeovers that may be beneficial to shareholders. While it may be true that some boards use such devices to obtain higher bids and to enhance shareholder value, it is more likely that such provisions are used to entrench management. The majority of historical evidence on individual corporate anti-takeover measures indicates that heavily insulated companies generally realize lower returns than those having managements that are more accountable to shareholders and the market. The evidence also suggests that when states adopt their own anti-takeover devices, or endorse those employed by firms, shareholder returns are harmed. Moreover, the body of evidence appears to indicate that companies in states with the strongest anti-takeover laws experience lower returns than they would absent such statutes.

Takeover Defenses and Shareholder Rights-Related Management Proposals

Poison Pills (Shareholder Rights Plans)

Poison pills are corporate-sponsored financial devices that, when triggered by potential acquirers, do one or more of the following: 1) dilute the acquirer's equity holdings in the target company; 2) dilute the acquirer's voting interests in the target company; or 3) dilute the acquirer's equity holdings in the post-merger company. Poison pills generally allow shareholders to purchase shares from, or sell shares back to, the target company (flip-in pill) and/or the potential acquirer (flip-out pill) at a price far out of line with fair market value. Depending on the type of pill, the triggering event can either transfer wealth from the target company or dilute the equity holdings of current shareholders. Poison pills insulate management from the threat of a change in control and provide the target board with veto power over takeover bids. Because poison pills greatly alter the balance of power between shareholders and management, shareholders should be allowed to make their own evaluation of such plans.

**Social Advisory Services Recommendation:**Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

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| § | No lower than a 20 percent trigger, flip-in or flip-over provision;  |

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§ A term of no more than three years;

§ No deadhand, slowhand, no-hand or similar feature that limits the ability of a future board to redeem the pill;

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| § | Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.  |

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In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.

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Net Operating Loss (NOL) Poison Pills/Protective Amendments

The financial crisis has prompted widespread losses in certain industries. This has resulted in previously profitable companies considering the adoption of a poison pill and/or NOL protective amendment to protect their NOL tax assets, which may be lost upon an acquisition of 5 percent of a company's shares.

When evaluating management proposals seeking to adopt NOL pills or protective amendments, the purpose behind the proposal, its terms, and the company's existing governance structure should be taken into account to assess whether the structure actively promotes board entrenchment or adequately protects shareholder rights. While Social Advisory Services acknowledges the high estimated tax value of NOLs, which benefit shareholders, the ownership acquisition limitations contained in an NOL pill/protective amendment coupled with a company's problematic governance structure could serve as an antitakeover device.

Given the fact that shareholders will want to ensure that such an amendment does not remain in effect permanently, Social Advisory Services will also closely review whether the pill/amendment contains a sunset provision or a commitment to cause the expiration of the NOL pill/protective amendment upon exhaustion or expiration of the NOLs.

**Social Advisory Services Recommendation:** Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses ("NOLs") if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5%);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses ("NOLs") if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing five-percent holder);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL);

§ The company's existing governance structure including; board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns;

§ Any other factors that may be applicable.

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Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions

**Social Advisory Services Recommendation:** Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Supermajority Shareholder Vote Requirements

Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change at a company.

Social Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to reduce supermajority shareholder vote requirements for charter amendments, mergers and other significant business combinations. For companies with shareholder(s) who own a significant amount of company stock, vote case-by-case, taking into account: a) ownership structure; b) quorum requirements; and c) supermajority vote requirements.  |

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| § | Vote against proposals to require a supermajority shareholder vote for charter amendments, mergers and other significant business combinations.  |

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Shareholder Ability to Call a Special Meeting

Most state corporation statutes allow shareholders to call a special meeting when they want to take action on certain matters that arise between regularly scheduled annual meetings. Sometimes this right applies only if a shareholder or a group of shareholders own a specified percentage of shares, with 10 percent being the most common. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.

Social Advisory Services Recommendation:

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| § | Vote for proposals that provide shareholders with the ability to call special meetings taking into account: a) shareholders' current right to call special meetings; b) minimum ownership threshold necessary to call special meetings (10% preferred); c) the inclusion of exclusionary or prohibitive language; d) investor ownership structure; and e) shareholder support of and management's response to previous shareholder proposals.  |

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| § | Vote against proposals to restrict or prohibit shareholders' ability to call special meetings.  |

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Shareholder Ability to Act by Written Consent

Consent solicitations allow shareholders to vote on and respond to shareholder and management proposals by mail without having to act at a physical meeting. A consent card is sent by mail for shareholder approval and only requires a signature for action. Some corporate bylaws require supermajority votes for consents while at others, standard annual meeting rules apply. Shareholders may lose the ability to remove directors, initiate a shareholder resolution, or respond to a beneficial offer without having to wait for the next scheduled meeting if they are unable to act at a special meeting of their own calling.

Social Advisory Services Recommendation:

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| § | Generally vote against proposals to restrict or prohibit shareholders' ability to take action by written consent.  |

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| § | Vote for proposals to allow or facilitate shareholder action by written consent, taking into consideration: a) shareholders' current right to act by written consent; b) consent threshold; c) the inclusion of exclusionary or prohibitive language; d) Investor ownership structure; and e) shareholder support of and management's response to previous shareholder proposals.  |

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|:---|:---|
| § | Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions; a) an unfettered**<sup>14</sup>** right for shareholders to call special meetings at a 10 percent threshold; b) a majority vote standard in uncontested director elections; c) no non-shareholder-approved pill, and; d) an annually elected board.  |

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Advance Notice Requirements for Shareholder Proposals/Nominations

In 2008, the Delaware courts handed down two decisions, which, read together, indicate a judicial move toward a narrower interpretation of companies' advance notice bylaws. These recent court decisions have encouraged companies to take a closer look at their bylaw provisions to ensure that broad language does not provide loopholes for activist investors. Specifically, companies are including language designed to provide more detailed advance notice provisions and to ensure full disclosure of economic and voting interests in a shareholder's notice of proposals, including derivatives and hedged positions.

**Social Advisory Services Recommendation:** Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/ nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120 day window).The submittal window is the period under which shareholders must file their proposals/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

<sup>14</sup> "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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Fair Price Provisions

Fair price provisions were originally designed to specifically defend against the most coercive of takeover devises, the two-tiered, front-end loaded tender offer. In such a hostile takeover, the bidder offers cash for enough shares to gain control of the target. At the same time the acquirer states that once control has been obtained, the target's remaining shares will be purchased with cash, cash and securities or only securities. Since the payment offered for the remaining stock is, by design less valuable than the original offer for the controlling shares, shareholders are forced to sell out early to maximize their value. Standard fair price provisions require that, absent board or shareholder approval of the acquisition, the bidder must pay the remaining shareholders the same price for their shares that brought control.

Social Advisory Services Recommendation:

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| § | Vote case-by-case on proposals to adopt fair price provisions evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.  |

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| § | Generally, vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.  |

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Greenmail

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of shares, the practice discriminates against most shareholders. This transferred cash, absent the greenmail payment, could be put to much better use for reinvestment in the company, payment of dividends, or to fund a public share repurchase program.

Social Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to adopt antigreenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.  |

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§ Review on a case-by-case basis antigreenmail proposals when they are bundled with other charter or bylaw amendments.

Confidential Voting

Confidential voting, or voting by secret ballot, is one of the key structural issues in the proxy system. It ensures that all votes are based on the merits of proposals and cast in the best interests of fiduciary clients and pension plan beneficiaries. In a confidential voting system, only vote tabulators and inspectors of election may examine individual proxies and ballots; management and shareholders are given only vote totals. In an open voting system, management can determine who has voted against its nominees or proposals and then re-solicit those votes before the final vote count. As a result, shareholders can be pressured to vote with management at companies with which they maintain, or would like to establish, a business relationship. Confidential voting also protects employee shareholders from retaliation. Shares held by employee stock ownership plans, for example, are important votes that are typically voted by employees.

**Social Advisory Services Recommendation:** Vote for management proposals to adopt confidential voting.

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Control Share Acquisition Provisions

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

Social Advisory Services Recommendation:

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|:---|:---|
| § | Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.  |

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| § | Vote against proposals to amend the charter to include control share acquisition provisions.  |

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|:---|:---|
| § | Vote for proposals to restore voting rights to the control shares.  |

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Control Share Cash-Out Provisions

Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

**Social Advisory Services Recommendation:** Vote for proposals to opt out of control share cash-out statutes.

Disgorgement Provisions

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

**Social Advisory Services Recommendation:** Vote for proposals to opt out of state disgorgement provisions.

State Takeover Statutes

**Social Advisory Services Recommendation:** Vote case-by-case on proposals to opt in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freezeout provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, antigreenmail provisions, and disgorgement provisions).

Vote for opting into stakeholder protection statutes if they provide comprehensive protections for employees and community stakeholders. Social Advisory Services would be less supportive of takeover statutes that only serve to protect incumbent management from accountability to shareholders and which negatively influence shareholder value.

Freeze-Out Provisions

Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

**Social Advisory Services Recommendation:** Vote for proposals to opt out of state freeze-out provisions.

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Reincorporation Proposals

**Social Advisory Services Recommendation:** Vote case-by-case on proposals to change a company's state of incorporation giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation;

§ Comparison of corporation laws of original state and destination state.

Reincorporations into "tax havens" will be given special consideration.

While a firm's country of incorporation will remain the primary basis for evaluating companies, Social Advisory Services will generally apply U.S. policies to the extent possible with respect to issuers that file DEF 14As, 10-K annual reports, and 10-Q quarterly reports, and are thus considered domestic issuers by the U.S. Securities and Exchange Commission (SEC). Corporations that have reincorporated outside the U.S. have found themselves subject to a combination of governance regulations and best practice standards that may not be entirely compatible with an evaluation framework based solely on country of incorporation.

Amend Bylaws without Shareholder Consent

**Social Advisory Services Recommendation:** Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote for proposals giving the board the ability to amend the bylaws in addition to shareholders.

Shareholder Litigation Rights

Federal Forum Selection Provisions

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

**Social Advisory Services Recommendation:** Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the <u>Unilateral Bylaw/Charter Amendments</u> policy.

Exclusive Forum Provisions for State Law Matters

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

**Social Advisory Services Recommendation:** Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

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For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

§ The company's stated rationale for adopting such a provision;

§ Disclosure of past harm from duplicative shareholder lawsuits in more than one forum;

§ The breadth of application of the charter or bylaw provision, including the types of lawsuits to which it would apply and the definition of key terms; and

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|:---|:---|
| § | Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the charter or bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections.  |

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Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the <u>Unilateral Bylaw/Charter Amendments</u> policy.

Fee Shifting

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

**Social Advisory Services Recommendation:** Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the Unilateral Bylaw/Charter Amendments policy.

Takeover Defenses and Shareholder Rights-Related Shareholder Proposals

Shareholder Proposals to put Pill to a Vote and/or Adopt a Pill Policy

**Social Advisory Services Recommendation:** Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: (1) a shareholder approved poison pill in place; or(2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

§ Shareholders have approved the adoption of the plan; or

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|:---|:---|
| § | The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e., the "fiduciary out" provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.  |

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If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

Reduce Supermajority Vote Requirements

Supermajority provisions violate the principle that a simple majority of voting shares should be all that is necessary to effect change regarding a company.

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Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to lower supermajority shareholder vote requirements for charter and bylaw amendments.  |

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| § | Vote for shareholder proposals to lower supermajority shareholder vote requirements for mergers and other significant business combinations.  |

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Remove Antitakeover Provisions

There are numerous antitakeover mechanisms available to corporations that can make takeovers prohibitively expensive for a bidder or at least guarantee that all shareholders are treated equally. The debate over antitakeover devices centers on whether these devices enhance or detract from shareholder value. One theory argues that a company's board, when armed with these takeover protections, may use them as negotiating tools to obtain a higher premium for shareholders. The opposing view maintains that managements afforded such protection are more likely to become entrenched than to actively pursue the best interests of shareholders. Such takeover defenses also serve as obstacles to the normal functioning of the marketplace which, when operating efficiently, should replace incapable and poorly performing managements.

**Social Advisory Services Recommendation:** Vote for shareholder proposals that seek to remove antitakeover provisions.

Reimburse Proxy Solicitation Expenses

**Social Advisory Services Recommendation:** Vote case-by-case on proposals to reimburse proxy solicitation expenses. When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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| § | The election of fewer than 50 percent of the directors to be elected is contested in the election;  |

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§ One or more of the dissident's candidates is elected;

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| § | Shareholders are not permitted to cumulate their votes for directors;  |

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§ The election occurred, and the expenses were incurred, after the adoption of this bylaw.

Virtual Shareholder Meetings

**Social Advisory Services Recommendation:** Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only**<sup>15</sup>** meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

<sup>15</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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4. Miscellaneous Governance Provisions

Bundled Proposals

**Social Advisory Services Recommendation:** Review on a case-by-case basis bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances where the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

Adjourn Meeting

Companies may ask shareholders to adjourn a meeting in order to solicit more votes. Generally, shareholders already have enough information to make their vote decisions. Once their votes have been cast, there is no justification for spending more money to continue pressing shareholders for more votes.

Social Advisory Services Recommendation:

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| § | Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.  |

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| § | Vote for proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote against proposals if the wording is too vague or if the proposal includes "other business."  |

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Changing Corporate Name

Proposals to change a company's name are generally routine matters. Generally, the name change reflects a change in corporate direction or the result of a merger agreement.

**Social Advisory Services Recommendation:** Vote for changing the corporate name unless there is compelling evidence that the change would adversely affect shareholder value.

Amend Quorum Requirements

**Social Advisory Services Recommendation:** Vote case-by-case on proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

§ The new quorum threshold requested;

§ The rationale presented for the reduction;

§ The market capitalization of the company (size, inclusion in indices);

§ The company's ownership structure;

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| § | Previous voter turnout or attempts to achieve quorum;  |

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| § | Any provisions or commitments to restore quorum to a majority of shares outstanding, should voter turnout improve sufficiently; and  |

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§ Other factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

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Amend Minor Bylaws

**Social Advisory Services Recommendation:** Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Other Business

Other business proposals are routine items to allow shareholders to raise other issues and discuss them at the meeting. Only issues that may be legally discussed at meetings may be raised under this authority. However, shareholders cannot know the content of these issues so they are generally not supported.

**Social Advisory Services Recommendation:** Generally vote against other business proposals.

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5. Capital Structure

The equity in a corporate enterprise (that is, the residual value of the company's assets after the payment of all debts) belongs to the shareholders. Equity securities may be employed, or manipulated, in a manner that will ultimately enhance or detract from shareholder value. As such, certain actions undertaken by management in relation to a company's capital structure can be of considerable significance to shareholders. Changes in capitalization usually require shareholder approval or ratification.

Common Stock Authorization

State statutes and stock exchanges require shareholder approval for increases in the number of common shares. Corporations increase their supply of common stock for a variety of ordinary business purposes: raising new capital, funding stock compensation programs, business acquisitions, and implementation of stock splits or payment of stock dividends.

General Authorization Requests

Social Advisory Services Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes:

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|:---|:---|
| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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Specific Authorization Requests

Social Advisory Services Recommendation: Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Issue Stock for Use with Rights Plan

Social Advisory Services Recommendation: Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder approved shareholder rights plan (poison pill).

Stock Distributions: Splits and Dividends

Social Advisory Services Recommendation: Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in accordance with Social Advisory Services' Common Stock Authorization policy.

Reverse Stock Splits

Reverse splits exchange multiple shares for a lesser amount to increase share price. Increasing share price is sometimes necessary to restore a company's share price to a level that will allow it to be traded on the national stock exchanges. In addition, some brokerage houses have a policy of not monitoring or investing in very low priced shares. Reverse stock splits help maintain stock liquidity.

Social Advisory Services Recommendation: Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with Social Advisory Services' Common Stock Authorization policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting;

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

Preferred Stock Authorization

Preferred stock is an equity security which has certain features similar to debt instruments, such as fixed dividend payments, seniority of claims to common stock, and in most cases no voting rights. The terms of blank check preferred stock give the board of directors the power to issue shares of preferred stock at their discretion—with voting rights,

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conversion, distribution and other rights to be determined by the board at time of issue. Blank check preferred stock can be used for sound corporate purposes but could be used as a device to thwart hostile takeovers without shareholder approval.

General Authorization Requests

Social Advisory Services Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate services:

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|:---|:---|
| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

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|:---|:---|
| § | If no preferred shares are currently issued and outstanding, vote against the request, unless the company discloses a specific use for the shares.  |

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Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ If the shares requested are blank check preferred shares that can be used for antitakeover purposes;<sup>16</sup>

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|:---|:---|
| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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|:---|:---|
| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they're convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

<sup>16</sup> ****To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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Specific Authorization Requests

Social Advisory Services Recommendation: Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Blank Check Preferred Stock

Social Advisory Services Recommendation:

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| § | Vote against proposals that would authorize the creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights ("blank check" preferred stock).  |

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| § | Vote against proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose.  |

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|:---|:---|
| § | Vote for proposals to create "declawed" blank check preferred stock (stock that cannot be used as a takeover defense).  |

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|:---|:---|
| § | Vote for requests to require shareholder approval for blank check authorizations.  |

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Adjustments to Par Value of Common Stock

Stock that has a fixed per share value that is on its certificate is called par value stock. The purpose of par value stock is to establish the maximum responsibility of a stockholder in the event that a corporation becomes insolvent. Proposals to reduce par value come from certain state level requirements for regulated industries such as banks, and other legal requirements relating to the payment of dividends.

Social Advisory Services Recommendation:

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| § | Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.  |

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| § | Vote for management proposals to eliminate par value.  |

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Unequal Voting Rights/Dual Class Structure

Incumbent managers use unequal voting rights with the voting rights of their common shares superior to other shareholders in order to concentrate their power and insulate themselves from the wishes of the majority of shareholders. Dual class exchange offers involve a transfer of voting rights from one group of shareholders to another group of shareholders typically through the payment of a preferential dividend. A dual class recapitalization also establishes two classes of common stock with unequal voting rights, but initially involves an equal distribution of preferential and inferior voting shares to current shareholders.

Social Advisory Services Recommendation: Generally vote against proposals to create a new class of common stock unless:

§ The company discloses a compelling rationale for the dual-class capital structure, including: a) the company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or b) the new class of shares will be transitory;

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§ The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term;

§ The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.

Preemptive Rights

Preemptive rights permit shareholders to share proportionately in any new issues of stock of the same class. These rights guarantee existing shareholders the first opportunity to purchase shares of new issues of stock in the same class as their own and in the same proportion. The absence of these rights could cause stockholders' interest in a company to be reduced by the sale of additional shares without their knowledge and at prices unfavorable to them. Preemptive rights, however, can make it difficult for corporations to issue large blocks of stock for general corporate purposes. Both corporations and shareholders benefit when corporations are able to arrange issues without preemptive rights that do not result in a substantial transfer of control.

Social Advisory Services Recommendation: Review on a case-by-case basis proposals to create or abolish preemptive rights. In evaluating proposals on preemptive rights, we look at the size of a company, the characteristics of its shareholder base and the liquidity of the stock.

Debt Restructurings

Proposals to increase common and/or preferred shares and to issue shares as part of a debt-restructuring plan will be analyzed considering the following issues:

§ *Dilution*: How much will the ownership interest of existing shareholders be reduced, and how extreme will dilution to any future earnings be?

§ *Change in Control*: Will the transaction result in a change in control/management at the company? Are board and committee seats guaranteed? Do standstill provisions and voting agreements exist? Is veto power over certain corporate actions in place?

§ *Financial Issues*: company's financial situation, degree of need for capital, use of proceeds, and effect of the financing on the company's cost of capital;

§ *Terms of the offer*: discount/premium in purchase price to investor including any fairness opinion, termination penalties and exit strategy;

§ *Conflict of interest*: arm's length transactions and managerial incentives;

§ *Management's efforts to pursue other alternatives.*

Social Advisory Services Recommendation:

§ Review on a case-by-case basis proposals regarding debt restructurings.

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|:---|:---|
| § | Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.  |

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Share Repurchase Programs

Social Advisory Services Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail,

§ The use of buybacks to inappropriately manipulate incentive compensation metrics,

§ Threats to the company's long-term viability, or

§ Other company-specific factors as warranted.

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Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Conversion of Securities

Social Advisory Services Recommendation: Vote case-by-case on proposals regarding conversion of securities, taking into account the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Recapitalization

Social Advisory Services Recommendation: Vote case-by-case on recapitalizations (reclassifications of securities), taking into account:

§ Whether the capital structure is simplified;

§ Liquidity is enhanced;

§ Fairness of conversion terms;

§ Impact on voting power and dividends;

§ Reasons for the reclassification;

§ Conflicts of interest;

§ Other alternatives considered.

Tracking Stock

Social Advisory Services Recommendation: Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

§ Adverse governance changes;

§ Excessive increases in authorized capital stock;

§ Unfair method of distribution;

§ Diminution of voting rights;

§ Adverse conversion features;

§ Negative impact on stock option plans;

§ Alternatives such as spin-offs.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

Social Advisory Services Recommendation: For U.S. domestic issuers incorporated outside the U.S. and listed <u>solely</u> on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

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6. Executive and Director Compensation

The global financial crisis resulted in significant erosion of shareholder value and highlighted the need for greater assurance that executive compensation is principally performance-based, fair, reasonable, and not designed in a manner that would incentivize excessive risk-taking by managements. The financial crisis raised questions about the role of pay incentives in influencing executive behavior and motivating inappropriate or excessive risk-taking that could threaten a corporation's long-term viability. The safety lapses that led to the disastrous explosions at BP's Deepwater Horizon oil rig and Massey Energy's Upper Big Branch mine, and the resulting unprecedented losses in shareholder value; a) underscore the importance of incorporating meaningful economic incentives around social and environmental considerations in compensation program design, and b) exemplify the costly liabilities of failing to do so.

Evolving disclosure requirements have opened a wider window into compensation practices and processes, giving shareholders more opportunity and responsibility to ensure that pay is designed to create and sustain value. Companies in the U.S. are now required to evaluate and discuss potential risks arising from misguided or misaligned compensation programs. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires advisory shareholder votes on executive compensation (management "say on pay"), an advisory vote on the frequency of say on pay, as well as a shareholder advisory vote on golden parachute compensation. The advent of "say on pay" votes for shareholders in the U.S. has provided a new communication mechanism and impetus for constructive engagement between shareholders and managers/directors on pay issues.

The socially responsible investing community contends that corporations should be held accountable for their actions and decisions, including those around executive compensation. Social Advisory Services believes that executive pay programs should be fair, competitive, reasonable, and create appropriate incentives, and that pay for performance should be a central tenet in executive compensation philosophy. Most investors expect corporations to adhere to certain best practice pay considerations in designing and administering executive and director compensation programs, including:

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| § | *Appropriate pay-for-performance alignment with emphasis on long-term shareholder value:* executive pay practices must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. Evaluating appropriate alignment of pay incentives with shareholder value creation includes taking into consideration, among other factors, the link between pay and performance, the mix between fixed and variable pay, equity-based plan costs, and performance goals - including goals tied to social and environmental considerations.  |

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| § | *Avoiding arrangements that risk "pay for failure":* this includes assessing the appropriateness of long or indefinite contracts, excessive severance packages, guaranteed compensation, and practices or policies that fail to adequately mitigate against or address environmental, social and governance failures.  |

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| § | *Independent and effective compensation committees:* oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed) should be promoted.  |

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§ *Clear and comprehensive compensation disclosures:* shareholders expect companies to provide informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly.

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| § | *Avoiding inappropriate pay to non-executive directors:* compensation to outside directors should not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance. At the market level, this may incorporate a variety of generally accepted best practices.  |

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A non-exhaustive list of best pay practices includes:

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| § | *Employment contracts:* Companies should enter into employment contracts under limited circumstances for a short time period (e.g., new executive hires for a three-year contract) for limited executives. The contracts should not have automatic renewal feature and should have a specified termination date.  |

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| § | *Severance agreements:* Severance provisions should not be so appealing that it becomes an incentive for the executive to be terminated. Severance provisions should exclude excise tax gross-up. The severance formula should be reasonable and not overly generous to the executive (e.g., severance multiples of 1X, 2X, or 3X and use pro-rated target/average historical bonus and not maximum bonus). Failure to renew employment contract, termination under questionable events, or poor performance should not be considered as appropriate reasons for severance payments.  |

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| § | *Change-in-control payments:* Change-in-control payments should only be made when there is a significant change in company ownership structure, and when there is a loss of employment or substantial change in job duties associated with the change in company ownership structure ("double-triggered"). Change-in-control provisions should exclude excise tax gross-up and eliminate the acceleration of vesting of equity awards upon a change in control unless provided under a double-trigger scenario. Similarly, change in control provisions in equity plans should be double-triggered. A change in control event should not result in an acceleration of vesting of all unvested stock options or removal of vesting/performance requirements on restricted stock/performance shares, unless there is a loss of employment or substantial change in job duties.  |

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| § | *Supplemental executive retirement plans (SERPs):* SERPS should not include sweeteners that can increase the SERP value significantly or even exponentially, such as additional years of service credited for pension calculation, inclusion of variable pay (e.g. bonuses and equity awards) into the formula. Pension formula should not include extraordinary annual bonuses paid close to retirement years, and should be based on the average, not the maximum level of compensation earned.  |

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§ *Deferred compensation:* Above-market returns or guaranteed minimum returns should not be applied on deferred compensation.

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| § | *Disclosure practices:* The Compensation Discussion & Analysis should be written in plain English, with as little "legalese" as possible and formatted using section headers, bulleted lists, tables, and charts where possible to ease reader comprehension. Ultimately, the document should provide detail and rationale regarding compensation, strategy, pay mix, goals/metrics, challenges, competition and pay for performance linkage, etc. in a narrative fashion.  |

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| § | *Responsible use of company stock:* Companies should adopt policies that prohibit executives from speculating in company's stock or using company stock in hedging activities, such as "cashless" collars, forward sales, equity swaps or other similar arrangements. Such behavior undermines the ultimate alignment with long-term shareholders' interests. In addition, the policy should prohibit or discourage the use of company stock as collateral for margin loans, to avoid any potential sudden stock sales (required upon margin calls), that could have a negative impact on the company's stock price.  |

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| § | *Long-term focus:* Executive compensation programs should be designed to support companies' long-term strategic goals. A short-term focus on performance does not necessarily create sustainable shareholder value, since long-term goals may be sacrificed to achieve short-term expectations. Compensation programs embedding a long-term focus with respect to company goals better align with the long-term interests of shareholders. Granting stock options and restricted stock to executives that vest in five years do not necessarily provide a long-term focus, as executives can sell the company shares once they vest. However, requiring senior executives to hold company stock until they retire can encourage a long-term focus on company performance.  |

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Criteria for Evaluating Executive Pay

Pay-for-Performance Evaluation

Social Advisory Services conducts a five-part pay analysis to evaluate the degree of alignment between the CEO's pay with the company's performance over a sustained period. From a shareholders' perspective, performance is predominantly gauged by the company's stock performance over time. Even when financial, non-financial or operational measures are utilized in incentive awards, the achievement related to these measures should ultimately translate into superior shareholder returns in the long-term. With respect to companies in the Russell 3000 or Russel 3000E Indices**<sup>17</sup>**, this analysis considers the following:

Pay-for-Performance Elements

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| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period,**<sup>18</sup>** and the rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period  |

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| § | Absolute Alignment: The absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – *i.e.*, the difference between the trend in annual pay changes and the trend in annualized TSR during the period.**<sup>19</sup>**  |

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§ Equity Pay Mix: The ratio of the CEO's performance- vs. time-based equity awards.

Pay Equity (Quantum) Elements

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| § | Multiple of Median: The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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| § | Internal Pay Disparity: The multiple of the CEO's total pay relative to other named executive officers (NEOs) – *i.e.*, an excessive differential between CEO total pay and that of the next highest-paid NEO as well as CEO total pay relative to the average NEO pay.  |

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If the above pay-for-performance analysis demonstrates unsatisfactory long-term pay-for-performance alignment or, in the case of non-Russell 3000 index companies, misaligned pay and performance are otherwise suggested, the following qualitative factors will be evaluated to determine how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance-based compensation to overall compensation, including whether any relevant social or environmental factors are a component of performance-contingent pay elements;

§ The presence of significant environmental, social or governance (ESG) controversies that have the potential to pose material risks to the company and its shareholders;

§ Any downward discretion applied to executive compensation on the basis of a failure to achieve performance goals, including ESG performance objectives;

§ The completeness of disclosure and rigor of performance goals;

§ The company's peer group benchmarking practices;

§ Actual results of financial/non-financial and operational metrics, such as growth in revenue, profit, cash flow, workplace safety, environmental performance, etc., both absolute and relative to peers;

§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

<sup>17</sup> The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

<sup>18</sup> The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group and company's selected peers' GICS industry group with size constraints, via a process designed to select peers that are closest to the subject company in terms of revenue/assets and industry and also within a market cap bucket that is reflective of the company's.

<sup>19</sup> Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

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§ Realizable pay compared to grant pay; and

§ Any other factors deemed relevant.

Problematic Pay Practices

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

§ Problematic practices related to non-performance-based compensation elements;

§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

§ Repricing or replacing of underwater stock options/SARs without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);

§ Extraordinary perquisites or tax gross-ups);

§ New or materially amended agreements that provide for:

§ Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus);

§ CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition;

§ CIC excise tax gross-up entitlements (including "modified" gross-ups);

§ Multi-year guaranteed awards that are not at risk due to rigorous performance conditions;

§ Liberal CIC definition combined with any single-trigger CIC benefits;

§ Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason);

§ E&S Incentives: A lack of any LTI and STI performance metrics and/or a lack of disclosure on LTI and STI performance metrics related to E&S criteria.

§ Any other provision or practice deemed to be egregious and present a significant risk to investors.

The above examples are not an exhaustive list. Please refer to the U.S. Compensation Policies FAQ document for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

Incentives that may Motivate Excessive Risk-Taking

Assess company policies and disclosure related to compensation that could incentivize excessive risk-taking, for example:

§ Multi-year guaranteed bonuses;

§ A single or common performance metric used for short- and long-term plans;

§ Lucrative severance packages;

§ High pay opportunities relative to industry peers;

§ Disproportionate supplemental pensions;

§ Mega annual equity grants that provide unlimited upside with no downside risk.

Factors that potentially mitigate the impact of risky incentives include rigorous claw-back provisions and robust stock ownership/holding guidelines.

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Options Backdating

The following factors should be examined on a case-by-case basis to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud, as well as those instances in which companies that subsequently took corrective action. Cases where companies have committed fraud are considered most egregious.

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

§ Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants;

§ Adoption of a grant policy that prohibits backdating, and creates a fixed grant schedule or window period for equity grants in the future.

Board Communications and Responsiveness

Consider the following factors case-by-case when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

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| § | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Advisory Votes on Executive Compensation – Management Say-on-Pay Proposals

The Dodd-Frank Act mandates advisory votes on executive compensation (Say on Pay or "SOP") for a proxy or consent or authorization for an annual or other meeting of the shareholders that includes required SEC compensation disclosures. This non-binding shareholder vote on compensation must be included in a proxy or consent or authorization at least once every three years.

In general, the SOP ballot item is the primary focus of voting on executive pay practices – dissatisfaction with compensation practices can be expressed by voting against the SOP proposal rather than voting against or withhold from the compensation committee. However, if there is no SOP on the ballot, then the negative vote will apply to members of the compensation committee. In addition, in egregious cases, or if the board fails to respond to concerns raised by a prior SOP proposal, then Social Advisory Services will recommend a vote against or withhold votes from compensation committee members (or, if the full board is deemed accountable, all directors). If the negative factors involve equity-based compensation, then a vote against an equity-based plan proposal presented for shareholder approval may be appropriate. In evaluating SOP proposals, Social Advisory Services will also assess to what degree social and environmental considerations are incorporated into compensation programs and executive pay decision-making – to the extent that proxy statement Compensation Discussion and Analysis (CD&A) disclosures permit.

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Social Advisory Services Recommendation: Evaluate executive pay and practices, as well as certain aspects of outside director compensation on a case-by-case basis.

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| § | Vote against management Say on Pay proposals if:  |

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§ There is a misalignment between CEO pay and company performance (pay-for-performance);

§ The company maintains problematic pay practices;

§ The board exhibits a significant level of poor communication and responsiveness to shareholders.

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| § | Vote against or withhold from the members of the compensation committee and potentially the full board if:  |

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| § | There is no SOP on the ballot, and an against vote on an SOP is warranted due to pay-for-performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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| § | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast;  |

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§ The company has recently practiced or approved problematic pay practices, including option repricing or option backdating; or

§ The situation is egregious.

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| § | Vote against an equity plan on the ballot if:  |

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§ A pay for performance misalignment exists, and a significant portion of the CEO's misaligned pay is attributed to non-performance-based equity awards, taking into consideration:

§ Magnitude of pay misalignment;

§ Contribution of non-performance-based equity grants to overall pay; and

§ The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer (NEO) level.

Frequency of Advisory Vote on Executive Compensation – Management Say on Pay

The Dodd-Frank Act, in addition to requiring advisory votes on compensation (SOP), requires that each proxy for the first annual or other meeting of the shareholders (that includes required SEC compensation disclosures) occurring after Jan. 21, 2011, include an advisory voting item to determine whether, going forward, the "say on pay" vote by shareholders to approve compensation should occur every one, two, or three years.

Social Advisory Services will recommend a vote for annual advisory votes on compensation. The SOP is at its essence a communication vehicle, and communication is most useful when it is received in a consistent and timely manner. Social Advisory Services supports an annual SOP vote for many of the same reasons it supports annual director elections rather than a classified board structure: because this provides the highest level of accountability and direct communication by enabling the MSOP vote to correspond to the majority of the information presented in the accompanying proxy statement for the applicable shareholders' meeting. Having SOP votes every two or three years, covering all actions occurring between the votes, would make it difficult to create the meaningful and coherent communication that the votes are intended to provide. Under triennial elections, for example, a company would not know whether the shareholder vote references the compensation year being discussed or a previous year, making it more difficult to understand the implications of the vote.

Social Advisory Services Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Advisory Vote on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

This is a proxy item regarding specific advisory votes on "golden parachute" arrangements for Named Executive Officers (NEOs) that is required under The Dodd-Frank Wall Street Reform and Consumer Protection Act. Social Advisory Services places particular focus on severance packages that provide inappropriate windfalls and cover certain tax liabilities of executives.

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Social Advisory Services Recommendation: Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers rather than focusing primarily on new or extended arrangements.

Features that may result in an against recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

§ Single- or modified-single-trigger cash severance;

§ Single-trigger acceleration of unvested equity awards;

§ Excessive cash severance (>3x base salary and bonus);

§ Excise tax gross-ups triggered and payable (as opposed to a provision to provide excise tax gross-ups);

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| § | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or  |

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§ Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or

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| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote.  |

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Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation ("management "say on pay"), Social Advisory Services will evaluate the "say on pay" proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity-Based Incentive Plans

As executive pay levels continue to soar, non-salary compensation remains one of the most sensitive and visible corporate governance issues. The financial crisis raised questions about the role of pay incentives in influencing executive behavior, including their appetite for risk-taking. Although shareholders may have little say about how much the CEO is paid in salary and bonus, they do have a major voice in approving stock incentive plans.

Stock-based plans can transfer significant amounts of wealth from shareholders to executives and directors and are among the most economically significant issues that shareholders are entitled to vote on. Rightly, the cost of these plans must be in line with the anticipated benefits to shareholders. Clearly, reasonable limits must be set on dilution as well as administrative authority. In addition, shareholders must consider the necessity of the various pay programs and examine the appropriateness of award types. Consequently, the pros and cons of these proposals necessitate a case-by-case evaluation.

Factors that increase the cost (or have the potential to increase the cost) of plans to shareholders include: excessive dilution, options awarded at below-market discounts, permissive policies on pyramiding, restricted stock giveaways that reward tenure rather than results, sales of shares on concessionary terms, blank-check authority for administering committees, option repricing or option replacements, accelerated vesting of awards in the event of defined changes in corporate control, stand-alone stock appreciation rights, loans or other forms of assistance, or evidence of improvident award policies.

Positive plan features that can offset costly features include: plans with modest dilution potential (i.e. appreciably below double-digit levels), bars to pyramiding and related safeguards for investor interests. Also favorable are performance programs with a duration of two or more years, bonus schemes that pay off in non-dilutive, fully deductible cash, 401K and other thrift or profit sharing plans, and tax-favored employee stock purchase plans. In general, we believe that stock plans should afford incentives, not sure-fire, risk-free rewards.

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Social Advisory Services Recommendation: Vote case-by-case on equity-based compensation plans**<sup>20</sup>** depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "equity plan scorecard" (EPSC) approach with three pillars:

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| § | **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:  |

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§ SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and

§ SVT based only on new shares requested plus shares remaining for future grants.

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| § | **Plan Features:**  |

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§ Automatic single-triggered award vesting upon a change in control (CIC);

§ Discretionary vesting authority;

§ Liberal share recycling on various award types;

§ Lack of minimum vesting period for grants made under the plan;

§ Dividends payable prior to award vesting.

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| § | **Grant Practices:**  |

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§ The company's three-year burn rate relative to its industry/market cap peers;

§ Vesting requirements in most recent CEO equity grants (3-year look-back);

§ The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years);

§ The proportion of the CEO's most recent equity grants/awards subject to performance conditions;

§ Whether the company maintains a claw-back policy;

§ Whether the company has established post exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following apply:

§ Awards may vest in connection with a liberal change-of-control definition;

§ The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies — or by not prohibiting it when the company has a history of repricing – for non-listed companies);

§ The plan is a vehicle for problematic pay practices or a pay-for-performance disconnect;

§ The plan contains an evergreen (automatic share replenishment) feature; or

§ Any other plan features are determined to have a significant negative impact on shareholder interests.

Each of these factors is described below.

Generally vote against equity plans if the cost is unreasonable. For non-employee director plans, vote for the plan if certain factors are met.

FURTHER INFORMATION ON CERTAIN EPSC FACTORS:

Shareholder Value Transfer (SVT)

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed,

<sup>20</sup> Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors.

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shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full value awards), the assumption is made that all awards to be granted will be the most expensive types. See discussion of specific types of awards.

Except for proposals subject to Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size and cash compensation into the industry cap equations to arrive at the company's benchmark.**<sup>21</sup>** 

Repricing Provisions

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" includes the ability to do any of the following:

§ Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs;

§ Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs.

§ The cancellation of underwater options in exchange for stock awards; or

§ Cash buyouts of underwater options.

While the above cover most types of repricing, Social Advisory Services may view other provisions as akin to repricing depending on the facts and circumstances.

Also, vote against or withhold from members of the compensation committee who approved repricing (as defined above or otherwise determined by Social Advisory Services), without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans if the company has a history of repricing without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Pay-for-Performance Misalignment – Application to Equity Plans

If the equity plan on the ballot is a vehicle for problematic pay practices, vote against the plan.

Social Advisory Services may recommend a vote against the equity plan if the plan is determined to be a vehicle for pay-for-performance misalignment. Considerations in voting against the equity plan may include, but are not limited to:

§ Severity of the pay-for-performance misalignment;

§ Whether problematic equity grant practices are driving the misalignment; and/or

§ Whether equity plan awards have been heavily concentrated to the CEO and/or the other NEOs.

Three-Year Value Adjusted Burn Rate

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks will be calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group

<sup>21</sup> For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate will be calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Liberal Definition of Change-in-Control

Generally vote against equity plans if the plan provides for the acceleration of vesting of equity awards even though an actual change in control may not occur. Examples of such a definition could include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

Other Compensation Plans

Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))

Cash bonus plans can be an important part of an executive's overall pay package, along with stock-based plans tied to long-term total shareholder returns. Over the long term, stock prices are an excellent indicator of management performance. However, other factors, such as economic conditions and investor reaction to the stock market in general and certain industries in particular, can greatly impact the company's stock price. As a result, a cash bonus plan can effectively reward individual performance and the achievement of business unit objectives that are independent of short-term market share price fluctuations.

Social Advisory Services Recommendation: Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Addresses administrative features only; or

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| § | Seeks approval for Section 162(m) purposes <u>only</u>, and the plan administering committee consists entirely of independent directors, per Social Advisory Services' Categorization of Directors. Note that if the company is presenting the plan to shareholders for the first time after the company's initial public offering (IPO), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).  |

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Vote against such proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent directors, per Social Advisory Services' Categorization of Directors.

Vote case-by-case on all other proposals to amend <u>cash</u> incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes

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Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

§ If the proposal requests additional shares and/or the amendments may potentially increase the transfer of shareholder value to employees, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments.

§ If the plan is being presented to shareholders for the first time (including after the company's IPO), whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments.

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| § | If there is no request for additional shares and the amendments are not deemed to potentially increase the transfer of shareholder value to employees, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown for informational purposes.  |

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In the first two case-by-case evaluation scenarios, the EPSC evaluation/score is the more heavily weighted consideration.

Employee Stock Purchase Plans (ESPPs)

Employee stock purchase plans enable employees to become shareholders, which gives them a stake in the company's growth. However, purchase plans are beneficial only when they are well balanced and in the best interests of all shareholders. From a shareholder's perspective, plans with offering periods of 27 months or less are preferable. Plans with longer offering periods remove too much of the market risk and could give participants excessive discounts on their stock purchases that are not offered to other shareholders.

Qualified Plans

Qualified employee stock purchase plans qualify for favorable tax treatment under Section 423 of the Internal Revenue Code. Such plans must be broad-based, permitting all full-time employees to participate. Some companies also permit part-time staff to participate. Qualified ESPPs must be expensed under SFAS 123 unless the plan meets the following conditions; a) purchase discount is 5 percent or below; b) all employees can participate in the program; and 3) no look-back feature in the program. Therefore, some companies offer nonqualified ESPPs.

Social Advisory Services Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

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| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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| § | The number of shares allocated to the plan is ten percent or less of the outstanding shares.  |

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Vote against qualified employee stock purchase plans where any of the following apply:

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| § | Purchase price is less than 85 percent of fair market value; or  |

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§ Offering period is greater than 27 months; or

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| § | The number of shares allocated to the plan is more than ten percent of the outstanding shares.  |

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Non-Qualified Plans

For nonqualified ESPPs, companies provide a match to employees' contributions instead of a discount in stock price. Also, limits are placed on employees' contributions. Some companies provide a maximum dollar value for the year and others specify the limits in terms of a percent of base salary, excluding bonus or commissions. For plans that do not qualify under Section 423 of the Internal Revenue Code, a plan participant will not recognize income by participating in the plan, but will recognize ordinary compensation income for federal income tax purposes at the time of the purchase.

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Social Advisory Services Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

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| § | Broad-based participation (i.e., all employees of the company with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);  |

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| § | Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;  |

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| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value;  |

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§ No discount on the stock price on the date of purchase since there is a company matching contribution.

Vote against nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the company matching contribution exceeds 25 percent of employee's contribution, evaluate the cost of the plan against its allowable cap.

Employee Stock Ownership Plans (ESOPs)

An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that makes the employees of a company also owners of stock in that company. The plans are designed to defer a portion of current employee income for retirement purposes.

The primary difference between ESOPs and other employee benefit plans is that ESOPs invest primarily in the securities of the employee's company. In addition, an ESOP must be created for the benefit of non-management level employees and administered by a trust that cannot discriminate in favor of highly paid personnel.

Academic research of the performance of ESOPs in closely held companies found that ESOPs appear to increase overall sales, employment, and sales per employee over what would have been expected absent an ESOP. Studies have also found that companies with an ESOP are also more likely to still be in business several years later, and are more likely to have other retirement oriented benefit plans than comparable non-ESOP companies.

Social Advisory Services Recommendation: Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

Option Exchange Programs/Repricing Options

Social Advisory Services Recommendation: Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

§ Historic trading patterns – the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing – was the stock price decline beyond management's control?

§ Is this a value-for-value exchange?

§ Are surrendered stock options added back to the plan reserve?

§ Option vesting – does the new option vest immediately or is there a black-out period?

§ Term of the option – the term should remain the same as that of the replaced option;

§ Exercise price – should be set at fair market or a premium to market;

§ Participants – executive officers and directors should be excluded.

If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

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In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing. Repricing after a recent decline in stock price triggers additional scrutiny and a potential vote against the proposal. At a minimum, the decline should not have happened within the past year. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

Stock Plans in Lieu of Cash

Social Advisory Services Recommendation:

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| § | Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.  |

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| § | Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.  |

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| § | Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, Social Advisory Services will not make any adjustments to carve out the in-lieu-of cash compensation.  |

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Transfer Stock Option (TSO) Programs

Social Advisory Services Recommendation:

One-time Transfers: Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote case-by-case on one-time transfers. Vote for if:

§ Executive officers and non-employee directors are excluded from participating;

§ Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models;

§ There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

§ Eligibility;

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| § | Vesting;  |

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§ Bid-price;

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§ Term of options;

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| § | Cost of the program and impact of the TSOs on company's total option expense; and  |

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§ Option repricing policy.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

401(k) Employee Benefit Plans

The 401(k) plan is one of the most popular employee benefit plans among U.S. companies. A 401(k) plan is any qualified plan under Section 401(k) of the Internal Revenue Code that contains a cash or deferred arrangement. In its simplest form, an employee can elect to have a portion of his salary invested in a 401(k) plan before any income taxes are assessed. The money can only be withdrawn before retirement under penalty. However, because the money contributed to the plan is withdrawn before taxes (reducing the employee's income tax), a properly planned 401(k) plan will enable an employee to make larger contributions to a 401(k) plan than to a savings plan, and still take the same amount home.

Social Advisory Services Recommendation: Vote for proposals to implement a 401(k) savings plan for employees.

Severance Agreements for Executives/Golden Parachutes

Social Advisory Services Recommendation: Vote on a case-by-case basis on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

§ The triggering mechanism should be beyond the control of management;

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| § | The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs;  |

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§ Change-in-control payments should be double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

Director Compensation

The board's legal charge of fulfilling its fiduciary obligations of loyalty and care is put to the ultimate test through the task of the board setting its own compensation. Directors themselves oversee the process for evaluating board performance and establishing pay packages for board members.

Shareholders provide limited oversight of directors by electing individuals who are primarily selected by the board, or a board nominating committee, and by voting on stock-based plans for directors designed by the board compensation committee. Additionally, shareholders may submit and vote on their own resolutions seeking to limit or restructure director pay. While the cost of compensating non-employee directors is small in absolute terms, compared to the cost of compensating executives, it is still a critical aspect of a company's overall corporate governance structure.

Overall, director pay levels are rising in part because of the new forms of pay in use at many companies, as well as because of the increased responsibilities arising from the 2002 Sarbanes-Oxley Act requirements. In addition to an annual retainer fee, many companies also pay fees for attending board and committee meetings, fees for chairing a committee, or a retainer fee for chairing a committee.

Director compensation packages should be designed to provide value to directors for their contribution. Given that many directors are high-level executives whose personal income levels are generally high, cash compensation may hold little

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appeal. Stock-based incentives on the other hand reinforce the directors' role of protecting and enhancing shareholder value. The stock-based component of director compensation should be large enough to ensure that when faced with a situation in which the interests of shareholders and management differ, the board will have a financial incentive to think as a shareholder. Additionally, many companies have instituted equity ownership programs for directors. Social Advisory Services recommends that directors receive stock grants equal to three times of their annual retainer, as it is a reasonable starting point for companies of all sizes and industries. A vesting schedule for director grants helps directors to meet the stock ownership guidelines and maintains their long-term interests in the firm.

Director compensation packages should also be designed to attract and retain competent directors who are willing to risk becoming a defendant in a lawsuit and suffer potentially adverse publicity if the company runs into financial difficulties or is mismanaged.

Shareholder Ratification of Director Pay Programs

Social Advisory Services Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Equity Plans for Non-Employee Directors

Stock-based plans may take on a variety of forms including: grants of stock or options, including: discretionary grants, formula based grants, and one-time awards; stock-based awards in lieu of all or some portion of the cash retainer and/or other fees; and deferred stock plans allowing payment of retainer and/or meeting fees to be taken in stock, the payment of which is postponed to some future time, typically retirement or termination of directorship.

Social Advisory Services Recommendation: Vote case-by-case on compensation plans for non-employee directors, based on:

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| § | The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants;  |

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§ The company's three year burn rate relative to its industry/market cap peers; and

§ The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).

On occasion, director stock plans that set aside a relatively small number of shares will exceed the plan cost or burn rate benchmark when combined with employee or executive stock compensation plans. In such cases, vote for the plan if all of the following qualitative factors in the board's compensation are met and disclosed in the proxy statement:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

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§ Director stock ownership guidelines and holding requirement;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites;

§ The quality of disclosure surrounding director compensation.

Outside Director Stock Awards/Options in Lieu of Cash

These proposals seek to pay outside directors a portion of their compensation in stock rather than cash. By doing this, a director's interest may be more closely aligned with those of shareholders.

Social Advisory Services Recommendation: Vote for proposals that seek to pay outside directors a portion of their compensation in stock rather than cash.

Director Retirement Plans

Social Advisory Services Recommendation:

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| § | Vote against retirement plans for non-employee directors.  |

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| § | Vote for shareholder proposals to eliminate retirement plans for non-employee directors.  |

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Shareholder Proposals on Compensation

Increase Disclosure of Executive Compensation

The SEC requires that companies disclose, in their proxy statements, the salaries of the top five corporate executives (who make at least $100,000 a year). Companies also disclose their compensation practices and details of their stock-based compensation plans. While this level of disclosure is helpful, it does not always provide a comprehensive picture of the company's compensation practices. For shareholders to make informed decisions on compensation levels, they need to have clear, concise information at their disposal. Increased disclosure will help ensure that management: (1) has legitimate reasons for setting specific pay levels; and (2) is held accountable for its actions.

Social Advisory Services Recommendation: Vote for shareholder proposals seeking increased disclosure on executive compensation issues including the preparation of a formal report on executive compensation practices and policies.

Limit Executive Compensation

Proposals that seek to limit executive or director compensation usually focus on the absolute dollar figure of the compensation or focus on the ratio of compensation between the executives and the average worker of a specific company. Proponents argue that the exponential growth of executive salaries is not in the best interests of shareholders, especially when that pay is exorbitant when compared to the compensation of other workers.

Social Advisory Services Recommendation:

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| § | Vote for proposals to prepare reports seeking to compare the wages of a company's lowest paid worker to the highest paid workers.  |

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| § | Vote case-by-case on proposals that seek to establish a fixed ratio between the company's lowest paid workers and the highest paid workers.  |

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Stock Ownership Requirements

Corporate directors should own some amount of stock of the companies on which they serve as board members. Stock ownership is a simple method to align the interests of directors with company shareholders. Nevertheless, many highly qualified individuals such as academics and clergy who can offer valuable perspectives in boardrooms may be unable to purchase individual shares of stock. In such a circumstance, the preferred solution is to look at the board nominees individually and take stock ownership into consideration when voting on the merits of each candidate.

Social Advisory Services Recommendation: Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Prohibit/Require Shareholder Approval for Option Repricing

Repricing involves the reduction of the original exercise price of a stock option after the fall in share price. Social Advisory Services does not support repricing since it undermines the incentive purpose of the plan. The use of options as an incentive means that employees must bear the same risks as shareholders in holding these options. Shareholder resolutions calling on companies to abandon the practice of repricing or to submit repricings to a shareholder vote will be supported.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking to limit repricing.  |

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| § | Vote for shareholder proposals asking the company to have option repricings submitted for shareholder ratification.  |

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Severance Agreements/Golden Parachutes

Golden parachutes are designed to protect the employees of a corporation in the event of a change in control. With Golden Parachutes senior level management employees receive a payout during a change in control at usually two to three times base salary.

Social Advisory Services Recommendation: Vote for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts.

Cash Balance Plans

A cash balance plan is a defined benefit plan that treats an earned retirement benefit as if it was a credit from a defined contribution plan, but which provides a stated benefit at the end of its term. Because employer contributions to these plans are credited evenly over the life of a plan, and not based on a seniority formula they may reduce payouts to long-term employees who are currently vested in plans.

Cash-balance pension conversions have undergone congressional and federal agency scrutiny following high-profile EEOC complaints on age discrimination and employee anger at companies like IBM. While significant change is unlikely in the short-tm, business interests were concerned enough that the National Association of Manufacturers and other business lobbies formed a Capitol Hill coalition to preserve the essential features of the plans and to overturn an IRS ruling. Driving the push behind conversions from traditional pension plans to cash-balance plans are the substantial savings that companies generate in the process. Critics point out that these savings are gained at the expense of the most senior employees. Resolutions call on corporate boards to establish a committee of outside directors to prepare a report to shareholders on the potential impact of pension-related proposals now being considered by national policymakers in reaction to the controversy spawned by the plans.

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Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals calling for non-discrimination in retirement benefits.  |

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| § | Vote for shareholder proposals asking a company to give employees the option of electing to participate in either a cash balance plan or in a defined benefit plan.  |

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Performance-Based Equity Awards

Social Advisory Services supports compensating executives at a reasonable rate and believes that executive compensation should be strongly correlated to performance. Social Advisory Services supports equity awards that provide challenging performance objectives and serve to motivate executives to superior performance and as performance-contingent stock options as a significant component of compensation.

Social Advisory Services Recommendation: Vote case-by-case on shareholder proposal requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

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| § | First, vote for shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a "substantial" portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a meaningful premium to be considered performance-based awards.  |

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| § | Second, assess the rigor of the company's performance-based equity program. If the bar set for the performance-based program is too low based on the company's historical or peer group comparison, generally vote for the proposal. Furthermore, if target performance results in an above target payout, vote for the shareholder proposal due to program's poor design. If the company does not disclose the performance metric of the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.  |

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

Pay for Superior Performance

Social Advisory Services Recommendation: Generally vote for shareholder proposals based on a case-by-case analysis that requests the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. The proposal has the following principles:

§ Sets compensation targets for the Plan's annual and long-term incentive pay components at or below the peer group median;

§ Delivers a majority of the Plan's target long-term compensation through performance-vested, not simply time-vested, equity awards;

§ Provides the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the plan;

§ Establishes performance targets for each plan financial metric relative to the performance of the company's peer companies;

§ Limits payment under the annual and performance-vested long-term incentive components of the plan to when the company's performance on its selected financial performance metrics exceeds peer group median performance.

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Consider the following factors in evaluating this proposal:

§ What aspects of the company's annual and long-term equity incentive programs are performance driven?

§ If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates disclosed to shareholders or are they benchmarked against a disclosed peer group?

§ Can shareholders assess the correlation between pay and performance based on the current disclosure?

§ What type of industry and stage of business cycle does the company belong to?

Advisory Vote on Executive Compensation (Say-on-Pay) Shareholder Proposals

Social Advisory Services Recommendation: Generally, vote for shareholder proposals that call for non-binding shareholder ratification of the compensation of the Named Executive Officers and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table.

Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity

Social Advisory Services Recommendation: Generally vote for proposals seeking a policy that prohibits acceleration of the vesting of equity awards to senior executives in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

Vote on a case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment, and eliminating accelerated vesting of unvested equity. The following factors will be taken into regarding this policy:

§ The company's current treatment of equity in change-of-control situations (i.e. is it double triggered, does it allow for the assumption of equity by acquiring company, the treatment of performance shares;

§ Current employment agreements, including potential problematic pay practices such as gross-ups embedded in those agreements.

Tax Gross-up Proposals

Social Advisory Services Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

Compensation Consultants - Disclosure of Board or Company's Utilization

Social Advisory Services Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s) and fees paid.

Golden Coffins/Executive Death Benefits

Social Advisory Services Recommendation: Generally vote for proposals calling companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.

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Recoup Bonuses

Social Advisory Services Recommendation: Vote on a case-by-case on proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that the figures upon which incentive compensation is earned later turn out to have been in error. This is line with the clawback provision in the Troubled Asset Relief Program. Many companies have adopted policies that permit recoupment in cases where fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. The following will be taken into consideration:

§ If the company has adopted a formal recoupment bonus policy;

§ If the company has chronic restatement history or material financial problems;

§ If the company's policy substantially addresses the concerns raised by the proponent.

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

Social Advisory Services Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

Bonus Banking

Social Advisory Services Recommendation: Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

§ The company's past practices regarding equity and cash compensation;

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| § | Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and  |

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§ Whether the company has a rigorous claw-back policy in place.

Hold Equity Past Retirement or for a Significant Period of Time

Social Advisory Services Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans. The following factors will be taken into account:

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| § | The percentage/ratio of net shares required to be retained;  |

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§ The time period required to retain the shares;

§ Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements;

§ Whether the company has any other policies aimed at mitigating risk taking by executives;

§ Executives' actual stock ownership and the degree to which it meets or exceeds the proponent's suggested holding period/retention ratio or the company's existing requirements; and

§ Problematic pay practices, current and past, which may demonstrate a short-term versus long-term focus.

Non-Deductible Compensation

Social Advisory Services Recommendation: Generally vote for proposals seeking disclosure of the extent to which the company paid non-deductible compensation to senior executives due to Internal Revenue Code Section 162(m), while considering the company's existing disclosure practices.

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Pre-Arranged Trading Plans (10b5-1 Plans)

Social Advisory Services Recommendation: Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

§ Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

§ Amendment or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances, as determined by the board;

§ Request that a certain number of days that must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan;

§ Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

§ An executive may not trade in company stock outside the 10b5-1 Plan;

§ Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive.

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7. Mergers and Corporate Restructurings

A merger occurs when one corporation is absorbed into another and ceases to exist. The surviving company gains all the rights, privileges, powers, duties, obligations and liabilities of the merged corporation. The shareholders of the absorbed company receive stock or securities of the surviving company or other consideration as provided by the plan of merger. Mergers, consolidations, share exchanges, and sale of assets are friendly in nature, which is to say that both sides have agreed to the combination or acquisition of assets.

Shareholder approval for an acquiring company is generally not required under state law or stock exchange regulations unless the acquisition is in the form of a stock transaction which would result in the issue of 20 percent or more of the acquirer's outstanding shares or voting power, or unless the two entities involved require that shareholders approve the deal. Under most state laws, however, a target company must submit merger agreements to a shareholder vote. Shareholder approval is required in the formation of a consolidated corporation.

Mergers and Acquisitions

M&A analyses are inherently a balance of competing factors. Bright line rules are difficult if not impossible to apply to a world where every deal is different. Ultimately, the question for shareholders (both of the acquirer and the target) is the following: Is the valuation fair? Shareholders of the acquirer may be concerned that the deal values the target too highly. Shareholders of the target may be concerned that the deal undervalues their interests.

Vote recommendation will be based on primarily an analysis of shareholder value, which itself can be affected by ancillary factors such as the negotiation process. The importance of other factors, including corporate governance and social and environmental considerations however, should not fail to be recognized.

Social Advisory Services Recommendation: Votes on mergers and acquisitions are considered on a case-by-case basis. A review and evaluation of the merits and drawbacks of the proposed transaction is conducted, balancing various and sometimes countervailing factors including:

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| § | *Valuation*: Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction and strategic rationale;  |

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§ *Market reaction*: How has the market responded to the proposed deal? A negative market reaction *should cause closer scrutiny of a deal;*

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| § | *Strategic rationale: Does the deal make sense strategically? From where is the value derived?* Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions;  |

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§ *Negotiations and process*: Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable?

§ *Conflicts of interest*: Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders?

§ *Governance*: Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction?

§ *Stakeholder impact*: Impact on community stakeholders and workforce including impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment etc.

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Corporate Reorganization/Restructuring Plans (Bankruptcy)

The recent financial crisis has placed Chapter 11 bankruptcy reorganizations as a potential alternative for distressed companies. While the number of bankruptcies has risen over the past year as evidenced by many firms, including General Motors and Lehman Brothers, the prevalence of these reorganizations can vary year over year due to, among other things, market conditions and a company's ability to sustain its operations. Additionally, the amount of time that lapses between a particular company's entrance into Chapter 11 and its submission of a plan of reorganization varies significantly depending on the complexity, timing, and jurisdiction of the particular case. These plans are often put to a vote of shareholders (in addition to other interested parties), as required by the Bankruptcy Code.

Social Advisory Services Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an official equity committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization;

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

Social Advisory Services Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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| § | *Valuation*: Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target, if it is a private entity.  |

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§ *Market reaction*: How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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| § | *Deal timing*: A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *Negotiations and process*: What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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| § | *Conflicts of interest*: How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24 month timeframe.  |

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| § | *Voting agreements*: Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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§ *Governance*: What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

§ *Stakeholder Impact*: Impact on community stakeholders and workforce including impact on stakeholders, such as job loss, community lending, equal opportunity, impact on environment etc.

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Special Purpose Acquisition Corporations (SPACs) – Proposals for Extensions

Social Advisory Services Recommendation: Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ *Length of request*: Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquistion process.

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| § | *Pending transaction(s)* <u>or</u> *progression of the acquisition process*: Sometimes an intial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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| § | *Added incentive for non-redeeming shareholders*: Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.  |

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§ *Prior extension requests*: Some SPACs request additional time beyond the extension period sought in prior extension requests.

Spin-offs

Social Advisory Services Recommendation: Votes on spin-offs should be considered on a case-by-case basis depending on the tax and regulatory advantages, planned use of sale proceeds, valuation of spinoff, fairness opinion, benefits to the parent company, conflicts of interest, managerial incentives, corporate governance changes, changes in the capital structure.

Asset Purchases

Social Advisory Services Recommendation: Votes on asset purchase proposals should be made on a case-by-case after considering the purchase price, fairness opinion, financial and strategic benefits, how the deal was negotiated, conflicts of interest, other alternatives for the business, non-completion risk.

Asset Sales

Social Advisory Services Recommendation: Votes on asset sales should be made on a case-by-case basis after considering the impact on the balance sheet/working capital, value received for the asset, potential elimination of diseconomies, anticipated financial and operating benefits, anticipated use of funds, fairness opinion, how the deal was negotiated, and conflicts of interest.

Liquidations

Social Advisory Services Recommendation: Votes on liquidations should be made on a case-by-case basis after reviewing management's efforts to pursue other alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation. Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

Joint Ventures

Social Advisory Services Recommendation: Vote case-by-case on proposals to form joint ventures, taking into account percentage of assets/business contributed, percentage ownership, financial and strategic benefits, governance structure, conflicts of interest, other alternatives and non-completion risk.

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Appraisal Rights

Rights of appraisal provide shareholders who do not approve of the terms of certain corporate transactions the right to demand a judicial review in order to determine the fair value for their shares. The right of appraisal generally applies to mergers, sales of essentially all assets of the corporation, and charter amendments that may have a materially adverse effect on the rights of dissenting shareholders.

Social Advisory Services Recommendation: Vote for proposals to restore, or provide shareholders with, rights of appraisal.

Going Private/Dark Transactions (Leveraged buyouts and Minority Squeeze-outs)

Social Advisory Services Recommendation: Vote case-by-case on going private transactions, taking into account the following: offer price/premium, fairness opinion, how the deal was negotiated, conflicts of interest, other alternatives/offers considered, and non-completion risk.

Vote case-by-case on "going dark" transactions, determining whether the transaction enhances shareholder value by taking into consideration:

§ Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock);

§ Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:

§ Are all shareholders able to participate in the transaction?

§ Will there be a liquid market for remaining shareholders following the transaction?

§ Does the company have strong corporate governance?

§ Will insiders reap the gains of control following the proposed transaction?

§ Does the state of incorporation have laws requiring continued reporting that may benefit shareholders?

Private Placements/Warrants/Convertible Debentures

Social Advisory Services Recommendation: Vote case-by-case on proposals regarding private placements taking into consideration:

§ Dilution to existing shareholders' position.

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| § | The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion.  |

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§ Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; conversion features; termination penalties; exit strategy.

§ The terms of the offer should be weighed against the alternatives of the company and in light of company's financial issues.

§ When evaluating the magnitude of a private placement discount or premium, Social Advisory Services will consider whether it is affected by liquidity, due diligence, control and monitoring issues, capital scarcity, information asymmetry and anticipation of future performance.

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| § | Financial issues include but are not limited to examining the following: a) company's financial situation; b) degree of need for capital; c) use of proceeds; d) effect of the financing on the company's cost of capital; e) current and proposed cash burn rate; and f) going concern viability and the state of the capital and credit markets.  |

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| § | Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives. A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger or sale of part or all of the company.  |

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§ Control issues including: a) Change in management; b) change in control; c) guaranteed board and committee seats; d) standstill provisions; e) voting agreements; f) veto power over certain corporate actions.

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§ Minority versus majority ownership and corresponding minority discount or majority control premium

§ Conflicts of interest

§ Conflicts of interest should be viewed from the perspective of the company and the investor.

§ Were the terms of the transaction negotiated at arm's-length? Are managerial incentives aligned with shareholder interests?

§ Market reaction

§ The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one day impact on the unaffected stock price.

Vote for the private placement if it is expected that the company will file for bankruptcy if the transaction is not approved.

Formation of Holding Company

Social Advisory Services Recommendation:

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| § | Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration: a) the reasons for the change; b) any financial or tax benefits; c) regulatory benefits; d) increases in capital structure; and e) changes to the articles of incorporation or bylaws of the company.  |

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| § | Vote against the formation of a holding company, absent compelling financial reasons to support the transaction, if the transaction would include either: a) increases in common or preferred stock in excess of the allowable maximum; or b) adverse changes in shareholder rights.  |

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Value Maximization Shareholder Proposals

Social Advisory Services Recommendation: Vote case-by-case on shareholder proposals seeking to maximize shareholder value by hiring a financial advisor to explore strategic alternatives, selling the company or liquidating the company and distributing the proceeds to shareholders. These proposals should be evaluated based on the following factors:

§ Prolonged poor performance with no turnaround in sight;

§ Signs of entrenched board and management;

§ Strategic plan in place for improving value;

§ Likelihood of receiving reasonable value in a sale or dissolution;

§ Whether company is actively exploring its strategic options, including retaining a financial advisor.

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8. Social and Environmental Proposals

Socially responsible shareholder resolutions are receiving a great deal more attention from institutional shareholders today than they have in the past. In addition to the moral and ethical considerations intrinsic to many of these proposals, there is a growing recognition of their potential impact on the economic performance of the company. Among the reasons for this change are:

§ The number and variety of shareholder resolutions on social and environmental issues has increased;

§ Many of the sponsors and supporters of these resolutions are large institutional shareholders with significant holdings, and therefore, greater direct influence on the outcomes;

§ The proposals are more sophisticated – better written, more focused, and more sensitive to the feasibility of implementation;

§ Investors now understand that a company's response to social and environmental issues can have serious economic consequences for the company and its shareholders.

Social Advisory Services Recommendation: Generally vote for social and environmental shareholder proposals that promote good corporate citizens while enhancing long-term shareholder and stakeholder value. Vote for disclosure reports that seek additional information particularly when it appears companies have not adequately addressed shareholders' social, workforce, and environmental concerns. In determining vote recommendations on shareholder social, workforce, and environmental proposals, Social Advisory Services will analyze the following factors:

§ Whether the proposal itself is well framed and reasonable;

§ Whether adoption of the proposal would have either a positive or negative impact on the company's short-term or long-term share value;

§ Whether the company's analysis and voting recommendation to shareholders is persuasive;

§ The degree to which the company's stated position on the issues could affect its reputation or sales, or leave it vulnerable to boycott or selective purchasing;

§ Whether the subject of the proposal is best left to the discretion of the board;

§ Whether the issues presented in the proposal are best dealt with through legislation, government regulation, or company-specific action;

§ The company's approach compared with its peers or any industry standard practices for addressing the issue(s) raised by the proposal;

§ Whether the company has already responded in an appropriate or sufficient manner to the issue(s) raised in the proposal;

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's environmental or social practices;

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| § | If the proposal requests increased disclosure or greater transparency, whether sufficient information is publicly available to shareholders and whether it would be unduly burdensome for the company to compile and avail the requested information to shareholders in a more comprehensive or amalgamated fashion;  |

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§ Whether implementation of the proposal would achieve the objectives sought in the proposal.

In general, Social Advisory Services supports proposals that request the company to furnish information helpful to shareholders in evaluating the company's operations. In order to be able to intelligently monitor their investments shareholders often need information best provided by the company in which they have invested. Requests to report such information will merit support. Requests to establish special committees of the board to address broad corporate policy and provide forums for ongoing dialogue on issues including, but not limited to shareholder relations, the environment, human rights, occupational health and safety, and executive compensation, will generally be supported, particularly when they appear to offer a potentially effective method for enhancing shareholder value. We will closely evaluate proposals that ask the company to cease certain actions that the proponent believes are harmful to society or some segment of society with special attention to the company's legal and ethical obligations, its ability to remain profitable, and potential negative publicity if the company fails to honor the request. Social Advisory Services supports shareholder proposals that improve the company's public image, and reduce exposure to liabilities.

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Diversity and Equality

Significant progress has been made in recent years in the advancement of women and racial minorities in the workplace and the establishment of greater protections against discriminatory practices in the workplace. In the U.S, there are many civil rights laws that are enforced by the Equal Employment Opportunity Commission. The Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex and nationality. However, discrimination on the basis of race, gender, religion, nationality, and sexual preference continues. The SEC's revised disclosure rules now require information on how boards factor diversity into the director nomination process, as well as disclosure on how the board assesses the effectiveness of its diversity policy. Shareholder proposals on diversity may target a company's board nomination procedures or seek greater disclosure on a company's programs and procedures on increasing the diversity of its workforce, and make reference to one or more of the following points:

§ Violations of workplace anti-discrimination laws lead to expensive litigation and damaged corporate reputations that are not in the best interests of shareholders;

§ Employers already prepare employee diversity reports for the EEOC, so preparing a similar report to shareholders can be done at minimal cost;

§ The presence of women, ethnic minorities and union members in workforce and customer pools gives companies with diversified boards a practical advantage over their competitors as a result of their unique perspectives;

§ Efforts to include women, minorities and union representatives on corporate boards can be made at reasonable costs;

§ Reports can be prepared "at reasonable expense" describing efforts to encourage diversified representation on their boards;

§ Board diversification increases the pool of the company's potential investors because more and more investors are favoring companies with diverse boards;

§ A commitment to diversity in the workforce can lead to superior financial returns.

Add Women and Minorities to the Board

Board diversification proposals ask companies to put systems in place to increase the representation of women, racial minorities, union members or other underrepresented minority groups on boards of directors. In prior years, board diversification proposals requested that companies nominate board members from certain constituencies, appoint special committees to recommend underrepresented classes of board members, establish board positions reserved for representatives of certain groups, or simply "make greater efforts" to nominate women and ethnic minorities to their boards.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask the company to take steps to nominate more women and racial minorities to the board.  |

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| § | Vote for shareholder proposals asking for reports on board diversity.  |

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| § | Vote for shareholder proposals asking companies to adopt nomination charters or amend existing charters to include reasonable language addressing diversity.  |

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Racial Equity and/or Civil Rights Audits

Social Advisory Services Recommendation: Generally vote for proposals requesting that a company conduct an independent racial equity and/or civil rights audit, considering company disclosures, policies, actions, and engagements.

Report on the Distribution of Stock Options by Gender and Race

Companies have received requests from shareholders to prepare reports documenting the distribution of the stock options and restricted stock awards by race and gender of the recipient. Proponents of these proposals argue that, in the

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future, there will be a shift toward basing racial and gender discrimination suits on the distribution of corporate wealth through stock options. The appearance of these proposals is also in response to the nationwide wage gap and under representation of minorities and women at the highest levels of compensation.

Social Advisory Services Recommendation: Vote for shareholder proposals asking companies to report on the distribution of stock options by race and gender of the recipient.

Prepare Report/Promote EEOC-Related Activities

Filers of proposals on this issue generally ask a company to make available, at reasonable cost and omitting proprietary information, data the company includes in its annual report to the Equal Employment Opportunity Commission (EEOC) outlining the make-up of its workforce by race, gender and position. Shareholders also ask companies to report on any efforts they are making to advance the representation of women and ethnic minorities in jobs in which they have been historically underrepresented, such as sales and management. The costs of violating federal laws that prohibit discrimination by corporations are high and can affect corporate earnings. The Equal Opportunities Employment Commission does not release the companies' filings to the public, unless it is involved in litigation, and this information is difficult to obtain from other sources. Companies need to be sensitive to minority employment issues as the new evolving work force becomes increasingly diverse. This information can be provided with little cost to the company and does not create an unreasonable burden on management.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask the company to report on its diversity and/or affirmative action programs.  |

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| § | Vote for shareholder proposals calling for legal and regulatory compliance and public reporting related to non-discrimination, affirmative action, workplace health and safety, and labor policies and practices that effect long-term corporate performance.  |

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| § | Vote for shareholder proposals requesting nondiscrimination in salary, wages and all benefits.  |

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| § | Vote for shareholder proposals calling for action on equal employment opportunity and antidiscrimination.  |

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Report on Progress Towards Glass Ceiling Commission Recommendations

In November 1995, the Glass Ceiling Commission (Commission), a bipartisan panel of leaders from business and government, issued a report describing "an unseen yet unbreachable barrier that keeps women and minorities from rising to the upper rungs of the corporate ladder." The Commission recommended that companies take practical steps to rectify this disparity, such as including diversity goals in business plans, committing to affirmative action for qualified employees and initiating family-friendly labor policies. Shareholders have submitted proposals asking companies to report on progress made toward the Commission's recommendations.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals that ask the company to report on its progress against the Glass Ceiling Commission's recommendations.  |

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| § | Vote for shareholder proposals seeking to eliminate the "glass ceiling" for women and minority employees.  |

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Prohibit Discrimination on the Basis of Sexual Orientation or Gender Identity

Federal law does not ban workplace discrimination against gay and lesbian employees, and only some states have enacted workplace protections for these employees. Although an increasing number of US companies have explicitly banned discrimination on the basis of sexual orientation or gender identity in their equal employment opportunity (EEO) statements, many still do not. Shareholder proponents and other activist groups concerned with gay and lesbian rights,

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such as the Human Rights Campaign (HRC) and the Pride Foundation, have targeted U.S. companies that do not specifically restrict discrimination on the basis of sexual orientation in their EEO statements. Shareholder proposals on this topic ask companies to change the language of their EEO statements in order to put in place anti-discrimination protection for their gay and lesbian employees. In addition, proposals may seek disclosure on a company's general initiatives to create a workplace free of discrimination on the basis of sexual orientation, including reference to such items as support of gay and lesbian employee groups, diversity training that addresses sexual orientation, and non-medical benefits to domestic partners of gay and lesbian employees.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to include language in EEO statements specifically barring discrimination on the basis of sexual orientation or gender identity.  |

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| § | Vote for shareholder proposals seeking reports on a company's initiatives to create a workplace free of discrimination on the basis of sexual orientation or gender identity.  |

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| § | Vote against shareholder proposals that seek to eliminate protection already afforded to gay and lesbian employees.  |

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Report on/Eliminate Use of Racial Stereotypes in Advertising

Many companies continue to use racial stereotypes or images perceived as racially insensitive in their advertising campaigns. Filers of shareholder proposals on this topic often request companies to give more careful consideration to the symbols and images that are used to promote the company.

Social Advisory Services Recommendation: Vote for shareholder proposals seeking more careful consideration of using racial stereotypes in advertising campaigns, including preparation of a report on this issue.

Gender, Race, or Ethnicity Pay Gap

Over the past several years, shareholders have filed resolutions requesting that companies report whether a gender, race, or ethnicity pay gap exists, and if so, what measures are being taken to eliminate the gap. While primarily filed at technology firms, in 2017, the resolutions were also filed at firms in the financial services, insurance, healthcare, and telecommunication sectors. Proponents are expected to continue this campaign by engaging companies and filing shareholder proposals on this issue.

Social Advisory Services Recommendation: Vote for requests for reports on a company's pay data by gender, race, or ethnicity, or a report on a company's policies and goals to reduce any gender, race, or ethinicity pay gap.

Labor and Human Rights

Investors, international human rights groups, and labor advocacy groups have long been making attempts to safeguard worker rights in the international marketplace. In instances where companies themselves operate factories in developing countries for example, these advocates have asked that the companies adopt global corporate standards that guarantee sustainable wages and safe working conditions for their workers abroad. Companies that contract out portions of their manufacturing operations to foreign companies have been asked to ensure that the products they receive from those contractors have not been made using forced labor, child labor, or sweatshop labor. These companies are asked to adopt formal vendor standards that, among other things, include some sort of monitoring mechanism. Globalization, relocation of production overseas, and widespread use of subcontractors and vendors, often make it difficult to obtain a complete picture of a company's labor practices in global markets. Recent deadly accidents at factories, notably in Bangladesh and in Pakistan, have continued to intensify these concerns. Many investors believe that companies would benefit from adopting a human rights policy based on the Universal Declaration of Human Rights and the International Labour Organization's Core Labor Standards. Efforts that seek greater disclosure on a company's global labor practices, including its supply chain, and that seek to establish minimum standards for a company's operations will be supported. In addition, requests for independent monitoring of overseas operations will be supported.

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Social Advisory Services generally supports proposals that call for the adoption and/or enforcement of principles or codes relating to countries in which there are systematic violations of human rights; such as the use of slave, child, or prison labor; a government that is illegitimate; or there is a call by human rights advocates, pro-democracy organizations, or legitimately-elected representatives for economic sanctions. The use of child, sweatshop, or forced labor is unethical and can damage corporate reputations. Poor labor practices can lead to litigation against the company, which can be costly and time consuming.

Codes of Conduct and Vendor Standards

In recent years, an increasing number of shareholder proposals have been submitted that pertain to the adoption of codes of conduct or provision, greater disclosure on a company's international workplace standards, or that request human rights risk assessment. Companies have been asked to adopt a number of different types of codes, including a workplace code of conduct, standards for international business operations, human rights standards, International Labour Organization (ILO) standards and the SA 8000 principles. The ILO is an independent agency of the United Nations which consists of 187 member nations represented by workers, employers, and governments. The ILO's general mandate is to promote a decent workplace for all individuals. The ILO sets international labor standards in the form of its conventions and then monitors compliance with the standards. The seven conventions of the ILO fall under four broad categories: Right to organize and bargain collectively, Nondiscrimination in employment, Abolition of forced labor, and End of child labor. Each of the 187 member-nations of the ILO is bound to respect and promote these rights to the best of their abilities. SA 8000 is a set of labor standards, based on the principles of the ILO conventions and other human rights conventions, and covers eight workplace conditions, including: child labor, forced labor, health and safety, freedom of association and the right to collective bargaining, discrimination, disciplinary practices, working hours and compensation. The Global Sullivan Principles are a set of guidelines that support economic, social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to implement human rights standards and workplace codes of conduct.  |

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| § | Vote for shareholder proposals calling for the implementation and reporting on ILO codes of conduct, SA 8000 Standards, or the Global Sullivan Principles.  |

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| § | Vote for shareholder proposals that call for the adoption of principles or codes of conduct relating to company investments in countries with patterns of human rights abuses (e.g. Northern Ireland, Burma, former Soviet Union, and China).  |

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| § | Vote for shareholder proposals that call for independent monitoring programs in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with codes.  |

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| § | Vote for shareholder proposals that seek publication of a "Code of Conduct" by the company's foreign suppliers and licensees, requiring that they satisfy all applicable standards and laws protecting employees' wages, benefits, working conditions, freedom of association, and other rights.  |

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| § | Vote for proposals requesting that a company conduct an assessment of the human rights risks in its operations or in its supply chain, or report on its human rights risk assessment process.  |

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| § | Vote for shareholder proposals seeking reports on, or the adoption of, vendor standards including: reporting on incentives to encourage suppliers to raise standards rather than terminate contracts and providing public disclosure of contract supplier reviews on a regular basis.  |

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| § | Vote for shareholder proposals to adopt labor standards for foreign and domestic suppliers to ensure that the company will not do business with foreign suppliers that manufacture products for sale in the U.S. using forced labor, child labor, or that fail to comply with applicable laws protecting employee's wages and working conditions.  |

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Adopt/Report on MacBride Principles

These resolutions have called for the adoption of the MacBride Principles for operations located in Northern Ireland. They request companies operating abroad to support the equal employment opportunity policies that apply in facilities they

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operate domestically. The principles were established to address the sectarian hiring problems between Protestants and Catholics in Northern Ireland. It is well documented that Northern Ireland's Catholic community faced much higher unemployment figures than the Protestant community. In response to this problem, the U.K. government instituted the New Fair Employment Act of 1989 (and subsequent amendments) to address the sectarian hiring problems.

Many companies believe that the Act adequately addresses the problems and that further action, including adoption of the MacBride Principles, only duplicates the efforts already underway. In evaluating a proposal to adopt the MacBride Principles, shareholders must decide whether the principles will cause companies to divest, and therefore worsen the unemployment problem, or whether the principles will promote equal hiring practices. Proponents believe that the Fair Employment Act does not sufficiently address the sectarian hiring problems. They argue that the MacBride Principles serve to stabilize the situation and promote further investment.

Social Advisory Services Recommendation: Vote for shareholder proposals to report on or implement the MacBride Principles.

Community Impact Assessment/Indigenous Peoples' Rights

In recent years, a number of U.S. public companies have found their operations or expansion plans in conflict with local indigenous groups. In order to improve their standing with indigenous groups and decrease any negative publicity companies may face, some concerned shareholders have sought reports requesting that companies review their obligations, actions and presence on these groups. Some have also requested these companies adopt policies based on the Draft UN Declaration on the Rights of Indigenous Peoples and the Organization of American States' (OAS) American Declaration on rights of Indigenous Peoples. Some companies such as Starbucks have reached agreements with local governments to ensure better business practices for products produced by indigenous groups. Shareholders, concerned with the negative impact that the company's operations may have on the indigenous people's land and community, have sought reports detailing the impact of the company's actions and presence on these groups.

Social Advisory Services Recommendation: Vote for shareholder proposals asking to prepare reports on a company's environmental and health impact on communities.

Report on Risks of Outsourcing

Consumer interest in keeping costs low through comparison shopping, coupled with breakthroughs in productivity have prompted companies to look for methods of increasing profit margins while keeping prices competitive. Through a practice known as off-shoring, the outsourcing or moving of manufacturing and service operations to foreign markets with lower labor costs, companies have found one method where the perceived savings potential is quite substantial. Shareholder opponents of outsourcing argue that there may be long-term consequences to offshore outsourcing that outweigh short-term benefits such as backlash from a public already sensitive to off-shoring, security risks from information technology development overseas, and diminished employee morale. Shareholder proposals addressing outsourcing ask that companies prepare a report to shareholders evaluating the risk to the company's brand name and reputation in the U.S. from outsourcing and off-shoring of manufacturing and service work to other countries.

Social Advisory Services Recommendation: Vote for shareholders proposals asking companies to report on the risks associated with outsourcing or off-shoring.

Report on the Impact of Health Pandemics on Company Operations

Sub-Saharan Africa is the most affected region in the world with regard to the HIV/AIDS pandemic. With limited access to antiretroviral treatment for HIV/AIDS, the increasing death toll is expected to have profound social, political and economic impact on that region and the companies or industries with operations in Sub-Saharan Africa. In the past, shareholder

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proposals asked companies to develop policies to provide affordable HIV/AIDS, malaria, and tuberculosis drugs in third-world countries. However, in recent years, shareholders have changed their tactic, asking instead for reports on the impact of these pandemics on company operations, including both pharmaceutical and non-pharmaceutical companies operating in high-risk areas. This change is consistent with the general shift in shareholder proposals towards risk assessment and mitigation.

Social Advisory Services Recommendation: Vote for shareholder proposals asking for companies to report on the impact of pandemics, such as HIV/AIDS, malaria, and tuberculosis, on their business strategies.

Mandatory Arbitration

Social Advisory Services Recommendation: Generally vote for requests for a report on a company's use of mandatory arbitration on employment-related claims.

Sexual Harassment

Social Advisory Services Recommendation: Generally vote for requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment.

Operations in High Risk Markets

In recent years, shareholder advocates and human rights organizations have highlighted concerns associated with companies operating in regions that are politically unstable, including state sponsors of terror. The U.S. government has active trade sanction regimes in place against a number of countries, including Cuba, Iran, North Korea, Sudan, and Syria, among others. These sanctions are enforced by the Office of Foreign Assets Control, which is part of the U.S. Department of the Treasury. However, these countries do not comprise an exhaustive list of countries considered to be high-risk markets.

Shareholder proponents have filed resolutions addressing a variety of concerns around how investments and operations in high-risk regions may support, or be perceived to support, potentially oppressive governments. Proponents contend that operations in these countries may lead to potential reputational, regulatory, and/or supply chain risks as a result of operational disruptions. Concerned shareholders have requested investment withdrawals or cessation of operations in high-risk markets as well as reports on operations in high-risk markets. Such reports may seek additional disclosure from companies on criteria employed for investing in, continuing to operate in, and withdrawing from specific countries.

Depending on the country's human rights record, investors have also asked companies to refrain from commencing new projects in the country of concern until improvements are made. In addition, investors have sought greater disclosure on the nature of a company's involvement in the country and on the impact of their involvement or operations.

Social Advisory Services Recommendation: Vote for requests for a review of and a report outlining the company's potential financial and reputation risks associated with operations in "high-risk" markets, such as a terrorism-sponsoring state or otherwise, taking into account:

§ The nature, purpose, and scope of the operations and business involved that could be affected by social or political disruption;

§ Current disclosure of applicable risk assessment(s) and risk management procedures;

§ Compliance with U.S. sanctions and laws;

§ Consideration of other international policies, standards, and laws;

§ Whether the company has been recently involved in significant controversies or violations in "high-risk" markets.

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Reports on Operations in Burma/Myanmar

Since the early 1960s, Burma (also known as Myanmar) has been ruled by a military dictatorship that has been condemned for human rights abuses, including slave labor, torture, rape and murder. Many companies have pulled out of Burma over the past decade given the controversy surrounding involvement in the country. Oil companies continue be the largest investors in Burma and therefore are the usual targets of shareholder proposals on this topic. However, proposals have also been filed at other companies, including financial companies, for their involvement in the country.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to adopt labor standards in connection with involvement in Burma.  |

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| § | Vote for shareholder proposals seeking reports on Burmese operations and reports on costs of continued involvement in the country.  |

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| § | Vote shareholder proposals to pull out of Burma on a case-by-case basis.  |

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Reports on Operations in China

Documented human rights abuses in China continue to raise concerns among investors, specifically with respect to alleged use of prison and child labor in manufacturing. Reports have identified U.S. companies with direct or indirect ties to companies controlled by the Chinese military, the People's Liberation Army (PLA), and hence links to prison labor. The U.S. Business Principles for Human Rights of Workers in China may help a company with operations in China avoid being blacklisted by U.S. states and municipalities, many of whom have limited their contracts with companies that fail to adopt similar principles in other countries recognized for committing gross human rights violations.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals requesting more disclosure on a company's involvement in China  |

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| § | Vote case-by-case on shareholder proposals that ask a company to terminate a project or investment in China.  |

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Product Sales to Repressive Regimes

Certain Internet technology companies have been accused of assisting repressive governments in violating human rights through the knowing misuse of their hardware and software. Human rights groups have accused companies such as Yahoo!, Cisco, Google, and Microsoft of allowing the Chinese government to censor and track down dissenting voices on the internet.

Social Advisory Services Recommendation:

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| § | Vote case-by-case on shareholder proposals requesting that companies cease product sales to repressive regimes that can be used to violate human rights.  |

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| § | Vote for proposals to report on company efforts to reduce the likelihood of product abuses in this manner.  |

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Internet Privacy/Censorship and Data Security

Information technology sector companies have been at the center of shareholder advocacy campaigns regarding concerns over Internet service companies and technology providers' alleged cooperation with potentially repressive regimes, notably the Chinese government. Shareholder proposals, submitted at Yahoo!, Google, Microsoft, and Cisco, among others, asked companies to take steps to stop abetting repression and censorship of the Internet and/or review their human rights policies taking this issue into consideration. Resolution sponsors generally argue that the Chinese government is using IT company technologies to track, monitor, identify, and, ultimately, suppress political dissent. In the view of proponents, this process of surveillance and associated suppression violates internationally accepted norms outlined in the U.N. Universal Declaration of Human Rights.

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While early shareholder resolutions on Internet issues focused on censorship by repressive regimes and net neutrality, proponents have recently raised concerns regarding privacy and data security in the wake of increased breaches that result in the misuse of personal information. On Oct. 13, 2011, the Securities and Exchange Commission (SEC) issued a guidance document about the disclosure obligations relating to cybersecurity risks and cyber incidents. In the document, the SEC references the negative consequences that are associated with cyber-attacks, such as: remediation costs, including those required to repair relationships with customers and clients; increased cyber-security protection costs; lost revenues from unauthorized use of the information or missed opportunities to attract clients; litigation; and reputational damage. The document says that while the federal securities laws do not explicitly require disclosure of cybersecurity risks and incidents, some disclosure requirements may impose an obligation on the company to disclose such information and provides scenarios where disclosure may be required. A 2013 study by the Ponemon Institute found that the median annualized cost of cyber-attacks for the 60 organizations studied was $11.6 million. The study also found that the number of successful cyber-attacks among the 60 companies increased by 18 percent between 2012 and 2013, from 102 successful attacks on average per week to 122.

More recently, data security has been the focus of media outlets and a public concern. During the 2013 holiday shopping season, Target, Neiman Marcus, and other retailers were the targets of hackers looking to steal credit card numbers. It is estimated that as many as 40 million customer credit and debit card accounts were stolen at Target alone. These incidents preceded what many people consider the largest data security breach in the United States. In June 2013, major media outlets began releasing information about leaked classified documents disclosed by Edward Snowden, an NSA contractor. The documents revealed a government-run Internet and telephone surveillance program aimed at collecting metadata. As part of this operation, the government is said to have obtained from major U.S. telecommunications companies the call records of their customers.

Social Advisory Services Recommendation: Vote for resolutions requesting the disclosure and implementation of Internet privacy and censorship policies and procedures considering:

§ The level of disclosure of policies and procedures relating to privacy, freedom of speech, Internet censorship, and government monitoring of the Internet;

§ Engagement in dialogue with governments and/or relevant groups with respect to the Internet and the free flow of information;

§ The scope of business involvement and of investment in markets that maintain government censorship or monitoring of the Internet;

§ The market-specific laws or regulations applicable to Internet censorship or monitoring that may be imposed on the company; and

§ The level of controversy or litigation related to the company's international human rights policies and procedures.

Disclosure on Plant Closings

Shareholders have asked that companies contemplating plant closures consider the impact of such closings on employees and the community, especially when such plan closures involve a community's largest employers. Social Advisory Services usually recommends voting for greater disclosure of plant closing criteria. In cases where it can be shown that companies have been proactive and responsible in adopting these criteria, Social Advisory Services recommends against the proposal.

Social Advisory Services Recommendation: Vote for shareholder proposals seeking greater disclosure on plant closing criteria if the company has not provided such information.

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Climate Change

Say on Climate (SoC) Management Proposals

Social Advisory Services Recommendation: Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan<sup>22</sup>, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

§ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

§ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

§ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions (Scopes 1, 2, and 3 if relevant);

§ Whether the company has sought and received third-party approval that its targets are science-based;

§ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

§ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

§ Whether the company's climate data has received third-party assurance;

§ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

§ Whether there are specific industry decarbonization challenges; and

§ The company's related commitment, disclosure, and performance compared to its industry peers.

Say on Climate (SoC) Shareholder Proposals

Social Advisory Services Recommendation: Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

§ The completeness and rigor of the company's climate-related disclosure;

§ The company's actual GHG emissions performance;

§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Climate Change/Greenhouse Gas Emissions

Climate change has emerged as the most significant environmental threat to the planet to date. Scientists generally agree that gases released by chemical reactions including the burning of fossil fuels contribute to a "greenhouse effect" that traps the planet's heat. Environmentalists claim that the Greenhouse Gases(GHG) produced by the industrial age have caused recent weather crises such as heat waves, rainstorms, melting glaciers, rising sea levels and receding coastlines. Climate change skeptics have described the rise and fall of global temperatures as naturally occurring phenomena and depicted human impact on climate change as minimal. Shareholder proposals requesting companies to issue a report to shareholders, "at reasonable cost and omitting proprietary information," on greenhouse gas emissions ask that the report include descriptions of corporate efforts to reduce emissions, companies' financial exposure and potential liability from operations that contribute to global warming, their direct or indirect efforts to promote the view that global warming is not a threat, and their goals in reducing these emissions from their operations. Shareholder proponents argue that there

<sup>22</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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is scientific proof that the burning of fossil fuels causes global warming, that future legislation may make companies financially liable for their contributions to global warming, and that a report on the company's role in global warming can be assembled at reasonable cost.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking information on the financial, physical, or regulatory risks it faces related to climate change- on its operations and investments, or on how the company identifies, measures, and manage such risks.  |

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| § | Vote for shareholder proposals calling for the reduction of GHG or adoption of GHG goals in products and operations.  |

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| § | Vote for shareholder proposals seeking reports on responses to regulatory and public pressures surrounding climate change, and for disclosure of research that aided in setting company policies around climate change.  |

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| § | Vote for shareholder proposals requesting reports on greenhouse gas emissions from companies' operations and/or products.  |

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Invest in Clean/Renewable Energy

Filers of proposals on renewable energy ask companies to increase their investment in renewable energy sources and to work to develop products that rely more on renewable energy sources. Increased use of renewable energy will reduce the negative environmental impact of energy companies. In addition, as supplies of oil and coal exist in the earth in limited quantities, renewable energy sources represent a competitive, and some would argue essential, long-term business strategy.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking the preparation of a report on a company's activities related to the development of renewable energy sources.  |

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| § | Vote for shareholder proposals seeking increased investment in renewable energy sources unless the terms of the resolution are overly restrictive.  |

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Energy Efficiency

Reducing the negative impact to the environment can be done through the use of more energy efficient practices and products. Shareholders propose that corporations should have energy efficient manufacturing processes and should market more energy efficient products. This can be done by utilizing renewable energy sources that are cost-competitive and by implementing energy efficient operations.

Social Advisory Services Recommendation: Vote for shareholder proposals requesting a report on company energy efficiency policies and/or goals.

Environment

Proposals addressing environmental and energy concerns are plentiful, and generally seek greater disclosure on a particular issue or seek to improve a company's environmental practices in order to protect the world's natural resources. In addition, some proponents cite the negative financial implications for companies with poor environmental practices, including liabilities associated with site clean-ups and lawsuits, as well as arguments that energy efficient products and clean environmental practices are sustainable business practices that will contribute to long-term shareholder value. Shareholders proponents point out that the majority of independent atmospheric scientists agree that global warming poses a serious problem to the health and welfare of our planet, citing the findings of the Intergovernmental Panel on

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Climate Change. Shareholder activists argue that companies can report on their greenhouse gas emissions within a few months at reasonable cost. The general trend indicates a movement towards encouraging companies to have proactive environmental policies, focusing on maximizing the efficient use of non-renewable resources and minimizing threats of harm to human health or the environment.

Environmental/Sustainability Reports

Shareholders may request general environmental disclosures or reports on a specific location/operation, often requesting that the company detail the environmental risks and potential liabilities of a specific project. Increasingly, companies have begun reporting on environmental and sustainability issues using the Global Reporting Initiative (GRI) standards. The GRI was established in 1997 with the mission of developing globally applicable guidelines for reporting on economic, environmental, and social performance. The GRI was developed by Ceres (formerly known as the Coalition for Environmentally Responsible Economies, CERES) in partnership with the United Nations Environment Programme (UNEP).

Ceres was formed in the wake of the March 1989 Exxon Valdez oil spill, when a consortium of investors, environmental groups, and religious organizations drafted what were originally named the Valdez Principles. Later to be renamed the CERES Principles, and now branded as the Ceres Roadmap 2030, corporate signatories to the Ceres Roadmap 2030 pledge to publicly report on environmental issues, including protection of the biosphere, sustainable use of natural resources, reduction and disposal of wastes, energy conservation, and employee and community risk reduction in a standardized form.

The Equator Principles are the financial industry's benchmark for determining, assessing and managing social and environmental risk in project financing. The Principles were first launched in June 2003 and were ultimately adopted by over forty financial institutions during a three year implementation period. The principles were subsequently revised in July 2006 to take into account the new performance standards approved by the World Bank Group's International Finance Corporation (IFC). The third iteration of the Principles was launched in June 2013 and it amplified the banks' commitments to social responsibility, including human rights, climate change, and transparency. Financial institutions adopt these principles to ensure that the projects they venture in are developed in a socially responsible manner and reflect sound environmental management practices.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking greater disclosure on the company's environmental and social practices, and/or associated risks and liabilities.  |

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| § | Vote for shareholder proposals asking companies to report in accordance with the Global Reporting Initiative (GRI).  |

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| § | Vote for shareholder proposals seeking the preparation of sustainability reports.  |

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| § | Vote for shareholder proposals to study or implement the CERES Roadmap 2030.  |

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| § | Vote for shareholder proposals to study or implement the Equator Principles.  |

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Operations in Environmentally Sensitive Areas

Canadian Oil Sands

Proposals asking for a report on oil sands operations in the Athabasca region of Alberta, Canada have appeared at a number of oil and gas companies. Alberta's oil sands contain a reserve largely thought to be one of the world's largest potential energy sources. Rising oil sands production in Alberta has been paralleled with concerns from a variety of stakeholders—including environmental groups, local residents, and shareholders—regarding the environmental impacts of the complicated extraction and upgrading processes required to convert oil sands into a synthetic crude oil. The high viscosity of bitumen makes its extraction a challenging and resource-intensive process; the most common extraction technique involves pumping steam into the oil sands to lower the viscosity of bitumen in order to pump it to the surface.

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One of the most prominent issues concerning oil sands is the large volume of greenhouse gases (GHG) associated with production. Oil sands are by far one of the most energy-intensive forms of oil production, releasing three times more GHG emissions from production than conventional oil.

Shareholders have kept up pressure on the issue of potential long-term risks to companies posed by the environmental, social, and economic challenges associated with Canadian oil sands operations. Resolutions on the topic have focused on requesting greater transparency on the ramifications of oil sands development projects.

Arctic National Wildlife Refuge

The Arctic National Wildlife Refuge (ANWR) is a federally protected wilderness along Alaska's North Slope. In the past, legislation proposed in both the House and Senate that, if passed, would allow a portion of this area to be leased to private companies for development and production of oil, has been witnessed. Oil companies have expressed an interest in bidding for these leases given the opportunity. In response, shareholder activists have filed resolutions asking these companies to cancel any plans to drill in the ANWR and cease their lobbying efforts to open the area for drilling. Proponents of shareholder proposals on this issue argue that the Coastal Plain section of the ANWR is the most environmentally sensitive area of the refuge, that the majority of Alaska's North Slope that is not federally designated wilderness already provides the oil industry with sufficient resources for oil production, and that advocates of drilling in ANWR overstate the benefit to be derived from opening the wilderness to oil production. Those in favor of opening the area up to drilling note that only a small portion of ANWR would be considered for exploration, and if drilling were to take place, it would be on less than one percent of the entire area, that modern technology reduces the environmental impact of oil drilling on both the land and surrounding wildlife, and that oil production in ANWR would have considerable benefit to company shareholders, Alaskans, and the United States as a whole.

Social Advisory Services Recommendation:

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| § | Vote for requests for reports on potential environmental damage as a result of company operations in protected regions.  |

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| § | Vote for shareholder proposals asking companies to prepare reports or adopt policies on operations that include mining, drilling or logging in environmentally sensitive areas.  |

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| § | Vote for shareholder proposals seeking to curb or reduce the sale of products manufactured from materials extracted from environmentally sensitive areas such as old growth forests.  |

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Hydraulic Fracturing

Shareholder proponents have elevated concerns on the use of hydraulic fracturing, an increasingly controversial process in which water, sand, and a mix of chemicals are blasted horizontally into tight layers of shale rock to extract natural gas. As this practice has gained more widespread use, environmentalists have raised concerns that the chemicals mixed with sand and water to aid the fracturing process can contaminate ground water supplies. Proponents of resolutions at companies that employ hydraulic fracturing are also concerned that wastewater produced by the process could overload the waste treatment plants to which it is shipped. Shareholders have asked companies that utilize hydraulic fracturing to report on the environmental impact of the practice and to disclose policies aimed at reducing hazards from the process.

Social Advisory Services Recommendation: Vote for requests seeking greater transparency on the practice of hydraulic fracturing and its associated risks.

Phase Out Chlorine-Based Chemicals

The Environmental Protection Agency (EPA) identified chlorine bleaching of pulp and paper as a major source of dioxin, a known human carcinogen linked to have negative effects to humans and animals. A number of shareholder proposals have been filed in recent years asking companies to report on the possible phase-out of chlorine bleaching in the production of paper because of the practice's negative environmental impact.

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Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to prepare a report on the phase-out of chlorine bleaching in paper production.  |

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| § | Vote on a case-by-case basis on shareholder proposals asking companies to cease or phase-out the use of chlorine bleaching.  |

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Land Procurement and Development

Certain real estate developers including big-box large retailers have received criticism over their processes for acquiring and developing land. Given a 2005 Supreme Court decision allowing for the usage of eminent domain laws in the U.S. to take land from property-owners for tax generating purposes, as well as certain controversies outside of the U.S. with land procurement, some shareholders would like assurances that companies are acting ethically and with local stakeholders in mind.

Social Advisory Services Recommendation: Vote for shareholder proposals requesting that companies report on or adopt policies for land procurement and utilize the policies in their decision-making.

Report on the Sustainability of Concentrated Area Feeding Operations (CAFO)

The potential environmental impact on water, aquatic ecosystems, and local areas from odor and chemical discharges from CAFOs has led to lawsuits and EPA regulations. Certain shareholders have asked companies to provide additional details on their CAFOs in addition to those with which the companies contract to raise their livestock.

Social Advisory Services Recommendation: Vote for requests that companies report on the sustainability and the environmental impacts of both company-owned and contract livestock operations.

Adopt a Comprehensive Recycling Policy

A number of companies have received proposals to step-up their recycling efforts, with the goal of reducing the company's negative impact on the environment and reducing costs over the long-term.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals requesting the preparation of a report on the company's recycling efforts.  |

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| § | Vote for shareholder proposals that ask companies to increase their recycling efforts or to adopt a formal recycling policy.  |

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Nuclear Energy

Nuclear power continues to be a controversial method of producing electricity. Opponents of nuclear energy are primarily concerned with serious accidents and the related negative human health consequences, and with the difficulties involved in nuclear waste storage.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking the preparation of a report on a company's nuclear energy procedures.  |

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| § | Vote case-by-case on proposals that ask the company to cease the production of nuclear power.  |

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Water Use

Shareholders may ask for a company to prepare a report evaluating the business risks linked to water use and impacts on the company's supply chain, including subsidiaries and bottling partners. Such proposals also ask companies to disclose current policies and procedures for mitigating the impact of operations on local communities in areas of water scarcity.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking the preparation of a report on a company's risks linked to water use.  |

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| § | Vote for resolutions requesting companies to promote the "human right to water" as articulated by the United Nations.  |

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| § | Vote for shareholder proposals requesting that companies report on or adopt policies for water use that incorporate social and environmental factors.  |

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Kyoto Protocol Compliance

With the Kyoto Protocol operational as of February 2005, ratifying countries have agreed to reduce their emissions of carbon dioxide and five other greenhouse gases. While some signatories have yet to release specific details of corporate regulations, the impact on multinationals operating in Kyoto-compliant countries is anticipated to be significant.

Social Advisory Services Recommendation: Vote for shareholder proposals asking companies to review and report on how companies will meet GHG reduction targets of the Kyoto-compliant countries in which they operate.

Health and Safety

Toxic Materials

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking companies to report on policies and activities to ensure product safety.  |

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| § | Vote for shareholder proposals asking companies to disclose annual expenditures relating to the promotion and/or environmental cleanup of toxins.  |

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| § | Vote for shareholder proposals asking companies to report on the feasibility of removing, or substituting with safer alternatives, all "harmful" ingredients used in company products.  |

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Product Safety

Social Advisory Services Recommendation:

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| § | Generally vote for proposals requesting the company to report on or adopt consumer product safety policies and initiatives.  |

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| § | Generally vote for proposals requesting the study, adoption and/or implementation of consumer product safety programs in the company's supply chain.  |

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Workplace/Facility Safety

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals requesting workplace safety reports, including reports on accident risk reduction efforts.  |

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| § | Vote shareholder proposals requesting companies report on or implement procedures associated with their operations and/or facilities on a case-by-case basis.  |

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Report on Handgun Safety Initiatives

Shareholders may ask for a company to report on policies and procedures that are aimed at curtailing the incidence of gun violence. Such a report may include: implementation of the company's contract instruction to distributors not to sell the company's weapons at gun shows or through pawn shops; recalls or retro-fits of products with safety-related defects causing death or serious injury to consumers, as well as development of systems to identify and remedy these defects; names and descriptions of products that are developed or are being developed for a combination of higher caliber/maximum capacity and greater conceal-ability; and the company's involvement in promotion campaigns that could be construed as aimed at children. The Sandy Hook Principles were established to commemorate the victims of gun violence and to encourage positive corporate behavior in response to the proliferation of gun violence in America.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking the company to report on its efforts to promote handgun safety.  |

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| § | Vote for shareholder proposals asking the company to stop the sale of handguns and accessories.  |

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Phase-out or Label Products Containing Genetically Engineered Ingredients

Shareholders have asked companies engaged in the development of genetically modified agricultural products to adopt a policy of not marketing or distributing such products until "long term safety testing" demonstrates that they are not harmful to humans, animals or the environment. Until further long term testing demonstrates that these products are not harmful, companies in the restaurant and prepared foods industries have been asked to remove genetically altered ingredients from products they manufacture or sell, and label such products in the interim. Shareholders have also asked supermarket companies to do the same for their own private label brands.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to label products that contain genetically engineered products or products from cloned animals.  |

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| § | Vote for shareholder proposals that ask the company to phase out the use of genetically engineered ingredients in their products.  |

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| § | Vote for shareholder proposals that ask the company to report on the use of genetically engineered organisms in their products.  |

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| § | Vote for shareholder proposals asking for reports on the financial, legal, and operational risks posed by the use of genetically engineered organisms.  |

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Tobacco-related Proposals

Under the pressure of ongoing litigation and negative media attention, tobacco companies and even non-tobacco companies with ties to the industry have received an assortment of shareholder proposals seeking increased responsibility and social consciousness from tobacco companies and as well as firms affiliated with the tobacco industry.

While the specific resolutions for shareholder proponents vary from year to year, activist shareholders consistently make the tobacco industry a prominent target. Examples of shareholder proposals focused on tobacco include: warnings on the risks of tobacco smoke and smoking-related diseases, attempting to link executive compensation with reductions in teen smoking rates, the placement of company tobacco products in retail outlets, a review of advertising campaigns and their impact on children and minority groups, prohibiting non-tobacco companies from entering into contracts with tobacco companies, and requesting restaurant operators maintain smoke-free restaurants.

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In June 2009, the Family Smoking Prevention and Tobacco Control Act was signed into law, giving the FDA authority to regulate the tobacco industry for the first time, including the power to block or approve new products as well as the nicotine and other content in existing tobacco products. This legislation empowers the imposition of a ban on tobacco advertising within 1,000 feet of schools and playgrounds, require FDA-approved graphic warning labels that occupy 50 percent of the space on each package of cigarettes.

In September 2009, the FDA issued a ban on the sale of flavored cigarettes, exercising its regulatory power in a major way over tobacco for the first time under the new law. The ban affected tobacco products with chocolate, vanilla, clove, and other similar flavors.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals seeking to limit the sale of tobacco products to children.  |

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| § | Vote for shareholder proposals asking producers of tobacco product components (such as filters, adhesives, flavorings, and paper products) to halt sales to tobacco companies.  |

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| § | Vote for shareholder proposals that ask restaurants to adopt smoke-free policies and that ask tobacco companies to support smoke-free legislation.  |

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| § | Vote for shareholder proposals seeking a report on a tobacco company's advertising approach.  |

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| § | Vote for shareholder proposals at insurance companies to cease investment in tobacco companies.  |

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| § | Vote for proposals at producers of cigarette components calling for a report outlining the risks and potential liabilities of the production of these components.  |

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| § | Vote for proposals calling for tobacco companies to cease the production of tobacco products.  |

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| § | Vote for shareholder proposals asking companies to stop all advertising, marketing and sale of cigarettes using the terms "light," "ultra-light," "mild," and other similar words and/or colors.  |

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| § | Vote for shareholder proposals asking companies to increase health warnings on cigarette smoking. (i.e.: information for pregnant women, "Canadian Style" warnings, filter safety).  |

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Adopt Policy/Report on Drug Pricing

Pharmaceutical drug pricing, both within the United States and internationally, has raised many questions of the companies that are responsible for creating and marketing these treatments. Shareholder proponents, activists and even some legislators have called upon drug companies to restrain pricing of prescription drugs.

The high cost of prescription drugs is a vital issue for senior citizens across the country. Seniors have the greatest need for prescription drugs, accounting for a significant portion of all prescription drug sales, but they often live on fixed incomes and are underinsured.

Proponents note that efforts to reign-in pharmaceutical costs will not negatively impact research and development (R&D) costs and that retail drug prices are consistently higher in the U.S. than in other industrialized nations. Pharmaceutical companies often respond that adopting a formal drug pricing policy could put the company at a competitive disadvantage.

Against the backdrop of the AIDS crisis in Africa, many shareholders have called on companies to address the issue of affordable drugs for the treatment of AIDS, as well as tuberculosis and malaria throughout the developing world. When analyzing such resolutions, consideration should be made of the strategic implications of pricing policies in the market.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to prepare a report on drug pricing.  |

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| § | Vote for shareholder proposals to adopt a formal policy on drug pricing.  |

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| § | Vote for shareholder proposals that call on companies to develop a policy to provide affordable HIV, AIDS, tuberculosis, and malaria drugs in third-world nations.  |

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| § | Vote for proposals asking for reports on the economic effects and legal risks of limiting pharmaceutical products to Canada or certain wholesalers.  |

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| § | Vote case-by-case proposals requesting that companies adopt policies not to constrain prescription drug re-importation by limiting supplies to foreign markets.  |

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Government and Military

Weapons-related proposals may target handguns, landmines, defense contracting, or sale of weapons to foreign governments.

Prepare Report to Renounce Future Landmine Production

Although very few companies currently produce landmines, some companies continue to have links to landmine production or produce components that are used to make landmines. Shareholders have asked companies to renounce the future development of landmines or their components, or to prepare a report on the feasibility of such a renouncement.

Social Advisory Services Recommendation: Vote for shareholder proposals seeking a report on the renouncement of future landmine production.

Prepare Report on Foreign Military Sales

Shareholders have filed proxy resolutions asking companies to account for their policies surrounding the sale of military equipment to foreign governments. The proposals can take various forms. One resolution simply calls on companies to report on their foreign military sales, provide information on military product exports, disclose the company's basis for determining whether those sales should be made, and any procedures used to market or negotiate those sales. Another resolution calls for companies to report on "offsets" e.g. guarantee of new jobs in the purchasing country and technology transfers. Offsets involve a commitment by military contractors and the U.S. government to direct benefits back to a foreign government as a condition of a military sale.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals to report on foreign military sales or offset agreements.  |

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| § | Vote case-by-case on proposals that call for outright restrictions on foreign military sales.  |

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Depleted Uranium/Nuclear Weapons

Depleted uranium is the less radioactive uranium that is left behind after enriched uranium is produced for nuclear reactor fuel and fissile material for nuclear weapons. The main difference is that depleted uranium contains at least three times less U-235 than natural uranium. However, it is still weakly radioactive. Shareholders want reports on companies' policies, procedures and involvement in the said substance and nuclear weapons.

Social Advisory Services Recommendation: Vote for shareholder proposals requesting a report on involvement, policies, and procedures related to depleted uranium and nuclear weapons.

Adopt Ethical Criteria for Weapons Contracts

Shareholders have requested that companies review their code of conduct and statements of ethical criteria for military production-related contract bids, awards, and execution to incorporate environmental factors and sustainability issues

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related to the contract bidding process. Sustainability is a business model that requires companies to balance the needs and interests of various stakeholders while concurrently sustaining their businesses, communities, and the environment for future generations.

Social Advisory Services Recommendation: Vote for shareholder proposals asking companies to review and amend, if necessary, the company's code of conduct and statements of ethical criteria for military production-related contract bids, awards and execution.

Animal Welfare

Animal Rights/Testing

Shareholders and animal rights groups, including People for the Ethical Treatment of Animals (PETA), may file resolutions calling for the end to painful and unnecessary animal testing on laboratory animals by companies developing products for the cosmetics and medical supply industry. Since advanced testing methods now produce many reliable results without the use of live animals, Social Advisory Services generally supports proposals on this issue. In cases where it can be determined that alternative testing methods are unreliable or are required by law, Social Advisory Services recommends voting against such proposals. Other resolutions call for the adoption of animal welfare standards that would ensure humane treatment of animals on vendors' farms and slaughter houses. Social Advisory Services will generally vote in favor of such resolutions.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals that seek to limit unnecessary animal testing where alternative testing methods are feasible or not barred by law.  |

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| § | Vote for shareholder proposals that ask companies to adopt or/and report on company animal welfare standards or animal-related risks.  |

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| § | Vote for shareholder proposals asking companies to report on the operational costs and liabilities associated with selling animals.  |

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| § | Vote for shareholder proposals to eliminate cruel product testing methods.  |

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| § | Vote for shareholder proposals that seek to monitor, limit, report, or eliminate the outsourcing of animal testing to overseas laboratories.  |

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| § | Vote for shareholder proposals to adopt or adhere to a public animal welfare policy at both company and contracted laboratory levels.  |

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| § | Vote for shareholder proposals to evaluate, adopt, or require suppliers to adopt Controlled Atmosphere Killing (CAK) slaughter methods.  |

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Political and Charitable Giving

Lobbying Efforts

Shareholders have asked companies to report on their lobbying efforts on proposed legislation or to refute established scientific research regarding climate change, the health effects of smoking, fuel efficiency standards etc. Proponents have pointed to potential legislation on climate change, the lethargic pace of improvements in fuel efficiency standards in the U.S. automotive industry, and the highly litigious nature surrounding the tobacco industry as rationales for greater transparency on corporate lobbying practices that would shed light on whether companies are acting in the best long-term interests of their shareholders. Proponents of lobbying resolutions typically request enhanced disclosure of lobbying policies and expenditures, including a report on the policies and procedures related to lobbying, amounts used for various types of lobbying, and any membership or payments to a tax-exempt organization that writes and endorses model legislation.

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Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking companies to review and report on their lobbying activities, including efforts to challenge scientific research and influence governmental legislation.  |

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| § | Vote for proposals requesting information on a company's lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures.  |

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Political Contributions/Non-Partisanship

As evidenced by the U.S. Supreme Court's January 2010 decision in *Citizens United vs. Federal Election Commission* that lifted restrictions on corporate spending in federal elections, changes in legislation that governs corporate political giving have, rather than limiting such contributions, increased the potential for corporate contributions to the political process and the complexity of tracking such contributions.

Proponents of political spending resolutions generally call for enhanced disclosure of political contributions, including a report on the policies and procedures for corporate political campaign contributions and trade association expenditures, the respective amounts of such donations using company funds, or an assessment of the impacts of such contributions on the firm's image, sales and profitability. Shareholder advocates of these proposals are concerned with the lack of transparency on political giving and the increasing involvement and influence of corporations in the political process.

Social Advisory Services Recommendation:

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| § | Vote for proposals calling for a company to disclose political and trade association contributions, unless the terms of the proposal are unduly restrictive.  |

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| § | Vote for proposals calling for a company to maintain a policy of political non-partisanship.  |

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| § | Vote against proposals asking a company to refrain from making any political contributions.  |

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Political Expenditures and Lobbying Congruency

Social Advisory Services Recommendation: Generally vote for proposals requesting greater disclosure of a company's alignment of political contributions, lobbying, and electioneering spending with a company's publicly stated values and policies, unless the terms of the proposal are unduly restrictive. Additionally, Social Advisory Services will consider whether:

§ The company's policies, management, board oversight, governance processes, and level of disclosure related to direct political contributions, lobbying activities, and payments to trade associations, political action committees, or other groups that may be used for political purposes;

§ The company's disclosure regarding: the reasons for its support of candidates for public offices; the reasons for support of and participation in trade associations or other groups that may make political contributions; and other political activities;

§ Any incongruencies identified between a company's direct and indirect political expenditures and its publicly stated values and priorities;

§ Recent significant controversies related to the company's direct and indirect lobbying, political contributions, or political activities.

Charitable Contributions

Shareholder proponents of charitable-contributions related resolutions may seek greater disclosure on a company's charitable donations including dollar amounts, sponsorships, and policies on corporate philanthropy. Social Advisory

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Services is generally supportive of increased transparency around corporate charitable giving. However, some resolutions extend beyond mere disclosure requests and attempt to influence or restrict companies' contributions to specific types of beneficiaries in a manner that furthers particular objectives supported by the proposal sponsors. Social Advisory Services believes that management is better positioned to decide what criteria are appropriate for making corporate charitable contributions. Also, some of the proposals may require companies to poll their shareholders as part of the grant-making process. Since majority of companies generally have thousands of shareholders, contacting, confirming, and processing each individual opinion and/or consent would be a burdensome and expensive exercise.

Social Advisory Services Recommendation:

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| § | Generally vote for shareholder resolutions seeking enhanced transparency on corporate philanthropy.  |

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| § | Vote against shareholder proposals imposing charitable giving criteria or requiring shareholder ratification of grants.  |

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| § | Vote against shareholder proposals requesting that companies prohibit charitable contributions.  |

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Disclosure on Prior Government Service

Shareholders have asked companies to disclose the identity of any senior executive and/or other high-level employee, consultant, lobbyist, attorney, or investment banker who has served in government. Although the movement of individuals between government and the private sector may benefit both, the potential also exists for conflicts of interest, especially in industries that have extensive dealings with government agencies.

Social Advisory Services Recommendation: Vote for shareholder proposals calling for the disclosure of prior government service of the company's key executives.

Consumer Lending and Economic Development

Adopt Policy/Report on Predatory Lending Practices

Predatory lending involves charging excessive fees to subprime borrowers without adequate disclosure. More specifically, predatory lending includes misleading subprime borrowers about the terms of a loan, charging excessive fees that are folded into the body of a refinancing loan, including life insurance policies or other unnecessary additions to a mortgage, or lending to homeowners with insufficient income to cover loan payments.

Social Advisory Services Recommendation: Vote for shareholder proposals seeking the development of a policy or preparation of a report to guard against predatory lending practices.

Disclosure on Credit in Developing Countries (LDCs) or Forgive LDC Debt

Shareholders have asked banks and other financial services firms to develop and disclose lending policies for less developed countries. Proponents are concerned that, without such policies, lending to developing countries may contribute to the outflow of capital, the inefficient use of capital, and corruption, all of which increase the risk of loan loss. In the interest of promoting improved LDC lending practices and responsible loan disclosure, Social Advisory Services generally supports voting for such proposals. In cases where it can be determined that companies have been proactive and responsible in developing policies, Social Advisory Services may recommend a vote against the proposal's adoption. Social Advisory Services usually opposes proposals that call for outright loan forgiveness; such action represents an unacceptable loss to lending institutions and their shareholders. Social Advisory Services may support such proposals at banks that have failed to make reasonable provisions for non-performing loans as a means to encourage a change in policy.

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Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals asking for disclosure on lending practices in developing countries, unless the company has demonstrated a clear proactive record on the issue.  |

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| § | Vote against shareholder proposals asking banks to forgive loans outright.  |

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| § | Vote case-by-case on shareholder proposals asking for loan forgiveness at banks that have failed to make reasonable provisions for non-performing loans.  |

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| § | Vote for proposals to restructure and extend the terms of non-performing loans.  |

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Community Investing

Shareholders may ask for a company to prepare a report addressing the company's community investing efforts. Such proposals also ask companies to review their policies regarding their investments in different communities.

Social Advisory Services Recommendation: Vote for proposals that seek a policy review or report addressing the company's community investing efforts.

Miscellaneous

Adult Entertainment

Traditionally, there have not been many proposals filed in the area of adult entertainment. However, with the consolidation of the communications industry, a number of large companies have ended up with ownership of cable companies. These cable companies may offer their customers access to pay-per-view programming or channels intended for adult audiences. Proponents of shareholder proposals on this issue ask cable companies and companies with interests in cable companies to assess the costs and benefits of continuing to distribute sexually-explicit content, including the potential negative impact on the company's image.

Social Advisory Services Recommendation: Vote for shareholder proposals that seek a review of the company's involvement with pornography.

Abortion/Right to Life Issues

Shareholder proposals pertaining to abortion and right to life issues are rare. However, in the past shareholders have asked companies to stop manufacturing abortifacient drugs; to separate abortifacient drug operations from other operations; or to discontinue acute-care or physician management practices that involve support for abortion services. As long as abortion is legal, Social Advisory Services' position is that issues related to abortion should be a personal decision, not a corporate one. Therefore Social Advisory Services recommends abstaining on anti-abortion and right-to-life proposals.

Social Advisory Services Recommendation: Abstain on shareholder proposals that address right to life issues.

Anti-Social Proposals

A number of 'anti-social' shareholder proposals have been filed at companies requesting increased disclosure. While these proposals' requests are very similar to those submitted by shareholder advocates within traditional socially responsible investor circles, the underlying motives for filing the proposals appear to be very different. In addition to charitable contribution proposals, anti-social proposals addressing climate change, sustainability, and conflicts of interest may be seen at shareholder meetings. Despite implicitly different motivations in some of these proposals, the underlying requests for increased disclosure, in some cases, may be worth shareholder support.

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Social Advisory Services Recommendation:

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| § | Vote against shareholder proposals that do not seek to ultimately advance the goals of the social investment community.  |

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| § | Vote case-by-case on anti-social shareholder proposals seeking a review or report on the company's charitable contributions.  |

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Violence and Adult Themes in Video Games

Perceptions of increased sex and violence in video games have led certain shareholders to question the availability of adult-themed content to children and teens. The Entertainment Software Ratings Board, which provides ratings for video games, has classified approximately 34 percent of the total games it reviews as either Teen, Mature, or Adults Only.

Social Advisory Services Recommendation: Vote for shareholder proposals asking for reports on company policies related to the sale of mature-rated video games to children and teens.

Link Compensation to Non-Financial Factors

Proponents of these proposals feel that social and environmental criteria should be factored into the formulas used in determining executive compensation packages. The shareholder sponsors of the resolutions look to companies to review current compensation practices and to include social or environmental performance criteria such as accounting for "poor corporate citizenship" and meeting environmental or workplace safety objectives and metrics when evaluating executive compensation. Some of the non-financial criteria that proponents of these resolutions seek to be incorporated in compensation program design include workplace safety, environmental stewardship, or diversity and customer/employee satisfaction – as part of a written policy used to align compensation with performance on non-financial factors alongside financial criteria.

Proponents believe that factors such as poor environmental performance, workplace lawsuits, etc. could have a significant adverse impact on a company's financial performance if not proactively and adequately addressed, and that these factors *should* be considered along with traditional financial considerations when determining executive pay. The significant stock price declines and massive losses in shareholder value stemming from the BP Deepwater Horizon oil rig disaster and the tragic explosion at Massey Energy's Upper Big Branch mine that killed 29 employees is a sobering reminder of the need to have the right management incentives in place to ensure that social and environmental risks are actively managed and mitigated against. Given the proliferation of derivative lawsuits targeted at firms such as Halliburton, Transocean and Cameron International that were suppliers to or partners with BP in a capacity that ignored safety considerations or that contributed to the economic and ecological disaster, investors are increasingly mindful of the far-reaching implications that exposure to social or environmental risks could have on shareholder value at portfolio companies.

Social Advisory Services Recommendation:

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| § | Vote for shareholder proposals calling for linkage of executive pay to non-financial factors including performance against social and environmental goals, customer/employee satisfaction, corporate downsizing, community involvement, human rights, or predatory lending.  |

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| § | Vote for shareholder proposals seeking reports on linking executive pay to non-financial factors.  |

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9. Mutual Fund Proxies

Election of Trustees and Directors

Social Advisory Services Recommendation: Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes

Social Advisory Services Recommendation: For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

Investment Advisory Agreement

An investment advisory agreement is an agreement between a mutual fund and its financial advisor under which the financial advisor provides investment advice to the fund in return for a fee based on the fund's net asset size.

Social Advisory Services Recommendation: Votes on investment advisory agreements should be evaluated on a case-by-case basis, considering the following factors:

§ Proposed and current fee schedules;

§ Fund category/investment objective;

§ Performance benchmarks;

§ Share price performance as compared with peers;

§ Resulting fees relative to peers;

§ Assignments (where the advisor undergoes a change of control).

Changing a Fundamental Restriction to a Non-fundamental Restriction

Fundamental investment restrictions are limitations within a fund's articles of incorporation that limit the investment practices of the particular fund.

Social Advisory Services Recommendation: Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

§ The fund's target investments;

§ The reasons given by the fund for the change; and

§ The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Non-fundamental

Social Advisory Services Recommendation: Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

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Distribution Agreements

Distribution agreements are agreements between a fund and its distributor which provide that the distributor is paid a fee to promote the sale of the fund's shares.

Social Advisory Services Recommendation: Vote case-by-case on distribution agreement proposals, considering the following factors:

§ Fees charged to comparably sized funds with similar objectives;

§ The proposed distributor's reputation and past performance;

§ The competitiveness of the fund in the industry; and

§ The terms of the agreement.

Approving New Classes or Series of Shares

Social Advisory Services Recommendation: Vote for the establishment of new classes or series of shares.

Convert Closed-end Fund to Open-end Fund

Although approval of these proposals would eliminate the discount at which the fund's shares trade. The costs associated with converting the fund, in addition to the potential risks to long-term shareholder value, outweigh the potential benefits of the conversion.

Social Advisory Services Recommendation: Vote case-by-case on conversion proposals, considering the following factors:

§ Past performance as a closed-end fund;

§ Market in which the fund invests;

§ Measures taken by the board to address the discount; and

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| § | Past shareholder activism, board activity, and votes on related proposals.  |

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Proxy Contests

Social Advisory Services Recommendation: Vote case-by-case on proxy contests, considering the following factors:

§ Past performance relative to its peers;

§ Market in which fund invests;

§ Measures taken by the board to address the issues;

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| § | Past shareholder activism, board activity, and votes on related proposals;  |

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§ Strategy of the incumbents versus the dissidents;

§ Independence of directors;

§ Experience and skills of director candidates;

§ Governance profile of the company;

§ Evidence of management entrenchment.

Preferred Stock Proposals

Social Advisory Services Recommendation: Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

§ Stated specific financing purpose;

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§ Possible dilution for common shares;

§ Whether the shares can be used for antitakeover purposes.

Mergers

Social Advisory Services Recommendation: Vote case-by-case on merger proposals, considering the following factors:

§ Resulting fee structure;

§ Performance of both funds;

§ Continuity of management personnel; and

§ Changes in corporate governance and their impact on shareholder rights.

Business Development Companies – Authorization to Sell Shares of Common Stock at a Price below Net Asset Value

Social Advisory Services Recommendation: Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV) if:

§ The proposal to allow share issuances below NAV has an expiration date that is less than one year from the date shareholders approve the underlying proposal, as required under the Investment Company Act of 1940;

§ A majority of the independent directors who have no financial interest in the sale have made a determination as to whether such sale would be in the best interests of the company and its shareholders prior to selling shares below NAV; and

§ The company has demonstrated responsible past use of share issuances by either:

§ Outperforming peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

§ Providing disclosure that its past share issuances were priced at levels that resulted in only small or moderate discounts to NAV and economic dilution to existing non-participating shareholders.

Change in Fund's Subclassification

Social Advisory Services Recommendation: Vote case-by-case on changes in a fund's sub-classification, considering the following factors: a) potential competitiveness; b) current and potential returns; c) risk of concentration; d) consolidation in target industry.

Changing the Domicile of a Fund

Social Advisory Services Recommendation: Vote case-by-case on re-incorporations, considering the following factors: a) regulations of both states; b) required fundamental policies of both states; c) the increased flexibility available.

Disposition of Assets/Termination/Liquidation

Social Advisory Services Recommendation: Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors: a) strategies employed to salvage the company; b) the fund's past performance; c) the terms of the liquidation.

Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval

Social Advisory Services Recommendation: Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

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Name Change Proposals

Social Advisory Services Recommendation: Vote case-by-case on name change proposals, considering the following factors: a) political/economic changes in the target market; b) consolidation in the target market; and c) current asset composition.

1940 Act Policies

Social Advisory Services Recommendation:

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| § | Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors: a) potential competitiveness; b) regulatory developments; c) current and potential returns; and d) current and potential risk.  |

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| § | Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.  |

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![LOGO](g79608g83w02.jpg)

UNITED STATES SUSTAINABILITY PROXY VOTING GUIDELINES 2023 Policy Recommendations Published January 17, 2023 W W W . I S S G O V E R N A N C E . C O M

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![LOGO](g79608g00k14.jpg)

## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  [**Introduction**](#appda79608_1) | E-419 |
| [**1. Routine/Miscellaneous**](#appda79608_2) | E-420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjourn Meeting](#appda79608_3) | E-420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Quorum Requirements](#appda79608_4) | E-420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Minor Bylaws](#appda79608_5) | E-420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Company Name](#appda79608_6) | E-420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Date, Time, or Location of Annual Meeting](#appda79608_7) | E-420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Other Business](#appda79608_8) | E-421 |
|  [Audit-Related](#appda79608_9) | E-421 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Indemnification and Limitation of Liability](#appda79608_10) | E-421 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Ratification](#appda79608_11) | E-421 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals Limiting Non-Audit Services](#appda79608_12) | E-421 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Audit Firm Rotation](#appda79608_13) | E-422 |
| [**2. Board of Directors**](#appda79608_14) | E-423 |
|  [Voting on Director Nominees in Uncontested Elections](#appda79608_15) | E-423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Accountability](#appda79608_16) | E-423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Takeover Defenses, Capital Structure, and Governance Structures](#appda79608_17) | E-423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Audit-Related Practices](#appda79608_18) | E-426 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Compensation Practices](#appda79608_19) | E-426 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Environmental, Social and Governance (ESG) Failures](#appda79608_20) | E-427 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Risk Mitigation and Net Zero](#appda79608_21) | E-427 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Responsiveness](#appda79608_22) | E-428 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Composition](#appda79608_23) | E-428 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender Diversity](#appda79608_24) | E-429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial and/or Ethnic Diversity](#appda79608_25) | E-429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independence](#appda79608_26) | E-429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sustainability Policy Classification of Directors – U.S.](#appda79608_27) | E-430 |
|  [Other Board-Related Proposals](#appda79608_28) | E-432 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appda79608_29) | E-432 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Size](#appda79608_30) | E-432 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification/Declassification of the Board](#appda79608_31) | E-432 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appda79608_32) | E-433 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appda79608_33) | E-433 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification, Liability Protection, and Exculpation](#appda79608_34) | E-433 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appda79608_35) | E-433 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish Other Board Committee Proposals](#appda79608_36) | E-434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Filling Vacancies/Removal of Directors](#appda79608_37) | E-434 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independent Board Chair](#appda79608_38) | E-434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority of Independent Directors/Establishment of Independent Committees](#appda79608_39) | E-434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Vote Standard for the Election of Directors](#appda79608_40) | E-435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Access](#appda79608_41) | E-435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Require More Nominees than Open Seats](#appda79608_42) | E-435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Engagement Policy (Shareholder Advisory Committee)](#appda79608_43) | E-435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access - Voting for Director Nominees in Contested Elections](#appda79608_44) | E-436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Vote-No Campaigns](#appda79608_45) | E-436 |
| [**3. Shareholder Rights & Defenses**](#appda79608_46) | E-437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advance Notice Requirements for Shareholder Proposals/Nominations](#appda79608_47) | E-437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Bylaws without Shareholder Consent](#appda79608_48) | E-437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Acquisition Provisions](#appda79608_49) | E-437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Cash-Out Provisions](#appda79608_50) | E-437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disgorgement Provisions](#appda79608_51) | E-438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appda79608_52) | E-438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Freeze-Out Provisions](#appda79608_53) | E-438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appda79608_54) | E-438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Litigation Rights](#appda79608_55) | E-438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Federal Forum Selection Provisions](#appda79608_56) | E-438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Forum Provisions for State Law Matters](#appda79608_57) | E-439 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee Shifting](#appda79608_58) | E-439 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Protective Amendments](#appda79608_59) | E-439 |
|  [Poison Pills (Shareholder Rights Plans)](#appda79608_60) | E-440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy](#appda79608_61) | E-440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify a Poison Pill](#appda79608_62) | E-440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)](#appda79608_63) | E-440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Voting Disclosure, Confidentiality, and Tabulation](#appda79608_64) | E-441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appda79608_65) | E-441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimbursing Proxy Solicitation Expenses](#appda79608_66) | E-441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appda79608_67) | E-442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appda79608_68) | E-442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call Special Meetings](#appda79608_69) | E-443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stakeholder Provisions](#appda79608_70) | E-443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [State Antitakeover Statutes](#appda79608_71) | E-443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Vote Requirements](#appda79608_72) | E-443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appda79608_73) | E-443 |
| [**4. Capital/Restructuring**](#appda79608_74) | E-444 |
|  [Capital](#appda79608_75) | E-444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjustments to Par Value of Common Stock](#appda79608_76) | E-444 |

---

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![LOGO](g79608g00k14.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appda79608_77) | E-444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appda79608_78) | E-444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appda79608_79) | E-445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Dual Class Structure](#appda79608_80) | E-445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Issue Stock for Use with Rights Plan](#appda79608_81) | E-445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appda79608_82) | E-445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appda79608_83) | E-445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appda79608_84) | E-445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appda79608_85) | E-446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recapitalization Plans](#appda79608_86) | E-447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appda79608_87) | E-447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appda79608_88) | E-447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appda79608_89) | E-447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tracking Stock](#appda79608_90) | E-448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S](#appda79608_91) | E-448 |
|  [Restructuring](#appda79608_92) | E-448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appda79608_93) | E-448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Purchases](#appda79608_94) | E-448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appda79608_95) | E-449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appda79608_96) | E-449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conversion of Securities](#appda79608_97) | E-449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans](#appda79608_98) | E-449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Formation of Holding Company](#appda79608_99) | E-450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)](#appda79608_100) | E-450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Joint Ventures](#appda79608_101) | E-450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appda79608_102) | E-451 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers and Acquisitions](#appda79608_103) | E-451 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Private Placements/Warrants/Convertible Debentures](#appda79608_104) | E-451 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reorganization/Restructuring Plan (Bankruptcy)](#appda79608_105) | E-452 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appda79608_106) | E-453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions](#appda79608_107) | E-453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appda79608_108) | E-454 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Value Maximization Shareholder Proposals](#appda79608_109) | E-454 |
| [**5. Compensation**](#appda79608_110) | E-455 |
|  [Executive Pay Evaluation](#appda79608_111) | E-455 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation—Management Proposals (Management Say-on-Pay)](#appda79608_112) | E-455 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Evaluation](#appda79608_113) | E-456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices](#appda79608_114) | E-456 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Committee Communications and Responsiveness](#appda79608_115) | E-457 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")](#appda79608_116) | E-458 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appda79608_117) | E-458 |
|  [Equity-Based and Other Incentive Plans](#appda79608_118) | E-458 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Value Transfer (SVT)](#appda79608_119) | E-459 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Three-Year Value-Adjusted Burn Rate](#appda79608_120) | E-460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Egregious Factors](#appda79608_121) | E-460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liberal Change in Control Definition](#appda79608_122) | E-460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Repricing Provisions](#appda79608_123) | E-460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices or Significant Pay-for-Performance Disconnect](#appda79608_124) | E-461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Treatment of Certain Award Types in Equity Plan Evaluations](#appda79608_125) | E-461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Dividend Equivalent Rights](#appda79608_126) | E-461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)](#appda79608_127) | E-461 |
|  [Other Compensation Plans](#appda79608_128) | E-461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [401(k) Employee Benefit Plans](#appda79608_129) | E-461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Ownership Plans (ESOPs)](#appda79608_130) | E-461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans—Qualified Plans](#appda79608_131) | E-462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans—Non-Qualified Plans](#appda79608_132) | E-462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))](#appda79608_133) | E-462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appda79608_134) | E-463 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Plans in Lieu of Cash](#appda79608_135) | E-463 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Stock Option (TSO) Programs](#appda79608_136) | E-464 |
|  [Director Compensation](#appda79608_137) | E-464 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appda79608_138) | E-464 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Plans for Non-Employee Directors](#appda79608_139) | E-465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Employee Director Retirement Plans](#appda79608_140) | E-465 |
|  [Shareholder Proposals on Compensation](#appda79608_141) | E-465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appda79608_142) | E-465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking/Bonus Banking "Plus"](#appda79608_143) | E-465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants—Disclosure of Board or Company's Utilization](#appda79608_144) | E-466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure/Setting Levels or Types of Compensation for Executives and Directors](#appda79608_145) | E-466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden Coffins/Executive Death Benefits](#appda79608_146) | E-466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hold Equity Past Retirement or for a Significant Period of Time](#appda79608_147) | E-466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay Disparity](#appda79608_148) | E-467 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Performance/Performance-Based Awards](#appda79608_149) | E-467 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appda79608_150) | E-467 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pre-Arranged Trading Plans (10b5-1 Plans)](#appda79608_151) | E-468 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit Outside CEOs from Serving on Compensation Committees](#appda79608_152) | E-468 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoupment of Incentive or Stock Compensation in Specified Circumstances](#appda79608_153) | E-468 |

---

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---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements for Executives/Golden Parachutes](#appda79608_154) | E-469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Buyback Proposals](#appda79608_155) | E-469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supplemental Executive Retirement Plans (SERPs)](#appda79608_156) | E-469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-Up Proposals](#appda79608_157) | E-469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity](#appda79608_158) | E-470 |
| [**6. Social and Environmental Issues**](#appda79608_159) | E-471 |
|  [Global Approach](#appda79608_160) | E-471 |
|  [Animal Welfare](#appda79608_161) | E-471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Welfare Policies](#appda79608_162) | E-471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Testing](#appda79608_163) | E-471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Slaughter](#appda79608_164) | E-472 |
|  [Consumer Issues](#appda79608_165) | E-472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Genetically Modified Ingredients](#appda79608_166) | E-472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports on Potentially Controversial Business/Financial Practices](#appda79608_167) | E-472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Consumer Lending](#appda79608_168) | E-473 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pharmaceutical Pricing, Access to Medicines, Product Reimportation and Health Pandemics](#appda79608_169) | E-473 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Health Pandemics](#appda79608_170) | E-473 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Product Safety and Toxic/Hazardous Materials](#appda79608_171) | E-474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tobacco-Related Proposals](#appda79608_172) | E-474 |
|  [Climate Change](#appda79608_173) | E-474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Change/Greenhouse Gas (GHG) Emissions](#appda79608_174) | E-474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appda79608_175) | E-475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appda79608_176) | E-475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Energy Efficiency](#appda79608_177) | E-476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Renewable Energy](#appda79608_178) | E-476 |
|  [Diversity](#appda79608_179) | E-476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Diversity](#appda79608_180) | E-476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equality of Opportunity](#appda79608_181) | E-476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender Identity, Sexual Orientation, and Domestic Partner Benefits](#appda79608_182) | E-476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender, Race/Ethnicity Pay Gap](#appda79608_183) | E-477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial Equity and/or Civil Rights Audits](#appda79608_184) | E-477 |
|  [Environment and Sustainability](#appda79608_185) | E-477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Facility and Workplace Safety](#appda79608_186) | E-477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hydraulic Fracturing](#appda79608_187) | E-477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in Protected Areas](#appda79608_188) | E-477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recycling](#appda79608_189) | E-478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sustainability Reporting](#appda79608_190) | E-478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Water Issues](#appda79608_191) | E-478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equator Principles](#appda79608_192) | E-478 |

---

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---

| | |
|:---|:---|
|  [General Corporate Issues](#appda79608_193) | E-479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Charitable Contributions](#appda79608_194) | E-479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Data Security, Privacy, and Internet Issues](#appda79608_195) | E-479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Environmental, Social, and Governance (ESG) Compensation-Related Proposals](#appda79608_196) | E-479 |
|  [Human Rights, Labor Issues, and International Operations](#appda79608_197) | E-479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Human Rights Proposals](#appda79608_198) | E-480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mandatory Arbitration](#appda79608_199) | E-480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [MacBride Principles](#appda79608_200) | E-481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Community Social and Environmental Impact Assessments](#appda79608_201) | E-481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in High-Risk Markets](#appda79608_202) | E-481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Outsourcing/Offshoring](#appda79608_203) | E-481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sexual Harassment](#appda79608_204) | E-482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Weapons and Military Sales](#appda79608_205) | E-482 |
|  [Political Activities](#appda79608_206) | E-482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Lobbying](#appda79608_207) | E-482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Contributions](#appda79608_208) | E-482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Ties](#appda79608_209) | E-483 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Expenditures and Lobbying Congruency](#appda79608_210) | E-483 |
| [**7. Mutual Fund Proxies**](#appda79608_211) | E-484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Election of Directors](#appda79608_212) | E-484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes](#appda79608_213) | E-484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Converting Closed-end Fund to Open-end Fund](#appda79608_214) | E-484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests](#appda79608_215) | E-484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Advisory Agreements](#appda79608_216) | E-484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Approving New Classes or Series of Shares](#appda79608_217) | E-485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Proposals](#appda79608_218) | E-485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [1940 Act Policies](#appda79608_219) | E-485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing a Fundamental Restriction to a Nonfundamental Restriction](#appda79608_220) | E-485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Fundamental Investment Objective to Nonfundamental](#appda79608_221) | E-485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Name Change Proposals](#appda79608_222) | E-485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change in Fund's Subclassification](#appda79608_223) | E-486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value](#appda79608_224) | E-486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disposition of Assets/Termination/Liquidation](#appda79608_225) | E-486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changes to the Charter Document](#appda79608_226) | E-486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing the Domicile of a Fund](#appda79608_227) | E-487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval](#appda79608_228) | E-487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Distribution Agreements](#appda79608_229) | E-487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Master-Feeder Structure](#appda79608_230) | E-487 |

---

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers](#appda79608_231) | E-487 |
|  [Shareholder Proposals for Mutual Funds](#appda79608_232) | E-487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish Director Ownership Requirement](#appda79608_233) | E-487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimburse Shareholder for Expenses Incurred](#appda79608_234) | E-488 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Terminate the Investment Advisor](#appda79608_235) | E-488 |
| [**8. Foreign Private Issuers Listed on U.S. Exchanges**](#appda79608_236) | E-489 |

---

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## Introduction
ISS recognizes the growing view among investment professionals that sustainability or environmental, social, and corporate governance (ESG) factors could present material risks to portfolio investments. Whereas investment managers have traditionally analyzed topics such as board accountability and executive compensation to mitigate risk, greater numbers are incorporating ESG performance into their investment making decisions in order to have a more comprehensive understanding of the overall risk profile of the companies in which they invest and ensure sustainable long-term profitability for their beneficiaries.

Investors concerned with portfolio value preservation and enhancement through the incorporation of sustainability factors can also carry out this active ownership approach through their proxy voting activity. In voting their shares, sustainability-minded investors are concerned not only with economic returns to shareholders and good corporate governance, but also with ensuring corporate activities and practices are aligned with the broader objectives of society. These investors seek standardized reporting on ESG issues, request information regarding an issuer's adoption of, or adherence to, relevant norms, standards, codes of conduct or universally recognized international initiatives including affirmative support for related shareholder resolutions advocating enhanced disclosure and transparency.

#### ISS' Sustainability Proxy Voting Guidelines
ISS has, therefore, developed proxy voting guidelines that are consistent with the objectives of sustainability-minded investors and fiduciaries. On matters of ESG import, ISS' Sustainability Policy seeks to promote support for recognized global governing bodies promoting sustainable business practices advocating for stewardship of environment, fair labor practices, non-discrimination, and the protection of human rights. Generally, ISS' Sustainability Policy will take as its frame of reference internationally recognized sustainability-related initiatives such as the United Nations Environment Programme Finance Initiative (UNEP FI), United Nations Principles for Responsible Investment (UNPRI), United Nations Global Compact, Global Reporting Initiative (GRI), Carbon Principles, International Labour Organization Conventions (ILO), Ceres Roadmap 2030, Global Sullivan Principles, MacBride Principles, and environmental and social European Union Directives. Each of these efforts promote a fair, unified and productive reporting and compliance environment which advances positive corporate ESG actions that promote practices that present new opportunities or that mitigate related financial and reputational risks.

On matters of corporate governance, executive compensation, and corporate structure, the Sustainability Policy guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance.

These guidelines provide an overview of how ISS approaches proxy voting issues for subscribers of the Sustainability Policy. We note there may be cases in which the final vote recommendation at a particular company varies from the voting guidelines due to the fact that we closely examine the merits of each proposal and consider relevant information and company-specific circumstances in arriving at our decisions. To that end, ISS engages with both interested shareholders as well as issuers to gain further insight into contentious issues facing the company. Where ISS acts as voting agent for clients, it follows each client's voting policy, which may differ in some cases from the policies outlined in this document. ISS updates its guidelines on an annual basis to take into account emerging issues and trends on environmental, social and corporate governance topics, as well as the evolution of market standards, regulatory changes and client feedback.

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1. Routine/Miscellaneous

Adjourn Meeting

Sustainability Policy Recommendation: Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.

---

| | |
|:---|:---|
| § | Vote for proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction.  |

---

---

| | |
|:---|:---|
| § | Vote against proposals if the wording is too vague or if the proposal includes "other business."  |

---

Amend Quorum Requirements

Sustainability Policy Recommendation: Vote case-by-case on proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

§ The new quorum threshold requested;

§ The rationale presented for the reduction;

§ The market capitalization of the company (size, inclusion in indices);

§ The company's ownership structure;

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| | |
|:---|:---|
| § | Previous voter turnout or attempts to achieve quorum;  |

---

---

| | |
|:---|:---|
| § | Any provisions or commitments to restore quorum to a majority of shares outstanding, should voter turnout improve sufficiently; and  |

---

§ Other factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

Amend Minor Bylaws

Sustainability Policy Recommendation: Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Change Company Name

Sustainability Policy Recommendation: Vote for proposals to change the corporate name unless there is compelling evidence that the change would adversely impact shareholder value.

Change Date, Time, or Location of Annual Meeting

Sustainability Policy Recommendation: Vote for management proposals to change the date, time, or location of the annual meeting unless the proposed change is unreasonable.

Vote against shareholder proposals to change the date, time, or location of the annual meeting unless the current scheduling or location is unreasonable.

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Other Business

Sustainability Policy Recommendation: Vote against proposals to approve other business when it appears as voting item.

Audit-Related

Auditor Indemnification and Limitation of Liability

Sustainability Policy Recommendation: Vote case-by-case on the issue of auditor indemnification and limitation of liability. Factors to be assessed include, but are not limited to:

§ The terms of the auditor agreement--the degree to which these agreements impact shareholders' rights;

§ The motivation and rationale for establishing the agreements;

§ The quality of the company's disclosure; and

§ The company's historical practices in the audit area.

Vote against or withhold from members of an audit committee in situations where there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Auditor Ratification

Sustainability Policy Recommendation: Vote for proposals to ratify auditors unless any of the following apply:

§ An auditor has a financial interest in or association with the company, and is therefore not independent;

§ There is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company's financial position;

§ Poor accounting practices are identified that rise to a serious level of concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures; or

§ Fees for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

§ Non-audit ("other") fees > audit fees + audit-related fees + tax compliance/preparation fees

Tax compliance and preparation include the preparation of original and amended tax returns and refund claims, and tax payment planning. All other services in the tax category, such as tax advice, planning, or consulting, should be added to "Other" fees. If the breakout of tax fees cannot be determined, add all tax fees to "Other" fees.

In circumstances where "Other" fees include fees related to significant one-time capital structure events (such as initial public offerings, bankruptcy emergence, and spin-offs) and the company makes public disclosure of the amount and nature of those fees that are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

Shareholder Proposals Limiting Non-Audit Services

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.

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Shareholder Proposals on Audit Firm Rotation

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals asking for audit firm rotation, taking into account:

§ The tenure of the audit firm;

§ The length of rotation specified in the proposal;

§ Any significant audit-related issues at the company;

§ The number of audit committee meetings held each year;

§ The number of financial experts serving on the committee; and

§ Whether the company has a periodic renewal process where the auditor is evaluated for both audit quality and competitive price.

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2. Board of Directors

Voting on Director Nominees in Uncontested Elections

Four fundamental principles apply when determining votes on director nominees:

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| | |
|:---|:---|
| § | *<u>Accountability</u>:* Boards should be sufficiently accountable to shareholders, including through transparency of the company's governance practices and regular board elections, by the provision of sufficient information for shareholders to be able to assess directors and board composition, and through the ability of shareholders to remove directors.  |

---

---

| | |
|:---|:---|
| § | *<u>Responsiveness</u>:* Directors should respond to investor input, such as that expressed through significant opposition to management proposals, significant support for shareholder proposals (whether binding or non-binding), and tender offers where a majority of shares are tendered.  |

---

---

| | |
|:---|:---|
| § | *<u>Composition</u>:* Companies should seek directors who can add value to the board through specific skills or expertise and who can devote sufficient time and commitment to serve effectively. Boards should be of a size appropriate to accommodate diversity, expertise, and independence, while ensuring active and collaborative participation by all members. Boards should be sufficiently diverse to ensure consideration of a wide range of perspectives.  |

---

---

| | |
|:---|:---|
| § | *<u>Independence</u>:* Boards should be sufficiently independent from management (and significant shareholders) so as to ensure that they are able and motivated to effectively supervise management's performance for the benefit of all shareholders, including in setting and monitoring the execution of corporate strategy, with appropriate use of shareholder capital, and in setting and monitoring executive compensation programs that support that strategy. The chair of the board should ideally be an independent director, and all boards should have an independent leadership position or a similar role in order to help provide appropriate counterbalance to executive management, as well as having sufficiently independent committees that focus on key governance concerns such as audit, compensation, and nomination of directors.  |

---

Sustainability Policy Recommendation: Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>1</sup>** considered on a case-by-case basis):

Accountability

Problematic Takeover Defenses, Capital Structure, and Governance Structures

Classified Board Structure: The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election. All appropriate nominees (except new) may be held accountable.

Removal of Shareholder Discretion on Classified Boards: The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

Director Performance Evaluation: The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted. Problematic provisions include but are not limited to:

§ A classified board structure;

<sup>1</sup> A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

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| | |
|:---|:---|
| § | A supermajority vote requirement;  |

---

---

| | |
|:---|:---|
| § | Either a plurality vote standard in uncontested director elections or a majority vote standard with no plurality carve-out for contested elections;  |

---

§ The inability of shareholders to call special meetings;

§ The inability of shareholders to act by written consent;

§ A multi-class capital structure; and/or

§ A non–shareholder-approved poison pill.

Poison Pills: Generally vote against or withhold from all nominees (except new nominees<sup>1</sup>, who should be considered case-by-case) if:

---

| | |
|:---|:---|
| § | The company has a poison pill with a deadhand or slowhand feature**<sup>2</sup>**;  |

---

§ The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

---

| | |
|:---|:---|
| § | The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders**<sup>3</sup>**.  |

---

Vote case-by-case on nominees if the board adopts an initial short-term pill**<sup>3</sup>** (with a term of one year or less) without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

---

| | |
|:---|:---|
| § | A commitment to put any renewal to a shareholder vote; and  |

---

§ Other factors as relevant.

Unilateral Bylaw/Charter Amendments: Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees<sup>2</sup>, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and,

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees.

<sup>2</sup> If the short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, ISS will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

<sup>3</sup> Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

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Generally vote against (except new nominees, who should be considered case-by-case) if the directors:

§ Classified the board;

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| | |
|:---|:---|
| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

---

§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a fee-shifting provision; or

§ Adopted another provision deemed egregious.

Problematic Governance Structure: For companies that hold or held their first annual meeting**<sup>7</sup>** of public shareholders after Feb. 1, 2015,**<sup>4</sup>** generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees<sup>1</sup>, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights

---

| | |
|:---|:---|
| § | Supermajority vote requirements to amend the bylaws or charter;  |

---

§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

Unequal Voting Rights: Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees<sup>1</sup>, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>5</sup>**.

Exceptions to this policy will generally be limited to:

---

| | |
|:---|:---|
| § | Newly-public companies**<sup>6</sup>** with a sunset provision of no more than seven years from the date of going public;  |

---

§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

§ Situations where the unequal voting rights are considered *de minimis;* or

---

| | |
|:---|:---|
| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

---

Management Proposals to Ratify Existing Charter or Bylaw Provisions: Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

<sup>4</sup> Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

<sup>5</sup> This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

<sup>6</sup> Newly-public companies generally include companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

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§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Restricting Binding Shareholder Proposals: Generally vote against or withhold from members of the governance committee if:

---

| | |
|:---|:---|
| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals, or share ownership requirements, subject matter restrictions, or time holding requirement in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

---

Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally, continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Problematic Audit-Related Practices

Generally, vote against or withhold from the members of the audit committee if:

§ The non-audit fees paid to the auditor are excessive (see discussion under "Auditor Ratification");

§ The company receives an adverse opinion on the company's financial statements from its auditor; or

§ There is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Vote case-by-case on members of the audit committee and potentially the full board if:

---

| | |
|:---|:---|
| § | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company's efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted.  |

---

Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the compensation committee and potentially the full board if:

§ There is a significant misalignment between CEO pay and company performance (pay for performance);

§ The company maintains significant problematic pay practices;

§ The board exhibits a significant level of poor communication and responsiveness to shareholders;

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

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**Problematic Pledging of Company Stock:** Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

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§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Environmental, Social and Governance (ESG) Failures

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

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| § | Material failures of governance, stewardship, risk oversight**<sup>7</sup>**, or fiduciary responsibilities at the company, including failure to adequately guard against or manage ESG risks;  |

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§ A lack of sustainability reporting in the company's public documents and/or website in conjunction with a failure to adequately manage or mitigate ESG risks;

§ Failure to replace management as appropriate; or

§ Egregious actions related to a director's service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

Climate Risk Mitigation and Net Zero

For companies that are significant greenhouse gas (GHG) emitters, through their operations or value chain**<sup>8</sup>**, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where Sustainability Advisory Services determines that the company is not taking the minimum steps need to be aligned with a Net Zero by 2050 trajectory.

For **2023,** the minimum steps needed to be considered to be aligned with a Net Zero by 2050 trajectory are (all minimum criteria will be required to be in alignment with the policy):

§ The company has detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

§ Board governance measures;

§ Corporate strategy;

§ Risk management analyses; and

§ Metrics and targets.

§ The company has declared a Net Zero target by 2050 or sooner and the target includes scope 1, 2, and relevant scope 3 emissions.

§ The company has set a medium-term target for reducing its GHG emissions.

<sup>7</sup> Examples of failure of risk oversight include, but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant environmental incidents including spills and pollution; large scale or repeat workplace fatalities or injuries; significant adverse legal judgments or settlements; or hedging of company stock.

<sup>8</sup> For 2023, companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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Expectations about what constitutes "minimum steps needed to be aligned with a Net Zero by 2050 trajectory" will increase over time.

Responsiveness

Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

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| § | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:  |

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| § | Disclosed outreach efforts by the board to shareholders in the wake of the vote;  |

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§ Rationale provided in the proxy statement for the level of implementation;

§ The subject matter of the proposal;

§ The level of support for and opposition to the resolution in past meetings;

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|:---|:---|
| § | Actions taken by the board in response to the majority vote and its engagement with shareholders;  |

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§ The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and

§ Other factors as appropriate.

§ The board failed to act on takeover offers where the majority of shares are tendered;

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|:---|:---|
| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote.  |

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Vote case-by-case on compensation committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

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|:---|:---|
| § | The company's previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Composition

Attendance at Board and Committee Meetings: Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>9</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

§ Medical issues/illness;

§ Family emergencies; and

<sup>9</sup> Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

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| § | Missing only one meeting (when the total of all meetings is three or fewer).  |

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| § | In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.  |

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If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

Overboarded Directors: Generally, vote against or withhold from individual directors who:

§ Sit on more than five public company boards; or

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| § | Are CEOs of public companies who sit on the boards of more than two public companies besides their own—withhold only at their outside boards**<sup>10</sup>**.  |

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Gender Diversity

Sustainability Policy Recommendation: Generally vote against or withhold from the chair of the nominating committee, or other nominees on a case-by-case basis, if the board lacks at least one director of an underrepresented gender identity<sup>11</sup>.

Racial and/or Ethnic Diversity

Sustainability Policy Recommendation: Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members<sup>12</sup>.

Independence

Vote against or withhold from non-independent directors (Executive Directors and Non-Independent Non-Executive Directors per Sustainability Advisory Services' Classification of Directors) when:

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| § | Independent directors comprise 50 percent or less of the board;  |

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§ The non-independent director serves on the audit, compensation, or nominating committee;

§ The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or

§ The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee.

<sup>10</sup> Although all of a CEO's subsidiary boards will be counted as separate boards, Sustainability Advisory Services will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent, but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

<sup>11</sup> Underrepresented gender identity includes directors who identify as women or as non-binary.

<sup>12</sup> Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

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Sustainability Policy Classification of Directors – U.S.

1. **Executive Director** 

1.1. Current officer **<sup>[1]</sup>** of the company or one of its affiliates **<sup>[2]</sup>**.

2. Non-Independent Non-Executive Director

<u>Board Identification</u> 

2.1. Director identified as not independent by the board.

<u>Controlling/Significant Shareholder</u> 

2.2. Beneficial owner of more than 50 percent of the company's voting power (this may be aggregated if voting power is distributed among more than one member of a group).

<u>Current Employment at Company or Partnership</u> 

2.3. Non-officer employee of the firm (including employee representatives).

2.4. Officer **<sup>[1]</sup>**, former officer, or general or limited partner of a joint venture or partnership with the company.

<u>Former Employment</u> 

2.5. Former CEO of the company. **<sup>[3]</sup>,<sup>[4]</sup>** 

2.6. Former non-CEO officer **<sup>[1]</sup>** of the company or an affiliate **<sup>[2]</sup>** within the past five years.

2.7. Former officer *[1]* of an acquired company within the past five years **<sup>[4]</sup>**.

2.8. Officer **<sup>[1]</sup>** of a former parent or predecessor firm at the time the company was sold or split off within the past five years.

2.9. Former interim officer if the service was longer than 18 months. If the service was between 12 and 18 months an assessment of the interim officer's employment agreement will be made. **<sup>[5]</sup>** 

<u>Family Members</u> 

2.10. Immediate family member **<sup>[6]</sup>** of a current or former officer **<sup>[1]</sup>** of the company or its affiliates **<sup>[2]</sup>** within the last five years.

2.11. Immediate family member **<sup>[6]</sup>** of a current employee of company or its affiliates **<sup>[2]</sup>** where additional factors raise concern (which may include, but are not limited to, the following: a director related to numerous employees; the company or its affiliates employ relatives of numerous board members; or a non-Section 16 officer in a key strategic role).

<u>Professional, Transactional, and Charitable Relationships</u> 

2.12. Director who (or whose immediate family member **<sup>[6]</sup>**) currently provides professional services **<sup>[7]</sup>** in excess of $10,000 per year to: the company, an affiliate **<sup>[2]</sup>**, or an individual officer of the company or an affiliate; either directly or is (or whose family member is) a partner, employee, or controlling shareholder of an organization which provides the services.

2.13. Director who (or whose immediate family member **<sup>[6]</sup>**) currently has any material transactional relationship **<sup>[8]</sup>** with the company or its affiliates **<sup>[2]</sup>**; or who is (or whose immediately family member *[6]* is) a partner in, or a controlling shareholder or an executive officer of, an organization which has the material transactional relationship *[8]* (excluding investments in the company through a private placement).

2.14. Director who (or whose immediate family member **<sup>[6]</sup>**) is a trustee, director, or employee of a charitable or non-profit organization that receives material grants or endowments **<sup>[8]</sup>** from the company or its affiliates **<sup>[2]</sup>**.

<u>Other Relationships</u> 

2.15. Party to a voting agreement **<sup>[9]</sup>** to vote in line with management on proposals being brought to shareholder vote.

2.16. Has (or an immediate family member **<sup>[6]</sup>** has) an interlocking relationship as defined by the SEC involving members of the board of directors or its Compensation Committee **<sup>[10]</sup>**.

2.17. Founder **<sup>[11]</sup>** of the company but not currently an employee.

2.18. Director with pay comparable to Named Executive Officers.

2.19. Any material **<sup>[12]</sup>** relationship with the company.

3. **Independent Director** 

3.1. No material **<sup>[12]</sup>** connection to the company other than a board seat.

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#### Footnotes:
**<sup>[1]</sup>**The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will be classified as an Affiliated Outsider under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation in excess of $10,000 per year for serving in that capacity, then the director will be classified as an Independent Outsider.

**<sup>[2]</sup>** "Affiliate" includes a subsidiary, sibling company, or parent company. Sustainability Advisory Services uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

**<sup>[3]</sup>** Includes any former CEO of the company prior to the company's initial public offering (IPO).

**<sup>[4]</sup>** When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, Sustainability Advisory Services will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

**<sup>[5]</sup>** Sustainability Advisory Services will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. Sustainability Advisory Services will also consider if a formal search process was under way for a full-time officer at the time.

**<sup>[6]</sup>** "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

**<sup>[7]</sup>** Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include, but are not limited to the following: investment banking/financial advisory services; commercial banking (beyond deposit services); investment services; insurance services; accounting/audit services; consulting services; marketing services; legal services; property management services; realtor services; lobbying services; executive search services; and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services; IT tech support services; educational services; and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than

a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

**<sup>[8]</sup>** A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity exceeding the greater of $200,000 or 5 percent of the recipient's gross revenues, in the case of a company which follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, in the case of a company which follows NYSE listing standards. In the case of a company which follows neither of the preceding standards, Sustainability Advisory Services will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

**<sup>[9]</sup>** Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as independent outsiders if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

**<sup>[10]</sup>** Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

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**<sup>[11]</sup>** The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, Sustainability Advisory Services may deem him or her an independent outsider.

**<sup>[12]</sup>** For purposes of Sustainability Advisory Services' director independence classification, "material" will be defined as a standard of relationship (financial, personal or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Other Board-Related Proposals

Board Refreshment

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

#### Term/Tenure Limits
Sustainability Policy Recommendation: Vote case-by-case on management proposals regarding director term/tenure limits, considering:

§ The rationale provided for adoption of the term/tenure limit;

§ The robustness of the company's board evaluation process;

§ Whether the limit is of sufficient length to allow for a broad range of director tenures;

§ Whether the limit would disadvantage independent directors compared to non-independent directors; and

§ Whether the board will impose the limit evenly, and not have the ability to waive it in a discriminatory manner.

Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:

§ The scope of the shareholder proposal; and

§ Evidence of problematic issues at the company combined with, or exacerbated by, a lack of board refreshment.

#### Age Limits
Sustainability Policy Recommendation: Generally vote against management and shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

Board Size

**Sustainability Policy Recommendation:** Vote for proposals seeking to fix the board size or designate a range for the board size.

Vote against proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.

Classification/Declassification of the Board

**Sustainability Policy Recommendation:** Vote against proposals to classify (stagger) the board.

Vote for proposals to repeal classified boards and to elect all directors annually.

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CEO Succession Planning

**Sustainability Policy Recommendation:** Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering, at a minimum, the following factors:

§ The reasonableness/scope of the request; and

§ The company's existing disclosure on its current CEO succession planning process.

Cumulative Voting

**Sustainability Policy Recommendation:** Generally vote against management proposals to eliminate cumulate voting, and for shareholder proposals to restore or provide for cumulative voting, unless:

§ The company has proxy access, thereby allowing shareholders to nominate directors to the company's ballot; and

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| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

Director and Officer Indemnification, Liability Protection, and Exculpation

**Sustainability Policy Recommendation:** Vote case-by-case on proposals on director and officer indemnification liability protection, and exculpation**<sup>13</sup>.** 

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

§ Eliminate entirely directors' and officers' liability for monetary damages for violating the duty of care.

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of loyalty.

§ Expand coverage beyond just legal expenses to liability for acts that are more serious violations of fiduciary obligation than mere carelessness.

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| § | Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (i.e., "permissive indemnification"), but that previously the company was not required to indemnify.  |

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Vote for only those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

§ If the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and

§ If only the director's legal expenses would be covered.

Establish/Amend Nominee Qualifications

**Sustainability Policy Recommendation:** Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and the degree to which they may preclude dissident nominees from joining the board.

<sup>13</sup> **Indemnification:** the condition of being secured against loss or damage.

**Limited liability:** a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation:** to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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Vote case-by-case on shareholder resolutions seeking a director nominee who possesses a particular subject matter expertise, considering:

§ The company's board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers;

§ The company's existing board and management oversight mechanisms regarding the issue for which board oversight is sought;

§ The company's disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies; and

§ The scope and structure of the proposal.

Establish Other Board Committee Proposals

**Sustainability Policy Recommendation:** Generally vote against shareholder proposals to establish a new board committee, as such proposals seek a specific oversight mechanism/structure that potentially limits a company's flexibility to determine an appropriate oversight mechanism for itself. However, the following factors will be considered:

§ Existing oversight mechanisms (including current committee structure) regarding the issue for which board oversight is sought;

§ Level of disclosure regarding the issue for which board oversight is sought;

§ Company performance related to the issue for which board oversight is sought;

§ Board committee structure compared to that of other companies in its industry sector; and

§ The scope and structure of the proposal.

Filling Vacancies/Removal of Directors

**Sustainability Policy Recommendation:** Vote against proposals that provide that directors may be removed only for cause.

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| § | Vote for proposals to restore shareholders' ability to remove directors with or without cause.  |

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| § | Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies.  |

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| § | Vote for proposals that permit shareholders to elect directors to fill board vacancies.  |

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Independent Board Chair

One of the principal functions of the board is to monitor and evaluate the performance of the CEO and other executive officers. The board chair's duty to oversee management may be compromised when he/she is connected to or a part of the management team. Generally, Sustainability Advisory Services recommends supporting shareholder proposals that would require that the position of board chair be held by an individual with no materials ties to the company other than their board seat.

**Sustainability Policy Recommendation:** Generally, support shareholder proposals that would require the board chair to be independent of management.

Majority of Independent Directors/Establishment of Independent Committees

**Sustainability Policy Recommendation:** Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by the Sustainability policy's definition of independent outsider. (See Sustainability Policy Classification of Directors – U.S.)

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Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors unless they currently meet that standard.

Majority Vote Standard for the Election of Directors

**Sustainability Policy Recommendation:** Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections. Vote against if no carve-out for a plurality vote standard in contested elections is included.

Generally vote for precatory and binding shareholder resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

Proxy Access

**Sustainability Policy Recommendation:** Generally vote for management and shareholder proposals for proxy access with the following provisions:

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| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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| § | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access.

Generally vote against proposals that are more restrictive than these guidelines.

Require More Nominees than Open Seats

**Sustainability Policy Recommendation:** Vote against shareholder proposals that would require a company to nominate more candidates than the number of open board seats.

Shareholder Engagement Policy (Shareholder Advisory Committee)

**Sustainability Policy Recommendation:** Generally vote for shareholder proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

§ Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board;

§ Effectively disclosed information with respect to this structure to its shareholders;

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| § | Company has not ignored majority-supported shareholder proposals or a majority withhold vote on a director nominee; and  |

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§ The company has an independent chair or a lead director, according to ISS' Sustainability policy definition. This individual must be made available for periodic consultation and direct communication with major shareholders.

Proxy Contests/Proxy Access -Voting for Director Nominees in Contested Elections

**Sustainability Policy Recommendation:** Vote case-by-case on the election of directors in contested elections, considering the following factors:

§ Long-term financial performance of the company relative to its industry;

§ Management's track record;

§ Background to the contested election;

§ Nominee qualifications and any compensatory arrangements;

§ Strategic plan of dissident slate and quality of the critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates); and

§ Stock ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether or not there are more candidates than board seats).

Vote-No Campaigns

**Sustainability Policy Recommendation:** In cases where companies are targeted in connection with public "vote-no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

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3. Shareholder Rights & Defenses

Advance Notice Requirements for Shareholder Proposals/Nominations

**Sustainability Policy Recommendation:** Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory, and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120 day window). The submittal window is the period under which shareholders must file their proposal/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

Amend Bylaws without Shareholder Consent

**Sustainability Policy Recommendation:** Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote for proposals giving the board the ability to amend the bylaws in addition to shareholders.

Control Share Acquisition Provisions

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

**Sustainability Policy Recommendation:** Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.

Vote against proposals to amend the charter to include control share acquisition provisions.

Vote for proposals to restore voting rights to the control shares.

Control Share Cash-Out Provisions

Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

**Sustainability Policy Recommendation:** Vote for proposals to opt out of control share cash-out statutes.

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Disgorgement Provisions

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

**Sustainability Policy Recommendation:** Vote for proposals to opt out of state disgorgement provisions.

Fair Price Provisions

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.

Generally vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

Freeze-Out Provisions

**Sustainability Policy Recommendation:** Vote for proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

Greenmail

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.

**Sustainability Policy Recommendation:** Vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.

Vote case-by-case on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.

Shareholder Litigation Rights

Federal Forum Selection Provisions

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

**Sustainability Policy Recommendation:** Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

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Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Exclusive Forum Provisions for State Law Matters

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

**Sustainability Policy Recommendation:** Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

§ The company's stated rationale for adopting such a provision;

§ Disclosure of past harm from duplicative shareholder lawsuits in more than one forum;

§ The breadth of application of the charter or bylaw provision, including the types of lawsuits to which it would apply and the definition of key terms; and

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|:---|:---|
| § | Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the charter or bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections.  |

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Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

Fee Shifting

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

**Sustainability Policy Recommendation:** Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the Unilateral Bylaw/Charter Amendments and Problematic Capital Structures policy.

Net Operating Loss (NOL) Protective Amendments

**Sustainability Policy Recommendation:**Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses (NOL) if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

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|:---|:---|
| § | The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing 5-percent holder);  |

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§ The value of the NOLs;

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§ Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Poison Pills (Shareholder Rights Plans)

Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy

**Sustainability Policy Recommendation:** Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: (1) A shareholder approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

§ Shareholders have approved the adoption of the plan; or

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|:---|:---|
| § | The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.*e.*, the "fiduciary out" provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.  |

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If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

Management Proposals to Ratify a Poison Pill

**Sustainability Policy Recommendation:** Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

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| § | No lower than a 20% trigger, flip-in or flip-over;  |

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§ A term of no more than three years;

§ No dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future board to redeem the pill;

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|:---|:---|
| § | Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.  |

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In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.

Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)

Sustainability Policy Recommendation: Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses (NOL) if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5 percent);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Proxy Voting Disclosure, Confidentiality, and Tabulation

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding proxy voting mechanics, taking into consideration whether implementation of the proposal is likely to enhance or protect shareholder rights. Specific issues covered under the policy include, but are not limited to, confidential voting of individual proxies and ballots, confidentiality of running vote tallies, and the treatment of abstentions and/or broker non-votes in the company's vote-counting methodology.

While a variety of factors may be considered in each analysis, the guiding principles are: transparency, consistency, and fairness in the proxy voting process. The factors considered, as applicable to the proposal, may include:

§ The scope and structure of the proposal;

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| § | The company's stated confidential voting policy (or other relevant policies) and whether it ensures a "level playing field" by providing shareholder proponents with equal access to vote information prior to the annual meeting;  |

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| § | The company's vote standard for management and shareholder proposals and whether it ensures consistency and fairness in the proxy voting process and maintains the integrity of vote results;  |

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| § | Whether the company's disclosure regarding its vote counting method and other relevant voting policies with respect to management and shareholder proposals are consistent and clear;  |

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§ Any recent controversies or concerns related to the company's proxy voting mechanics;

§ Any unintended consequences resulting from implementation of the proposal; and

§ Any other factors that may be relevant.

Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions

**Sustainability Policy Recommendation:** Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Reimbursing Proxy Solicitation Expenses

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to reimburse proxy solicitation expenses.

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When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Generally vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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| § | The election of fewer than 50% of the directors to be elected is contested in the election;  |

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§ One or more of the dissident's candidates is elected;

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| § | Shareholders are not permitted to cumulate their votes for directors; and  |

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§ The election occurred, and the expenses were incurred, after the adoption of this bylaw.

Reincorporation Proposals

**Sustainability Policy Recommendation:** Management or shareholder proposals to change a company's state of incorporation should be evaluated case-by-case, giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation; and

§ Comparison of corporation laws of original state and destination state.

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|:---|:---|
| § | Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.  |

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Shareholder Ability to Act by Written Consent

**Sustainability Policy Recommendation:** Generally vote against management and shareholder proposals to restrict or prohibit shareholders' ability to act by written consent.

Generally vote for management and shareholder proposals that provide shareholders with the ability to act by written consent, taking into account the following factors:

§ Shareholders' current right to act by written consent;

§ The consent threshold;

§ The inclusion of exclusionary or prohibitive language;

§ Investor ownership structure; and

§ Shareholder support of, and management's response to, previous shareholder proposals.

Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:

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| § | An unfettered**<sup>14</sup>** right for shareholders to call special meetings at a 10 percent threshold;  |

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| § | A majority vote standard in uncontested director elections;  |

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§ No non-shareholder-approved pill; and

§ An annually elected board.

<sup>14</sup> "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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Shareholder Ability to Call Special Meetings

**Sustainability Policy Recommendation:** Vote against management or shareholder proposals to restrict or prohibit shareholders' ability to call special meetings.

Generally vote for management or shareholder proposals that provide shareholders with the ability to call special meetings taking into account the following factors:

§ Shareholders' current right to call special meetings;

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|:---|:---|
| § | Minimum ownership threshold necessary to call special meetings (10% preferred);  |

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§ The inclusion of exclusionary or prohibitive language;

§ Investor ownership structure; and

§ Shareholder support of, and management's response to, previous shareholder proposals.

Stakeholder Provisions

**Sustainability Policy Recommendation:** Vote against proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.

State Antitakeover Statutes

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to opt in or out of state takeover statutes (including fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, and anti-greenmail provisions).

Supermajority Vote Requirements

**Sustainability Policy Recommendation:** Vote against proposals to require a supermajority shareholder vote.

Vote for management or shareholder proposals to reduce supermajority vote requirements. However, for companies with shareholder(s) who have significant ownership levels, vote case-by-case, taking into account:

§ Ownership structure;

§ Quorum requirements; and

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|:---|:---|
| § | Vote requirements.  |

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Virtual Shareholder Meetings

**Sustainability Policy Recommendation:** Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only<sup>15</sup> meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

<sup>15</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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4. Capital/Restructuring

Capital

Adjustments to Par Value of Common Stock

**Sustainability Policy Recommendation:** Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.

Vote for management proposals to eliminate par value.

Common Stock Authorization

General Authorization Requests

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes:

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| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50%** of current authorized shares.  |

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| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100%** of current authorized shares.  |

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|:---|:---|
| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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Specific Authorization Requests

**Sustainability Policy Recommendation:** Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Dual Class Structure

**Sustainability Policy Recommendation:** Generally vote against proposals to create a new class of common stock unless:

§ The company discloses a compelling rationale for the dual-class capital structure, such as:

§ The company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or

§ The new class of shares will be transitory;

§ The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term; and

§ The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.

Issue Stock for Use with Rights Plan

Sustainability Policy Recommendation: Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder- approved shareholder rights plan (poison pill).

Preemptive Rights

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals that seek preemptive rights, taking into consideration:

§ The size of the company;

§ The shareholder base; and

§ The liquidity of the stock.

Preferred Stock Authorization

General Authorization Requests

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes:

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| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50%** of current authorized shares.  |

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| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100%** of current authorized shares.  |

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| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

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| § | If no preferred shares are currently issued and outstanding, vote against the request, unless the company discloses a specific use for the shares.  |

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Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

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|:---|:---|
| § | If the shares requested are blank check preferred shares that can be used for antitakeover purposes;**<sup>16</sup>**  |

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| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they're convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

Specific Authorization Requests

**Sustainability Policy Recommendation:** Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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|:---|:---|
| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

<sup>16</sup> To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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Recapitalization Plans

**Sustainability Policy Recommendation:** Vote case-by-case on recapitalizations (reclassifications of securities), taking into account the following:

§ More simplified capital structure;

§ Enhanced liquidity;

§ Fairness of conversion terms;

§ Impact on voting power and dividends;

§ Reasons for the reclassification;

§ Conflicts of interest; and

§ Other alternatives considered.

Reverse Stock Splits

**Sustainability Policy Recommendation:** Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with Sustainability Advisory Services' Common Stock Authorization policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting;

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

Share Repurchase Programs

**Sustainability Policy Recommendation:** For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail,

§ The use of buybacks to inappropriately manipulate incentive compensation metrics,

§ Threats to the company's long-term viability, or

§ Other company-specific factors as warranted.

Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Stock Distributions: Splits and Dividends

**Sustainability Policy Recommendation:** Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to

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or is less than the allowable increase calculated in accordance with Sustainability Advisory Services' Common Stock Authorization policy.

Tracking Stock

**Sustainability Policy Recommendation:** Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

§ Adverse governance changes;

§ Excessive increases in authorized capital stock;

§ Unfair method of distribution;

§ Diminution of voting rights;

§ Adverse conversion features;

§ Negative impact on stock option plans; and

§ Alternatives such as spin-off.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

**Sustainability Policy Recommendation:** For U.S. domestic issuers incorporated outside the U.S. and listed solely on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

Restructuring

Appraisal Rights

**Sustainability Policy Recommendation:** Vote for proposals to restore or provide shareholders with rights of appraisal.

Asset Purchases

**Sustainability Policy Recommendation:** Vote case-by-case on asset purchase proposals, considering the following factors:

§ Purchase price;

§ Fairness opinion;

§ Financial and strategic benefits;

§ How the deal was negotiated;

§ Conflicts of interest;

§ Other alternatives for the business;

§ Non-completion risk.

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Asset Sales

**Sustainability Policy Recommendation:** Vote case-by-case on asset sales, considering the following factors:

§ Impact on the balance sheet/working capital;

§ Potential elimination of diseconomies;

§ Anticipated financial and operating benefits;

§ Anticipated use of funds;

§ Value received for the asset;

§ Fairness opinion;

§ How the deal was negotiated;

§ Conflicts of interest.

Bundled Proposals

**Sustainability Policy Recommendation:** Vote case-by-case on bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

Conversion of Securities

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding conversion of securities. When evaluating these proposals, the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, after evaluating:

§ Dilution to existing shareholders' positions;

§ Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; termination penalties; exit strategy;

§ Financial issues - company's financial situation; degree of need for capital; use of proceeds; effect of the financing on the company's cost of capital;

§ Management's efforts to pursue other alternatives;

§ Control issues - change in management; change in control, guaranteed board and committee seats; standstill provisions; voting agreements; veto power over certain corporate actions; and

§ Conflict of interest - arm's length transaction, managerial incentives.

Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.

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Formation of Holding Company

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration the following:

§ The reasons for the change;

§ Any financial or tax benefits;

§ Regulatory benefits;

§ Increases in capital structure; and

§ Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend for the transaction, vote against the formation of a holding company if the transaction would include either of the following:

§ Increases in common or preferred stock in excess of the allowable maximum (see discussion under "Capital"); or

§ Adverse changes in shareholder rights.

Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)

**Sustainability Policy Recommendation:** Vote case-by-case on going private transactions, taking into account the following:

§ Offer price/premium;

§ Fairness opinion;

§ How the deal was negotiated;

§ Conflicts of interest;

§ Other alternatives/offers considered; and

§ Non-completion risk.

Vote case-by-case on going dark transactions, determining whether the transaction enhances shareholder value by taking into consideration:

§ Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock);

§ Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:

§ Are all shareholders able to participate in the transaction?

§ Will there be a liquid market for remaining shareholders following the transaction?

§ Does the company have strong corporate governance?

§ Will insiders reap the gains of control following the proposed transaction?

§ Does the state of incorporation have laws requiring continued reporting that may benefit shareholders?

Joint Ventures

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to form joint ventures, taking into account the following:

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|:---|:---|
| § | Percentage of assets/business contributed;  |

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| § | Percentage ownership;  |

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§ Financial and strategic benefits;

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§ Governance structure;

§ Conflicts of interest;

§ Other alternatives; and

§ Non-completion risk.

Liquidations

**Sustainability Policy Recommendation:** Vote case-by-case on liquidations, taking into account the following:

§ Management's efforts to pursue other alternatives;

§ Appraisal value of assets; and

§ The compensation plan for executives managing the liquidation.

Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

Mergers and Acquisitions

**Sustainability Policy Recommendation:** Vote case-by-case on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

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|:---|:---|
| § | *Valuation* - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction and strategic rationale.  |

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§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.

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|:---|:---|
| § | *Strategic rationale* - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.  |

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|:---|:---|
| § | *Negotiations and process* - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.*g.*, full auction, partial auction, no auction) can also affect shareholder value.  |

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|:---|:---|
| § | *Conflicts of interest* - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger.  |

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|:---|:---|
| § | *Governance* - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.  |

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Private Placements/Warrants/Convertible Debentures

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding private placements, warrants, and convertible debentures taking into consideration:

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|:---|:---|
| § | Dilution to existing shareholders' position: The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion. Although newly issued common stock, absent preemptive rights, is typically dilutive to existing shareholders, share price appreciation is often the necessary event to trigger the exercise of "out of the money" warrants and convertible debt. In these instances from  |

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a value standpoint, the negative impact of dilution is mitigated by the increase in the company's stock price that must occur to trigger the dilutive event.

§ Terms of the offer (discount/premium in purchase price to investor, including any fairness opinion, conversion features, termination penalties, exit strategy):

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|:---|:---|
| § | The terms of the offer should be weighed against the alternatives of the company and in light of company's financial condition. Ideally, the conversion price for convertible debt and the exercise price for warrants should be at a premium to the then prevailing stock price at the time of private placement.  |

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§ When evaluating the magnitude of a private placement discount or premium, consider factors that influence the discount or premium, such as, liquidity, due diligence costs, control and monitoring costs, capital scarcity, information asymmetry and anticipation of future performance.

§ Financial issues:

§ The company's financial condition;

§ Degree of need for capital;

§ Use of proceeds;

§ Effect of the financing on the company's cost of capital;

§ Current and proposed cash burn rate;

§ Going concern viability and the state of the capital and credit markets.

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|:---|:---|
| § | Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives: A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger or sale of part or all of the company.  |

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§ Control issues:

§ Change in management;

§ Change in control;

§ Guaranteed board and committee seats;

§ Standstill provisions;

§ Voting agreements;

§ Veto power over certain corporate actions; and

§ Minority versus majority ownership and corresponding minority discount or majority control premium

§ Conflicts of interest:

§ Conflicts of interest should be viewed from the perspective of the company and the investor.

§ Were the terms of the transaction negotiated at arm's length? Are managerial incentives aligned with shareholder interests?

§ Market reaction:

§ The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one day impact on the unaffected stock price.

Vote for the private placement, or for the issuance of warrants and/or convertible debentures in a private placement, if it is expected that the company will file for bankruptcy if the transaction is not approved.

Reorganization/Restructuring Plan (Bankruptcy)

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an official equity committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization; and

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

**Sustainability Policy Recommendation:**Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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|:---|:---|
| § | *<u>Valuation</u>—Is* the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target, if it is a private entity.  |

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§ *<u>Market reaction</u>—How* has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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|:---|:---|
| § | *<u>Deal timing</u>—A* main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *<u>Negotiations and process</u>—What* was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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|:---|:---|
| § | *<u>Conflicts of interest</u>—How* are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80% rule (the charter requires that the fair market value of the target is at least equal to 80% of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24 month timeframe.  |

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|:---|:---|
| § | *<u>Voting agreements</u>—Are* the sponsors entering into enter into any voting agreements/ tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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§ *<u>Governance</u>—What* is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions

**Sustainability Policy Recommendation:** Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ *<u>Length of request</u>:* Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquistion process.

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|:---|:---|
| § | *<u>Pending transaction(s)</u> or progression of the acquisition process:* Sometimes an intial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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|:---|:---|
| § | *<u>Added incentive for non-redeeming shareholders</u>:* Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is  |

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to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.

§ *<u>Prior extension requests</u>:* Some SPACs request additional time beyond the extension period sought in prior extension requests.

Spin-offs

**Sustainability Policy Recommendation:** Vote case-by-case on spin-offs, considering:

§ Tax and regulatory advantages;

§ Planned use of the sale proceeds;

§ Valuation of spinoff;

§ Fairness opinion;

§ Benefits to the parent company;

§ Conflicts of interest;

§ Managerial incentives;

§ Corporate governance changes;

§ Changes in the capital structure.

Value Maximization Shareholder Proposals

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals seeking to maximize shareholder value by:

§ Hiring a financial advisor to explore strategic alternatives;

§ Selling the company; or

§ Liquidating the company and distributing the proceeds to shareholders.

These proposals should be evaluated based on the following factors:

§ Prolonged poor performance with no turnaround in sight;

§ Signs of entrenched board and management (such as the adoption of takeover defenses);

§ Strategic plan in place for improving value;

§ Likelihood of receiving reasonable value in a sale or dissolution; and

§ The company actively exploring its strategic options, including retaining a financial advisor.

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5. Compensation

Executive Pay Evaluation

Underlying all evaluations are five global principles that most investors expect corporations to adhere to in designing and administering executive and director compensation programs:

1. Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs;

2. Avoid arrangements that risk "pay for failure": This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation;

3. Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e. *g.*, including access to independent expertise and advice when needed);

4. Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly;

5. Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors does not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance. At the market level, it may incorporate a variety of generally accepted best practices.

Advisory Votes on Executive Compensation—Management Proposals (Management Say-on-Pay)

Sustainability Policy Recommendation: Vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation.

Vote against Advisory Votes on Executive Compensation (Say-on-Pay or "SOP") if:

§ There is an unmitigated misalignment between CEO pay and company performance (pay for performance);

§ The company maintains significant problematic pay practices;

§ The board exhibits a significant level of poor communication and responsiveness to shareholders.

Vote against or withhold from the members of the compensation committee and potentially the full board if:

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| § | There is no SOP on the ballot, and an against vote on an SOP is warranted due to pay for performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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| § | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast;  |

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§ The company has recently practiced or approved problematic pay practices, such as option repricing or option backdating; or

§ The situation is egregious.

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PRIMARY EVALUATION FACTORS FOR EXECUTIVE PAY

Pay-for-Performance Evaluation

Sustainability Advisory Services annually conducts a pay-for-performance analysis to identify strong or satisfactory alignment between pay and performance over a sustained period. With respect to companies in the Russell 3000 or Russell 3000E Indices<sup>17</sup>, this analysis considers the following:

1. Peer Group **<sup>18</sup>** Alignment:

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| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period.  |

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| § | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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| § | The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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2. Absolute Alignment **<sup>19</sup>** – the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, misaligned pay and performance are otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to evaluating how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance- to time-based incentive awards;

§ The overall ratio of performance-based compensation;

§ The rigor of performance goals;

§ The complexity and risks around pay program design;

§ The transparency and clarity of disclosure;

§ The company's peer group benchmarking practices;

§ Financial/operational results, both absolute and relative to peers;

§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

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| § | Realizable pay**<sup>20</sup>** compared to grant pay; and  |

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§ Any other factors deemed relevant.

Problematic Pay Practices

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

§ Problematic practices related to non-performance-based compensation elements;

<sup>17</sup> The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

<sup>18</sup> The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market cap bucket that is reflective of the company's. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

<sup>19</sup> Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

<sup>20</sup> Sustainability Advisory Services research reports include realizable pay for S&P1500 companies.

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§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

§ Repricing or replacing of underwater stock options/SARs without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);

§ Extraordinary perquisites or tax gross-ups;

§ New or materially amended agreements that provide for:

§ Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus);

§ CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition;

§ CIC excise tax gross-up entitlements (including "modified" gross-ups);

§ Multi-year guaranteed awards that are not at risk due to rigorous performance conditions;

§ Liberal CIC definition combined with any single-trigger CIC benefits;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason);

§ Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible;

§ Any other provision or practice deemed to be egregious and present a significant risk to investors.

The above examples are not an exhaustive list. Please refer to ISS' U.S. Compensation Policies FAQ document for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

#### Options Backdating
The following factors should be examined case-by-case to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud:

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

§ Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants; and

§ Adoption of a grant policy that prohibits backdating, and creates a fixed grant schedule or window period for equity grants in the future.

Compensation Committee Communications and Responsiveness

Consider the following factors case-by-case when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

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| § | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:  |

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§ The company's response, including:

◾ Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support (including the timing and frequency of engagements and whether independent directors participated);

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◾ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

◾ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

◾ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")

Sustainability Policy Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

Sustainability Policy Recommendation: Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers rather than focusing primarily on new or extended arrangements.

Features that may result in an "against" recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

§ Single- or modified-single-trigger cash severance;

§ Single-trigger acceleration of unvested equity awards;

§ Full acceleration of equity awards granted shortly before the change in control;

§ Acceleration of performance awards above the target level of performance without compelling rationale;

§ Excessive cash severance (>3x base salary and bonus);

§ Excise tax gross-ups triggered and payable;

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| § | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or  |

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§ Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or

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| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote.  |

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Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation (management say-on-pay), the say-on-pay proposal will be evaluated in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity-Based and Other Incentive Plans

Please refer to ISS' U.S. Equity Compensation Plans FAQ document for additional details on the Equity Plan Scorecard policy.

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Sustainability Policy Recommendation: Vote case-by-case on certain equity-based compensation plans<sup>21</sup> depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars:

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| § | **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:  |

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§ SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and

§ SVT based only on new shares requested plus shares remaining for future grants.

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| § | **Plan Features:**  |

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§ Quality of disclosure around vesting upon a change in control (CIC);

§ Discretionary vesting authority;

§ Liberal share recycling on various award types;

§ Lack of minimum vesting period for grants made under the plan;

§ Dividends payable prior to award vesting.

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|:---|:---|
| § | **Grant Practices:**  |

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§ The company's three year burn rate relative to its industry/market cap peers;

§ Vesting requirements in CEO'S recent equity grants (3-year look-back);

§ The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years);

§ The proportion of the CEO's most recent equity grants/awards subject to performance conditions;

§ Whether the company maintains a sufficient claw-back policy;

§ Whether the company maintains sufficient post exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following egregious factors ("overriding factors") apply:

§ Awards may vest in connection with a liberal change-of-control definition;

§ The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies -- or by not prohibiting it when the company has a history of repricing – for non-listed companies);

§ The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances;

§ The plan is excessively dilutive to shareholders' holdings;

§ The plan contains an evergreen (automatic share replenishment) feature; or

§ Any other plan features are determined to have a significant negative impact on shareholder interests.

FURTHER INFORMATION ON CERTAIN EPSC FACTORS

Shareholder Value Transfer (SVT)

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors.

<sup>21</sup> Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors; amended plans will be further evaluated case-by-case.

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SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full value awards), the assumption is made that all awards to be granted will be the most expensive types.

For proposals subject to Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size and cash compensation into the industry cap equations to arrive at the company's benchmark.<sup>22</sup>

Three-Year Value-Adjusted Burn Rate

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks are calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a *de minimis* threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate will be calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Egregious Factors

Liberal Change in Control Definition

Generally vote against equity plans if the plan has a liberal definition of change in control and the equity awards could vest upon such liberal definition of change-in-control, even though an actual change in control may not occur. Examples of such a definition include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

Repricing Provisions

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" includes the ability to do any of the following:

§ Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs;

§ Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs;

§ Cancel underwater options in exchange for stock awards; or

§ Provide cash buyouts of underwater options.

<sup>22</sup> For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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While the above cover most types of repricing, Sustainability Advisory Services may view other provisions as akin to repricing depending on the facts and circumstances.

Also, vote against or withhold from members of the Compensation Committee who approved repricing (as defined above or otherwise determined by Sustainability Advisory Services) without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans that do not expressly prohibit repricing or cash buyout of underwater options without shareholder approval if the company has a history of repricing/buyouts without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Problematic Pay Practices or Significant Pay-for-Performance Disconnect

If the equity plan on the ballot is a vehicle for problematic pay practices, vote against the plan.

If a significant portion of the CEO's misaligned pay is attributed to non-performance-based equity awards, and there is an equity plan on the ballot with the CEO as one of the participants, Sustainability Advisory Services may recommend a vote against the equity plan. Considerations in voting against the equity plan may include, but are not limited to:

§ Magnitude of pay misalignment;

§ Contribution of non–performance-based equity grants to overall pay; and

§ The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer level.

Specific Treatment of Certain Award Types in Equity Plan Evaluations

Dividend Equivalent Rights

Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.

Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)

For Real Estate Investment Trusts (REITS), include the common shares issuable upon conversion of outstanding Operating Partnership (OP) units in the share count for the purposes of determining: (1) market capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares outstanding in the burn rate analysis.

Other Compensation Plans

401(k) Employee Benefit Plans

Sustainability Policy Recommendation: Vote for proposals to implement a 401(k) savings plan for employees.

Employee Stock Ownership Plans (ESOPs)

Sustainability Policy Recommendation: Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

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Employee Stock Purchase Plans—Qualified Plans

Sustainability Policy Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

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| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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| § | The number of shares allocated to the plan is 10 percent or less of the outstanding shares.  |

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Vote against qualified employee stock purchase plans where any of the following apply:

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| § | Purchase price is less than 85 percent of fair market value; or  |

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§ Offering period is greater than 27 months; or

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| § | The number of shares allocated to the plan is more than ten percent of the outstanding shares.  |

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Employee Stock Purchase Plans—Non-Qualified Plans

Sustainability Policy Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

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| § | Broad-based participation (i.*e.*, all employees of the company with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);  |

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| § | Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;  |

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| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value;  |

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§ No discount on the stock price on the date of purchase when there is a company matching contribution.

Vote against nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the company matching contribution or effective discount exceeds the above, Sustainability Advisory Services may evaluate the SVT cost as part of the assessment.

Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))

Sustainability Policy Recommendation: Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Addresses administrative features only; or

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| § | Seeks approval for Section 162(m) purposes only, and the plan administering committee consists entirely of independent outsiders, per Sustainability Advisory Services' Classification of Directors. Note that if the company is presenting the plan to shareholders for the first time after the company's initial public offering (IPO), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).  |

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Vote against such proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent outsiders, per Sustainability Advisory Services' Classification of Directors.

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Vote case-by-case on all other proposals to amend cash incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes

Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

§ If the proposal requests additional shares and/or the amendments may potentially increase the transfer of shareholder value to employees, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments.

§ If the plan is being presented to shareholders for the first time after the company's IPO, whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments.

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| § | If there is no request for additional shares and the amendments are not deemed to potentially increase the transfer of shareholder value to employees, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown for informational purposes.  |

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Option Exchange Programs/Repricing Options

Sustainability Policy Recommendation: Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

§ Historic trading patterns--the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing--was the stock price decline beyond management's control?

§ Is this a value-for-value exchange?

§ Are surrendered stock options added back to the plan reserve?

§ Timing--repricing should occur at least one year out from any precipitous drop in company's stock price;

§ Option vesting--does the new option vest immediately or is there a black-out period?

§ Term of the option--the term should remain the same as that of the replaced option;

§ Exercise price--should be set at fair market or a premium to market;

§ Participants--executive officers and directors must be excluded.

If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing. and warrants additional scrutiny. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

Stock Plans in Lieu of Cash

Sustainability Policy Recommendation: Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.

Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.

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Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, no adjustments will be made to carve out the in-lieu-of cash compensation.

Transfer Stock Option (TSO) Programs

Sustainability Policy Recommendation: One-time Transfers: Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote case-by-case on one-time transfers. Vote for if:

§ Executive officers and non-employee directors are excluded from participating;

§ Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models;

§ There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

§ Eligibility;

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| § | Vesting;  |

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§ Bid-price;

§ Term of options;

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| § | Cost of the program and impact of the TSOs on company's total option expense  |

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§ Option repricing policy.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

Director Compensation

Shareholder Ratification of Director Pay Programs

Sustainability Policy Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

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§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Equity Plans for Non-Employee Directors

Sustainability Policy Recommendation: Vote case-by-case on compensation plans for non-employee directors, based on:

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| § | The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants;  |

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§ The company's three-year burn rate relative to its industry/market cap peers; and

§ The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).

On occasion, director stock plans will exceed the plan cost or burn rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Non-Employee Director Retirement Plans

Sustainability Policy Recommendation: Vote against retirement plans for non-employee directors.

Vote for shareholder proposals to eliminate retirement plans for non-employee directors.

Shareholder Proposals on Compensation

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

Sustainability Policy Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

Bonus Banking/Bonus Banking "Plus"

Sustainability Policy Recommendation: Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

§ The company's past practices regarding equity and cash compensation;

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| § | Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and  |

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§ Whether the company has a rigorous claw-back policy in place.

Compensation Consultants—Disclosure of Board or Company's Utilization

Sustainability Policy Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s), and fees paid.

Disclosure/Setting Levels or Types of Compensation for Executives and Directors

Sustainability Policy Recommendation: Generally vote for shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders' needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.

Vote against shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation.

Vote against shareholder proposals seeking to eliminate stock options or any other equity grants to employees or directors.

Vote against shareholder proposals requiring director fees be paid in stock only.

Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Vote case-by-case on all other shareholder proposals regarding executive and director pay, taking into account company performance, pay level versus peers, pay level versus industry, and long-term corporate outlook.

Golden Coffins/Executive Death Benefits

Sustainability Policy Recommendation: Generally vote for proposals calling companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.

Hold Equity Past Retirement or for a Significant Period of Time

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans. The following factors will be taken into account:

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| § | The percentage/ratio of net shares required to be retained;  |

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§ The time period required to retain the shares;

§ Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements;

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§ Whether the company has any other policies aimed at mitigating risk taking by executives;

§ Executives' actual stock ownership and the degree to which it meets or exceeds the proponent's suggested holding period/retention ratio or the company's existing requirements; and

Pay Disparity

Sustainability Policy Recommendation: Generally vote case-by-case on proposals calling for an analysis of the pay disparity between corporate executives and other non-executive employees.

Pay for Performance/Performance-Based Awards

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

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| § | First, vote for shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a "substantial" portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a meaningful premium to be considered performance-based awards.  |

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| § | Second, assess the rigor of the company's performance-based equity program. If the bar set for the performance-based program is too low based on the company's historical or peer group comparison, generally vote for the proposal. Furthermore, if target performance results in an above target payout, vote for the shareholder proposal due to program's poor design. If the company does not disclose the performance metric of the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.  |

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

Pay for Superior Performance

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals that request the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. These proposals generally include the following principles:

§ Set compensation targets for the plan's annual and long-term incentive pay components at or below the peer group median;

§ Deliver a majority of the plan's target long-term compensation through performance-vested, not simply time-vested, equity awards;

§ Provide the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the plan;

§ Establish performance targets for each plan financial metric relative to the performance of the company's peer companies;

§ Limit payment under the annual and performance-vested long-term incentive components of the plan to when the company's performance on its selected financial performance metrics exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

§ What aspects of the company's annual and long-term equity incentive programs are performance driven?

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§ If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates disclosed to shareholders or are they benchmarked against a disclosed peer group?

§ Can shareholders assess the correlation between pay and performance based on the current disclosure?

§ What type of industry and stage of business cycle does the company belong to?

Pre-Arranged Trading Plans (10b5-1 Plans)

Sustainability Policy Recommendation: Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

§ Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

§ Amendment or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances, as determined by the board;

§ Request that a certain number of days that must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan;

§ Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

§ An executive may not trade in company stock outside the 10b5-1 Plan;

§ Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive.

Prohibit Outside CEOs from Serving on Compensation Committees

Sustainability Policy Recommendation: Generally vote against proposals seeking a policy to prohibit any outside CEO from serving on a company's compensation committee, unless the company has demonstrated problematic pay practices that raise concerns about the performance and composition of the committee.

Recoupment of Incentive or Stock Compensation in Specified Circumstances

Sustainability Policy Recommendation: Vote case-by-case on proposals to recoup incentive cash or stock compensation made to senior executives if it is later determined that the figures upon which incentive compensation is earned turn out to have been in error, or if the senior executive has breached company policy or has engaged in misconduct that may be significantly detrimental to the company's financial position or reputation, or if the senior executive failed to manage or monitor risks that subsequently led to significant financial or reputational harm to the company. Many companies have adopted policies that permit recoupment in cases where an executive's fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. However, such policies may be narrow given that not all misconduct or negligence may result in significant financial restatements. Misconduct, negligence or lack of sufficient oversight by senior executives may lead to significant financial loss or reputational damage that may have long-lasting impact.

In considering whether to support such shareholder proposals, the following factors will be taken into consideration:

§ If the company has adopted a formal recoupment policy;

§ The rigor of the recoupment policy focusing on how and under what circumstances the company may recoup incentive or stock compensation;

§ Whether the company has chronic restatement history or material financial problems;

§ Whether the company's policy substantially addresses the concerns raised by the proponent;

§ Disclosure of recoupment of incentive or stock compensation from senior executives or lack thereof; or

§ Any other relevant factors.

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Severance Agreements for Executives/Golden Parachutes

Sustainability Policy Recommendation: Vote for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval *prior* to entering into employment contracts.

Vote case-by-case on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

§ The triggering mechanism should be beyond the control of management;

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| § | The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs);  |

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§ Change-in-control payments should be double-triggered, *i.e.*, (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

Share Buyback Proposals

Sustainability Policy Recommendation: Generally vote against shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote for the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.

Vote case-by-case on proposals requesting the company exclude the impact of share buybacks from the calculation of incentive program metrics, considering the following factors:

§ The frequency and timing of the company's share buybacks;

§ The use of per-share metrics in incentive plans;

§ The effect of recent buybacks on incentive metric results and payouts; and

§ Whether there is any indication of metric result manipulation.

Supplemental Executive Retirement Plans (SERPs)

Sustainability Policy Recommendation: Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Generally vote for shareholder proposals requesting to limit the executive benefits provided under the company's supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive's annual salary or those pay elements covered for the general employee population.

Tax Gross-Up Proposals

Sustainability Policy Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

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Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment and/or eliminating accelerated vesting of unvested equity.

The following factors will be considered:

§ The company's current treatment of equity in change-of-control situations (i.e. is it double triggered, does it allow for the assumption of equity by acquiring company, the treatment of performance shares, etc.);

§ Current employment agreements, including potential poor pay practices such as gross-ups embedded in those agreements.

Generally vote for proposals seeking a policy that prohibits acceleration of the vesting of equity awards to senior executives in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

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6. Social and Environmental Issues

Global Approach

Socially responsible shareholder resolutions receive a great deal more attention from institutional shareholders today than in the past. While focusing on value enhancement through risk mitigation and exposure to new sustainability-related opportunities, these resolutions also seek standardized reporting on ESG issues, request information regarding an issuer's adoption of, or adherence to, relevant norms, standards, codes of conduct or universally recognized international initiatives to promote disclosure and transparency. ISS' Sustainability Policy generally supports standards-based ESG shareholder proposals that enhance long-term shareholder and stakeholder value while aligning the interests of the company with those of society at large. In particular, the policy will focus on resolutions seeking greater transparency and/or adherence to internationally recognized standards and principles.

Sustainability Policy Recommendation: In determining our vote recommendation on standardized ESG reporting shareholder proposals, we also analyze the following factors:

§ Whether the proposal itself is well framed and reasonable;

§ Whether adoption of the proposal would have either a positive or negative impact on the company's short-term or long-term share value;

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| § | The percentage of sales, assets and earnings affected;  |

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§ Whether the company has already responded in some appropriate manner to the request embodied in a proposal;

§ Whether the company's analysis and voting recommendation to shareholders is persuasive;

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's environmental or social practices;

§ What other companies have done in response to the issue addressed in the proposal;

§ Whether implementation of the proposal would achieve the objectives sought in the proposal; and

§ The degree to which the company's stated position on the issues raised in the proposal could affect its reputation or sales, or leave it vulnerable to a boycott or selective purchasing.

Animal Welfare

Animal Welfare Policies

Sustainability Policy Recommendation: Generally vote for proposals seeking a report on a company's animal welfare standards, or animal welfare-related risks, unless:

§ The company has already published a set of animal welfare standards and monitors compliance;

§ The company's standards are comparable to industry peers; and

§ There are no recent significant fines, litigation, or controversies related to the company's and/or its suppliers' treatment of animals.

Animal Testing

Sustainability Policy Recommendation: Generally vote against proposals to phase out the use of animals in product testing, unless:

§ The company is conducting animal testing programs that are unnecessary or not required by regulation;

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§ The company is conducting animal testing when suitable alternatives are commonly accepted and used by industry peers; or

§ There are recent, significant fines or litigation related to the company's treatment of animals.

Animal Slaughter

Sustainability Policy Recommendation: Generally vote against proposals requesting the implementation of Controlled Atmosphere Killing (CAK) methods at company and/or supplier operations unless such methods are required by legislation or generally accepted as the industry standard.

Vote case-by-case on proposals requesting a report on the feasibility of implementing CAK methods at company and/or supplier operations considering the availability of existing research conducted by the company or industry groups on this topic and any fines or litigation related to current animal processing procedures at the company.

Consumer Issues

Genetically Modified Ingredients

Sustainability Policy Recommendation: Generally vote against proposals requesting that a company voluntarily label genetically engineered (GE) ingredients in its products. The labeling of products with GE ingredients is best left to the appropriate regulatory authorities.

Vote case-by-case on proposals asking for a report on the feasibility of labeling products containing GE ingredients, taking into account:

§ The potential impact of such labeling on the company's business;

§ The quality of the company's disclosure on GE product labeling, related voluntary initiatives, and how this disclosure compares with industry peer disclosure; and

§ Company's current disclosure on the feasibility of GE product labeling.

Generally vote FOR proposals seeking a report on the social, health, and environmental effects of genetically modified organism (GMOs).

Generally vote against proposals to eliminate GE ingredients from the company's products, or proposals asking for reports outlining the steps necessary to eliminate GE ingredients from the company's products. Such decisions are more appropriately made by management with consideration of current regulations.

Reports on Potentially Controversial Business/Financial Practices

Sustainability Policy Recommendation: Vote case-by-case on requests for reports on a company's potentially controversial business or financial practices or products, taking into account:

§ Whether the company has adequately disclosed mechanisms in place to prevent abuses;

§ Whether the company has adequately disclosed the financial risks of the products/practices in question;

§ Whether the company has been subject to violations of related laws or serious controversies; and

§ Peer companies' policies/practices in this area.

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Consumer Lending

Sustainability Policy Recommendation: Vote case-by-case on requests for reports on the company's lending guidelines and procedures taking into account:

§ Whether the company has adequately disclosed mechanisms in place to prevent abusive lending practices;

§ Whether the company has adequately disclosed the financial risks of the lending products in question;

§ Whether the company has been subject to violations of lending laws or serious lending controversies; and

§ Peer companies' policies to prevent abusive lending practices.

Pharmaceutical Pricing, Access to Medicines, Product Reimportation and Health Pandemics

Sustainability Policy Recommendation: Generally vote against proposals requesting that companies implement specific price restraints on pharmaceutical products unless the company fails to adhere to legislative guidelines or industry norms in its product pricing practices.

Vote case-by-case on proposals requesting that a company report on its product pricing or access to medicine policies, considering:

§ The potential for reputational, market, and regulatory risk exposure;

§ Existing disclosure of relevant policies;

§ Deviation from established industry norms;

§ Relevant company initiatives to provide research and/or products to disadvantaged consumers;

§ Whether the proposal focuses on specific products or geographic regions;

§ The potential burden and scope of the requested report; and

§ Recent significant controversies, litigation, or fines at the company.

Generally vote for proposals requesting that a company report on the financial and legal impact of its prescription drug reimportation policies unless such information is already publicly disclosed.

Generally vote against proposals requesting that companies adopt specific policies to encourage or constrain prescription drug reimportation. Such matters are more appropriately the province of legislative activity and may place the company at a competitive disadvantage relative to its peers.

Health Pandemics

Sustainability Policy Recommendation: Vote case-by-case on requests for reports outlining the impact of health pandemics (such as HIV/AIDS, malaria, tuberculosis, and avian flu) on the company's operations and how the company is responding to the situation, taking into account:

§ The scope of the company's operations in the affected/relevant area(s);

§ The company's existing healthcare policies, including benefits and healthcare access; and

§ Company donations to relevant healthcare providers.

Vote against proposals asking companies to establish, implement, and report on a standard of response to health pandemics (such as HIV/AIDS, malaria, tuberculosis, and avian flu), unless the company has significant operations in the affected markets and has failed to adopt policies and/or procedures to address these issues comparable to those of industry peers.

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Product Safety and Toxic/Hazardous Materials

Sustainability Policy Recommendation: Generally vote for proposals requesting that a company report on its policies, initiatives/procedures, and oversight mechanisms related to toxic/hazardous materials or product safety in its supply chain.

Generally vote for resolutions requesting that companies develop a feasibility assessment to phase-out of certain toxic/hazardous materials, or evaluate and disclose the potential financial and legal risks associated with utilizing certain materials.

Generally vote against resolutions requiring that a company reformulate its products.

Tobacco-Related Proposals

Sustainability Policy Recommendation: Vote case-by-case on resolutions regarding the advertisement of tobacco products, considering:

§ Recent related fines, controversies, or significant litigation;

§ Whether the company complies with relevant laws and regulations on the marketing of tobacco;

§ Whether the company's advertising restrictions deviate from those of industry peers;

§ Whether the company entered into the Master Settlement Agreement, which restricts marketing of tobacco to youth; and

§ Whether restrictions on marketing to youth extend to foreign countries.

Vote case-by-case on proposals regarding second-hand smoke, considering;

§ Whether the company complies with all laws and regulations;

§ The degree that voluntary restrictions beyond those mandated by law might hurt the company's competitiveness; and

§ The risk of any health-related liabilities.

Generally vote against resolutions to cease production of tobacco-related products, to avoid selling products to tobacco companies, to spin-off tobacco-related businesses, or prohibit investment in tobacco equities. Such business decisions are better left to company management or portfolio managers.

Generally vote against proposals regarding tobacco product warnings. Such decisions are better left to public health authorities.

Climate Change

Climate Change/Greenhouse Gas (GHG) Emissions

Climate change has emerged as the most significant environmental threat to the planet to date. Scientists agree that gases released by chemical reactions including the burning of fossil fuels contribute to a "greenhouse effect" that traps the planet's heat. Environmentalists claim that the greenhouse gases produced by the industrial age have caused recent weather crises such as heat waves, rainstorms, melting glaciers, rising sea levels and receding coastlines. With notable exceptions, business leaders have described the rise and fall of global temperatures as naturally occurring phenomena and depicted corporate impact on climate change as minimal. Shareholder proposals asking a company to issue a report to shareholders, "at reasonable cost and omitting proprietary information," on greenhouse gas emissions ask that the

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report include descriptions of efforts within companies to reduce emissions, their financial exposure and potential liability from operations that contribute to global warming, their direct or indirect efforts to promote the view that global warming is not a threat and their goals in reducing these emissions from their operations. Proponents argue that there is scientific proof that the burning of fossil fuels causes global warming, that future legislation may make companies financially liable for their contributions to global warming, and that a report on the company's role in global warming can be assembled at reasonable cost.

Sustainability Policy Recommendation:

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| § | Vote for shareholder proposals seeking information on the financial, physical, or regulatory risks it faces related to climate change- on its operations and investments, or on how the company identifies, measures, and manage such risks.  |

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| § | Vote for shareholder proposals calling for the reduction of GHG emissions.  |

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| § | Vote for shareholder proposals seeking reports on responses to regulatory and public pressures surrounding climate change, and for disclosure of research that aided in setting company policies around climate change.  |

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| § | Vote for shareholder proposals requesting a report/disclosure of goals on GHG emissions from company operations and/or products.  |

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Say on Climate (SoC) Management Proposals

Sustainability Policy Recommendation: Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan<sup>23</sup>, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

§ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

§ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

§ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions (Scopes 1, 2, and 3 if relevant);

§ Whether the company has sought and received third-party approval that its targets are science-based;

§ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

§ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

§ Whether the company's climate data has received third-party assurance;

§ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

§ Whether there are specific industry decarbonization challenges; and

§ The company's related commitment, disclosure, and performance compared to its industry peers.

Say on Climate (SoC) Shareholder Proposals

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

§ The completeness and rigor of the company's climate-related disclosure;

§ The company's actual GHG emissions performance;

<sup>23</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Energy Efficiency

Sustainability Policy Recommendation: Generally vote for proposals requesting that a company report on its energy efficiency policies.

Renewable Energy

Sustainability Policy Recommendation: Generally vote for requests for reports on the feasibility of developing renewable energy resources.

Generally vote for proposals requesting that the company invest in renewable energy resources.

Diversity

Board Diversity

Sustainability Policy Recommendation: Generally vote for requests for reports on a company's efforts to diversify the board, unless:

§ The gender and racial minority representation of the company's board is reasonably inclusive in relation to companies of similar size and business; and

§ The board already reports on its nominating procedures and gender and racial minority initiatives on the board and within the company.

Generally vote for shareholder proposals that ask the company to take reasonable steps to increase the levels of underrepresented gender identities and racial minorities on the board.

Equality of Opportunity

Sustainability Policy Recommendation: Generally vote for proposals requesting a company disclose its diversity policies or initiatives, or proposals requesting disclosure of a company's comprehensive workforce diversity data, including requests for EEO-1 data.

Generally vote for proposals seeking information on the diversity efforts of suppliers and service providers.

Gender Identity, Sexual Orientation, and Domestic Partner Benefits

Sustainability Policy Recommendation: Generally vote for proposals seeking to amend a company's EEO statement or diversity policies to prohibit discrimination based on sexual orientation and/or gender identity, unless the change would be unduly burdensome.

Generally vote for proposals to extend company benefits to domestic partners.

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Gender, Race/Ethnicity Pay Gap

Sustainability Policy Recommendation: Vote case-by-case on requests for reports on a company's pay data by gender or race/ethnicity or a report on a company's policies and goals to reduce any gender or race/ethnicity pay gaps, taking into account:

§ The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy and fair and equitable compensation practices;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race, or ethnicity pay gap issues;

§ The company's disclosure regarding gender, race, or ethnicity pay gap policies or initiatives compared to its industry peers; and

§ Local laws regarding categorization of race and/or ethnicity and definitions of ethnic and/or racial minorities.

Racial Equity and/or Civil Rights Audits

Sustainability Policy Recommendation: Generally vote for proposals requesting that a company conduct an independent racial equity and/or civil rights audit, considering company disclosures, policies, actions, and engagements.

Environment and Sustainability

Facility and Workplace Safety

Sustainability Policy Recommendation: Vote case-by-case on resolutions requesting that a company report on safety and/or security risks associated with its operations and/or facilities, considering:

§ The company's compliance with applicable regulations and guidelines;

§ The company's current level of disclosure regarding its security and safety policies, procedures, and compliance monitoring; and

§ The existence of recent, significant violations, fines, or controversy regarding the safety and security of the company's operations and/or facilities.

Hydraulic Fracturing

Sustainability Policy Recommendation: Generally vote for proposals requesting greater disclosure of a company's (natural gas) hydraulic fracturing operations, including measures the company has taken to manage and mitigate the potential community and environmental impacts of those operations.

Operations in Protected Areas

Sustainability Policy Recommendation: Generally vote for requests for reports on potential environmental damage as a result of company operations in protected regions, unless:

§ Operations in the specified regions are not permitted by current laws or regulations;

§ The company does not currently have operations or plans to develop operations in these protected regions; or

§ The company's disclosure of its operations and environmental policies in these regions is comparable to industry peers.

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Recycling

Sustainability Policy Recommendation: Vote FOR proposals to adopt a comprehensive recycling strategy, taking into account:

§ The nature of the company's business;

§ The current level of disclosure of the company's existing related programs;

§ The timetable and methods of program implementation prescribed by the proposal;

§ The company's ability to address the issues raised in the proposal; and

§ How the company's recycling programs compare to similar programs of its industry peers.

Sustainability Reporting

The concept of sustainability is commonly understood as meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. Indeed, the term sustainability is complex and poses significant challenges for companies on many levels. Many in the investment community have termed this broader responsibility the "triple bottom line," referring to the triad of performance goals related to economic prosperity, social responsibility and environmental quality. In essence, the concept requires companies to balance the needs and interests of their various stakeholders while operating in a manner that sustains business growth for the long-term, supports local communities and protects the environment and natural capital for future generations.

Shareholders may request general environmental reports or reports on a specific location/operation, often requesting that the company detail the environmental risks and potential liabilities of a specific project. Companies have begun to report on environmental and sustainability issues using the Global Reporting Initiative (GRI) standards. The GRI was established in 1997 with the mission of developing globally applicable guidelines for reporting on economic, environmental, and social performance. The GRI was developed by Ceres (formerly known as the Coalition for Environmentally Responsible Economies, CERES) in partnership with the United Nations Environment Programme (UNEP).

Sustainability Policy Recommendation:

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| § | Vote for shareholder proposals seeking greater disclosure on the company's environmental and social practices, and/or associated risks and liabilities.  |

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| § | Vote for shareholder proposals asking companies to report in accordance with the Global Reporting Initiative (GRI).  |

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| § | Vote for shareholder proposals to prepare a sustainability report.  |

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Water Issues

Sustainability Policy Recommendation: Generally vote for on proposals requesting a company to report on, or to adopt a new policy on, water-related risks and concerns, taking into account:

§ The company's current disclosure of relevant policies, initiatives, oversight mechanisms, and water usage metrics;

§ Whether or not the company's existing water-related policies and practices are consistent with relevant internationally recognized standards and national/local regulations;

§ The potential financial impact or risk to the company associated with water-related concerns or issues; and

§ Recent, significant company controversies, fines, or litigation regarding water use by the company and its suppliers.

Equator Principles

The Equator Principles are the financial industry's benchmark for determining, assessing and managing social and environmental risk in project financing. First launched in June 2003, the Principles were ultimately adopted by over forty

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financial institutions over a three-year implementation period. Since its adoption, the Principles have undergone a number of revisions, expanding the use of performance standards and signatory banks' banks' commitments to social responsibility, including human rights, climate change, and transparency. The fourth iteration of the Principles was launched in November 2019, incorporating amendments and new commitment to human rights, climate change, Indigenous Peoples and biodiversity related topics. Financial institutions adopt these principles to ensure that the projects they finance are developed in a socially responsible manner and reflect sound environmental management practices. As of 2019, 101 financial institutions have officially adopted the Equator Principles.

Sustainability Policy Recommendation: Vote for shareholder proposals to study or implement the Equator Principles.

General Corporate Issues

Charitable Contributions

Sustainability Policy Recommendation: Vote against proposals restricting a company from making charitable contributions. Charitable contributions are generally useful for assisting worthwhile causes and for creating goodwill in the community. In the absence of bad faith, self-dealing, or gross negligence, management should determine which, and if, contributions are in the best interests of the company.

Data Security, Privacy, and Internet Issues

Sustainability Policy Recommendation: Vote case-by-case on proposals requesting the disclosure or implementation of data security, privacy, or information access and management policies and procedures, considering:

§ The level of disclosure of company policies and procedures relating to data security, privacy, freedom of speech, information access and management, and Internet censorship;

§ Engagement in dialogue with governments or relevant groups with respect to data security, privacy, or the free flow of information on the Internet;

§ The scope of business involvement and of investment in countries whose governments censor or monitor the Internet and other telecommunications;

§ Applicable market-specific laws or regulations that may be imposed on the company; and

§ Controversies, fines, or litigation related to data security, privacy, freedom of speech, or Internet censorship.

Environmental, Social, and Governance (ESG) Compensation-Related Proposals

Sustainability Policy Recommendation: Generally vote for proposals to link, or report on linking, executive compensation to environmental and social criteria (such as corporate downsizings, customer or employee satisfaction, community involvement, human rights, environmental performance, or predatory lending).

Human Rights, Labor Issues, and International Operations

Investors, international human rights groups, and labor advocacy groups have long been making attempts to safeguard worker rights in the international marketplace. In instances where companies themselves operate factories in developing countries for example, these advocates have asked that the companies adopt global corporate human rights standards that guarantee sustainable wages and safe working conditions for their workers abroad. Companies that contract out portions of their manufacturing operations to foreign companies have been asked to ensure that the products they receive from those contractors have not been made using forced labor, child labor, or sweatshop labor. These companies are asked to adopt formal vendor standards that, among other things, include monitoring or auditing mechanisms. Globalization, relocation of production overseas, and widespread use of subcontractors and vendors, often make it

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difficult to obtain a complete picture of a company's labor practices in global markets. Many Investors believe that companies would benefit from adopting a human rights policy based on the Universal Declaration of Human Rights and the International Labor Organization's Core Labor Standards. Efforts that seek greater disclosure on a company's labor practices and that seek to establish minimum standards for a company's operations will be supported. In addition, requests for independent monitoring of overseas operations will be supported.

The Sustainability Policy generally supports proposals that call for the adoption and/or enforcement of principles or codes relating to countries in which there are systematic violations of human rights; such as the use of slave, child, or prison labor; a government that is illegitimate; or there is a call by human rights advocates, pro-democracy organizations, or legitimately-elected representatives for economic sanctions. The use of child, sweatshop, or forced labor is unethical and can damage corporate reputations. Poor labor practices can lead to litigation against the company, which can be costly and time consuming.

Human Rights Proposals

Sustainability Policy Recommendation:

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| § | Vote for shareholder proposals to implement human rights standards and workplace codes of conduct.  |

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| § | Vote for shareholder proposals calling for the implementation and reporting on ILO codes of conduct, SA 8000 Standards, or the Global Sullivan Principles.  |

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| § | Vote for shareholder proposals that call for the adoption and/or enforcement of principles or codes relating to countries in which there are systematic violations of human rights.  |

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| § | Vote for shareholder proposals that call for independent monitoring programs in conjunction with local and respected religious and human rights groups to monitor supplier and licensee compliance with codes.  |

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| § | Vote for shareholder proposals that seek publication of a "Code of Conduct" to the company's foreign suppliers and licensees, requiring they satisfy all applicable standards and laws protecting employees' wages, benefits, working conditions, freedom of association, and other rights.  |

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| § | Vote for shareholder proposals seeking reports on, or the adoption of, vendor standards including: reporting on incentives to encourage suppliers to raise standards rather than terminate contracts and providing public disclosure of contract supplier reviews on a regular basis.  |

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| § | Vote for shareholder proposals to adopt labor standards for foreign and domestic suppliers to ensure that the company will not do business with foreign suppliers that manufacture products for sale using forced labor, child labor, or that fail to comply with applicable laws protecting employee's wages and working conditions.  |

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| § | Vote for proposals requesting that a company conduct an assessment of the human rights risks in its operations or in its supply chain, or report on its human rights risk assessment process.  |

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Mandatory Arbitration

Sustainability Policy Recommendation: Vote case-by-case on requests for a report on a company's use of mandatory arbitration on employment-related claims, taking into account:

§ The company's current policies and practices related to the use of mandatory arbitration agreements on workplace claims;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to the use of mandatory arbitration agreements on workplace claims; and

§ The company's disclosure of its policies and practices related to the use of mandatory arbitration agreements compared to its peers.

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MacBride Principles

These resolutions have called for the adoption of the MacBride Principles for operations located in Northern Ireland. They request companies operating abroad to support the equal employment opportunity policies that apply in facilities they operate domestically. The principles were established to address the sectarian hiring problems between Protestants and Catholics in Northern Ireland. It is well documented that Northern Ireland's Catholic community faced much higher unemployment figures than the Protestant community. In response to this problem, the U.K. government instituted the New Fair Employment Act of 1989 (and subsequent amendments) to address the sectarian hiring problems.

Many companies believe that the Act adequately addresses the problems and that further action, including adoption of the MacBride Principles, only duplicates the efforts already underway. In evaluating a proposal to adopt the MacBride Principles, shareholders must decide whether the principles will cause companies to divest, and therefore worsen the unemployment problem, or whether the principles will promote equal hiring practices. Proponents believe that the Fair Employment Act does not sufficiently address the sectarian hiring problems. They argue that the MacBride Principles serve to stabilize the situation and promote further investment.

Sustainability Policy Recommendation: Support the MacBride Principles for operations in Northern Ireland that request companies to abide by equal employment opportunity policies.

Community Social and Environmental Impact Assessments

Sustainability Policy Recommendation: Generally vote for requests for reports outlining policies and/or the potential (community) social and/or environmental impact of company operations considering:

§ Current disclosure of applicable policies and risk assessment report(s) and risk management procedures;

§ The impact of regulatory non-compliance, litigation, remediation, or reputational loss that may be associated with failure to manage the company's operations in question, including the management of relevant community and stakeholder relations;

§ The nature, purpose, and scope of the company's operations in the specific region(s);

§ The degree to which company policies and procedures are consistent with industry norms; and

§ Scope of the resolution.

Operations in High-Risk Markets

Sustainability Policy Recommendation: Vote case-by-case on requests for a report on a company's potential financial and reputational risks associated with operations in "high-risk" markets, such as a terrorism-sponsoring state or politically/socially unstable region, taking into account:

§ The nature, purpose, and scope of the operations and business involved that could be affected by social or political disruption;

§ Current disclosure of applicable risk assessment(s) and risk management procedures;

§ Compliance with U.S. sanctions and laws;

§ Consideration of other international policies, standards, and laws; and

§ Whether the company has been recently involved in recent, significant controversies, fines or litigation related to its operations in "high-risk" markets.

Outsourcing/Offshoring

Sustainability Policy Recommendation: Vote case-by-case on proposals calling for companies to report on the risks associated with outsourcing/plant closures, considering:

§ Controversies surrounding operations in the relevant market(s);

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§ The value of the requested report to shareholders;

§ The company's current level of disclosure of relevant information on outsourcing and plant closure procedures; and

§ The company's existing human rights standards relative to industry peers.

Sexual Harassment

Sustainability Policy Recommendation: Vote case-by-case on requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment, taking into account:

§ The company's current policies, practices, oversight mechanisms related to preventing workplace sexual harassment;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to workplace sexual harassment issues; and

§ The company's disclosure regarding workplace sexual harassment policies or initiatives compared to its industry peers.

Weapons and Military Sales

Sustainability Policy Recommendation: Vote against reports on foreign military sales or offsets. Such disclosures may involve sensitive and confidential information. Moreover, companies must comply with government controls and reporting on foreign military sales.

Generally vote against proposals asking a company to cease production or report on the risks associated with the use of depleted uranium munitions or nuclear weapons components and delivery systems, including disengaging from current and proposed contracts. Such contracts are monitored by government agencies, serve multiple military and non-military uses, and withdrawal from these contracts could have a negative impact on the company's business.

Political Activities

Lobbying

Sustainability Policy Recommendation: Vote case-by-case on proposals requesting information on a company's lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures, considering:

§ The company's current disclosure of relevant lobbying policies, and management and board oversight;

§ The company's disclosure regarding trade associations or other groups that it supports, or is a member of, that engage in lobbying activities; and

§ Recent significant controversies, fines, or litigation regarding the company's lobbying-related activities.

Political Contributions

Sustainability Policy Recommendation: Generally vote for proposals requesting greater disclosure of a company's political contributions and trade association spending policies and activities, considering:

§ The company's policies, and management and board oversight related to its direct political contributions and payments to trade associations or other groups that may be used for political purposes;

§ The company's disclosure regarding its support of, and participation in, trade associations or other groups that may make political contributions; and

§ Recent significant controversies, fines, or litigation related to the company's political contributions or political activities.

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Vote against proposals barring a company from making political contributions. Businesses are affected by legislation at the federal, state, and local level; barring political contributions can put the company at a competitive disadvantage.

Vote against proposals to publish in newspapers and other media a company's political contributions. Such publications could present significant cost to the company without providing commensurate value to shareholders.

Political Ties

Sustainability Policy Recommendation: Generally vote against proposals asking a company to affirm political nonpartisanship in the workplace, so long as:

§ There are no recent, significant controversies, fines, or litigation regarding the company's political contributions or trade association spending; and

§ The company has procedures in place to ensure that employee contributions to company-sponsored political action committees (PACs) are strictly voluntary and prohibit coercion.

Vote against proposals asking for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have prior government service and whether such service had a bearing on the business of the company. Such a list would be burdensome to prepare without providing any meaningful information to shareholders.

Political Expenditures and Lobbying Congruency

Sustainability Policy Recommendation: Generally vote for proposals requesting greater disclosure of a company's alignment of political contributions, lobbying, and electioneering spending with a company's publicly stated values and policies, unless the terms of the proposal are unduly restrictive. Additionally, Sustainability Advisory Services will consider whether:

§ The company's policies, management, board oversight, governance processes, and level of disclosure related to direct political contributions, lobbying activities, and payments to trade associations, political action committees, or other groups that may be used for political purposes;

§ The company's disclosure regarding: the reasons for its support of candidates for public offices; the reasons for support of and participation in trade associations or other groups that may make political contributions; and other political activities;

§ Any incongruencies identified between a company's direct and indirect political expenditures and its publicly stated values and priorities;

§ Recent significant controversies related to the company's direct and indirect lobbying, political contributions, or political activities.

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7. Mutual Fund Proxies

Election of Directors

Sustainability Policy Recommendation: Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes

Sustainability Policy Recommendation: For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

Converting Closed-end Fund to Open-end Fund

Sustainability Policy Recommendation: Vote case-by-case on conversion proposals, considering the following factors:

§ Past performance as a closed-end fund;

§ Market in which the fund invests;

§ Measures taken by the board to address the discount; and

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Proxy Contests

Sustainability Policy Recommendation: Vote case-by-case on proxy contests, considering the following factors:

§ Past performance relative to its peers;

§ Market in which fund invests;

§ Measures taken by the board to address the issues;

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| § | Past shareholder activism, board activity, and votes on related proposals;  |

---

§ Strategy of the incumbents versus the dissidents;

§ Independence of directors;

§ Experience and skills of director candidates;

§ Governance profile of the company;

§ Evidence of management entrenchment.

Investment Advisory Agreements

Sustainability Policy Recommendation: Vote case-by-case on investment advisory agreements, considering the following factors:

§ Proposed and current fee schedules;

§ Fund category/investment objective;

§ Performance benchmarks;

§ Share price performance as compared with peers;

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§ Resulting fees relative to peers;

§ Assignments (where the advisor undergoes a change of control).

Approving New Classes or Series of Shares

Sustainability Policy Recommendation: Vote for the establishment of new classes or series of shares.

Preferred Stock Proposals

Sustainability Policy Recommendation: Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

§ Stated specific financing purpose;

§ Possible dilution for common shares;

§ Whether the shares can be used for antitakeover purposes.

1940 Act Policies

Sustainability Policy Recommendation: Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors:

§ Potential competitiveness;

§ Regulatory developments;

§ Current and potential returns; and

§ Current and potential risk.

Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.

Changing a Fundamental Restriction to a Nonfundamental Restriction

Sustainability Policy Recommendation: Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

§ The fund's target investments;

§ The reasons given by the fund for the change; and

§ The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Nonfundamental

Sustainability Policy Recommendation: Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

Name Change Proposals

Sustainability Policy Recommendation: Vote case-by-case on name change proposals, considering the following factors:

§ Political/economic changes in the target market;

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§ Consolidation in the target market; and

§ Current asset composition.

Change in Fund's Subclassification

Sustainability Policy Recommendation: Vote case-by-case on changes in a fund's sub-classification, considering the following factors:

§ Potential competitiveness;

§ Current and potential returns;

§ Risk of concentration;

§ Consolidation in target industry.

Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value

Sustainability Policy Recommendation: Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV) if:

§ The proposal to allow share issuances below NAV has an expiration date no more than one year from the date shareholders approve the underlying proposal, as required under the Investment Company Act of 1940;

§ The sale is deemed to be in the best interests of shareholders by (1) a majority of the company's independent directors and (2) a majority of the company's directors who have no financial interest in the issuance; and

§ The company has demonstrated responsible past use of share issuances by either:

§ Outperforming peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

§ Providing disclosure that its past share issuances were priced at levels that resulted in only small or moderate discounts to NAV and economic dilution to existing non-participating shareholders.

Disposition of Assets/Termination/Liquidation

Sustainability Policy Recommendation: Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors:

§ Strategies employed to salvage the company;

§ The fund's past performance;

§ The terms of the liquidation.

Changes to the Charter Document

Sustainability Policy Recommendation: Vote case-by-case on changes to the charter document, considering the following factors:

§ The degree of change implied by the proposal;

§ The efficiencies that could result;

§ The state of incorporation;

§ Regulatory standards and implications.

Vote against any of the following changes:

§ Removal of shareholder approval requirement to reorganize or terminate the trust or any of its series;

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§ Removal of shareholder approval requirement for amendments to the new declaration of trust;

§ Removal of shareholder approval requirement to amend the fund's management contract, allowing the contract to be modified by the investment manager and the trust management, as permitted by the 1940 Act;

§ Allow the trustees to impose other fees in addition to sales charges on investment in a fund, such as deferred sales charges and redemption fees that may be imposed upon redemption of a fund's shares;

§ Removal of shareholder approval requirement to engage in and terminate subadvisory arrangements;

§ Removal of shareholder approval requirement to change the domicile of the fund.

Changing the Domicile of a Fund

Sustainability Policy Recommendation: Vote case-by-case on re-incorporations, considering the following factors:

§ Regulations of both states;

§ Required fundamental policies of both states;

§ The increased flexibility available.

Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval

Sustainability Policy Recommendation: Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

Distribution Agreements

Sustainability Policy Recommendation: Vote case-by-case on distribution agreement proposals, considering the following factors:

§ Fees charged to comparably sized funds with similar objectives;

§ The proposed distributor's reputation and past performance;

§ The competitiveness of the fund in the industry;

§ The terms of the agreement.

Master-Feeder Structure

Sustainability Policy Recommendation: Vote for the establishment of a master-feeder structure.

Mergers

Sustainability Policy Recommendation: Vote case-by-case on merger proposals, considering the following factors:

§ Resulting fee structure;

§ Performance of both funds;

§ Continuity of management personnel;

§ Changes in corporate governance and their impact on shareholder rights.

Shareholder Proposals for Mutual Funds

Establish Director Ownership Requirement

Sustainability Policy Recommendation: Generally vote against shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

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Reimburse Shareholder for Expenses Incurred

Sustainability Policy Recommendation: Vote case-by-case on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote for the reimbursement of the proxy solicitation expenses.

Terminate the Investment Advisor

Sustainability Policy Recommendation: Vote case-by-case on proposals to terminate the investment advisor, considering the following factors:

§ Performance of the fund's Net Asset Value (NAV);

§ The fund's history of shareholder relations;

§ The performance of other funds under the advisor's management.

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8. Foreign Private Issuers Listed on U.S. Exchanges

Sustainability Policy Recommendation: Vote against (or withhold from) non-independent director nominees at companies which fail to meet the following criteria: a majority-independent board, and the presence of an audit, a compensation, and a nomination committee, each of which is entirely composed of independent directors.

Where the design and disclosure levels of equity compensation plans are comparable to those seen at U.S. companies, U.S. compensation policy will be used to evaluate the compensation plan proposals. Otherwise, they, and all other voting items, will be evaluated using the relevant regional or market approach under the Sustainability proxy voting guidelines.

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![LOGO](g79608g00k14.jpg)

We empower investors and companies to build

for long-term and sustainable growth by providing

high-quality data, analytics, and insight.

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Email sales@issgovernance.com or visit www.issgovernance.com for more information.

Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS' 2,600 employees operate worldwide across 29 global locations in 15 countries. Its approximately 3,400 clients include many of the world's leading institutional investors who rely on ISS' objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS' expertise to help them make informed investment decisions. This document and all of the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the "Information") is the property of Institutional Shareholder Services Inc. (ISS), its subsidiaries, or, in some cases third party suppliers.

The Information has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), or a promotion or recommendation of, any security, financial product or other investment vehicle or any trading strategy, and ISS does not endorse, approve, or otherwise express any opinion regarding any issuer, securities, financial products or instruments or trading strategies.

The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information.

ISS MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, TIMELINESS, NON-INFRINGEMENT, COMPLETENESS, MERCHANTABILITY, AND FITNESS for A PARTICULAR PURPOSE) WITH RESPECT TO ANY OF THE INFORMATION.

Without limiting any of the foregoing and to the maximum extent permitted by law, in no event shall ISS have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits), or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.

<sup>©</sup> 2023 \| Institutional Shareholder Services and/or its affiliates

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UNITED STATES Proxy Voting Guidelines Benchmark Policy Recommendations Effective for Meetings on or after February 1, 2023 Published December 13, 2022 WWW.ISSGOVERNANCE.COM ![LOGO](g79608g26b76.jpg)

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## **TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  [**Coverage**](#appda79608_237) | E-499 |
| [**1. Board of Directors**](#appda79608_238) | E-500 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Voting on Director Nominees in Uncontested Elections](#appda79608_239) | E-500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independence](#appda79608_240) | E-500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [ISS Classification of Directors – U.S.](#appda79608_241) | E-501 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Composition](#appda79608_242) | E-503 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Attendance](#appda79608_243) | E-503 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Overboarded Directors](#appda79608_244) | E-503 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender Diversity](#appda79608_245) | E-503 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial and/or Ethnic Diversity](#appda79608_246) | E-503 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Responsiveness](#appda79608_247) | E-504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Accountability](#appda79608_248) | E-504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills](#appda79608_249) | E-504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unequal Voting Rights](#appda79608_250) | E-505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classified Board Structure](#appda79608_251) | E-505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Removal of Shareholder Discretion on Classified Boards](#appda79608_252) | E-505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Governance Structure](#appda79608_253) | E-505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unilateral Bylaw/Charter Amendments](#appda79608_254) | E-506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Restricting Binding Shareholder Proposals](#appda79608_255) | E-506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director Performance Evaluation](#appda79608_256) | E-506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appda79608_257) | E-507 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Audit-Related Practices](#appda79608_258) | E-507 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Compensation Practices](#appda79608_259) | E-507 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pledging of Company Stock](#appda79608_260) | E-508 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Accountability](#appda79608_261) | E-508 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Governance Failures](#appda79608_262) | E-508 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Voting on Director Nominees in Contested Elections](#appda79608_263) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Vote-No Campaigns](#appda79608_264) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests/Proxy Access](#appda79608_265) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Board-Related Proposals](#appda79608_266) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adopt Anti-Hedging/Pledging/Speculative Investments Policy](#appda79608_267) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Refreshment](#appda79608_268) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Term/Tenure Limits](#appda79608_269) | E-509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Age Limits](#appda79608_270) | E-510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Size](#appda79608_271) | E-510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Classification/Declassification of the Board](#appda79608_272) | E-510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CEO Succession Planning](#appda79608_273) | E-510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Cumulative Voting](#appda79608_274) | E-510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director and Officer Indemnification, Liability Protection, and Exculpation](#appda79608_275) | E-511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish/Amend Nominee Qualifications](#appda79608_276) | E-511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish Other Board Committee Proposals](#appda79608_277) | E-512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Filling Vacancies/Removal of Directors](#appda79608_278) | E-512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independent Board Chair](#appda79608_279) | E-512 |

---

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority of Independent Directors/Establishment of Independent Committees](#appda79608_280) | E-512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Majority Vote Standard for the Election of Directors](#appda79608_281) | E-513 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Access](#appda79608_282) | E-513 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Require More Nominees than Open Seats](#appda79608_283) | E-513 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Engagement Policy (Shareholder Advisory Committee)](#appda79608_284) | E-513 |
| [**2. Audit-Related**](#appda79608_285) | E-514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Indemnification and Limitation of Liability](#appda79608_286) | E-514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Auditor Ratification](#appda79608_287) | E-514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals Limiting Non-Audit Services](#appda79608_288) | E-514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Audit Firm Rotation](#appda79608_289) | E-514 |
| [**3. Shareholder Rights & Defenses**](#appda79608_290) | E-516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advance Notice Requirements for Shareholder Proposals/Nominations](#appda79608_291) | E-516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Bylaws without Shareholder Consent](#appda79608_292) | E-516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Acquisition Provisions](#appda79608_293) | E-516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Control Share Cash-Out Provisions](#appda79608_294) | E-516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disgorgement Provisions](#appda79608_295) | E-517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fair Price Provisions](#appda79608_296) | E-517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Freeze-Out Provisions](#appda79608_297) | E-517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Greenmail](#appda79608_298) | E-517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Litigation Rights](#appda79608_299) | E-517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Federal Forum Selection Provisions](#appda79608_300) | E-517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Exclusive Forum Provisions for State Law Matters](#appda79608_301) | E-518 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Fee shifting](#appda79608_302) | E-518 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Net Operating Loss (NOL) Protective Amendments](#appda79608_303) | E-518 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Poison Pills (Shareholder Rights Plans)](#appda79608_304) | E-519 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy](#appda79608_305) | E-519 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify a Poison Pill](#appda79608_306) | E-519 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)](#appda79608_307) | E-519 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Voting Disclosure, Confidentiality, and Tabulation](#appda79608_308) | E-520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions](#appda79608_309) | E-520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimbursing Proxy Solicitation Expenses](#appda79608_310) | E-520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reincorporation Proposals](#appda79608_311) | E-521 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Act by Written Consent](#appda79608_312) | E-521 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ability to Call Special Meetings](#appda79608_313) | E-522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stakeholder Provisions](#appda79608_314) | E-522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [State Antitakeover Statutes](#appda79608_315) | E-522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supermajority Vote Requirements](#appda79608_316) | E-522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Virtual Shareholder Meetings](#appda79608_317) | E-522 |
| [**4. Capital/Restructuring**](#appda79608_318) | E-523 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Capital](#appda79608_319) | E-523 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjustments to Par Value of Common Stock](#appda79608_320) | E-523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock Authorization](#appda79608_321) | E-523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appda79608_322) | E-523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Authorization Requests](#appda79608_323) | E-524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Dual Class Structure](#appda79608_324) | E-524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Issue Stock for Use with Rights Plan](#appda79608_325) | E-524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preemptive Rights](#appda79608_326) | E-524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Authorization](#appda79608_327) | E-524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Authorization Requests](#appda79608_328) | E-524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recapitalization Plans](#appda79608_329) | E-525 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reverse Stock Splits](#appda79608_330) | E-526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.](#appda79608_331) | E-526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs](#appda79608_332) | E-526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Repurchase Programs Shareholder Proposals](#appda79608_333) | E-527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Distributions: Splits and Dividends](#appda79608_334) | E-527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tracking Stock](#appda79608_335) | E-527 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Restructuring](#appda79608_336) | E-527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraisal Rights](#appda79608_337) | E-527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Purchases](#appda79608_338) | E-527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Asset Sales](#appda79608_339) | E-528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bundled Proposals](#appda79608_340) | E-528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conversion of Securities](#appda79608_341) | E-528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans](#appda79608_342) | E-528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Formation of Holding Company](#appda79608_343) | E-529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)](#appda79608_344) | E-529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Joint Ventures](#appda79608_345) | E-529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liquidations](#appda79608_346) | E-530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers and Acquisitions](#appda79608_347) | E-530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Private Placements/Warrants/Convertible Debentures](#appda79608_348) | E-530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reorganization/Restructuring Plan (Bankruptcy)](#appda79608_349) | E-531 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)](#appda79608_350) | E-532 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Purpose Acquisition Corporations (SPACs)—Proposals for Extensions](#appda79608_351) | E-532 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Spin-offs](#appda79608_352) | E-533 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Value Maximization Shareholder Proposals](#appda79608_353) | E-533 |
| [**5. Compensation**](#appda79608_354) | E-534 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Executive Pay Evaluation](#appda79608_355) | E-534 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Advisory Votes on Executive Compensation—Management Proposals (Say-on-Pay)](#appda79608_356) | E-534 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay-for-Performance Evaluation](#appda79608_357) | E-535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices](#appda79608_358) | E-535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Committee Communications and Responsiveness](#appda79608_359) | E-536 |

---

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![LOGO](g79608g00k16.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")](#appda79608_360) | E-537 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale](#appda79608_361) | E-537 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Equity-Based and Other Incentive Plans](#appda79608_362) | E-537 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Value Transfer (SVT)](#appda79608_363) | E-538 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Three-Year Value-Adjusted Burn Rate](#appda79608_364) | E-539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Egregious Factors](#appda79608_365) | E-539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liberal Change in Control Definition](#appda79608_366) | E-539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Repricing Provisions](#appda79608_367) | E-539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Problematic Pay Practices or Significant Pay-for-Performance Disconnect](#appda79608_368) | E-540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))](#appda79608_369) | E-540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Specific Treatment of Certain Award Types in Equity Plan Evaluations](#appda79608_370) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Dividend Equivalent Rights](#appda79608_371) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)](#appda79608_372) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Other Compensation Plans](#appda79608_373) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [401(k) Employee Benefit Plans](#appda79608_374) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Ownership Plans (ESOPs)](#appda79608_375) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans—Qualified Plans](#appda79608_376) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employee Stock Purchase Plans—Non-Qualified Plans](#appda79608_377) | E-541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Option Exchange Programs/Repricing Options](#appda79608_378) | E-542 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Plans in Lieu of Cash](#appda79608_379) | E-542 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Stock Option (TSO) Programs](#appda79608_380) | E-542 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Director Compensation](#appda79608_381) | E-543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Ratification of Director Pay Programs](#appda79608_382) | E-543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity Plans for Non-Employee Directors](#appda79608_383) | E-544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Non-Employee Director Retirement Plans](#appda79608_384) | E-544 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals on Compensation](#appda79608_385) | E-544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Bonus Banking/Bonus Banking "Plus"](#appda79608_386) | E-544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation Consultants—Disclosure of Board or Company's Utilization](#appda79608_387) | E-544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disclosure/Setting Levels or Types of Compensation for Executives and Directors](#appda79608_388) | E-544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Golden Coffins/Executive Death Benefits](#appda79608_389) | E-545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hold Equity Past Retirement or for a Significant Period of Time](#appda79608_390) | E-545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay Disparity](#appda79608_391) | E-545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Performance/Performance-Based Awards](#appda79608_392) | E-546 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pay for Superior Performance](#appda79608_393) | E-546 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pre-Arranged Trading Plans (10b5-1 Plans)](#appda79608_394) | E-546 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibit Outside CEOs from Serving on Compensation Committees](#appda79608_395) | E-547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recoupment of Incentive or Stock Compensation in Specified Circumstances](#appda79608_396) | E-547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Severance Agreements for Executives/Golden Parachutes](#appda79608_397) | E-547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Buyback Impact on Incentive Program Metrics](#appda79608_398) | E-548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Supplemental Executive Retirement Plans (SERPs)](#appda79608_399) | E-548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Gross-Up Proposals](#appda79608_400) | E-548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity](#appda79608_401) | E-548 |

---

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![LOGO](g79608g00k16.jpg)

---

| | |
|:---|:---|
| [**6. Routine/Miscellaneous**](#appda79608_402) | E-549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Adjourn Meeting](#appda79608_403) | E-549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Quorum Requirements](#appda79608_404) | E-549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amend Minor Bylaws](#appda79608_405) | E-549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Company Name](#appda79608_406) | E-549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Date, Time, or Location of Annual Meeting](#appda79608_407) | E-549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Other Business](#appda79608_408) | E-549 |
| [**7. Social and Environmental Issue**s](#appda79608_409) | E-550 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Global Approach – E&S Shareholder Proposals](#appda79608_410) | E-550 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Endorsement of Principles](#appda79608_411) | E-550 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Animal Welfare](#appda79608_412) | E-550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Welfare Policies](#appda79608_413) | E-550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Testing](#appda79608_414) | E-551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Animal Slaughter](#appda79608_415) | E-551 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Consumer Issues](#appda79608_416) | E-551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Genetically Modified Ingredients](#appda79608_417) | E-551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports on Potentially Controversial Business/Financial Practices](#appda79608_418) | E-551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Pharmaceutical Pricing, Access to Medicines, and Prescription Drug Reimportation](#appda79608_419) | E-552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Product Safety and Toxic/Hazardous Materials](#appda79608_420) | E-552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tobacco-Related Proposals](#appda79608_421) | E-553 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Climate Change](#appda79608_422) | E-553 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Management Proposals](#appda79608_423) | E-553 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Say on Climate (SoC) Shareholder Proposals](#appda79608_424) | E-554 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Climate Change/Greenhouse Gas (GHG) Emissions](#appda79608_425) | E-554 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Energy Efficiency](#appda79608_426) | E-554 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Renewable Energy](#appda79608_427) | E-555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Diversity](#appda79608_428) | E-555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board Diversity](#appda79608_429) | E-555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equality of Opportunity](#appda79608_430) | E-555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender Identity, Sexual Orientation, and Domestic Partner Benefits](#appda79608_431) | E-556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Gender, Race/Ethnicity Pay Gap](#appda79608_432) | E-556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Racial Equity and/or Civil Rights Audit Guidelines](#appda79608_433) | E-556 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Environment and Sustainability](#appda79608_434) | E-556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Facility and Workplace Safety](#appda79608_435) | E-556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Environmental Proposals and Community Impact Assessments](#appda79608_436) | E-557 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Hydraulic Fracturing](#appda79608_437) | E-557 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in Protected Areas](#appda79608_438) | E-557 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recycling](#appda79608_439) | E-557 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sustainability Reporting](#appda79608_440) | E-558 |

---

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![LOGO](g79608g00k16.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Water Issues](#appda79608_441) | E-558 |
| &nbsp;&nbsp;&nbsp;&nbsp; [General Corporate Issues](#appda79608_442) | E-558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Charitable Contributions](#appda79608_443) | E-558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Data Security, Privacy, and Internet Issues](#appda79608_444) | E-558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [ESG Compensation-Related Proposals](#appda79608_445) | E-559 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Human Rights, Human Capital Management, and International Operations](#appda79608_446) | E-559 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Human Rights Proposals](#appda79608_447) | E-559 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mandatory Arbitration](#appda79608_448) | E-559 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Operations in High-Risk Markets](#appda79608_449) | E-560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Outsourcing/Offshoring](#appda79608_450) | E-560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sexual Harassment](#appda79608_451) | E-560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Weapons and Military Sales](#appda79608_452) | E-560 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Political Activities](#appda79608_453) | E-561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Lobbying](#appda79608_454) | E-561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Contributions](#appda79608_455) | E-561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Expenditures and Lobbying Congruency](#appda79608_456) | E-561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Political Ties](#appda79608_457) | E-562 |
| [**8. Mutual Fund Proxies**](#appda79608_458) | E-563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Election of Directors](#appda79608_459) | E-563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes](#appda79608_460) | E-563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Converting Closed-end Fund to Open-end Fund](#appda79608_461) | E-563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxy Contests](#appda79608_462) | E-563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Advisory Agreements](#appda79608_463) | E-563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Approving New Classes or Series of Shares](#appda79608_464) | E-564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Preferred Stock Proposals](#appda79608_465) | E-564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [1940 Act Policies](#appda79608_466) | E-564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing a Fundamental Restriction to a Nonfundamental Restriction](#appda79608_467) | E-564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change Fundamental Investment Objective to Nonfundamental](#appda79608_468) | E-564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Name Change Proposals](#appda79608_469) | E-564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Change in Fund's Subclassification](#appda79608_470) | E-565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value](#appda79608_471) | E-565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Disposition of Assets/Termination/Liquidation](#appda79608_472) | E-565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changes to the Charter Document](#appda79608_473) | E-565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Changing the Domicile of a Fund](#appda79608_474) | E-566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval](#appda79608_475) | E-566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Distribution Agreements](#appda79608_476) | E-566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Master-Feeder Structure](#appda79608_477) | E-566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Mergers](#appda79608_478) | E-566 |

---

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![LOGO](g79608g00k16.jpg)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; [Shareholder Proposals for Mutual Funds](#appda79608_479) | E-566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Establish Director Ownership Requirement](#appda79608_480) | E-566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reimburse Shareholder for Expenses Incurred](#appda79608_481) | E-567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Terminate the Investment Advisor](#appda79608_482) | E-567 |

---

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![LOGO](g79608g00k16.jpg)

## Coverage
The U.S. research team provides proxy analyses and voting recommendations for the common shareholder meetings of U.S. - incorporated companies that are publicly-traded on U.S. exchanges, as well as certain OTC companies, if they are held in our institutional investor clients' portfolios. Coverage generally includes corporate actions for common equity holders, such as written consents and bankruptcies. ISS' U.S. coverage includes investment companies (including open-end funds, closed-end funds, exchange-traded funds, and unit investment trusts), limited partnerships ("LPs"), master limited partnerships ("MLPs"), limited liability companies ("LLCs"), and business development companies. ISS reviews its universe of coverage on an annual basis, and the coverage is subject to change based on client need and industry trends.

#### Foreign-incorporated companies
In addition to U.S.- incorporated, U.S.- listed companies, ISS' U.S. policies are applied to certain foreign-incorporated company analyses. Like the SEC, ISS distinguishes two types of companies that list but are not incorporated in the U.S.:

---

| | |
|:---|:---|
| § | U.S. Domestic Issuers – which have a majority of outstanding shares held in the U.S. and meet other criteria, as determined by the SEC, and are subject to the same disclosure and listing standards as U.S. incorporated companies (e.g. they are required to file DEF14A proxy statements) – are generally covered under standard U.S. policy guidelines.  |

---

§ Foreign Private Issuers (FPIs) – which are allowed to take exemptions from most disclosure requirements (e.g., they are allowed to file 6-K for their proxy materials) and U.S. listing standards – are generally covered under a combination of policy guidelines:

§ FPI Guidelines (see the Americas Regional Proxy Voting Guidelines), may apply to companies incorporated in governance havens, and apply certain minimum independence and disclosure standards in the evaluation of key proxy ballot items, such as the election of directors; and/or

§ Guidelines for the market that is responsible for, or most relevant to, the item on the ballot.

U.S. incorporated companies listed only on non-U.S. exchanges are generally covered under the ISS guidelines for the market on which they are traded.

An FPI is generally covered under ISS' approach to FPIs outlined above, even if such FPI voluntarily files a proxy statement and/or other filing normally required of a U.S. Domestic Issuer, so long as the company retains its FPI status.

In all cases – including with respect to other companies with cross-market features that may lead to ballot items related to multiple markets – items that are on the ballot solely due to the requirements of another market (listing, incorporation, or national code) may be evaluated under the policy of the relevant market, regardless of the "assigned" primary market coverage.

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![LOGO](g79608g00k16.jpg)

1. Board of Directors

Voting on Director Nominees in Uncontested Elections

Four fundamental principles apply when determining votes on director nominees:

Independence: Boards should be sufficiently independent from management (and significant shareholders) to ensure that they are able and motivated to effectively supervise management's performance for the benefit of all shareholders, including in setting and monitoring the execution of corporate strategy, with appropriate use of shareholder capital, and in setting and monitoring executive compensation programs that support that strategy. The chair of the board should ideally be an independent director, and all boards should have an independent leadership position or a similar role in order to help provide appropriate counterbalance to executive management, as well as having sufficiently independent committees that focus on key governance concerns such as audit, compensation, and nomination of directors.

Composition: Companies should ensure that directors add value to the board through their specific skills and expertise and by having sufficient time and commitment to serve effectively. Boards should be of a size appropriate to accommodate diversity, expertise, and independence, while ensuring active and collaborative participation by all members. Boards should be sufficiently diverse to ensure consideration of a wide range of perspectives.

Responsiveness: Directors should respond to investor input, such as that expressed through significant opposition to management proposals, significant support for shareholder proposals (whether binding or non-binding), and tender offers where a majority of shares are tendered.

Accountability: Boards should be sufficiently accountable to shareholders, including through transparency of the company's governance practices and regular board elections, by the provision of sufficient information for shareholders to be able to assess directors and board composition, and through the ability of shareholders to remove directors.

General Recommendation: Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>1</sup>** considered on case-by-case basis):

Independence

Vote against**<sup>2</sup>** or withhold from non-independent directors (Executive Directors and Non-Independent Non-Executive Directors per <u>ISS' Classification of Directors</u>) when:

---

| | |
|:---|:---|
| § | Independent directors comprise 50 percent or less of the board;  |

---

§ The non-independent director serves on the audit, compensation, or nominating committee;

§ The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or

§ The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee.

<sup>1</sup> A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

<sup>2</sup> In general, companies with a plurality vote standard use "Withhold" as the contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.

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![LOGO](g79608g00k16.jpg)

ISS Classification of Directors – U.S.

1. **Executive Director** 

1.1. Current officer **<sup>1</sup>** of the company or one of its affiliates **<sup>2</sup> .** 

2. **Non-Independent Non-Executive Director** 

<u>Board Identification</u> 

2.1. Director identified as not independent by the board.

<u>Controlling/Significant Shareholder</u> 

2.2. Beneficial owner of more than 50 percent of the company's voting power (this may be aggregated if voting power is distributed among more than one member of a group).

<u>Current Employment at Company or Related Company</u> 

2.3. Non-officer employee of the firm (including employee representatives).

2.4. Officer **<sup>1</sup>**, former officer, or general or limited partner of a joint venture or partnership with the company.

<u>Former Employment</u> 

2.5. Former CEO of the company. **<sup>3, 4</sup>** 

2.6. Former non-CEO officer **<sup>1</sup>** of the company or an affiliate **<sup>2</sup>** within the past five years.

2.7. Former officer **<sup>1</sup>** of an acquired company within the past five years. **<sup>4</sup>** 

2.8. Officer **<sup>1</sup>** of a former parent or predecessor firm at the time the company was sold or split off within the past five years.

2.9. Former interim officer if the service was longer than 18 months. If the service was between 12 and 18 months an assessment of the interim officer's employment agreement will be made. **<sup>5</sup>** 

<u>Family Members</u> 

2.10. Immediate family member **<sup>6</sup>** of a current or former officer **<sup>1</sup>** of the company or its affiliates **<sup>2</sup>** within the last five years.

2.11. Immediate family member **<sup>6</sup>** of a current employee of company or its affiliates **<sup>2</sup>** where additional factors raise concern (which may include, but are not limited to, the following: a director related to numerous employees; the company or its affiliates employ relatives of numerous board members; or a non-Section 16 officer in a key strategic role).

<u>Professional, Transactional, and Charitable Relationships</u> 

2.12. Director who (or whose immediate family member **<sup>6</sup>**) currently provides professional services **<sup>7</sup>** in excess of $10,000 per year to: the company, an affiliate **<sup>2</sup>**, or an individual officer of the company or an affiliate; or who is (or whose immediate family member **<sup>6</sup>** is) a partner, employee, or controlling shareholder of an organization which provides the services.

2.13. Director who (or whose immediate family member **<sup>6</sup>**) currently has any material transactional relationship **<sup>8</sup>** with the company or its affiliates **<sup>2</sup>**; or who is (or whose immediate family member **<sup>6</sup>** is) a partner in, or a controlling shareholder or an executive officer of, an organization which has the material transactional relationship **<sup>8</sup>** (excluding investments in the company through a private placement).

2.14. Director who (or whose immediate family member **<sup>6</sup>)** is a trustee, director, or employee of a charitable or non-profit organization that receives material grants or endowments **<sup>8</sup>** from the company or its affiliates **<sup>2</sup>**.

<u>Other Relationships</u> 

2.15. Party to a voting agreement **<sup>9</sup>** to vote in line with management on proposals being brought to shareholder vote.

2.16. Has (or an immediate family member **<sup>6</sup>** has) an interlocking relationship as defined by the SEC involving members of the board of directors or its Compensation Committee. **<sup>10</sup>** 

2.17. Founder **<sup>11</sup>** of the company but not currently an employee.

2.18. Director with pay comparable to Named Executive Officers.

2.19. Any material **<sup>12</sup>** relationship with the company.

3. **Independent Director** 

3.1. No material **<sup>12</sup>** connection to the company other than a board seat.

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#### Footnotes:
&nbsp;&nbsp;&nbsp;&nbsp;*1.* The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will generally be classified as a Non-Independent Non-Executive Director under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation exceeding $10,000 per year for serving in that capacity, then the director will be classified as an Independent Director.

&nbsp;&nbsp;&nbsp;&nbsp;*2.* "Affiliate" includes a subsidiary, sibling company, or parent company. ISS uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;*3.* Includes any former CEO of the company prior to the company's initial public offering (IPO).

&nbsp;&nbsp;&nbsp;&nbsp;*4.* When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, ISS will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

&nbsp;&nbsp;&nbsp;&nbsp;*5.* ISS will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. ISS will also consider if a formal search process was under way for a full-time officer at the time.

&nbsp;&nbsp;&nbsp;&nbsp;*6.* "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

&nbsp;&nbsp;&nbsp;&nbsp;*7.* Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include but are not limited to the following: investment banking/financial advisory services, commercial banking (beyond deposit services), investment services, insurance services, accounting/audit services, consulting services, marketing services, legal services, property management services, realtor services, lobbying services, executive search services, and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services, IT tech support services, educational services, and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

&nbsp;&nbsp;&nbsp;&nbsp;*8.* A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity, exceeding the greater of: $200,000 or 5 percent of the recipient's gross revenues, for a company that follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, for a company that follows NYSE listing standards. For a company that follows neither of the preceding standards, ISS will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

&nbsp;&nbsp;&nbsp;&nbsp;*9.* Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as Independent Directors if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

&nbsp;&nbsp;&nbsp;&nbsp;*10.* Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

&nbsp;&nbsp;&nbsp;&nbsp;*11.* The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, ISS may deem him or her an Independent Director.

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&nbsp;&nbsp;&nbsp;&nbsp;*12.* For purposes of ISS's director independence classification, "material" will be defined as a standard of relationship (financial, personal, or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Composition

Attendance at Board and Committee Meetings: Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>3</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

§ Medical issues/illness;

§ Family emergencies; and

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| § | Missing only one meeting (when the total of all meetings is three or fewer).  |

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In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.

If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

Overboarded Directors: Generally vote against or withhold from individual directors who:

§ Sit on more than five public company boards; or

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| § | Are CEOs of public companies who sit on the boards of more than two public companies besides their own—withhold only at their outside boards**<sup>4</sup>**.  |

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Gender Diversity: Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company's board. An exception will be made if there was at least one woman on the board at the preceding annual meeting and the board makes a firm commitment to return to a gender-diverse status within a year.

Racial and/or Ethnic Diversity: For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members**<sup>5</sup>**. An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or ethnic diverse member within a year.

<sup>3</sup> Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

<sup>4</sup> Although all of a CEO's subsidiary boards with publicly-traded common stock will be counted as separate boards, ISS will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

<sup>5</sup> Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

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Responsiveness

Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

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| § | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:  |

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| § | Disclosed outreach efforts by the board to shareholders in the wake of the vote;  |

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§ Rationale provided in the proxy statement for the level of implementation;

§ The subject matter of the proposal;

§ The level of support for and opposition to the resolution in past meetings;

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|:---|:---|
| § | Actions taken by the board in response to the majority vote and its engagement with shareholders;  |

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§ The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and

§ Other factors as appropriate.

§ The board failed to act on takeover offers where the majority of shares are tendered;

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| § | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote.  |

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Vote case-by-case on Compensation Committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

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| § | The company's previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are:  |

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§ The company's response, including:

§ Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated);

§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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| § | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast.  |

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Accountability

**PROBLEMATIC TAKEOVER DEFENSES, CAPITAL STRUCTURE, AND GOVERNANCE STRUCTURE** 

Poison Pills: Generally vote against or withhold from all nominees (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if:

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| § | The company has a poison pill with a deadhand or slowhand feature**<sup>6</sup>**;  |

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§ The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval; or

<sup>6</sup> If a short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, ISS will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

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| § | The company has a long-term poison pill (with a term of over one year) that was not approved by the public shareholders**<sup>7</sup>**.  |

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Vote case-by-case on nominees if the board adopts an initial short-term pill**<sup>6</sup>** (with a term of one year or less)

without shareholder approval, taking into consideration:

§ The disclosed rationale for the adoption;

§ The trigger;

§ The company's market capitalization (including absolute level and sudden changes);

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|:---|:---|
| § | A commitment to put any renewal to a shareholder vote; and  |

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§ Other factors as relevant.

Unequal Voting Rights: Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>8</sup>**.

Exceptions to this policy will generally be limited to:

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|:---|:---|
| § | Newly-public companies**<sup>9</sup>** with a sunset provision of no more than seven years from the date of going public;  |

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§ Limited Partnerships and the Operating Partnership (OP) unit structure of REITs;

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|:---|:---|
| § | Situations where the super-voting shares represent less than 5% of total voting power and therefore considered to be *de minimis*; or  |

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| § | The company provides sufficient protections for minority shareholders, such as allowing minority shareholders a regular binding vote on whether the capital structure should be maintained.  |

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Classified Board Structure: The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election. All appropriate nominees (except new) may be held accountable.

Removal of Shareholder Discretion on Classified Boards: The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

Problematic Governance Structure: For companies that hold or held their first annual meeting**<sup>9</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:

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| § | Supermajority vote requirements to amend the bylaws or charter;  |

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§ A classified board structure; or

§ Other egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

<sup>7</sup> Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

<sup>8</sup> This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

<sup>9</sup> Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

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Unilateral Bylaw/Charter Amendments: Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

§ The board's rationale for adopting the bylaw/charter amendment without shareholder ratification;

§ Disclosure by the company of any significant engagement with shareholders regarding the amendment;

§ The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter;

§ The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions;

§ The company's ownership structure;

§ The company's existing governance provisions;

§ The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and

§ Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders.

Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees. Generally vote against (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if the directors:

§ Classified the board;

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| § | Adopted supermajority vote requirements to amend the bylaws or charter;  |

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§ Eliminated shareholders' ability to amend bylaws;

§ Adopted a <u>fee-shifting provision</u>; or

§ Adopted another provision deemed egregious.

Restricting Binding Shareholder Proposals: Generally vote against or withhold from the members of the governance committee if:

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|:---|:---|
| § | The company's governing documents impose undue restrictions on shareholders' ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.  |

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Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

Director Performance Evaluation: The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted. Problematic provisions include but are not limited to:

§ A classified board structure;

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| § | A supermajority vote requirement;  |

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| § | Either a plurality vote standard in uncontested director elections, or a majority vote standard in contested elections;  |

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§ The inability of shareholders to call special meetings;

§ The inability of shareholders to act by written consent;

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§ A multi-class capital structure; and/or

§ A non-shareholder-approved poison pill.

Management Proposals to Ratify Existing Charter or Bylaw Provisions: Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Problematic Audit-Related Practices

Generally vote against or withhold from the members of the Audit Committee if:

§ The non-audit fees paid to the auditor are excessive;

§ The company receives an adverse opinion on the company's financial statements from its auditor; or

§ There is persuasive evidence that the Audit Committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Vote case-by-case on members of the Audit Committee and potentially the full board if:

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|:---|:---|
| § | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company's efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted.  |

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Problematic Compensation Practices

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the Compensation Committee and potentially the full board if:

§ There is an unmitigated misalignment between CEO pay and company performance (<u>pay for performance</u>);

§ The company maintains significant <u>problematic pay practices</u>; or

§ The board exhibits a significant level of <u>poor communication and responsiveness</u> to shareholders.

Generally vote against or withhold from the Compensation Committee chair, other committee members, or potentially the full board if:

§ The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company's declared frequency of say on pay; or

§ The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions.

Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

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Problematic Pledging of Company Stock: Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

§ The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity;

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| § | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume;  |

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§ Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time;

§ Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and

§ Any other relevant factors.

Climate Accountability

For companies that are significant greenhouse gas (GHG) emitters, through their operations or value chain**<sup>10</sup>**, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where ISS determines that the company is not taking the minimum steps needed to understand, assess, and mitigate risks related to climate change to the company and the larger economy.

Minimum steps to understand and mitigate those risks are considered to be the following. Both minimum criteria will be required to be in alignment with the policy:

§ Detailed disclosure of climate-related risks, such as according to the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

§ Board governance measures;

§ Corporate strategy;

§ Risk management analyses; and

§ Metrics and targets.

§ Appropriate GHG emissions reduction targets.

At this time, "appropriate GHG emissions reductions targets" will be medium-term GHG reduction targets or Net Zero-by-2050 GHG reduction targets for a company's operations (Scope 1) and electricity use (Scope 2). Targets should cover the vast majority of the company's direct emissions.

Governance Failures

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

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| § | Material failures of governance, stewardship, risk oversight**<sup>11</sup>**, or fiduciary responsibilities at the company;  |

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§ Failure to replace management as appropriate; or

§ Egregious actions related to a director's service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

<sup>10</sup> Companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

<sup>11</sup> Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant adverse legal judgments or settlement; or hedging of company stock.

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Voting on Director Nominees in Contested Elections

Vote-No Campaigns

General Recommendation: In cases where companies are targeted in connection with public "vote-no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

Proxy Contests/Proxy Access

General Recommendation: Vote case-by-case on the election of directors in contested elections, considering the following factors:

§ Long-term financial performance of the company relative to its industry;

§ Management's track record;

§ Background to the contested election;

§ Nominee qualifications and any compensatory arrangements;

§ Strategic plan of dissident slate and quality of the critique against management;

§ Likelihood that the proposed goals and objectives can be achieved (both slates); and

§ Stock ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether there are more candidates than board seats).

Other Board-Related Proposals

Adopt Anti-Hedging/Pledging/Speculative Investments Policy

General Recommendation: Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

Board Refreshment

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

Term/Tenure Limits

General Recommendation: Vote case-by-case on management proposals regarding director term/tenure limits, considering:

§ The rationale provided for adoption of the term/tenure limit;

§ The robustness of the company's board evaluation process;

§ Whether the limit is of sufficient length to allow for a broad range of director tenures;

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§ Whether the limit would disadvantage independent directors compared to non-independent directors; and

§ Whether the board will impose the limit evenly, and not have the ability to waive it in a discriminatory manner.

Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:

§ The scope of the shareholder proposal; and

§ Evidence of problematic issues at the company combined with, or exacerbated by, a lack of board refreshment.

Age Limits

General Recommendation: Generally vote against management and shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

Board Size

General Recommendation: Vote for proposals seeking to fix the board size or designate a range for the board size.

Vote against proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.

Classification/Declassification of the Board

General Recommendation: Vote against proposals to classify (stagger) the board.

Vote for proposals to repeal classified boards and to elect all directors annually.

CEO Succession Planning

General Recommendation: Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering, at a minimum, the following factors:

§ The reasonableness/scope of the request; and

§ The company's existing disclosure on its current CEO succession planning process.

Cumulative Voting

General Recommendation: Generally vote against management proposals to eliminate cumulate voting, and for shareholder proposals to restore or provide for cumulative voting, unless:

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| § | The company has proxy access**<sup>12</sup>**, thereby allowing shareholders to nominate directors to the company's ballot; and  |

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| § | The company has adopted a majority vote standard, with a carve-out for plurality voting in situations where there are more nominees than seats, and a director resignation policy to address failed elections.  |

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Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

<sup>12</sup> A proxy access right that meets the <u>recommended guidelines.</u> 

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Director and Officer Indemnification, Liability Protection, and Exculpation

General Recommendation: Vote case-by-case on proposals on director and officer indemnification, liability protection, and exculpation<sup>13</sup>.

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of care.

§ Eliminate directors' and officers' liability for monetary damages for violating the duty of loyalty.

§ Expand coverage beyond just legal expenses to liability for acts that are more serious violations of fiduciary obligation than mere carelessness.

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| § | Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (*i.e.*, "permissive indemnification"), but that previously the company was not required to indemnify.  |

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Vote for those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

§ If the individual was found to have acted in good faith and in a manner that the individual reasonably believed was in the best interests of the company; and

If only the individual's legal expenses would be covered.

Establish/Amend Nominee Qualifications

General Recommendation: Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and the degree to which they may preclude dissident nominees from joining the board.

Vote case-by-case on shareholder resolutions seeking a director nominee who possesses a particular subject matter expertise, considering:

§ The company's board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers;

§ The company's existing board and management oversight mechanisms regarding the issue for which board oversight is sought;

§ The company's disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies; and

§ The scope and structure of the proposal.

<sup>13</sup> **Indemnification**: the condition of being secured against loss or damage.

**Limited liability**: a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation**: to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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Establish Other Board Committee Proposals

General Recommendation: Generally vote against shareholder proposals to establish a new board committee, as such proposals seek a specific oversight mechanism/structure that potentially limits a company's flexibility to determine an appropriate oversight mechanism for itself. However, the following factors will be considered:

§ Existing oversight mechanisms (including current committee structure) regarding the issue for which board oversight is sought;

§ Level of disclosure regarding the issue for which board oversight is sought;

§ Company performance related to the issue for which board oversight is sought;

§ Board committee structure compared to that of other companies in its industry sector; and

§ The scope and structure of the proposal.

Filling Vacancies/Removal of Directors

General Recommendation: Vote against proposals that provide that directors may be removed only for cause.

Vote for proposals to restore shareholders' ability to remove directors with or without cause.

Vote against proposals that provide that only continuing directors may elect replacements to fill board vacancies.

Vote for proposals that permit shareholders to elect directors to fill board vacancies.

Independent Board Chair

General Recommendation: Generally vote for shareholder proposals requiring that the board chair position be filled by an independent director, taking into consideration the following:

§ The scope and rationale of the proposal;

§ The company's current board leadership structure;

§ The company's governance structure and practices;

§ Company performance; and

§ Any other relevant factors that may be applicable.

The following factors will increase the likelihood of a "for" recommendation:

§ A majority non-independent board and/or the presence of non-independent directors on key board committees;

§ A weak or poorly-defined lead independent director role that fails to serve as an appropriate counterbalance to a combined CEO/chair role;

§ The presence of an executive or non-independent chair in addition to the CEO, a recent recombination of the role of CEO and chair, and/or departure from a structure with an independent chair;

§ Evidence that the board has failed to oversee and address material risks facing the company;

§ A material governance failure, particularly if the board has failed to adequately respond to shareholder concerns or if the board has materially diminished shareholder rights; or

§ Evidence that the board has failed to intervene when management's interests are contrary to shareholders' interests.

Majority of Independent Directors/Establishment of Independent Committees

General Recommendation: Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by ISS' definition of Independent Director (See <u>ISS' Classification of Directors</u>.)

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Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors unless they currently meet that standard.

Majority Vote Standard for the Election of Directors

General Recommendation: Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections. Vote against if no carve-out for a plurality vote standard in contested elections is included.

Generally vote for precatory and binding shareholder resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

Proxy Access

General Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions:

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| § | **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;  |

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| § | **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group;  |

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| § | **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating group;  |

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|:---|:---|
| § | **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.  |

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Review for reasonableness any other restrictions on the right of proxy access. Generally vote against proposals that are more restrictive than these guidelines.

Require More Nominees than Open Seats

General Recommendation: Vote against shareholder proposals that would require a company to nominate more candidates than the number of open board seats.

Shareholder Engagement Policy (Shareholder Advisory Committee)

General Recommendation: Generally vote for shareholder proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

§ Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board;

§ Effectively disclosed information with respect to this structure to its shareholders;

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|:---|:---|
| § | Company has not ignored majority-supported shareholder proposals, or a majority withhold vote on a director nominee; and  |

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§ The company has an independent chair or a lead director, according to ISS' definition. This individual must be made available for periodic consultation and direct communication with major shareholders.

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2. Audit-Related

Auditor Indemnification and Limitation of Liability

General Recommendation: Vote case-by-case on the issue of auditor indemnification and limitation of liability.

Factors to be assessed include, but are not limited to:

§ The terms of the auditor agreement—the degree to which these agreements impact shareholders' rights;

§ The motivation and rationale for establishing the agreements;

§ The quality of the company's disclosure; and

§ The company's historical practices in the audit area.

Vote against or withhold from members of an audit committee in situations where there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

Auditor Ratification

General Recommendation: Vote for proposals to ratify auditors unless any of the following apply:

§ An auditor has a financial interest in or association with the company, and is therefore not independent;

§ There is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company's financial position;

§ Poor accounting practices are identified that rise to a serious level of concern, such as fraud or misapplication of GAAP; or

§ Fees for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

§ Non-audit ("other") fees > audit fees + audit-related fees + tax compliance/preparation fees

Tax compliance and preparation include the preparation of original and amended tax returns and refund claims, and tax payment planning. All other services in the tax category, such as tax advice, planning, or consulting, should be added to "Other" fees. If the breakout of tax fees cannot be determined, add all tax fees to "Other" fees.

In circumstances where "Other" fees include fees related to significant one-time capital structure events (such as initial public offerings, bankruptcy emergence, and spin-offs) and the company makes public disclosure of the amount and nature of those fees that are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

Shareholder Proposals Limiting Non-Audit Services

General Recommendation: Vote case-by-case on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.

Shareholder Proposals on Audit Firm Rotation

General Recommendation: Vote case-by-case on shareholder proposals asking for audit firm rotation, taking into account:

§ The tenure of the audit firm;

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§ The length of rotation specified in the proposal;

§ Any significant audit-related issues at the company;

§ The number of Audit Committee meetings held each year;

§ The number of financial experts serving on the committee; and

§ Whether the company has a periodic renewal process where the auditor is evaluated for both audit quality and competitive price.

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3. Shareholder Rights & Defenses

Advance Notice Requirements for Shareholder Proposals/Nominations

General Recommendation: Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory, and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120-day window). The submittal window is the period under which shareholders must file their proposals/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

Amend Bylaws without Shareholder Consent

General Recommendation: Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote case-by-case on proposals giving the board the ability to amend the bylaws in addition to shareholders, taking into account the following:

§ Any impediments to shareholders' ability to amend the bylaws (i.e. supermajority voting requirements);

§ The company's ownership structure and historical voting turnout;

§ Whether the board could amend bylaws adopted by shareholders; and

§ Whether shareholders would retain the ability to ratify any board-initiated amendments.

Control Share Acquisition Provisions

General Recommendation: Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.

Vote against proposals to amend the charter to include control share acquisition provisions.

Vote for proposals to restore voting rights to the control shares.

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

Control Share Cash-Out Provisions

General Recommendation: Vote for proposals to opt out of control share cash-out statutes.

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Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

Disgorgement Provisions

General Recommendation: Vote for proposals to opt out of state disgorgement provisions.

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

Fair Price Provisions

General Recommendation: Vote case-by-case on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.

Generally vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

Freeze-Out Provisions

General Recommendation: Vote for proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

Greenmail

General Recommendation: Vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.

Vote case-by-case on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.

Shareholder Litigation Rights

Federal Forum Selection Provisions

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

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General Recommendation: Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the <u>Unilateral Bylaw/Charter Amendments</u> policy.

Exclusive Forum Provisions for State Law Matters

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

General Recommendation: Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

§ The company's stated rationale for adopting such a provision;

§ Disclosure of past harm from duplicative shareholder lawsuits in more than one forum;

§ The breadth of application of the charter or bylaw provision, including the types of lawsuits to which it would apply and the definition of key terms; and

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| § | Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the charter or bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections.  |

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Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the <u>Unilateral Bylaw/Charter Amendments</u> policy.

Fee shifting

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

General Recommendation: Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the <u>Unilateral Bylaw/Charter Amendments</u> policy.

Net Operating Loss (NOL) Protective Amendments

General Recommendation: Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses (NOL) if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing 5-percent holder);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL);

§ The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Poison Pills (Shareholder Rights Plans)

Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy

General Recommendation: Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: (1) A shareholder-approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

§ Shareholders have approved the adoption of the plan; or

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| § | The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e., the "fiduciary out" provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.  |

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If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

Management Proposals to Ratify a Poison Pill

General Recommendation: Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

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| § | No lower than a 20 percent trigger, flip-in or flip-over;  |

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§ A term of no more than three years;

§ No deadhand, slowhand, no-hand, or similar feature that limits the ability of a future board to redeem the pill;

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| § | Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.  |

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In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.

Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)

General Recommendation: Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses (NOL) if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

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| § | The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5 percent);  |

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§ The value of the NOLs;

§ Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);

§ The company's existing governance structure, including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and

§ Any other factors that may be applicable.

Proxy Voting Disclosure, Confidentiality, and Tabulation

General Recommendation: Vote case-by-case on proposals regarding proxy voting mechanics, taking into consideration whether implementation of the proposal is likely to enhance or protect shareholder rights. Specific issues covered under the policy include, but are not limited to, confidential voting of individual proxies and ballots, confidentiality of running vote tallies, and the treatment of abstentions and/or broker non-votes in the company's vote-counting methodology.

While a variety of factors may be considered in each analysis, the guiding principles are: transparency, consistency, and fairness in the proxy voting process. The factors considered, as applicable to the proposal, may include:

§ The scope and structure of the proposal;

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| § | The company's stated confidential voting policy (or other relevant policies) and whether it ensures a "level playing field" by providing shareholder proponents with equal access to vote information prior to the annual meeting;  |

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| § | The company's vote standard for management and shareholder proposals and whether it ensures consistency and fairness in the proxy voting process and maintains the integrity of vote results;  |

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| § | Whether the company's disclosure regarding its vote counting method and other relevant voting policies with respect to management and shareholder proposals are consistent and clear;  |

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§ Any recent controversies or concerns related to the company's proxy voting mechanics;

§ Any unintended consequences resulting from implementation of the proposal; and

§ Any other factors that may be relevant.

Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions

General Recommendation: Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

§ The presence of a shareholder proposal addressing the same issue on the same ballot;

§ The board's rationale for seeking ratification;

§ Disclosure of actions to be taken by the board should the ratification proposal fail;

§ Disclosure of shareholder engagement regarding the board's ratification request;

§ The level of impairment to shareholders' rights caused by the existing provision;

§ The history of management and shareholder proposals on the provision at the company's past meetings;

§ Whether the current provision was adopted in response to the shareholder proposal;

§ The company's ownership structure; and

§ Previous use of ratification proposals to exclude shareholder proposals.

Reimbursing Proxy Solicitation Expenses

General Recommendation: Vote case-by-case on proposals to reimburse proxy solicitation expenses.

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When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Generally vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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| § | The election of fewer than 50 percent of the directors to be elected is contested in the election;  |

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§ One or more of the dissident's candidates is elected;

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| § | Shareholders are not permitted to cumulate their votes for directors; and  |

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§ The election occurred, and the expenses were incurred, after the adoption of this bylaw.

Reincorporation Proposals

General Recommendation: Management or shareholder proposals to change a company's state of incorporation should be evaluated case-by-case, giving consideration to both financial and corporate governance concerns including the following:

§ Reasons for reincorporation;

§ Comparison of company's governance practices and provisions prior to and following the reincorporation; and

§ Comparison of corporation laws of original state and destination state.

Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.

Shareholder Ability to Act by Written Consent

General Recommendation: Generally vote against management and shareholder proposals to restrict or prohibit shareholders' ability to act by written consent.

Generally vote for management and shareholder proposals that provide shareholders with the ability to act by written consent, taking into account the following factors:

§ Shareholders' current right to act by written consent;

§ The consent threshold;

§ The inclusion of exclusionary or prohibitive language;

§ Investor ownership structure; and

§ Shareholder support of, and management's response to, previous shareholder proposals.

Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:

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| § | An unfettered**<sup>14</sup>** right for shareholders to call special meetings at a 10 percent threshold;  |

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| § | A majority vote standard in uncontested director elections;  |

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§ No non-shareholder-approved pill; and

§ An annually elected board.

<sup>14</sup> "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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Shareholder Ability to Call Special Meetings

General Recommendation: Vote against management or shareholder proposals to restrict or prohibit shareholders' ability to call special meetings.

Generally vote for management or shareholder proposals that provide shareholders with the ability to call special meetings taking into account the following factors:

§ Shareholders' current right to call special meetings;

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| § | Minimum ownership threshold necessary to call special meetings (10 percent preferred);  |

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§ The inclusion of exclusionary or prohibitive language;

§ Investor ownership structure; and

§ Shareholder support of, and management's response to, previous shareholder proposals.

Stakeholder Provisions

General Recommendation: Vote against proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.

State Antitakeover Statutes

General Recommendation: Vote case-by-case on proposals to opt in or out of state takeover statutes (including fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, and anti-greenmail provisions).

Supermajority Vote Requirements

General Recommendation: Vote against proposals to require a supermajority shareholder vote.

Vote for management or shareholder proposals to reduce supermajority vote requirements. However, for companies with shareholder(s) who have significant ownership levels, vote case-by-case, taking into account:

§ Ownership structure;

§ Quorum requirements; and

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|:---|:---|
| § | Vote requirements.  |

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Virtual Shareholder Meetings

General Recommendation: Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only<sup>15</sup> meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

§ Scope and rationale of the proposal; and

§ Concerns identified with the company's prior meeting practices.

<sup>15</sup> Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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4. Capital/Restructuring

Capital

Adjustments to Par Value of Common Stock

General Recommendation: Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.

Vote for management proposals to eliminate par value.

Common Stock Authorization

General Authorization Requests

General Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes:

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| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

§ The proposal seeks to increase the number of authorized shares of the class of common stock that has superior voting rights to other share classes;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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Specific Authorization Requests

General Recommendation: Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Dual Class Structure

General Recommendation: Generally vote against proposals to create a new class of common stock unless:

§ The company discloses a compelling rationale for the dual-class capital structure, such as:

§ The company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or

§ The new class of shares will be transitory;

§ The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term; and

§ The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.

Issue Stock for Use with Rights Plan

General Recommendation: Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder-approved shareholder rights plan (poison pill).

Preemptive Rights

General Recommendation: Vote case-by-case on shareholder proposals that seek preemptive rights, taking into consideration:

§ The size of the company;

§ The shareholder base; and

§ The liquidity of the stock.

Preferred Stock Authorization

General Authorization Requests

General Recommendation: Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes:

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| § | If share usage (outstanding plus reserved) is less than 50% of the current authorized shares, vote for an increase of up to **50**% of current authorized shares.  |

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| § | If share usage is 50% to 100% of the current authorized, vote for an increase of up to **100**% of current authorized shares.  |

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| § | If share usage is greater than current authorized shares, vote for an increase of up to the current share usage.  |

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§ In the case of a stock split, the allowable increase is calculated (per above) based on the post-split adjusted authorization.

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| § | If no preferred shares are currently issued and outstanding, vote against the request, unless the company discloses a specific use for the shares.  |

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Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

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| § | If the shares requested are blank check preferred shares that can be used for antitakeover purposes;**<sup>16</sup>**  |

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| § | The company seeks to increase a class of non-convertible preferred shares entitled to more than one vote per share on matters that do not solely affect the rights of preferred stockholders "supervoting shares");  |

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| § | The company seeks to increase a class of convertible preferred shares entitled to a number of votes greater than the number of common shares into which they are convertible ("supervoting shares") on matters that do not solely affect the rights of preferred stockholders;  |

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§ The stated intent of the increase in the general authorization is to allow the company to increase an existing designated class of supervoting preferred shares;

§ On the same ballot is a proposal for a reverse split for which support is warranted despite the fact that it would result in an excessive increase in the share authorization;

§ The company has a non-shareholder approved poison pill (including an NOL pill); or

§ The company has previous sizeable placements (within the past 3 years) of stock with insiders at prices substantially below market value, or with problematic voting rights, without shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

§ In, or subsequent to, the company's most recent 10-K filing, the company discloses that there is substantial doubt about its ability to continue as a going concern;

§ The company states that there is a risk of imminent bankruptcy or imminent liquidation if shareholders do not approve the increase in authorized capital; or

§ A government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

#### Specific Authorization Requests
General Recommendation: Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

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| § | twice the amount needed to support the transactions on the ballot, and  |

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§ the allowable increase as calculated for general issuances above.

Recapitalization Plans

General Recommendation: Vote case-by-case on recapitalizations (reclassifications of securities), taking into account the following:

§ More simplified capital structure;

<sup>16</sup> To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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§ Enhanced liquidity;

§ Fairness of conversion terms;

§ Impact on voting power and dividends;

§ Reasons for the reclassification;

§ Conflicts of interest; and

§ Other alternatives considered.

Reverse Stock Splits

General Recommendation: Vote for management proposals to implement a reverse stock split if:

§ The number of authorized shares will be proportionately reduced; or

§ The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with ISS' Common Stock Authorization policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

§ Stock exchange notification to the company of a potential delisting;

§ Disclosure of substantial doubt about the company's ability to continue as a going concern without additional financing;

§ The company's rationale; or

§ Other factors as applicable.

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

General Recommendation: For U.S. domestic issuers incorporated outside the U.S. and listed <u>solely</u> on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

Share Repurchase Programs

General Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

§ Greenmail;

§ The use of buybacks to inappropriately manipulate incentive compensation metrics;

§ Threats to the company's long-term viability; or

§ Other company-specific factors as warranted.

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Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

Share Repurchase Programs Shareholder Proposals

General Recommendation: Generally vote against shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote for the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.

Stock Distributions: Splits and Dividends

General Recommendation: Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in accordance with ISS' Common Stock Authorization policy.

Tracking Stock

General Recommendation: Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

§ Adverse governance changes;

§ Excessive increases in authorized capital stock;

§ Unfair method of distribution;

§ Diminution of voting rights;

§ Adverse conversion features;

§ Negative impact on stock option plans; and

§ Alternatives such as spin-off.

Restructuring

Appraisal Rights

General Recommendation: Vote for proposals to restore or provide shareholders with rights of appraisal.

Asset Purchases

General Recommendation: Vote case-by-case on asset purchase proposals, considering the following factors:

§ Purchase price;

§ Fairness opinion;

§ Financial and strategic benefits;

§ How the deal was negotiated;

§ Conflicts of interest;

§ Other alternatives for the business;

§ Non-completion risk.

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Asset Sales

General Recommendation: Vote case-by-case on asset sales, considering the following factors:

§ Impact on the balance sheet/working capital;

§ Potential elimination of diseconomies;

§ Anticipated financial and operating benefits;

§ Anticipated use of funds;

§ Value received for the asset;

§ Fairness opinion;

§ How the deal was negotiated;

§ Conflicts of interest.

Bundled Proposals

General Recommendation: Vote case-by-case on bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

Conversion of Securities

General Recommendation: Vote case-by-case on proposals regarding conversion of securities. When evaluating these proposals, the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans

General Recommendation: Vote case-by-case on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, after evaluating:

§ Dilution to existing shareholders' positions;

§ Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; termination penalties; exit strategy;

§ Financial issues - company's financial situation; degree of need for capital; use of proceeds; effect of the financing on the company's cost of capital;

§ Management's efforts to pursue other alternatives;

§ Control issues - change in management; change in control, guaranteed board and committee seats; standstill provisions; voting agreements; veto power over certain corporate actions; and

§ Conflict of interest - arm's length transaction, managerial incentives.

Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.

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Formation of Holding Company

General Recommendation: Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration the following:

§ The reasons for the change;

§ Any financial or tax benefits;

§ Regulatory benefits;

§ Increases in capital structure; and

§ Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend for the transaction, vote against the formation of a holding company if the transaction would include either of the following:

§ Increases in common or preferred stock in excess of the allowable maximum (see discussion under "Capital"); or

§ Adverse changes in shareholder rights.

Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)

General Recommendation: Vote case-by-case on going private transactions, taking into account the following:

§ Offer price/premium;

§ Fairness opinion;

§ How the deal was negotiated;

§ Conflicts of interest;

§ Other alternatives/offers considered; and

§ Non-completion risk.

Vote case-by-case on going dark transactions, determining whether the transaction enhances shareholder value by taking into consideration:

§ Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock);

§ Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:

§ Are all shareholders able to participate in the transaction?

§ Will there be a liquid market for remaining shareholders following the transaction?

§ Does the company have strong corporate governance?

§ Will insiders reap the gains of control following the proposed transaction?

§ Does the state of incorporation have laws requiring continued reporting that may benefit shareholders?

Joint Ventures

General Recommendation: Vote case-by-case on proposals to form joint ventures, taking into account the following:

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| § | Percentage of assets/business contributed;  |

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| § | Percentage ownership;  |

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§ Financial and strategic benefits;

§ Governance structure;

§ Conflicts of interest;

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§ Other alternatives; and

§ Non-completion risk.

Liquidations

General Recommendation: Vote case-by-case on liquidations, taking into account the following:

§ Management's efforts to pursue other alternatives;

§ Appraisal value of assets; and

§ The compensation plan for executives managing the liquidation.

Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

Mergers and Acquisitions

General Recommendation: Vote case-by-case on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

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| § | *Valuation* - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction, and strategic rationale.  |

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§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.

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| § | *Strategic rationale* - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.  |

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| § | *Negotiations and process* - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value.  |

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| § | *Conflicts of interest* - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger. The CIC figure presented in the "ISS Transaction Summary" section of this report is an aggregate figure that can in certain cases be a misleading indicator of the true value transfer from shareholders to insiders. Where such figure appears to be excessive, analyze the underlying assumptions to determine whether a potential conflict exists.  |

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| § | *Governance* - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.  |

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Private Placements/Warrants/Convertible Debentures

General Recommendation: Vote case-by-case on proposals regarding private placements, warrants, and convertible debentures taking into consideration:

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| § | Dilution to existing shareholders' position: The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion. Although newly issued common stock, absent preemptive rights, is typically dilutive to existing shareholders, share price appreciation is often the necessary event to trigger the exercise of "out of the money" warrants and convertible debt. In these instances from a value standpoint, the negative impact of dilution is mitigated by the increase in the company's stock price that must occur to trigger the dilutive event.  |

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§ Terms of the offer (discount/premium in purchase price to investor, including any fairness opinion, conversion features, termination penalties, exit strategy):

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| § | The terms of the offer should be weighed against the alternatives of the company and in light of company's financial condition. Ideally, the conversion price for convertible debt and the exercise price for warrants should be at a premium to the then prevailing stock price at the time of private placement.  |

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§ When evaluating the magnitude of a private placement discount or premium, consider factors that influence the discount or premium, such as, liquidity, due diligence costs, control and monitoring costs, capital scarcity, information asymmetry, and anticipation of future performance.

§ Financial issues:

§ The company's financial condition;

§ Degree of need for capital;

§ Use of proceeds;

§ Effect of the financing on the company's cost of capital;

§ Current and proposed cash burn rate;

§ Going concern viability and the state of the capital and credit markets.

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| § | Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives: A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger, or sale of part or all of the company.  |

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§ Control issues:

§ Change in management;

§ Change in control;

§ Guaranteed board and committee seats;

§ Standstill provisions;

§ Voting agreements;

§ Veto power over certain corporate actions; and

§ Minority versus majority ownership and corresponding minority discount or majority control premium.

§ Conflicts of interest:

§ Conflicts of interest should be viewed from the perspective of the company and the investor.

§ Were the terms of the transaction negotiated at arm's length? Are managerial incentives aligned with shareholder interests?

§ Market reaction:

§ The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

Vote for the private placement, or for the issuance of warrants and/or convertible debentures in a private placement, if it is expected that the company will file for bankruptcy if the transaction is not approved.

Reorganization/Restructuring Plan (Bankruptcy)

General Recommendation: Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

§ Estimated value and financial prospects of the reorganized company;

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| § | Percentage ownership of current shareholders in the reorganized company;  |

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§ Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an Official Equity Committee);

§ The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);

§ Existence of a superior alternative to the plan of reorganization; and

§ Governance of the reorganized company.

Special Purpose Acquisition Corporations (SPACs)

General Recommendation: Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

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| § | *Valuation* - Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target if it is a private entity.  |

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§ *Market reaction* - How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.

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| § | *Deal timing* - A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.  |

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§ *Negotiations and process* - What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.

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| § | *Conflicts of interest* - How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80 percent rule (the charter requires that the fair market value of the target is at least equal to 80 percent of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24-month timeframe.  |

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| § | *Voting agreements* - Are the sponsors entering into enter into any voting agreements/tender offers with shareholders who are likely to vote against the proposed merger or exercise conversion rights?  |

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§ *Governance* - What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?

Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions

General Recommendation: Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

§ *Length of request*: Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquistion process.

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| § | *Pending transaction(s)* or *progression of the acquisition process:* Sometimes an intial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.  |

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| § | *Added incentive for non-redeeming shareholders*: Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.  |

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§ *Prior extension requests*: Some SPACs request additional time beyond the extension period sought in prior extension requests.

Spin-offs

General Recommendation: Vote case-by-case on spin-offs, considering:

§ Tax and regulatory advantages;

§ Planned use of the sale proceeds;

§ Valuation of spinoff;

§ Fairness opinion;

§ Benefits to the parent company;

§ Conflicts of interest;

§ Managerial incentives;

§ Corporate governance changes;

§ Changes in the capital structure.

Value Maximization Shareholder Proposals

General Recommendation: Vote case-by-case on shareholder proposals seeking to maximize shareholder value by:

§ Hiring a financial advisor to explore strategic alternatives;

§ Selling the company; or

§ Liquidating the company and distributing the proceeds to shareholders.

These proposals should be evaluated based on the following factors:

§ Prolonged poor performance with no turnaround in sight;

§ Signs of entrenched board and management (such as the adoption of takeover defenses);

§ Strategic plan in place for improving value;

§ Likelihood of receiving reasonable value in a sale or dissolution; and

§ The company actively exploring its strategic options, including retaining a financial advisor.

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5. Compensation

Executive Pay Evaluation

Underlying all evaluations are five global principles that most investors expect corporations to adhere to in designing and administering executive and director compensation programs:

1. Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs;

2. Avoid arrangements that risk "pay for failure": This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation;

3. Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (*e.g.*, including access to independent expertise and advice when needed);

4. Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly;

5. Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors is reasonable and does not compromise their independence and ability to make appropriate judgments in overseeing managers' pay and performance. At the market level, it may incorporate a variety of generally accepted best practices.

Advisory Votes on Executive Compensation—Management Proposals (Say-on-Pay)

General Recommendation: Vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation.

Vote against Advisory Votes on Executive Compensation (Say-on-Pay or "SOP") if:

§ There is an unmitigated misalignment between CEO pay and company performance (<u>pay for performance</u>);

§ The company maintains significant <u>problematic pay practices</u>;

§ The board exhibits a significant level of <u>poor communication and responsiveness</u> to shareholders.

Vote against or withhold from the members of the Compensation Committee and potentially the full board if:

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| § | There is no SOP on the ballot, and an against vote on an SOP would otherwise be warranted due to pay-for-performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;  |

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| § | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast;  |

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§ The company has recently practiced or approved problematic pay practices, such as option repricing or option backdating; or

§ The situation is egregious.

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Primary Evaluation Factors for Executive Pay

Pay-for-Performance Evaluation

ISS annually conducts a pay-for-performance analysis to identify strong or satisfactory alignment between pay and performance over a sustained period. With respect to companies in the S&P1500, Russell 3000, or Russell 3000E Indices**<sup>17</sup>**, this analysis considers the following:

1. Peer Group **<sup>18</sup>** Alignment:

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| § | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period.  |

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| § | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period.  |

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| § | The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year.  |

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2. Absolute Alignment **<sup>19</sup>** – the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, a misalignment between pay and performance is otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to an evaluation of how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

§ The ratio of performance- to time-based incentive awards;

§ The overall ratio of performance-based compensation to fixed or discretionary pay;

§ The rigor of performance goals;

§ The complexity and risks around pay program design;

§ The transparency and clarity of disclosure;

§ The company's peer group benchmarking practices;

§ Financial/operational results, both absolute and relative to peers;

§ Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards);

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| § | Realizable pay**<sup>20</sup>** compared to grant pay; and  |

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§ Any other factors deemed relevant.

Problematic Pay Practices

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

§ Problematic practices related to non-performance-based compensation elements;

<sup>17</sup> The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

<sup>18</sup> The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market-cap bucket that is reflective of the company's market cap. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

<sup>19</sup> Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

<sup>20</sup> ISS research reports include realizable pay for S&P1500 companies.

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§ Incentives that may motivate excessive risk-taking or present a windfall risk; and

§ Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

§ Repricing or replacing of underwater stock options/SARs without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);

§ Extraordinary perquisites or tax gross-ups;

§ New or materially amended agreements that provide for:

§ Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus);

§ CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition;

§ CIC excise tax gross-up entitlements (including "modified" gross-ups);

§ Multi-year guaranteed awards that are not at risk due to rigorous performance conditions;

§ Liberal CIC definition combined with any single-trigger CIC benefits;

§ Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible;

§ Severance payments made when the termination is not clearly disclosed as involuntary (for example, a termination without cause or resignation for good reason);

§ Any other provision or practice deemed to be egregious and present a significant risk to investors.

The above examples are not an exhaustive list. Please refer to ISS' <u>U.S. Compensation Policies FAQ</u> document for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

#### Options Backdating
The following factors should be examined case-by-case to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud:

§ Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;

§ Duration of options backdating;

§ Size of restatement due to options backdating;

§ Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants; and

§ Adoption of a grant policy that prohibits backdating and creates a fixed grant schedule or window period for equity grants in the future.

Compensation Committee Communications and Responsiveness

Consider the following factors case-by-case when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

§ Failure to respond to majority-supported shareholder proposals on executive pay topics; or

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|:---|:---|
| § | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:  |

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§ Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated);

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§ Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition;

§ Disclosure of specific and meaningful actions taken to address shareholders' concerns;

§ Other recent compensation actions taken by the company;

§ Whether the issues raised are recurring or isolated;

§ The company's ownership structure; and

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|:---|:---|
| § | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.  |

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Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")

General Recommendation: Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale

General Recommendation: Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers but also considering new or extended arrangements.

Features that may result in an "against" recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

§ Single- or modified-single-trigger cash severance;

§ Single-trigger acceleration of unvested equity awards;

§ Full acceleration of equity awards granted shortly before the change in control;

§ Acceleration of performance awards above the target level of performance without compelling rationale;

§ Excessive cash severance (generally >3x base salary and bonus);

§ Excise tax gross-ups triggered and payable;

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| | |
|:---|:---|
| § | Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value); or  |

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§ Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders; or

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|:---|:---|
| § | The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote.  |

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Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation (management say-on-pay), ISS will evaluate the say-on-pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

Equity-Based and Other Incentive Plans

Please refer to ISS' <u>U.S. Equity Compensation Plans FAQ</u> document for additional details on the Equity Plan Scorecard policy.

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General Recommendation: Vote case-by-case on certain equity-based compensation plans**<sup>21</sup>** depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars:

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|:---|:---|
| § | **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:  |

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§ SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and

§ SVT based only on new shares requested plus shares remaining for future grants.

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| | |
|:---|:---|
| § | **Plan Features:**  |

---

§ Quality of disclosure around vesting upon a change in control (CIC);

§ Discretionary vesting authority;

§ Liberal share recycling on various award types;

§ Lack of minimum vesting period for grants made under the plan;

§ Dividends payable prior to award vesting.

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| | |
|:---|:---|
| § | **Grant Practices:**  |

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§ The company's three-year burn rate relative to its industry/market cap peers;

§ Vesting requirements in CEO's recent equity grants (3-year look-back);

§ The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years);

§ The proportion of the CEO's most recent equity grants/awards subject to performance conditions;

§ Whether the company maintains a sufficient claw-back policy;

§ Whether the company maintains sufficient post-exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following egregious factors ("overriding factors") apply:

§ Awards may vest in connection with a liberal change-of-control definition;

§ The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies – or by not prohibiting it when the company has a history of repricing – for non-listed companies);

§ The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances;

§ The plan is excessively dilutive to shareholders' holdings;

§ The plan contains an evergreen (automatic share replenishment) feature; or

§ Any other plan features are determined to have a significant negative impact on shareholder interests.

#### Further Information on certain EPSC Factors:
Shareholder Value Transfer (SVT)

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans

<sup>21</sup> Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors; amended plans will be further evaluated case-by-case.

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subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full-value awards), the assumption is made that all awards to be granted will be the most expensive types.

For proposals that are not subject to the Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size, and cash compensation into the industry cap equations to arrive at the company's benchmark.**<sup>22</sup>** 

Three-Year Value-Adjusted Burn Rate

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks are calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a *de minimis* threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate is calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

Egregious Factors

Liberal Change in Control Definition

Generally vote against equity plans if the plan has a liberal definition of change in control and the equity awards could vest upon such liberal definition of change in control, even though an actual change in control may not occur. Examples of such a definition include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

Repricing Provisions

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" typically includes the ability to do any of the following:

§ Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs;

§ Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs;

§ Cancel underwater options in exchange for stock awards; or

§ Provide cash buyouts of underwater options.

While the above cover most types of repricing, ISS may view other provisions as akin to repricing depending on the facts and circumstances.

<sup>22</sup> For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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Also, vote against or withhold from members of the Compensation Committee who approved repricing (as defined above or otherwise determined by ISS), without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans that do not expressly prohibit repricing or cash buyout of underwater options without shareholder approval if the company has a history of repricing/buyouts without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Problematic Pay Practices or Significant Pay-for-Performance Disconnect

If the equity plan on the ballot is a vehicle for <u>problematic pay practices</u>, vote against the plan.

ISS may recommend a vote against the equity plan if the plan is determined to be a vehicle for pay-for-performance misalignment. Considerations in voting against the equity plan may include, but are not limited to:

§ Severity of the pay-for-performance misalignment;

§ Whether problematic equity grant practices are driving the misalignment; and/or

§ Whether equity plan awards have been heavily concentrated to the CEO and/or the other NEOs.

Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))

General Recommendation: Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Addresses administrative features only; or

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|:---|:---|
| § | Seeks approval for Section 162(m) purposes <u>only</u>, and the plan administering committee consists entirely of independent directors, per ISS' Classification of Directors. Note that if the company is presenting the plan to shareholders for the first time for any reason (including after the company's initial public offering), or if the proposal is bundled with other material plan amendments, then the recommendation will be case-by-case (see below).  |

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Vote against proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

§ Seeks approval for Section 162(m) purposes only, and the plan administering committee does not consist entirely of independent directors, per <u>ISS' Classification of Directors</u>.

Vote case-by-case on all other proposals to amend <u>cash</u> incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes.

Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

§ If the proposal requests additional shares and/or the amendments include a term extension or addition of full value awards as an award type, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the amendments.

§ If the plan is being presented to shareholders for the first time (including after the company's IPO), whether or not additional shares are being requested, the recommendation will be based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact of any amendments.

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|:---|:---|
| § | If there is no request for additional shares and the amendments do not include a term extension or addition of full value awards as an award type, then the recommendation will be based entirely on an analysis of the overall impact of the amendments, and the EPSC evaluation will be shown only for informational purposes.  |

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In the first two case-by-case evaluation scenarios, the EPSC evaluation/score is the more heavily weighted consideration.

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Specific Treatment of Certain Award Types in Equity Plan Evaluations

Dividend Equivalent Rights

Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.

Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)

For Real Estate Investment Trusts (REITS), include the common shares issuable upon conversion of outstanding Operating Partnership (OP) units in the share count for the purposes of determining: (1) market capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares outstanding in the burn rate analysis.

Other Compensation Plans

401(k) Employee Benefit Plans

General Recommendation: Vote for proposals to implement a 401(k) savings plan for employees.

Employee Stock Ownership Plans (ESOPs)

General Recommendation: Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

Employee Stock Purchase Plans—Qualified Plans

General Recommendation: Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

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|:---|:---|
| § | Purchase price is at least 85 percent of fair market value;  |

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§ Offering period is 27 months or less; and

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|:---|:---|
| § | The number of shares allocated to the plan is 10 percent or less of the outstanding shares.  |

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Vote against qualified employee stock purchase plans where when the plan features do not meet all of the above criteria.

Employee Stock Purchase Plans—Non-Qualified Plans

General Recommendation: Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

§ Broad-based participation;

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|:---|:---|
| § | Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;  |

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|:---|:---|
| § | Company matching contribution up to 25 percent of employee's contribution, which is effectively a discount of 20 percent from market value; and  |

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§ No discount on the stock price on the date of purchase when there is a company matching contribution.

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Vote against nonqualified employee stock purchase plans when the plan features do not meet all of the above criteria. If the matching contribution or effective discount exceeds the above, ISS may evaluate the SVT cost of the plan as part of the assessment.

Option Exchange Programs/Repricing Options

General Recommendation: Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

§ Historic trading patterns--the stock price should not be so volatile that the options are likely to be back "in-the-money" over the near term;

§ Rationale for the re-pricing--was the stock price decline beyond management's control?;

§ Is this a value-for-value exchange?;

§ Are surrendered stock options added back to the plan reserve?;

§ Timing--repricing should occur at least one year out from any precipitous drop in company's stock price;

§ Option vesting--does the new option vest immediately or is there a black-out period?;

§ Term of the option--the term should remain the same as that of the replaced option;

§ Exercise price--should be set at fair market or a premium to market;

§ Participants--executive officers and directors must be excluded.

If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing and warrants additional scrutiny. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

Stock Plans in Lieu of Cash

General Recommendation: Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.

Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.

Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, ISS will not make any adjustments to carve out the in-lieu-of cash compensation.

Transfer Stock Option (TSO) Programs

General Recommendation: One-time Transfers: Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

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Vote case-by-case on one-time transfers. Vote for if:

§ Executive officers and non-employee directors are excluded from participating;

§ Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models; and

§ There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure, and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

§ Eligibility;

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|:---|:---|
| § | Vesting;  |

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§ Bid-price;

§ Term of options;

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|:---|:---|
| § | Cost of the program and impact of the TSOs on company's total option expense; and  |

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§ Option repricing policy.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

Director Compensation

Shareholder Ratification of Director Pay Programs

General Recommendation: Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

§ If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and

§ An assessment of the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

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Equity Plans for Non-Employee Directors

General Recommendation: Vote case-by-case on compensation plans for non-employee directors, based on:

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|:---|:---|
| § | The total estimated cost of the company's equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants;  |

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§ The company's three-year burn rate relative to its industry/market cap peers (in certain circumstances); and

§ The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).

On occasion, non-employee director stock plans will exceed the plan cost or burn-rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:

§ The relative magnitude of director compensation as compared to companies of a similar profile;

§ The presence of problematic pay practices relating to director compensation;

§ Director stock ownership guidelines and holding requirements;

§ Equity award vesting schedules;

§ The mix of cash and equity-based compensation;

§ Meaningful limits on director compensation;

§ The availability of retirement benefits or perquisites; and

§ The quality of disclosure surrounding director compensation.

Non-Employee Director Retirement Plans

General Recommendation: Vote against retirement plans for non-employee directors. Vote for shareholder proposals to eliminate retirement plans for non-employee directors.

Shareholder Proposals on Compensation

Bonus Banking/Bonus Banking "Plus"

General Recommendation: Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

§ The company's past practices regarding equity and cash compensation;

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|:---|:---|
| § | Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and  |

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§ Whether the company has a rigorous claw-back policy in place.

Compensation Consultants—Disclosure of Board or Company's Utilization

General Recommendation: Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s), and fees paid.

Disclosure/Setting Levels or Types of Compensation for Executives and Directors

General Recommendation: Generally vote for shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders' needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.

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Generally vote against shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation (such as types of compensation elements or specific metrics) to be used for executive or directors.

Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Vote case-by-case on all other shareholder proposals regarding executive and director pay, taking into account relevant factors, including but not limited to: company performance, pay level and design versus peers, history of compensation concerns or pay-for-performance disconnect, and/or the scope and prescriptive nature of the proposal.

Golden Coffins/Executive Death Benefits

General Recommendation: Generally vote for proposals calling for companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals for which the broad-based employee population is eligible.

Hold Equity Past Retirement or for a Significant Period of Time

General Recommendation: Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans. The following factors will be taken into account:

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|:---|:---|
| § | The percentage/ratio of net shares required to be retained;  |

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§ The time period required to retain the shares;

§ Whether the company has equity retention, holding period, and/or stock ownership requirements in place and the robustness of such requirements;

§ Whether the company has any other policies aimed at mitigating risk taking by executives;

§ Executives' actual stock ownership and the degree to which it meets or exceeds the proponent's suggested holding period/retention ratio or the company's existing requirements; and

§ Problematic pay practices, current and past, which may demonstrate a short-term versus long-term focus.

Pay Disparity

General Recommendation: Vote case-by-case on proposals calling for an analysis of the pay disparity between corporate executives and other non-executive employees. The following factors will be considered:

§ The company's current level of disclosure of its executive compensation setting process, including how the company considers pay disparity;

§ If any problematic pay practices or pay-for-performance concerns have been identified at the company; and

§ The level of shareholder support for the company's pay programs.

Generally vote against proposals calling for the company to use the pay disparity analysis or pay ratio in a specific way to set or limit executive pay.

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Pay for Performance/Performance-Based Awards

General Recommendation: Vote case-by-case on shareholder proposals requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

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|:---|:---|
| § | First, vote for shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options, or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a "substantial" portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a meaningful premium to be considered performance-based awards.  |

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|:---|:---|
| § | Second, assess the rigor of the company's performance-based equity program. If the bar set for the performance-based program is too low based on the company's historical or peer group comparison, generally vote for the proposal. Furthermore, if target performance results in an above target payout, vote for the shareholder proposal due to program's poor design. If the company does not disclose the performance metric of the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.  |

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

Pay for Superior Performance

General Recommendation: Vote case-by-case on shareholder proposals that request the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. These proposals generally include the following principles:

§ Set compensation targets for the plan's annual and long-term incentive pay components at or below the peer group median;

§ Deliver a majority of the plan's target long-term compensation through performance-vested, not simply time-vested, equity awards;

§ Provide the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the plan;

§ Establish performance targets for each plan financial metric relative to the performance of the company's peer companies;

§ Limit payment under the annual and performance-vested long-term incentive components of the plan to when the company's performance on its selected financial performance metrics exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

§ What aspects of the company's annual and long-term equity incentive programs are performance driven?

§ If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates disclosed to shareholders or are they benchmarked against a disclosed peer group?

§ Can shareholders assess the correlation between pay and performance based on the current disclosure?

§ What type of industry and stage of business cycle does the company belong to?

Pre-Arranged Trading Plans (10b5-1 Plans)

General Recommendation: Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

§ Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

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§ Amendment or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances, as determined by the board;

§ Request that a certain number of days that must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan;

§ Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

§ An executive may not trade in company stock outside the 10b5-1 Plan;

§ Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive.

Prohibit Outside CEOs from Serving on Compensation Committees

General Recommendation: Generally vote against proposals seeking a policy to prohibit any outside CEO from serving on a company's compensation committee, unless the company has demonstrated problematic pay practices that raise concerns about the performance and composition of the committee.

Recoupment of Incentive or Stock Compensation in Specified Circumstances

General Recommendation: Vote case-by-case on proposals to recoup incentive cash or stock compensation made to senior executives if it is later determined that the figures upon which incentive compensation is earned turn out to have been in error, or if the senior executive has breached company policy or has engaged in misconduct that may be significantly detrimental to the company's financial position or reputation, or if the senior executive failed to manage or monitor risks that subsequently led to significant financial or reputational harm to the company. Many companies have adopted policies that permit recoupment in cases where an executive's fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. However, such policies may be narrow given that not all misconduct or negligence may result in significant financial restatements. Misconduct, negligence, or lack of sufficient oversight by senior executives may lead to significant financial loss or reputational damage that may have long-lasting impact.

In considering whether to support such shareholder proposals, ISS will take into consideration the following factors:

§ If the company has adopted a formal recoupment policy;

§ The rigor of the recoupment policy focusing on how and under what circumstances the company may recoup incentive or stock compensation;

§ Whether the company has chronic restatement history or material financial problems;

§ Whether the company's policy substantially addresses the concerns raised by the proponent;

§ Disclosure of recoupment of incentive or stock compensation from senior executives or lack thereof; or

§ Any other relevant factors.

Severance Agreements for Executives/Golden Parachutes

General Recommendation: Vote for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval *prior* to entering into employment contracts.

Vote case-by-case on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

§ The triggering mechanism should be beyond the control of management;

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§ Change-in-control payments should be double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

Share Buyback Impact on Incentive Program Metrics

General Recommendation: Vote case-by-case on proposals requesting the company exclude the impact of share buybacks from the calculation of incentive program metrics, considering the following factors:

§ The frequency and timing of the company's share buybacks;

§ The use of per-share metrics in incentive plans;

§ The effect of recent buybacks on incentive metric results and payouts; and

§ Whether there is any indication of metric result manipulation.

Supplemental Executive Retirement Plans (SERPs)

General Recommendation: Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Generally vote for shareholder proposals requesting to limit the executive benefits provided under the company's supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive's annual salary or those pay elements covered for the general employee population.

Tax Gross-Up Proposals

General Recommendation: Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity

General Recommendation: Vote case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment and/or eliminating accelerated vesting of unvested equity.

The following factors will be considered:

§ The company's current treatment of equity upon employment termination and/or in change-in-control situations (i.e., vesting is double triggered and/or pro rata, does it allow for the assumption of equity by acquiring company, the treatment of performance shares, etc.);

§ Current employment agreements, including potential poor pay practices such as gross-ups embedded in those agreements.

Generally vote for proposals seeking a policy that prohibits automatic acceleration of the vesting of equity awards to senior executives upon a voluntary termination of employment or in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

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6. Routine/Miscellaneous

Adjourn Meeting

General Recommendation: Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.

Vote for proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote against proposals if the wording is too vague or if the proposal includes "other business."

Amend Quorum Requirements

General Recommendation: Vote case-by-case on proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

§ The new quorum threshold requested;

§ The rationale presented for the reduction;

§ The market capitalization of the company (size, inclusion in indices);

§ The company's ownership structure;

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§ Other factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

Amend Minor Bylaws

General Recommendation: Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Change Company Name

General Recommendation: Vote for proposals to change the corporate name unless there is compelling evidence that the change would adversely impact shareholder value.

Change Date, Time, or Location of Annual Meeting

General Recommendation: Vote for management proposals to change the date, time, or location of the annual meeting unless the proposed change is unreasonable.

Vote against shareholder proposals to change the date, time, or location of the annual meeting unless the current scheduling or location is unreasonable.

Other Business

General Recommendation: Vote against proposals to approve other business when it appears as a voting item.

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7. Social and Environmental Issues

Global Approach – E&S Shareholder Proposals

ISS applies a common approach globally to evaluating social and environmental proposals which cover a wide range of topics, including consumer and product safety, environment and energy, labor standards and human rights, workplace and board diversity, and corporate political issues. While a variety of factors goes into each analysis, the overall principle guiding all vote recommendations focuses on how the proposal may enhance or protect shareholder value in either the short or long term.

General Recommendation: Generally vote case-by-case, examining primarily whether implementation of the proposal is likely to enhance or protect shareholder value. The following factors will be considered:

§ If the issues presented in the proposal are being appropriately or effectively dealt with through legislation or government regulation;

§ If the company has already responded in an appropriate and sufficient manner to the issue(s) raised in the proposal;

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive;

§ The company's approach compared with any industry standard practices for addressing the issue(s) raised by the proposal;

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's practices related to the issue(s) raised in the proposal;

§ If the proposal requests increased disclosure or greater transparency, whether reasonable and sufficient information is currently available to shareholders from the company or from other publicly available sources; and

§ If the proposal requests increased disclosure or greater transparency, whether implementation would reveal proprietary or confidential information that could place the company at a competitive disadvantage.

Endorsement of Principles

General Recommendation: Generally vote against proposals seeking a company's endorsement of principles that support a particular public policy position. Endorsing a set of principles may require a company to take a stand on an issue that is beyond its own control and may limit its flexibility with respect to future developments.

Management and the board should be afforded the flexibility to make decisions on specific public policy positions based on their own assessment of the most beneficial strategies for the company.

Animal Welfare

Animal Welfare Policies

**General Recommendation:** Generally vote for proposals seeking a report on a company's animal welfare standards, or animal welfare-related risks, unless:

§ The company has already published a set of animal welfare standards and monitors compliance;

§ The company's standards are comparable to industry peers; and

§ There are no recent significant fines, litigation, or controversies related to the company's and/or its suppliers' treatment of animals.

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Animal Testing

General Recommendation: Generally vote against proposals to phase out the use of animals in product testing, unless:

§ The company is conducting animal testing programs that are unnecessary or not required by regulation;

§ The company is conducting animal testing when suitable alternatives are commonly accepted and used by industry peers; or

§ There are recent, significant fines or litigation related to the company's treatment of animals.

Animal Slaughter

General Recommendation: Generally vote against proposals requesting the implementation of Controlled Atmosphere Killing (CAK) methods at company and/or supplier operations unless such methods are required by legislation or generally accepted as the industry standard.

Vote case-by-case on proposals requesting a report on the feasibility of implementing CAK methods at company and/or supplier operations considering the availability of existing research conducted by the company or industry groups on this topic and any fines or litigation related to current animal processing procedures at the company.

Consumer Issues

Genetically Modified Ingredients

General Recommendation: Generally vote against proposals requesting that a company voluntarily label genetically engineered (GE) ingredients in its products. The labeling of products with GE ingredients is best left to the appropriate regulatory authorities.

Vote case-by-case on proposals asking for a report on the feasibility of labeling products containing GE ingredients, taking into account:

§ The potential impact of such labeling on the company's business;

§ The quality of the company's disclosure on GE product labeling, related voluntary initiatives, and how this disclosure compares with industry peer disclosure; and

§ Company's current disclosure on the feasibility of GE product labeling.

Generally vote against proposals seeking a report on the social, health, and environmental effects of genetically modified organisms (GMOs). Studies of this sort are better undertaken by regulators and the scientific community.

Generally vote against proposals to eliminate GE ingredients from the company's products, or proposals asking for reports outlining the steps necessary to eliminate GE ingredients from the company's products. Such decisions are more appropriately made by management with consideration of current regulations.

Reports on Potentially Controversial Business/Financial Practices

General Recommendation: Vote case-by-case on requests for reports on a company's potentially controversial business or financial practices or products, taking into account:

§ Whether the company has adequately disclosed mechanisms in place to prevent abuses;

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§ Whether the company has adequately disclosed the financial risks of the products/practices in question;

§ Whether the company has been subject to violations of related laws or serious controversies; and

§ Peer companies' policies/practices in this area.

Pharmaceutical Pricing, Access to Medicines, and Prescription Drug Reimportation

General Recommendation: Generally vote against proposals requesting that companies implement specific price restraints on pharmaceutical products unless the company fails to adhere to legislative guidelines or industry norms in its product pricing practices.

Vote case-by-case on proposals requesting that a company report on its product pricing or access to medicine policies, considering:

§ The potential for reputational, market, and regulatory risk exposure;

§ Existing disclosure of relevant policies;

§ Deviation from established industry norms;

§ Relevant company initiatives to provide research and/or products to disadvantaged consumers;

§ Whether the proposal focuses on specific products or geographic regions;

§ The potential burden and scope of the requested report;

§ Recent significant controversies, litigation, or fines at the company.

Generally vote for proposals requesting that a company report on the financial and legal impact of its prescription drug reimportation policies unless such information is already publicly disclosed.

Generally vote against proposals requesting that companies adopt specific policies to encourage or constrain prescription drug reimportation. Such matters are more appropriately the province of legislative activity and may place the company at a competitive disadvantage relative to its peers.

Product Safety and Toxic/Hazardous Materials

General Recommendation: Generally vote for proposals requesting that a company report on its policies, initiatives/procedures, and oversight mechanisms related to toxic/hazardous materials or product safety in its supply chain, unless:

§ The company already discloses similar information through existing reports such as a supplier code of conduct and/or a sustainability report;

§ The company has formally committed to the implementation of a toxic/hazardous materials and/or product safety and supply chain reporting and monitoring program based on industry norms or similar standards within a specified time frame; and

§ The company has not been recently involved in relevant significant controversies, fines, or litigation.

Vote case-by-case on resolutions requesting that companies develop a feasibility assessment to phase-out of certain toxic/hazardous materials, or evaluate and disclose the potential financial and legal risks associated with utilizing certain materials, considering:

§ The company's current level of disclosure regarding its product safety policies, initiatives, and oversight mechanisms;

§ Current regulations in the markets in which the company operates; and

§ Recent significant controversies, litigation, or fines stemming from toxic/hazardous materials at the company.

Generally vote against resolutions requiring that a company reformulate its products.

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Tobacco-Related Proposals

**General Recommendation:** Vote case-by-case on resolutions regarding the advertisement of tobacco products, considering:

§ Recent related fines, controversies, or significant litigation;

§ Whether the company complies with relevant laws and regulations on the marketing of tobacco;

§ Whether the company's advertising restrictions deviate from those of industry peers;

§ Whether the company entered into the Master Settlement Agreement, which restricts marketing of tobacco to youth; and

§ Whether restrictions on marketing to youth extend to foreign countries.

Vote case-by-case on proposals regarding second-hand smoke, considering;

§ Whether the company complies with all laws and regulations;

§ The degree that voluntary restrictions beyond those mandated by law might hurt the company's competitiveness; and

§ The risk of any health-related liabilities.

Generally vote against resolutions to cease production of tobacco-related products, to avoid selling products to tobacco companies, to spin-off tobacco-related businesses, or prohibit investment in tobacco equities. Such business decisions are better left to company management or portfolio managers.

Generally vote against proposals regarding tobacco product warnings. Such decisions are better left to public health authorities.

Climate Change

Say on Climate (SoC) Management Proposals

General Recommendation: Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan<sup>23</sup>, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

§ The extent to which the company's climate related disclosures are in line with TCFD recommendations and meet other market standards;

§ Disclosure of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

§ The completeness and rigor of company's short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions (Scopes 1, 2, and 3 if relevant);

§ Whether the company has sought and received third-party approval that its targets are science-based;

§ Whether the company has made a commitment to be "net zero" for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050;

§ Whether the company discloses a commitment to report on the implementation of its plan in subsequent years;

§ Whether the company's climate data has received third-party assurance;

§ Disclosure of how the company's lobbying activities and its capital expenditures align with company strategy;

§ Whether there are specific industry decarbonization challenges; and

§ The company's related commitment, disclosure, and performance compared to its industry peers.

<sup>23</sup> Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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Say on Climate (SoC) Shareholder Proposals

**General Recommendation:** Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

§ The completeness and rigor of the company's climate-related disclosure;

§ The company's actual GHG emissions performance;

§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and

§ Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

Climate Change/Greenhouse Gas (GHG) Emissions

General Recommendation: Generally vote for resolutions requesting that a company disclose information on the financial, physical, or regulatory risks it faces related to climate change on its operations and investments or on how the company identifies, measures, and manages such risks, considering:

§ Whether the company already provides current, publicly-available information on the impact that climate change may have on the company as well as associated company policies and procedures to address related risks and/or opportunities;

§ The company's level of disclosure compared to industry peers; and

§ Whether there are significant controversies, fines, penalties, or litigation associated with the company's climate change-related performance.

Generally vote for proposals requesting a report on greenhouse gas (GHG) emissions from company operations and/or products and operations, unless:

§ The company already discloses current, publicly-available information on the impacts that GHG emissions may have on the company as well as associated company policies and procedures to address related risks and/or opportunities;

§ The company's level of disclosure is comparable to that of industry peers; and

§ There are no significant, controversies, fines, penalties, or litigation associated with the company's GHG emissions.

Vote case-by-case on proposals that call for the adoption of GHG reduction goals from products and operations, taking into account:

§ Whether the company provides disclosure of year-over-year GHG emissions performance data;

§ Whether company disclosure lags behind industry peers;

§ The company's actual GHG emissions performance;

§ The company's current GHG emission policies, oversight mechanisms, and related initiatives; and

§ Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to GHG emissions.

Energy Efficiency

General Recommendation: Generally vote for proposals requesting that a company report on its energy efficiency policies, unless:

§ The company complies with applicable energy efficiency regulations and laws, and discloses its participation in energy efficiency policies and programs, including disclosure of benchmark data, targets, and performance measures; or

§ The proponent requests adoption of specific energy efficiency goals within specific timelines.

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Renewable Energy

General Recommendation: Generally vote for requests for reports on the feasibility of developing renewable energy resources unless the report would be duplicative of existing disclosure or irrelevant to the company's line of business.

Generally vote against proposals requesting that the company invest in renewable energy resources. Such decisions are best left to management's evaluation of the feasibility and financial impact that such programs may have on the company.

Generally vote against proposals that call for the adoption of renewable energy goals, taking into account:

§ The scope and structure of the proposal;

§ The company's current level of disclosure on renewable energy use and GHG emissions; and

§ The company's disclosure of policies, practices, and oversight implemented to manage GHG emissions and mitigate climate change risks.

Diversity

Board Diversity

**General Recommendation:** Generally vote for requests for reports on a company's efforts to diversify the board, unless:

§ The gender and racial minority representation of the company's board is reasonably inclusive in relation to companies of similar size and business; and

§ The board already reports on its nominating procedures and gender and racial minority initiatives on the board and within the company.

Vote case-by-case on proposals asking a company to increase the gender and racial minority representation on its board, taking into account:

§ The degree of existing gender and racial minority diversity on the company's board and among its executive officers;

§ The level of gender and racial minority representation that exists at the company's industry peers;

§ The company's established process for addressing gender and racial minority board representation;

§ Whether the proposal includes an overly prescriptive request to amend nominating committee charter language;

§ The independence of the company's nominating committee;

§ Whether the company uses an outside search firm to identify potential director nominees; and

§ Whether the company has had recent controversies, fines, or litigation regarding equal employment practices.

Equality of Opportunity

General Recommendation: Generally vote for proposals requesting a company disclose its diversity policies or initiatives, or proposals requesting disclosure of a company's comprehensive workforce diversity data, including requests for EEO-1 data, unless:

§ The company publicly discloses equal opportunity policies and initiatives in a comprehensive manner;

§ The company already publicly discloses comprehensive workforce diversity data; and

§ The company has no recent significant EEO-related violations or litigation.

Generally vote against proposals seeking information on the diversity efforts of suppliers and service providers.

Such requests may pose a significant burden on the company.

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Gender Identity, Sexual Orientation, and Domestic Partner Benefits

General Recommendation: Generally vote for proposals seeking to amend a company's EEO statement or diversity policies to prohibit discrimination based on sexual orientation and/or gender identity, unless the change would be unduly burdensome.

Generally vote against proposals to extend company benefits to, or eliminate benefits from, domestic partners.

Decisions regarding benefits should be left to the discretion of the company.

Gender, Race/Ethnicity Pay Gap

General Recommendation: Vote case-by-case on requests for reports on a company's pay data by gender or race/ ethnicity, or a report on a company's policies and goals to reduce any gender or race/ethnicity pay gaps, taking into account:

§ The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy on fair and equitable compensation practices;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race, or ethnicity pay gap issues;

§ The company's disclosure regarding gender, race, or ethnicity pay gap policies or initiatives compared to its industry peers; and

§ Local laws regarding categorization of race and/or ethnicity and definitions of ethnic and/or racial minorities.

Racial Equity and/or Civil Rights Audit Guidelines

General Recommendation: Vote case-by-case on proposals asking a company to conduct an independent racial equity and/or civil rights audit, taking into account:

§ The company's established process or framework for addressing racial inequity and discrimination internally;

§ Whether the company adequately discloses workforce diversity and inclusion metrics and goals;

§ Whether the company has issued a public statement related to its racial justice efforts in recent years, or has committed to internal policy review;

§ Whether the company has engaged with impacted communities, stakeholders, and civil rights experts;

§ The company's track record in recent years of racial justice measures and outreach externally; and

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to racial inequity or discrimination.

Environment and Sustainability

Facility and Workplace Safety

General Recommendation: Vote case-by-case on requests for workplace safety reports, including reports on accident risk reduction efforts, taking into account:

§ The company's current level of disclosure of its workplace health and safety performance data, health and safety management policies, initiatives, and oversight mechanisms;

§ The nature of the company's business, specifically regarding company and employee exposure to health and safety risks;

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§ Recent significant controversies, fines, or violations related to workplace health and safety; and

§ The company's workplace health and safety performance relative to industry peers.

Vote case-by-case on resolutions requesting that a company report on safety and/or security risks associated with its operations and/or facilities, considering:

§ The company's compliance with applicable regulations and guidelines;

§ The company's current level of disclosure regarding its security and safety policies, procedures, and compliance monitoring; and

§ The existence of recent, significant violations, fines, or controversy regarding the safety and security of the company's operations and/or facilities.

General Environmental Proposals and Community Impact Assessments

General Recommendation: Vote case-by-case on requests for reports on policies and/or the potential (community) social and/or environmental impact of company operations, considering:

§ Current disclosure of applicable policies and risk assessment report(s) and risk management procedures;

§ The impact of regulatory non-compliance, litigation, remediation, or reputational loss that may be associated with failure to manage the company's operations in question, including the management of relevant community and stakeholder relations;

§ The nature, purpose, and scope of the company's operations in the specific region(s);

§ The degree to which company policies and procedures are consistent with industry norms; and

§ The scope of the resolution.

Hydraulic Fracturing

General Recommendation: Generally vote for proposals requesting greater disclosure of a company's (natural gas) hydraulic fracturing operations, including measures the company has taken to manage and mitigate the potential community and environmental impacts of those operations, considering:

§ The company's current level of disclosure of relevant policies and oversight mechanisms;

§ The company's current level of such disclosure relative to its industry peers;

§ Potential relevant local, state, or national regulatory developments; and

§ Controversies, fines, or litigation related to the company's hydraulic fracturing operations.

Operations in Protected Areas

General Recommendation: Generally vote for requests for reports on potential environmental damage as a result of company operations in protected regions, unless:

§ Operations in the specified regions are not permitted by current laws or regulations;

§ The company does not currently have operations or plans to develop operations in these protected regions; or

§ The company's disclosure of its operations and environmental policies in these regions is comparable to industry peers.

Recycling

**General Recommendation:** Vote case-by-case on proposals to report on an existing recycling program, or adopt a new recycling program, taking into account:

§ The nature of the company's business;

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§ The current level of disclosure of the company's existing related programs;

§ The timetable and methods of program implementation prescribed by the proposal;

§ The company's ability to address the issues raised in the proposal; and

§ How the company's recycling programs compare to similar programs of its industry peers.

Sustainability Reporting

General Recommendation: Generally vote for proposals requesting that a company report on its policies, initiatives, and oversight mechanisms related to social, economic, and environmental sustainability, unless:

§ The company already discloses similar information through existing reports or policies such as an environment, health, and safety (EHS) report; a comprehensive code of corporate conduct; and/or a diversity report; or

§ The company has formally committed to the implementation of a reporting program based on Global Reporting Initiative (GRI) guidelines or a similar standard within a specified time frame.

Water Issues

General Recommendation: Vote case-by-case on proposals requesting a company report on, or adopt a new policy on, water-related risks and concerns, taking into account:

§ The company's current disclosure of relevant policies, initiatives, oversight mechanisms, and water usage metrics;

§ Whether or not the company's existing water-related policies and practices are consistent with relevant internationally recognized standards and national/local regulations;

§ The potential financial impact or risk to the company associated with water-related concerns or issues; and

§ Recent, significant company controversies, fines, or litigation regarding water use by the company and its suppliers.

General Corporate Issues

Charitable Contributions

General Recommendation: Vote against proposals restricting a company from making charitable contributions. Charitable contributions are generally useful for assisting worthwhile causes and for creating goodwill in the community. In the absence of bad faith, self-dealing, or gross negligence, management should determine which, and if, contributions are in the best interests of the company.

Data Security, Privacy, and Internet Issues

General Recommendation: Vote case-by-case on proposals requesting the disclosure or implementation of data security, privacy, or information access and management policies and procedures, considering:

§ The level of disclosure of company policies and procedures relating to data security, privacy, freedom of speech, information access and management, and Internet censorship;

§ Engagement in dialogue with governments or relevant groups with respect to data security, privacy, or the free flow of information on the Internet;

§ The scope of business involvement and of investment in countries whose governments censor or monitor the Internet and other telecommunications;

§ Applicable market-specific laws or regulations that may be imposed on the company; and

§ Controversies, fines, or litigation related to data security, privacy, freedom of speech, or Internet censorship.

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ESG Compensation-Related Proposals

General Recommendation: Vote case-by-case on proposals seeking a report or additional disclosure on the company's approach, policies, and practices on incorporating environmental and social criteria into its executive compensation strategy, considering:

§ The scope and prescriptive nature of the proposal;

§ The company's current level of disclosure regarding its environmental and social performance and governance;

§ The degree to which the board or compensation committee already discloses information on whether it has considered related E&S criteria; and

§ Whether the company has significant controversies or regulatory violations regarding social or environmental issues.

Human Rights, Human Capital Management, and International Operations

Human Rights Proposals

General Recommendation: Generally vote for proposals requesting a report on company or company supplier labor and/or human rights standards and policies unless such information is already publicly disclosed.

Vote case-by-case on proposals to implement company or company supplier labor and/or human rights standards and policies, considering:

§ The degree to which existing relevant policies and practices are disclosed;

§ Whether or not existing relevant policies are consistent with internationally recognized standards;

§ Whether company facilities and those of its suppliers are monitored and how;

§ Company participation in fair labor organizations or other internationally recognized human rights initiatives;

§ Scope and nature of business conducted in markets known to have higher risk of workplace labor/human rights abuse;

§ Recent, significant company controversies, fines, or litigation regarding human rights at the company or its suppliers;

§ The scope of the request; and

§ Deviation from industry sector peer company standards and practices.

Vote case-by-case on proposals requesting that a company conduct an assessment of the human rights risks in its operations or in its supply chain, or report on its human rights risk assessment process, considering:

§ The degree to which existing relevant policies and practices are disclosed, including information on the implementation of these policies and any related oversight mechanisms;

§ The company's industry and whether the company or its suppliers operate in countries or areas where there is a history of human rights concerns;

§ Recent significant controversies, fines, or litigation regarding human rights involving the company or its suppliers, and whether the company has taken remedial steps; and

§ Whether the proposal is unduly burdensome or overly prescriptive.

Mandatory Arbitration

**General Recommendation:** Vote case-by-case on requests for a report on a company's use of mandatory arbitration on employment-related claims, taking into account:

§ The company's current policies and practices related to the use of mandatory arbitration agreements on workplace claims;

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§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to the use of mandatory arbitration agreements on workplace claims; and

§ The company's disclosure of its policies and practices related to the use of mandatory arbitration agreements compared to its peers.

Operations in High-Risk Markets

General Recommendation: Vote case-by-case on requests for a report on a company's potential financial and reputational risks associated with operations in "high-risk" markets, such as a terrorism-sponsoring state or politically/socially unstable region, taking into account:

§ The nature, purpose, and scope of the operations and business involved that could be affected by social or political disruption;

§ Current disclosure of applicable risk assessment(s) and risk management procedures;

§ Compliance with U.S. sanctions and laws;

§ Consideration of other international policies, standards, and laws; and

§ Whether the company has been recently involved in recent, significant controversies, fines, or litigation related to its operations in "high-risk" markets.

Outsourcing/Offshoring

General Recommendation: Vote case-by-case on proposals calling for companies to report on the risks associated with outsourcing/plant closures, considering:

§ Controversies surrounding operations in the relevant market(s);

§ The value of the requested report to shareholders;

§ The company's current level of disclosure of relevant information on outsourcing and plant closure procedures; and

§ The company's existing human rights standards relative to industry peers.

Sexual Harassment

General Recommendation: Vote case-by-case on requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment, taking into account:

§ The company's current policies, practices, oversight mechanisms related to preventing workplace sexual harassment;

§ Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to workplace sexual harassment issues; and

§ The company's disclosure regarding workplace sexual harassment policies or initiatives compared to its industry peers.

Weapons and Military Sales

General Recommendation: Vote against reports on foreign military sales or offsets. Such disclosures may involve sensitive and confidential information. Moreover, companies must comply with government controls and reporting on foreign military sales.

Generally vote against proposals asking a company to cease production or report on the risks associated with the use of depleted uranium munitions or nuclear weapons components and delivery systems, including disengaging from current and proposed contracts. Such contracts are monitored by government agencies, serve multiple military and non-military uses, and withdrawal from these contracts could have a negative impact on the company's business.

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![LOGO](g79608g00k16.jpg)

Political Activities

Lobbying

General Recommendation: Vote case-by-case on proposals requesting information on a company's lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures, considering:

§ The company's current disclosure of relevant lobbying policies, and management and board oversight;

§ The company's disclosure regarding trade associations or other groups that it supports, or is a member of, that engage in lobbying activities; and

§ Recent significant controversies, fines, or litigation regarding the company's lobbying-related activities.

Political Contributions

General Recommendation: Generally vote for proposals requesting greater disclosure of a company's political contributions and trade association spending policies and activities, considering:

§ The company's policies, and management and board oversight related to its direct political contributions and payments to trade associations or other groups that may be used for political purposes;

§ The company's disclosure regarding its support of, and participation in, trade associations or other groups that may make political contributions; and

§ Recent significant controversies, fines, or litigation related to the company's political contributions or political activities.

Vote against proposals barring a company from making political contributions. Businesses are affected by legislation at the federal, state, and local level; barring political contributions can put the company at a competitive disadvantage.

Vote against proposals to publish in newspapers and other media a company's political contributions. Such publications could present significant cost to the company without providing commensurate value to shareholders.

Political Expenditures and Lobbying Congruency

General Recommendation: Generally vote case-by-case on proposals requesting greater disclosure of a company's alignment of political contributions, lobbying, and electioneering spending with a company's publicly stated values and policies, considering:

§ The company's policies, management, board oversight, governance processes, and level of disclosure related to direct political contributions, lobbying activities, and payments to trade associations, political action committees, or other groups that may be used for political purposes;

§ The company's disclosure regarding: the reasons for its support of candidates for public offices; the reasons for support of and participation in trade associations or other groups that may make political contributions; and other political activities;

§ Any incongruencies identified between a company's direct and indirect political expenditures and its publicly stated values and priorities.

§ Recent significant controversies related to the company's direct and indirect lobbying, political contributions, or political activities.

Generally vote case-by-case on proposals requesting comparison of a company's political spending to objectives that can mitigate material risks for the company, such as limiting global warming.

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![LOGO](g79608g00k16.jpg)

Political Ties

General Recommendation: Generally vote against proposals asking a company to affirm political nonpartisanship in the workplace, so long as:

§ There are no recent, significant controversies, fines, or litigation regarding the company's political contributions or trade association spending; and

§ The company has procedures in place to ensure that employee contributions to company-sponsored political action committees (PACs) are strictly voluntary and prohibit coercion.

Vote against proposals asking for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have prior government service and whether such service had a bearing on the business of the company. Such a list would be burdensome to prepare without providing any meaningful information to shareholders.

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![LOGO](g79608g00k16.jpg)

8. Mutual Fund Proxies

Election of Directors

General Recommendation: Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes

General Recommendation: For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

Converting Closed-end Fund to Open-end Fund

General Recommendation: Vote case-by-case on conversion proposals, considering the following factors:

§ Past performance as a closed-end fund;

§ Market in which the fund invests;

§ Measures taken by the board to address the discount; and

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| | |
|:---|:---|
| § | Past shareholder activism, board activity, and votes on related proposals.  |

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Proxy Contests

General Recommendation: Vote case-by-case on proxy contests, considering the following factors:

§ Past performance relative to its peers;

§ Market in which the fund invests;

§ Measures taken by the board to address the issues;

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| | |
|:---|:---|
| § | Past shareholder activism, board activity, and votes on related proposals;  |

---

§ Strategy of the incumbents versus the dissidents;

§ Independence of directors;

§ Experience and skills of director candidates;

§ Governance profile of the company;

§ Evidence of management entrenchment.

Investment Advisory Agreements

General Recommendation: Vote case-by-case on investment advisory agreements, considering the following factors:

§ Proposed and current fee schedules;

§ Fund category/investment objective;

§ Performance benchmarks;

§ Share price performance as compared with peers;

§ Resulting fees relative to peers;

§ Assignments (where the advisor undergoes a change of control).

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![LOGO](g79608g00k16.jpg)

Approving New Classes or Series of Shares

General Recommendation: Vote for the establishment of new classes or series of shares.

Preferred Stock Proposals

General Recommendation: Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

§ Stated specific financing purpose;

§ Possible dilution for common shares;

§ Whether the shares can be used for antitakeover purposes.

1940 Act Policies

General Recommendation: Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors:

§ Potential competitiveness;

§ Regulatory developments;

§ Current and potential returns; and

§ Current and potential risk.

Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.

Changing a Fundamental Restriction to a Nonfundamental Restriction

General Recommendation: Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

§ The fund's target investments;

§ The reasons given by the fund for the change; and

§ The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Nonfundamental

General Recommendation: Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

Name Change Proposals

General Recommendation: Vote case-by-case on name change proposals, considering the following factors:

§ Political/economic changes in the target market;

§ Consolidation in the target market; and

§ Current asset composition.

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![LOGO](g79608g00k16.jpg)

Change in Fund's Subclassification

General Recommendation: Vote case-by-case on changes in a fund's sub-classification, considering the following factors:

§ Potential competitiveness;

§ Current and potential returns;

§ Risk of concentration;

§ Consolidation in target industry.

Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value

General Recommendation: Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV)

if:

§ The proposal to allow share issuances below NAV has an expiration date no more than one year from the date shareholders approve the underlying proposal, as required under the Investment Company Act of 1940;

§ The sale is deemed to be in the best interests of shareholders by (1) a majority of the company's independent directors and (2) a majority of the company's directors who have no financial interest in the issuance; and

§ The company has demonstrated responsible past use of share issuances by either:

§ Outperforming peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

§ Providing disclosure that its past share issuances were priced at levels that resulted in only small or moderate discounts to NAV and economic dilution to existing non-participating shareholders.

Disposition of Assets/Termination/Liquidation

General Recommendation: Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors:

§ Strategies employed to salvage the company;

§ The fund's past performance;

§ The terms of the liquidation.

Changes to the Charter Document

General Recommendation: Vote case-by-case on changes to the charter document, considering the following factors:

§ The degree of change implied by the proposal;

§ The efficiencies that could result;

§ The state of incorporation;

§ Regulatory standards and implications.

Vote against any of the following changes:

§ Removal of shareholder approval requirement to reorganize or terminate the trust or any of its series;

§ Removal of shareholder approval requirement for amendments to the new declaration of trust;

§ Removal of shareholder approval requirement to amend the fund's management contract, allowing the contract to be modified by the investment manager and the trust management, as permitted by the 1940 Act;

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![LOGO](g79608g00k16.jpg)

§ Allow the trustees to impose other fees in addition to sales charges on investment in a fund, such as deferred sales charges and redemption fees that may be imposed upon redemption of a fund's shares;

§ Removal of shareholder approval requirement to engage in and terminate subadvisory arrangements;

§ Removal of shareholder approval requirement to change the domicile of the fund.

Changing the Domicile of a Fund

General Recommendation: Vote case-by-case on re-incorporations, considering the following factors:

§ Regulations of both states;

§ Required fundamental policies of both states;

§ The increased flexibility available.

Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval

General Recommendation: Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

Distribution Agreements

General Recommendation: Vote case-by-case on distribution agreement proposals, considering the following factors:

§ Fees charged to comparably sized funds with similar objectives;

§ The proposed distributor's reputation and past performance;

§ The competitiveness of the fund in the industry;

§ The terms of the agreement.

Master-Feeder Structure

General Recommendation: Vote for the establishment of a master-feeder structure.

Mergers

General Recommendation: Vote case-by-case on merger proposals, considering the following factors:

§ Resulting fee structure;

§ Performance of both funds;

§ Continuity of management personnel;

§ Changes in corporate governance and their impact on shareholder rights.

Shareholder Proposals for Mutual Funds

Establish Director Ownership Requirement

General Recommendation: Generally vote against shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

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![LOGO](g79608g00k16.jpg)

Reimburse Shareholder for Expenses Incurred

General Recommendation: Vote case-by-case on shareholder proposals to reimburse proxy solicitation expenses.

When supporting the dissidents, vote for the reimbursement of the proxy solicitation expenses.

Terminate the Investment Advisor

General Recommendation: Vote case-by-case on proposals to terminate the investment advisor, considering the following factors:

§ Performance of the fund's Net Asset Value (NAV);

§ The fund's history of shareholder relations;

§ The performance of other funds under the advisor's management.

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![LOGO](g79608g00k16.jpg)

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**PART C**

**OTHER INFORMATION** 

**Item 28.**

**Exhibits** 

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| | |
|:---|:---|
| (a)(1) | &nbsp;&nbsp; [<u>Second Amended and Restated Master Trust Agreement dated May 15, 2012 is incorporated herein by reference to</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923a.htm)<br> [<u>Post-Effective Amendment No. 110 to the SSGA Funds (the "Trust" or the "Registrant") Registration Statement on</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923a.htm)<br> [<u>Form N-1A filed with the Securities and Exchange Commission (the "Commission") on August 2, 2012.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923a.htm)<br>|
| (2) | &nbsp;&nbsp; [<u>Amendment No. 1 to the Second Amended and Restated Master Trust Agreement dated May 15, 2012 is incorporated</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512503351/d448383dex9923a2.htm)<br> [<u>herein by reference to Post-Effective Amendment No. 114 to the Trust's Registration Statement on Form N-1A filed</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512503351/d448383dex9923a2.htm)<br> [<u>with the Commission on December 14, 2012.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512503351/d448383dex9923a2.htm)<br>|
| (3) | &nbsp;&nbsp; [<u>Amendment No. 2 to the Second Amended and Restated Master Trust Agreement dated May 15, 2012 is incorporated</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928a2.htm)<br> [<u>herein by reference to Post-Effective Amendment No. 149 to the Trust's Registration Statement on Form N-1A filed</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928a2.htm)<br> [<u>with the Commission on December 17, 2015.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928a2.htm)<br>|
| (4) | &nbsp;&nbsp; [<u>Amendment No. 3 to the Second Amended and Restated Master Trust Agreement dated May 15, 2012 is incorporated</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928a3.htm)<br> [<u>herein by reference to Post-Effective Amendment No. 152 to the Trust's Registration Statement on Form N-1A filed</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928a3.htm)<br> [<u>with the Commission on December 19, 2016.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928a3.htm)<br>|
| (5) | &nbsp;&nbsp; [<u>Amendment No. 4 to the Second Amended and Restated Master Trust Agreement dated September 11, 2025 is filed</u>](d79608dex99a5.htm)<br> [<u>herewith.</u>](d79608dex99a5.htm)<br>|
| (b) | &nbsp;&nbsp; [<u>Amended and Restated By-Laws of the Trust are incorporated herein by reference to the Post-Effective Amendment</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928b.htm)<br> [<u>No. 152 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 19, 2016</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928b.htm).<br>|
| (c) | &nbsp;&nbsp; [<u>Voting Rights Policy is incorporated herein by reference to Post-Effective Amendment No. 86 to the Trust's</u>](http://www.sec.gov/Archives/edgar/data/826686/000104746904037726/a2147901zex-99_22c1.txt)<br> [<u>Registration Statement on Form N-1A filed with the Commission on December 20, 2004.</u>](http://www.sec.gov/Archives/edgar/data/826686/000104746904037726/a2147901zex-99_22c1.txt)<br>|
| (d)(1) | &nbsp;&nbsp; [<u>Amended and Restated Investment Advisory Agreement dated April 11, 2012, as amended through May 15, 2012,</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923d1.htm)<br> [<u>between SSGA Funds Management, Inc. ("SSGA FM") and the Trust is incorporated herein by reference to Post-</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923d1.htm)<br> [<u>Effective Amendment No. 110 to the Trust's Registration Statement on Form N-1A filed with the Commission on</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923d1.htm)<br> [<u>August 2, 2012.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923d1.htm)<br>|
| (2) | &nbsp;&nbsp; [<u>Notice dated December 18, 2020 to the Amended and Restated Investment Advisory Agreement dated April 11, 2012,</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99d2.htm)<br> [<u>as amended through May 15, 2013, between SSGA FM and the Trust is incorporated herein by reference to Post-</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99d2.htm)<br> [<u>Effective Amendment No. 163 to the Trust's Registration Statement on Form N-1A filed with the Commission on</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99d2.htm)<br> [<u>December 20, 2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99d2.htm)<br>|
| (3) | [<u>Advisory Fee Waiver and Reimbursement Letter for Calendar Year Ending December 31, 2026 is filed herewith.</u>](d79608dex99d3.htm) |
| (e)(1) | &nbsp;&nbsp; [<u>Shareholder Servicing Agreement by and between the Trust and State Street Bank Solutions is incorporated herein by</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>reference as Exhibit 15(d) to Post-Effective Amendment No. 42 to the Trust's Registration Statement on Form N-1A</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>filed with the Commission on December 24, 1997.</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br>|
| (2) | &nbsp;&nbsp; [<u>Shareholder Servicing Agreement by and between the Trust and State Street Brokerage Services, Inc. is incorporated</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-96-002329.txt)<br> [<u>herein by reference as Exhibit 15(d)(i) to Post-Effective Amendment No. 39 to the Trust's Registration Statement on</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-96-002329.txt)<br> [<u>Form N-1A filed with the Commission on December 27, 1996.</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-96-002329.txt)<br>|
| (3) | &nbsp;&nbsp; [<u>Shareholder Servicing Agreement by and between the Trust and State Street Bank and Trust Company, Fiduciary</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-96-002329.txt)<br> [<u>Investor Services is incorporated herein by reference as Exhibit 15(d)(ii) to Post-Effective Amendment No. 39 to the</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-96-002329.txt)<br> [<u>Trust's Registration Statement on Form N-1A filed with the Commission on December 27, 1996.</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-96-002329.txt)<br>|
| (4) | &nbsp;&nbsp; [<u>Shareholder Servicing Agreement by and between the Trust and State Street Bank and Trust Company is incorporated</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>by reference as Exhibit 15(d)(iii) to Post-Effective Amendment No. 42 to the Trust's Registration Statement on Form</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>N-1A filed with the Commission on December 24, 1997.</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br>|
| (5) | &nbsp;&nbsp; [<u>Shareholder Servicing Agreement by and between the Trust and CitiStreet LLC is incorporated herein by reference to</u>](http://www.sec.gov/Archives/edgar/data/826686/000091205701534068/a2060279zex-99_b15dviii.txt)<br> [<u>Post-Effective Amendment No. 63 to the Trust's Registration Statement on Form N-1A filed with the Commission on</u>](http://www.sec.gov/Archives/edgar/data/826686/000091205701534068/a2060279zex-99_b15dviii.txt)<br> [<u>October 1, 2001.</u>](http://www.sec.gov/Archives/edgar/data/826686/000091205701534068/a2060279zex-99_b15dviii.txt)<br>|
| (6) | &nbsp;&nbsp; [<u>Shareholder Servicing Agreement by and between the Trust and State Street Bank and Trust Company, High Net</u>](http://www.sec.gov/Archives/edgar/data/826686/000091205701534068/a2060279zex-99_b15dvi.txt)<br> [<u>Worth Services Division is incorporated herein by reference to Post-Effective Amendment No. 63 to the Trust's</u>](http://www.sec.gov/Archives/edgar/data/826686/000091205701534068/a2060279zex-99_b15dvi.txt)<br> [<u>Registration Statement on Form N-1A filed with the Commission on October 1, 2001.</u>](http://www.sec.gov/Archives/edgar/data/826686/000091205701534068/a2060279zex-99_b15dvi.txt)<br>|
| (7) | &nbsp;&nbsp; [<u>Form of Shareholder Servicing and Distribution addenda relating to Select Class is incorporated herein by reference to</u>](http://www.sec.gov/Archives/edgar/data/826686/000104746905027491/a2165418zex-99_b22e.txt)<br> [<u>Post-Effective Amendment No. 93 to the Trust's Registration Statement on Form N-1A filed with the Commission on</u>](http://www.sec.gov/Archives/edgar/data/826686/000104746905027491/a2165418zex-99_b22e.txt)<br> [<u>November 29, 2005.</u>](http://www.sec.gov/Archives/edgar/data/826686/000104746905027491/a2165418zex-99_b22e.txt)<br>|
| (8) | &nbsp;&nbsp; [<u>Second Amended and Restated Distribution Agreement between State Street Global Advisors Funds Distributors, LLC</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928e8.htm)<br> [<u>("SSGA FD") and the Trust dated May 1, 2017 is incorporated herein by reference to Post-Effective Amendment</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928e8.htm)<br> [<u>No. 154 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 19, 2017.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928e8.htm)<br>|
| (9) | &nbsp;&nbsp; [<u>Notice dated December 18, 2020 to the Second Amended and Restated Distribution Agreement dated May 1, 2017</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99e9.htm)<br> [<u>between SSGA FD and the Trust is incorporated herein by reference to Post-Effective Amendment No. 163 to the</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99e9.htm)<br> [<u>Trust's Registration Statement on Form N-1A filed with the Commission on December 20, 2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99e9.htm)<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| (f) | Not applicable. |
| (g)(1) | &nbsp;&nbsp; [<u>Amended and Restated Custodian Agreement dated April 11, 2012 between State Street Bank and Trust Company and</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923g1.htm)<br> [<u>the Trust is incorporated herein by reference to Post-Effective Amendment No. 110 to the Trust's Registration</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923g1.htm)<br> [<u>Statement on Form N-1A filed with the Commission on August 2, 2012.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512331353/d388593dex9923g1.htm)<br>|
| (2) | &nbsp;&nbsp; [<u>Amendment dated September 30, 2020 to the Amended and Restated Custodian Agreement dated April 11, 2012</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928g2.htm)<br> [<u>between State Street Bank and Trust Company and the Trust is incorporated herein by reference to Post-Effective</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928g2.htm)<br> [<u>Amendment No. 162 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 21,</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928g2.htm)<br> [<u>2020.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928g2.htm)<br>|
| (3) | &nbsp;&nbsp; [<u>Notice dated December 18, 2020 to the Amended and Restated Custodian Agreement dated April 11, 2012 between</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99g3.htm)<br> [<u>State Street Bank and Trust Company and the Trust is incorporated herein by reference to Post-Effective Amendment</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99g3.htm)<br> [<u>No. 163 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 20, 2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99g3.htm)<br>|
| (h)(1) | &nbsp;&nbsp; [<u>Master Amended and Restated Securities Lending Authorization Agreement dated January 6, 2017 between the Trust,</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h1.htm)<br> [<u>State Street Institutional Investment Trust, State Street Master Funds and State Street Bank and Trust Company is</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h1.htm)<br> [<u>incorporated herein by reference to Post-Effective Amendment No. 154 to the Trust's Registration Statement on Form</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h1.htm)<br> [<u>N-1A filed with the Commission on December 19, 2017.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h1.htm)<br>|
| (2) | &nbsp;&nbsp; [<u>First Amendment dated December 7, 2018 to Master Amended and Restated Securities Lending Authorization</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h2.htm)<br> [<u>Agreement, dated January 6, 2017, between the Trust, State Street Institutional Investment Trust, State Street Master</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h2.htm)<br> [<u>Funds and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h2.htm)<br> [<u>No. 157 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 19, 2018.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h2.htm)<br>|
| (3) | &nbsp;&nbsp; [<u>Second Amendment dated February 8, 2022 to Master Amended and Restated Securities Lending Authorization</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h3.htm)<br> [<u>Agreement, dated January 6, 2017, between the Trust, State Street Institutional Investment Trust, State Street Master</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h3.htm)<br> [<u>Funds and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment No.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h3.htm)<br> [<u>164 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 19, 2022.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h3.htm)<br>|
| (4) | &nbsp;&nbsp; [<u>Third Amendment dated December 18, 2023 to Master Amended and Restated Securities Lending Authorization</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312524281240/d869743dex99h4.htm)<br> [<u>Agreement, dated January 6, 2017, between the Trust, State Street Institutional Investment Trust, State Street Master</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312524281240/d869743dex99h4.htm)<br> [<u>Funds and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment No.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312524281240/d869743dex99h4.htm)<br> [<u>166 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 18, 2024.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312524281240/d869743dex99h4.htm)<br>|
| (5) | &nbsp;&nbsp; [<u>Fourth Amendment dated April 3, 2025 to Master Amended and Restated Securities Lending Authorization</u>](d79608dex99h5.htm)<br> [<u>Agreement, dated January 6, 2017, between the Trust, State Street Institutional Investment Trust, State Street Master</u>](d79608dex99h5.htm)<br> [<u>Funds and State Street Bank and Trust Company is filed herewith.</u>](d79608dex99h5.htm)<br>|
| (6) | &nbsp;&nbsp; [<u>Reimbursement Agreement dated August 1, 2012 by and among the Trust and SSGA FM is incorporated herein by</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512503351/d448383dex9923h7.htm)<br> [<u>reference to Post-Effective Amendment No. 114 to the Trust's Registration Statement on Form N-1A filed with the</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512503351/d448383dex9923h7.htm)<br> [<u>Commission on December 14, 2012.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312512503351/d448383dex9923h7.htm)<br>|
| (7) | &nbsp;&nbsp; [<u>Transfer Agency and Service Agreement dated June 1, 2015 between DST Asset Manager Solutions, Inc. (f/k/a Boston</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515345791/d73293dex9928h11.htm)<br> [<u>Financial Data Services, Inc.), State Street Institutional Investment Trust and the Trust is incorporated herein by</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515345791/d73293dex9928h11.htm)<br> [<u>reference to Post-Effective Amendment No. 148 to the Trust's Registration Statement on Form N-1A filed with the</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515345791/d73293dex9928h11.htm)<br> [<u>Commission on October 16, 2015.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515345791/d73293dex9928h11.htm)<br>|
| (8) | &nbsp;&nbsp; [<u>Amendment dated September 23, 2016 to the Transfer Agency and Service Agreement dated June 1, 2015 between</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928h10.htm)<br> [<u>DST Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.), State Street Institutional Investment</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928h10.htm)<br> [<u>Trust and the Trust is incorporated herein by reference to Post-Effective Amendment No. 152 to the Trust's</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928h10.htm)<br> [<u>Registration Statement on Form N-1A filed with the Commission on December 19, 2016.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312516797412/d280277dex9928h10.htm)<br>|
| (9) | &nbsp;&nbsp; [<u>Amendment dated October 27, 2017 to the Transfer Agency and Service Agreement dated June 1, 2015 between DST</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h6.htm)<br> [<u>Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.), State Street Institutional Investment Trust</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h6.htm)<br> [<u>and the Trust is incorporated herein by reference to Post-Effective Amendment No. 154 to the Trust's Registration</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h6.htm)<br> [<u>Statement on Form N-1A filed with the Commission on December 19, 2017.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312517373778/d485611dex9928h6.htm)<br>|
| (10) | &nbsp;&nbsp; [<u>Amendment dated June 28, 2018 to the Transfer Agency and Service Agreement dated June 1, 2015 between DST</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h8.htm)<br> [<u>Asset Manager Solutions, Inc., (f/k/a Boston Financial Data Services, Inc.), State Street Institutional Investment Trust</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h8.htm)<br> [<u>and the Trust is incorporated herein by reference to Post-Effective Amendment No. 157 to the Trust's Registration</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h8.htm)<br> [<u>Statement on Form N-1A filed with the Commission on December 19, 2018.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h8.htm)<br>|
| (11) | &nbsp;&nbsp; [<u>Amended Schedule A dated August 6, 2019 to the Transfer Agency and Services Agreement dated June 1, 2015</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519277573/d815425dex9928h9.htm)<br> [<u>between DST Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.), State Street Institutional</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519277573/d815425dex9928h9.htm)<br> [<u>Investment Trust and the Trust is incorporated herein by reference to Post-Effective Amendment No. 159 to the Trust's</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519277573/d815425dex9928h9.htm)<br> [<u>Registration Statement on Form N-1A filed with the Commission on October 29, 2019.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519277573/d815425dex9928h9.htm)<br>|
| (12) | &nbsp;&nbsp; [<u>Amendment dated April 24, 2020 to the Transfer Agency and Service Agreement dated June 1, 2015 between DST</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928h9.htm)<br> [<u>Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.), State Street Institutional Investment Trust</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928h9.htm)<br> [<u>and the Trust is incorporated herein by reference to Post-Effective Amendment No. 162 to the Trust's Registration</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928h9.htm)<br> [<u>Statement on Form N-1A filed with the Commission on December 21, 2020.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312520322985/d23698dex9928h9.htm)<br>|
| (13) | &nbsp;&nbsp; [<u>Amendment dated February 10, 2021 to the Transfer Agency and Services Agreement dated June 1, 2015 between</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h10.htm)<br> [<u>DST Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.), State Street Institutional Investment</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h10.htm)<br> [<u>Trust and the Trust is incorporated herein by reference to Post-Effective Amendment No. 163 to the Trust's</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h10.htm)<br> [<u>Registration Statement on Form N-1A filed with the Commission on December 20, 2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h10.htm)<br>|

---

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| (14) | &nbsp;&nbsp; [<u>Amendment dated January 19, 2022 to the Transfer Agency and Service Agreement dated June 1, 2015 between DST</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h12.htm)<br> [<u>Asset Manager Solutions (f/k/a/ Boston Financial Data Services, Inc.) and the Trust is incorporated herein by</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h12.htm)<br> [<u>reference to Post-Effective Amendment No. 164 to the Trust's Registration Statement on Form N-1A filed with the</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h12.htm)<br> [<u>Commission on December 19, 2022.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h12.htm)<br>|
| (15) | &nbsp;&nbsp; [<u>DST Digital Solutions Services Master Agreement dated July 1, 2018 between DST Systems, Inc. and the Trust is</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519320564/d816955dex9928h9.htm)<br> [<u>incorporated herein by reference to Post-Effective Amendment No. 160 to the Trust's Registration Statement on Form</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519320564/d816955dex9928h9.htm)<br> [<u>N-1A filed with the Commission on December 20, 2019.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312519320564/d816955dex9928h9.htm)<br>|
| (16) | &nbsp;&nbsp; [<u>Master Sub-Administration Agreement between State Street Bank and Trust Company and SSGA FM dated June 1,</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928h10.htm)<br> [<u>2015 is incorporated herein by reference to Post-Effective Amendment No. 149 to the Trust's Registration Statement</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928h10.htm)<br> [<u>on Form N-1A filed with the Commission on December 17, 2015.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928h10.htm)<br>|
| (17) | &nbsp;&nbsp; [<u>Amendment dated June 29, 2018 to the Master Sub-Administration Agreement between State Street Bank and Trust</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h12.htm)<br> [<u>Company and SSGA FM is incorporated herein by reference to Post-Effective Amendment No. 157 to the Trust's</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h12.htm)<br> [<u>Registration Statement on Form N-1A filed with the Commission on December 19, 2018.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928h12.htm)<br>|
| (18) | &nbsp;&nbsp; [<u>Notice dated December 18, 2020 to the Master Sub-Administration Agreement dated June 29, 2018 between State</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h14.htm)<br> [<u>Street Bank and Trust Company and the Trust is incorporated herein by reference to Post-Effective Amendment No.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h14.htm)<br> [<u>163 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 20, 2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h14.htm)<br>|
| (19) | &nbsp;&nbsp; [<u>Administration Agreement between SSGA FM and the Registrant, dated June 1, 2015 is incorporated herein by</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928h11.htm)<br> [<u>reference to Post-Effective Amendment No. 149 to the Trust's Registration Statement on Form N-1A filed with the</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928h11.htm)<br> [<u>Commission on December 17, 2015.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312515406400/d101233dex9928h11.htm)<br>|
| (20) | &nbsp;&nbsp; [<u>Notice dated December 18, 2020 to the Administration Agreement dated June 1, 2015 between SSGA FM and the</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h16.htm)<br> [<u>Trust is incorporated herein by reference to Post-Effective Amendment No. 163 to the Trust's Registration Statement</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h16.htm)<br> [<u>on Form N-1A filed with the Commission on December 20, 2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99h16.htm)<br>|
| (21) | &nbsp;&nbsp; [<u>Indemnification Agreement dated September 15, 2022, between the Trust and the Board of Trustees is incorporated</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h19.htm)<br> [<u>herein by reference to Post-Effective Amendment No. 164 to the Trust's Registration Statement on Form N-1A filed</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h19.htm)<br> [<u>with the Commission on December 19, 2022.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312522308216/d397061dex99h19.htm)<br>|
| (22) | &nbsp;&nbsp; [<u>Indemnification Agreement dated March 2, 2023 is incorporated herein by reference to Post-Effective Amendment</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312523297704/d556288dex99h20.htm)<br> [<u>No. 165 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 18, 2023.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312523297704/d556288dex99h20.htm)<br>|
| (i)(1) | &nbsp;&nbsp; [<u>Legal Opinion of Counsel for S&P 500 Index Fund, Emerging Markets Fund and International Stock Selection Fund is</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>incorporated herein by reference as Exhibit 10(c) to Post-Effective Amendment No. 42 to the Trust's Registration</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>Statement on Form N-1A filed with the Commission on December 24, 1997.</u>](https://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br>|
| (2) | &nbsp;&nbsp; [<u>Legal Opinion of Counsel for Class A, I and K shares is incorporated herein by reference to Post-Effective</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312514247443/d745040dex9928i7.htm)<br> [<u>Amendment No. 140 to the Trust's Registration Statement on Form N-1A filed with the Commission on June 24,</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312514247443/d745040dex9928i7.htm)<br> [<u>2014.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312514247443/d745040dex9928i7.htm)<br>|
| (j) | [<u>Consent of Independent Registered Public Accountant - Ernst &Young LLP is filed herewith.</u>](d79608dex99j.htm) |
| (k) | Not applicable. |
| (l) | &nbsp;&nbsp; [<u>Initial Capital Agreements for S&P 500 Index Fund, Emerging Markets Fund and International Stock Selection Fund</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>is incorporated herein by reference as Exhibit 13(c) to Post-Effective Amendment No. 42 to the Trust's Registration</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br> [<u>Statement on Form N-1A filed with the Commission on December 24, 1997.</u>](http://www.sec.gov/Archives/edgar/data/826686/0000950146-97-001965.txt)<br>|
| (m)(1) | &nbsp;&nbsp; [<u>Plan of Distribution Pursuant to Rule 12b-1 dated January 8, 1992 and Restated as of April 9, 2002, as amended is</u>](https://www.sec.gov/Archives/edgar/data/826686/000104746904037726/a2147901zex-99_22m1.txt)<br> [<u>incorporated herein by reference to Post-Effective Amendment No. 86 to the Trust's Registration Statement on Form</u>](https://www.sec.gov/Archives/edgar/data/826686/000104746904037726/a2147901zex-99_22m1.txt)<br> [<u>N-1A filed with the Commission on December 20, 2004.</u>](https://www.sec.gov/Archives/edgar/data/826686/000104746904037726/a2147901zex-99_22m1.txt)<br>|
| (2) | &nbsp;&nbsp; [<u>Amended and Restated Rule 12b-1 Plan dated April 14, 2014, as amended May 17, 2018 is incorporated herein by</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928m2.htm)<br> [<u>reference to Pre-Effective Amendment No. 157 to the Trust's Registration Statement on Form N-1A filed with the</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928m2.htm)<br> [<u>Commission on December 19, 2018.</u>](http://www.sec.gov/Archives/edgar/data/826686/000119312518353346/d657681dex9928m2.htm)<br>|
| (n)(1) | &nbsp;&nbsp; [<u>Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 dated May 25, 2021, is incorporated herein by</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312523297704/d556288dex99n1.htm)<br> [<u>reference to Post-Effective Amendment No. 165 to the Trust's Registration Statement on Form N-1A filed with the</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312523297704/d556288dex99n1.htm)<br> [<u>Commission on December 18, 2023.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312523297704/d556288dex99n1.htm)<br>|
| (o) | &nbsp;&nbsp; [<u>Power of Attorney Relating to the Registrant, State Street Master Funds, State Street Institutional Investment Trust,</u>](d79608dex99o.htm)<br> [<u>State Street Navigator Securities Lending Trust, State Street Institutional Funds, State Street Variable Insurance Series</u>](d79608dex99o.htm)<br> [<u>Funds, Inc., Elfun Government Money Market Fund, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun</u>](d79608dex99o.htm)<br> [<u>Diversified Fund, Elfun International Equity Fund and Elfun Trusts dated January 21, 2025 is filed herewith.</u>](d79608dex99o.htm)<br>|
| (p)(1) | &nbsp;&nbsp; [<u>Code of Ethics Relating to the Principal Executive and Senior Financial Officers is incorporated herein by reference to</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312513477872/d638893dex9928p1.htm)<br> [<u>Post-Effective Amendment No. 130 to the Trust's Registration Statement on Form N-1A filed with the Commission on</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312513477872/d638893dex9928p1.htm)<br> [<u>December 18, 2013.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312513477872/d638893dex9928p1.htm)<br>|
| (2) | &nbsp;&nbsp; [<u>Code of Ethics Relating to the Principal Underwriter is incorporated herein by reference to Post-Effective Amendment</u>](http://www.sec.gov/Archives/edgar/data/826686/000095012310113838/b83667a1exv99w23p3.htm)<br> [<u>No. 104 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 15, 2010.</u>](http://www.sec.gov/Archives/edgar/data/826686/000095012310113838/b83667a1exv99w23p3.htm)<br>|
| (3) | &nbsp;&nbsp; [<u>Code of Ethics Relating to the Independent Board Members is incorporated herein by reference to Post-Effective</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99p3.htm)<br> [<u>Amendment No. 163 to the Trust's Registration Statement on Form N-1A filed with the Commission on December 20,</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99p3.htm)<br> [<u>2021.</u>](https://www.sec.gov/Archives/edgar/data/826686/000119312521362172/d192266dex99p3.htm)<br>|

---

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) [<u>Joint Code of Ethics of SSGA FM, effective March 31, 2025, is filed herewith.</u>](d79608dex99p4.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| EX-101.INS | &nbsp;&nbsp; XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL <br> tags are embedded within the inline XBRL document.<br>|
| EX-101.SCH | XBRL Taxonomy Extension Schema Document |
| EX-101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
| EX-101.DEF | XBRL Taxonomy Extension Definition Linkbase |
| EX-101.LAB | XBRL Taxonomy Extension Labels Linkbase |
| EX-101.PRE | XBRL Taxonomy Extension Presentation Linkbase |

---

**Item 29.**

**Persons Controlled By or Under Common Control With Registrant** 

See the Statement of Additional Information regarding the Trust's control relationships.

**Item 30.**

**Indemnification** 

Indemnification is provided to officers and Trustees of the Registrant pursuant to Section 6.4 of Article VI of the Registrant's Second Amended and Restated Master Trust Agreement, which reads as follows:

"Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered Person") against all liabilities, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and expenses, including reasonable accountants' and counsel fees, incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Trustee or officer, director or trustee, except with respect to any matter as to which it has been determined that such Covered Person had acted with willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office (such conduct referred to hereafter as "Disabling Conduct"). A determination that the Covered Person is entitled to indemnification may be made by (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified was not liable by reason of Disabling Conduct, (ii) dismissal of a court action or an administrative proceeding against a Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a review of the facts, that the indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of Trustees who are neither "interested persons" of the Trust as defined in section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act") nor parties to the proceeding, or (b) an independent legal counsel in a written opinion. Expenses, including accountants' and counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), may be paid from time to time by the Sub-Trust in question in advance of the final disposition of any such action, suit or proceeding, provided that the Covered Person shall have undertaken to repay the amounts so paid to the Sub-Trust in question if it is ultimately determined that indemnification of such expenses is not authorized under this Article VI and (i) the Covered Person shall have provided security for such undertaking, (ii) the Trust shall be insured against losses arising by reason of any lawful advances, or (iii) a majority of a quorum of the disinterested Trustees who are not a party to the proceeding, or an independent legal counsel in a written opinion, shall have determined, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the Covered Person ultimately will be found entitled to indemnification."

The Investment Advisory Agreement provides that, in the absence of negligence, bad faith or willful misconduct on the part of the Adviser in the performance of its obligations and duties under the Investment Advisory Agreement, reckless disregard by the Adviser of obligations and duties under the Investment Advisory Agreement, or a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services, the Adviser shall not be subject to liability to the Registrant or to any shareholder of the Registrant for any error of judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services under the Investment Advisory Agreement or for any losses that may be sustained in the purchase, holding, redemption or sale of any security on behalf of the Registrant.

The Distribution Agreement provides that, in the absence of negligence, bad faith or willful misconduct on the part of the Distributor in the performance of its obligations and duties under the Distribution Agreement, or reckless disregard by the Distributor of its obligations or duties under the Distribution Agreement, the Distributor shall not be subject to liability to the Registrant or to any shareholder of the Registrant for any error of judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services under the Distribution Agreement. The Distributor, each person who has been, is, or may hereafter be an officer, director, or employee or agent of the Distributor, and any person who controls the Distributor (within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act")) shall be indemnified by the Registrant from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which the Distributor, its officers or Trustees, or any such controlling person may incur under the

------

1933 Act or under common law arising out of or based upon any alleged untrue statement of a material fact contained in the Registration Statement, Prospectus or Statement of Additional Information or arising out of or based upon any alleged omission to state a material fact required to be stated in said documents or necessary to make the statements not misleading. The Registrant provides the following undertaking:

"Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue."

**Item 31.**

**Business and Other Connections of Investment Adviser** 

Any other business, profession, vocation or employment of a substantial nature in which each director or principal officer of each investment adviser is or has been, at any time during the last two fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee are as follows:

SSGA FM serves as the investment adviser for each series of the Trust. SSGA FM is a wholly-owned subsidiary of State Street Global Advisors, Inc., which itself is a wholly-owned subsidiary of State Street Corporation. SSGA FM and other advisory affiliates of State Street Corporation make up State Street Investment Management ("SSIM"), the investment management arm of State Street Corporation. The principal address of SSGA FM is One Congress Street, Boston, Massachusetts 02114. SSGA FM is an investment adviser registered under the Investment Advisers Act of 1940.

Below is a list of the directors and principal executive officers of SSGA FM and their principal occupation(s). Unless otherwise noted, the address of each person listed is One Congress Street, Boston, Massachusetts 02114.

---

| | |
|:---|:---|
| **Name** | **Principal Occupation** |
| Jeanne LaPorta | Chairperson, Director and President; Executive Vice President of SSIM |
| Sean Driscoll | Director of SSGA FM; Managing Director of SSIM |
| Apea Amoa | Director of SSGA FM; Chief Financial Officer of SSIM |
| Brian Harris | Chief Compliance Officer of SSGA FM; Managing Director of SSIM |
| Steven Hamm | Treasurer of SSGA FM; Vice President of SSIM |
| Sean O'Malley, Esq. | Chief Legal Officer of SSGA FM; General Counsel of SSIM |
| Ann M. Carpenter | Chief Operating Officer of SSGA FM; Managing Director of SSIM |
| Tim Corbett | Chief Risk Officer of SSGA FM; Senior Vice President/Senior Managing Director of SSIM |
| Christyann Weltens | Derivates Risk Manager; Vice President of SSIM |
| David Ireland | CTA Chief Marketing Officer; Senior Vice President/Senior Managing Director of SSIM |
| David Urman, Esq. | Clerk of SSGA FM; Vice President and Senior Counsel of SSIM |

---

**Item 32.**

**Principal Underwriters** 

(a) SSGA FD, One Congress Street, Boston, Massachusetts 02114, serves as the Trust's principal underwriter and also serves as the principal underwriter for the following investment companies: State Street Institutional Funds, State Street Variable Insurance Series Funds, Inc., SPDR Series Trust, SPDR Index Shares Funds, SSGA Active Trust, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun International Equity Fund, Elfun Government Money Market Fund, Elfun Trusts, Elfun Diversified Fund and State Street Institutional Investment Trust.

(b) To the best of the Trust's knowledge, the managers and executive officers of SSGA FD are as follows:

---

| | | |
|:---|:---|:---|
| **Name and Principal** <br> **Business Address\***<br>| **Positions and Offices with Underwriter** | **Positions and Offices** <br> **with the Trust**<br>|
| Jeanne LaPorta | Chairperson and Manager | Interested Trustee |
| Allison Bonds Mazza | President and Manager  | None |
| Editha V. Tenorio | Chief Financial Officer | None |
| Sean O'Malley | Chief Legal Officer | None |

---

------

---

| | | |
|:---|:---|:---|
| **Name and Principal** <br> **Business Address\***<br>| **Positions and Offices with Underwriter** | **Positions and Offices** <br> **with the Trust**<br>|
| Mark Trabucco | Chief Compliance Officer and Anti-Money Laundering Officer | None |
| Jessica Cross | Secretary | None |
| Sean Driscoll | Manager | None |
| David Maxham | Manager | None |
| Christine Stokes | Manager | None |
| John Tucker | Manager | None |

---

\*

The principal business address for each of the above managers and executive officers is One Congress Street, Boston, Massachusetts 02114.

(c) Not applicable.

**Item 33.**

**Location of Accounts and Records** 

The Registrant's Sub-Administrator, State Street Bank and Trust Company, One Congress Street, Boston, Massachusetts 02114, will maintain the physical possession of the books and records required by subsection (b)(4) of Rule 31a-1 under the 1940 Act. All other accounts, books and documents required by Rule 31a-1 are maintained in the physical possession of the Registrant's (i) investment adviser, SSGA FM, One Congress Street, Boston, Massachusetts 02114 or (ii) transfer agent, SS&C GIDS, Inc. SSGA Funds, 801 Pennsylvania Avenue, Suite 219737, Kansas City, MO 64105-1307; or (iii) Custodian, State Street Bank and Trust Company, One Congress Street, Boston, Massachusetts 02114.

**Item 34.**

**Management Services** 

Not applicable.

**Item 35.**

**Undertakings** 

Not applicable.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant, SSGA Funds (the "Trust") certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment No. 167 to its Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston and Commonwealth of Massachusetts on the 18th day of December, 2025.

---

| | |
|:---|:---|
| SSGA FUNDS | SSGA FUNDS |
| By: | /s/ Ann M. Carpenter |
|  | Ann M. Carpenter |
|  | President |

---

Pursuant to the requirements of the 1933 Act, this Registration Statement for the Trust has been signed below by the following persons in the capacities as indicated on the 18th day of December, 2025:

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Patrick J. Riley\* | Trustee | December 18, 2025 |
| Patrick J. Riley |  |  |
| /s/ Donna M. Rapaccioli\* | Trustee | December 18, 2025 |
| Donna M. Rapaccioli |  |  |
| /s/ Jeanne LaPorta\* | Trustee  | December 18, 2025 |
| Jeanne LaPorta |  |  |
| /s/ Margaret K. McLaughlin\* | Trustee  | December 18, 2025 |
| Margaret K. McLaughlin |  |  |
| /s/ George M. Pereira\* | Trustee  | December 18, 2025 |
| George M. Pereira |  |  |
| /s/ Mark E. Swanson\* | Trustee  | December 18, 2025 |
| Mark E. Swanson |  |  |
| /s/ Ann M. Carpenter | President (Principal Executive Officer)  | December 18, 2025 |
| Ann M. Carpenter | President (Principal Executive Officer)  |  |
| /s/ Bruce S. Rosenberg | &nbsp;&nbsp; Treasurer (Principal Accounting Officer) and Principal <br> Financial Officer | December 18, 2025 |
| Bruce S. Rosenberg | &nbsp;&nbsp; Treasurer (Principal Accounting Officer) and Principal <br> Financial Officer |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| \*By: | /s/ Edmund Gerard Maiorana, Jr. |
|  | Edmund Gerard Maiorana, Jr.<br> Attorney-in-Fact<br> Pursuant to Power of Attorney<br>|

---

\*

Signature affixed by Edmund Gerard Maiorana, Jr. pursuant to a power of attorney dated January 21, 2025.

------

**EXHIBIT INDEX** 

---

| | |
|:---|:---|
| **<u>Exhibit No.</u>** | **<u>Exhibit</u>** |
| (a)(5) | Amendment No. 4 to the Second Amended and Restated Master Trust Agreement |
| (d)(3) | Advisory Fee Waiver and Reimbursement Letter for Calendar Year Ending December 31, 2026 |
| (h)(5) | Fourth Amendment dated April 3, 2025 to Master Amended and Restated Securities Lending Authorization Agreement |
| (j) | Consent of Independent Registered Public Accountant |
| (o) | Power of Attorney dated January 21, 2025 |
| (p)(4) | Joint Code of Ethics of SSGA FM |

---

------

## Ex-99.(A)(5)

**SSGA FUNDS** 

**AMENDMENT NO. 4 TO** 

**THE SECOND AMENDED AND RESTATED MASTER TRUST AGREEMENT** 

**<u>Change of Principal Office</u>** 

AMENDMENT NO. 4 to the Second Amended and Restated Master Trust Agreement, dated May 15, 2012, as amended (the "Master Trust Agreement" or the "Agreement") of SSGA Funds (the "Trust") is made in Boston, Massachusetts as of this 11th day of September, 2025.

WHEREAS, Section 7.3 of the Master Trust Agreement of the Trust provides that the Agreement may be amended at any time, so long as such amendment does not adversely affect the rights of any shareholder of the Trust and so long as such amendment is not in contravention of applicable law, including the Investment Company Act of 1940, as amended, by an instrument in writing signed by an officer of the Trust pursuant to a vote of a majority of the Trustees; and

WHEREAS, the Trustees desire to amend the Agreement to update the Trust's principal office as permitted under Article I, Section 1.1 of the Agreement;

NOW, THEREFORE, the undersigned officer, pursuant to a vote of the majority of Trustees, hereby amends the Agreement as follows:

Effective as of September 22, 2025, the second sentence of the first paragraph of Section 1.1 of the Agreement is hereby amended in its entirety to read as follows:

"The principal office of the Trust shall be located at One Congress Street, Boston, Massachusetts 02114 or at such other location as the Trustees may from time to time dete1mine."

IN WITNESS WHEREOF, the undersigned hereunto has set her hand in the City of Boston, Commonwealth of Massachusetts, as of the 11<sup>th</sup> day of September, 2025.

---

| |
|:---|
| /s/ Ann M. Carpenter |
| Ann M. Carpenter |
| President of the Trust |

---

## Ex-99.(D)(3)

December 31, 2025

Mr. Bruce Rosenberg Treasurer

SSGA Funds

<sub>1</sub> Congress Street

Boston, Massachusetts 02214

RE: SSGA Funds Waiver and Reimbursement Agreement

Dear Mr. Rosenberg:

SSGA Funds Management, Inc. ("SSGA FM"), as investment adviser to each series of SSGA Funds (each a "Fund"), agrees until December 31, 2026:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. (i) to waive up to the full amount of the advisory fee payable by a Fund, and/or (ii) to reimburse a
Fund to the level of the expense limitation (exclusive of non-recurring account fees, extraordinary expenses, acquired fund fees and expenses and distribution, shareholder servicing and sub-transfer agency fees) as measured on an annualized basis for a Fund in the amounts shown in the following table:

---

| | |
|:---|:---|
| **Fund** | **Expense Limitation** |
|  State Street International Stock Selection Fund | 0.75% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. (i) to waive up to the full amount of the advisory fee payable by a Fund, and/or (ii) to reimburse a
Fund to the level of the expense limitation as measured on an annualized basis for a Fund in the amounts shown in the following table:

---

| | |
|:---|:---|
| **Fund** | **Expense Limitation** |
|  State Street S&P 500 Index Fund | 0.157% |

---

Each of the above stated fee waivers and/or expense reimbursements set forth in Sections (A) and (B) (i) supersedes any prior fee waiver and/or expense reimbursement for the applicable Fund and (ii) may only be terminated during the relevant period with the approval of the Funds' Board of Trustees. SSGA FM and a Fund Officer are authorized to take such actions as they deem necessary and appropriate to continue each of the above stated waivers and/or expense reimbursements for additional periods, including of one or more years, after the December 31, 2026 expiration date.

\*\*\*

Additionally, SSGA FM, as Administrator to each Fund in SSGA Funds, agrees to waive 0.01% of its administration fee. This waiver may not be terminated or modified except with the approval of the Funds' Board of Trustees and shall continue until at least December 31, 2026.

------

If these arrangements are acceptable to you, please sign below to indicate your acceptance and agreement and return a copy of this letter to me.

---

| |
|:---|
| Sincerely, |
| SSGA FUNDS MANAGEMENT, INC. |
| /s/ Ann M. Carpenter |
| By: |
| Ann Carpenter |
| Chief Operating Officer |
| Accepted and Agreed: |
| SSGA FUNDS,<br> on behalf of the Funds named above |
| /s/ Bruce Rosenberg |
| By: |
| Bruce Rosenberg<br> Treasurer |

---

## Ex-99.(H)(5)

**Execution Version** 

**FOURTH AMENDMENT TO MASTER AMENDED AND RESTATED** 

**SECURITIES LENDING AUTHORIZATION AGREEMENT** 

**Among** 

**SSGA FUNDS, STATE STREET INSTITUTIONAL INVESTMENT TRUST, and STATE STREET MASTER FUNDS** 

**EACH ON BEHALF OF EACH OF ITS RESPECTIVE SERIES** 

**AS LISTED ON <u>SCHEDULE B</u> OF THE AGREEMENT,** 

**SEVERALLY AND NOT JOINTLY,** 

**And** 

**STATE STREET BANK AND TRUST COMPANY** 

This Fourth Amendment (this "Amendment") dated April 3, 2025, is among SSGA FUNDS, STATE STREET INSTITUTIONAL INVESTMENT TRUST, and STATE STREET MASTER FUNDS, each an open-end management investment company, organized as a Massachusetts business trust, on behalf of each of its respective series as listed on Schedule B of the Agreement (defined below), severally and not jointly, each a registered management investment company organized and existing under the laws of Massachusetts (the "Trust") and STATE STREET BANK AND TRUST COMPANY ("State Street"). The Trust, acting on behalf of each of its series, a "Fund" and collectively, the "Funds".

Reference is made to the Master Amended and Restated Securities Lending Authorization Agreement dated as of January 6, 2017, between the Funds and State Street, as amended and in effect immediately prior to the date of this Amendment (the "Agreement").

**WHEREAS**, the Funds and State Street both desire to amend the Agreement as set forth in this Amendment;

**NOW, THEREFORE**, for value received, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually agree to amend the Agreement as follows:

1. **<u>Definitions</u>**. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Agreement.

2. **<u>Amendment</u>**. Schedule B (Funds) to the Agreement is hereby deleted in its entirety and replaced with the revised Schedule B attached to this Amendment.

3. **<u>Representations and Warranties</u>**. Each party hereto represents and warrants that (a) it has the legal right, power and authority to execute and deliver this Amendment, to enter into the transactions contemplated hereby, and to perform its obligations hereunder; (b) it has taken all necessary action to authorize such execution, delivery, and performance; (c) this Amendment constitutes a legal, valid, and binding obligation enforceable against it; and (d) the execution, delivery, and performance by it of this Amendment will at all times comply with all applicable laws and regulations.

4. **<u>Miscellaneous</u>**. Except to the extent specifically amended by this Amendment, the provisions of the Agreement shall remain unmodified, and the Agreement is ratified and affirmed as being in full force and effect. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts, together, constitute only one (1) instrument.

------

5. **<u>Governing Law</u>**. This Amendment shall be governed by and construed in accordance with the governing law of the Agreement.

6. **<u>Effective Date</u>**. This Amendment shall be effective as of the date first written above.

[Remainder of the Page Intentionally Left Blank.]

------

IN WITNESS WHEREOF, the parties hereto execute this Amendment as an instrument under seal by their duly authorized officers by affixing their signatures below.

---

| | |
|:---|:---|
| SSGA FUNDS, | SSGA FUNDS, |
| on behalf of each of its respective series as listed on <u>Schedule B</u>, severally and not jointly | on behalf of each of its respective series as listed on <u>Schedule B</u>, severally and not jointly |
| By: | /s/ Ann M. Carpenter |
|  | Name: Ann M. Carpenter |
|  | Title: President |
| STATE STREET INSTITUTIONAL INVESTMENT TRUST, on behalf of each of its respective series as listed on <u>Schedule B</u>, severally and not jointly | STATE STREET INSTITUTIONAL INVESTMENT TRUST, on behalf of each of its respective series as listed on <u>Schedule B</u>, severally and not jointly |
| By: | /s/ Ann M. Carpenter |
|  | Name: Ann M. Carpenter |
|  | Title: President |
| STATE STREET MASTER FUNDS, on behalf of each of its respective series as listed on <u>Schedule B</u>, severally and not jointly | STATE STREET MASTER FUNDS, on behalf of each of its respective series as listed on <u>Schedule B</u>, severally and not jointly |
| By: | /s/ Ann M. Carpenter |
|  | Name: Ann M. Carpenter |
|  | Title: President |
| STATE STREET BANK AND TRUST COMPANY | STATE STREET BANK AND TRUST COMPANY |
| By: | /s/ David Kim |
|  | Name: David Kim |
|  | Title: Managing Director |

---

------

*Execution Version* 

**Schedule B** 

This Schedule is attached to and made part of the Master Amended and Restated Securities Lending Authorization Agreement, dated the 6th day of January, 2017 among SSGA FUNDS, STATE STREET INSTITUTIONAL INVESTMENT TRUST, and STATE STREET MASTER FUNDS, EACH ON BEHALF OF EACH OF ITS RESPECTIVE SERIES AS LISTED ON SCHEDULE B, SEVERALLY AND NOT JOINTLY (the "Funds"), and STATE STREET BANK AND TRUST COMPANY acting either directly or through the State Street Affiliates (collectively, "State Street").

---

| | | | |
|:---|:---|:---|:---|
| **Portfolio Name** | **Taxpayer**<br>**Identification<br>Number** | **Fund<br>Code** | **Tax Year-End** |
| **SSGA Funds** |  |  |  |
| SSGA S&P 500 Index Fund | 91-1577830 | 2D05 | 8/31 |
| State Street Disciplined Emerging Markets Equity Fund | 91-1627434 | 2D09 | 8/31 |
| SSGA International Stock Selection Fund | 91-1672181 | 2D18 | 8/31 |
| **State Street Institutional Investment Trust** |  |  |  |
| State Street Equity 500 Index II Portfolio | 46-5692696 | K1B1 | 12/31 |
| State Street Equity 500 Index Fund | 04-3526811 | DVKS | 12/31 |
| State Street Global Equity ex-U.S. Index Portfolio | 46-5658677 | K1B2 | 12/31 |
| State Street Global Equity ex-U.S. Index Fund | 47-1194530 | K1X1 | 12/31 |
| State Street Aggregate Bond Index Portfolio | 36-4787514 | K1B3 | 12/31 |
| State Street Aggregate Bond Index Fund | 47-1236263 | K1Z1 | 12/31 |
| State Street Target Retirement 2020 Fund | 46-5741847 | K1C1 | 12/31 |
| State Street Target Retirement 2025 Fund | 46-5762161 | K1C2 | 12/31 |
| State Street Target Retirement 2030 Fund | 47-0967468 | K1C3 | 12/31 |
| State Street Target Retirement 2035 Fund | 47-0979972 | K1C4 | 12/31 |
| State Street Target Retirement 2040 Fund | 47-0992196 | K1C5 | 12/31 |
| State Street Target Retirement 2045 Fund | 47-1007658 | K1C6 | 12/31 |
| State Street Target Retirement 2050 Fund | 47-1040943 | KlC7 | 12/31 |
| State Street Target Retirement 2055 Fund | 47-1047870 | KlC8 | 12/31 |
| State Street Target Retirement 2060 Fund | 47-1058479 | K1C9 | 12/31 |
| State Street Target Retirement 2065 Fund | 84-4180801 | KlF0 | 12/31 |
| State Street Target Retirement 2070 Fund | 33-1340252 | K1AY | 12/31 |
| State Street Target Retirement Fund | 47-1089949 | K1D0 | 12/31 |
| State Street Hedged International Developed Equity Index Fund | 47-3451787 | K1D8 | 12/31 |
| State Street Small/Mid Cap Equity Index Portfolio | 47-4317378 | K1B5 | 12/31 |
| State Street Small/Mid Cap Equity Index Fund | 47-4381614 | K1E2 | 12/31 |
| State Street Emerging Markets Equity Index Fund | 47-4363541 | KlE3 | 12/31 |
| State Street International Value Spotlight Fund | 81-3041499 | K1E7 | 12/31 |
| State Street Balanced Index Fund | 93-2983891 | K1ZB | 12/31 |
| **State Street Master Funds** |  |  |  |
| State Street International Developed Equity Index Portfolio | 81-1763602 | K1B7 | 12/31 |

---

## Ex-99.(J)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the references to our firm under the captions "Financial Highlights" in the Prospectus and "Counsel and Independent Registered Public Accounting Firm" in the Statements of Additional Information, each dated December 30, 2025, and each included in this Post-Effective Amendment No. 167 on the Registration Statement (Form N-1A, File No. 33-19229) of SSGA funds (the "Registration Statement").

We also consent to the incorporation by reference of our reports, dated October 21, 2025, with respect to State Street S&P 500 Index Fund and State Street International Stock Selection Fund (two of the funds constituting SSGA funds) included in the Annual Reports to Shareholders (Form N-CSR) for the year ended August 31, 2025, into this Registration Statement filed with the Securities and Exchange Commission.

---

| |
|:---|
| ![LOGO](g79608g1203093148527.jpg) |
| Boston, Massachusetts |
| December 18, 2025 |

---

## Ex-99.(O)

**SSGA FUNDS** 

**STATE STREET MASTER FUNDS** 

**STATE STREET INSTITUTIONAL INVESTMENT TRUST** 

**STATE STREET NAVIGATOR SECURITIES LENDING TRUST** 

**STATE STREET INSTITUTIONAL FUNDS** 

**STATE STREET VARIABLE INSURANCE SERIES FUNDS, INC.** 

**ELFUN GOVERNMENT MONEY MARKET FUND** 

**ELFUN TAX-EXEMPT INCOME FUND ELFUN INCOME FUND** 

**ELFUN DIVERSIFIED FUND** 

**ELFUN INTERNATIONAL EQUITY FUND** 

**ELFUN TRUSTS** 

**POWER OF ATTORNEY** 

Each of the undersigned Directors/Trustees and Officers of SSGA Funds, State Street Master Funds, State Street Institutional Investment Trust, State Street Navigator Securities Lending Trust, State Street Institutional Funds, State Street Variable Insurance Series Funds, Inc., Elfun Government Money Market Fund, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun Diversified Fund, Elfun International Equity Fund and Elfun Trusts (each, a "Fund Entity" and collectively, the "Fund Entities"), as applicable, hereby constitutes and appoints David Barr, Esq., Andrew DeLorme, Esq., Chad C. Hallett, Arthur A. Jensen, Edmund Gerard Maiorana, Jr., Sean O'Malley, Esq., Bruce S. Rosenberg, David Urman, Esq., Julie Lee, Esq., and Francine Hayes, Esq., and each of them singly with full powers of substitution and resubstitution, as his or her true and lawful attorney-in-fact and agent, to execute in his or her name and on his or her behalf, and in any and all capacities indicated below, the Registration Statements on Form N-1A, and any and all amendments (including post-effective amendments) thereto, and all other documents, filed by any of the applicable Fund Entities or their affiliates with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940, as amended, and (as applicable) the Securities Act of 1933, as amended (collectively, the "Acts"), and any and all instruments which such attorneys and agents, or any of them, deem necessary or advisable to enable any of the applicable Fund Entities or their affiliates to comply with such Acts, the rules, regulations and requirements of the SEC, the securities, Blue Sky law and/or corporate/trust laws of any state or other jurisdiction, the Commodity Futures Trading Commission, and the regulatory authorities of any foreign jurisdiction, including all documents necessary to ensure each of the applicable Fund Entities has insurance and fidelity bond coverage, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC and such other jurisdictions, and the undersigned hereby ratifies and confirms as his or her own act and deed any and all acts that such attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. Any one of such attorneys and agents has, and may exercise, all of the powers hereby conferred. The undersigned hereby revokes any Powers of Attorney previously granted with respect to any of the applicable Fund Entities concerning the filings and actions described herein. This Power of Attorney shall become invalid with respect to any undersigned Director/Trustee or Officer of each Fund Entity upon such Director's/Trustee's or Officer's retirement, resignation or removal as a Director/Trustee or Officer of such Fund Entity.

If it is determined by a court of competent jurisdiction that any provision of this Power of Attorney is invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Power of Attorney. This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument.

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IN WITNESS WHEREOF, the undersigned has hereunto set their hands as of the 21<sup>st</sup> day of January 2025.

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| | |
|:---|:---|
| **SIGNATURE** | **TITLE** |
| /s/ Jeanne LaPorta | Director/Trustee |
| Jeanne LaPorta |  |
| /s/ Margaret K. McLaughlin | Director/Trustee |
| Margaret K. McLaughlin |  |
| /s/ George M. Pereira | Director/Trustee |
| George M. Pereira |  |
| /s/ Donna M. Rapaccioli | Director/Trustee |
| Donna M. Rapaccioli |  |
| /s/ Patrick J. Riley | Director/Trustee |
| Patrick J. Riley |  |
| /s/ Mark E. Swanson | Director/Trustee |
| Mark E. Swanson |  |
| /s/ Ann M. Carpenter | President and Principal Executive Officer |
| Ann M. Carpenter |  |
| /s/ Bruce S. Rosenberg | Treasurer and Principal Financial and Accounting Officer |
| Bruce S. Rosenberg |  |

---

## Ex-99.(P)(4)

![LOGO](g79608g21g21.jpg)

**Code of Ethics** 

**Effective March 31, 2025** 

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**Table of Contents** 

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| | |
|:---|:---|
|  Overview | 3 |
|  Covered Person Classifications | 4 |
|  Code of Ethics Rule Summary | 5 |
|  Statement of General Fiduciary Principles | 6 |
|  Related Policies and Procedures | 6 |
|  General Requirements | 7 |
|  Personal Trading Requirements – Accounts and Holdings | 8 |
|  Reportable Accounts Guide | 10 |
|  Personal Trading Requirements – Transactions | 12 |
|  Exempted Transactions | 15 |
|  Pre-Clearance | 16 |
|  Personal Trading Requirements – Pre-Clearance | 16 |
|  Administration and Enforcement of the Code of Ethics | 20 |

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**Appendices** 

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| | |
|:---|:---|
|  Appendix A – Terms and Definitions | 21 |
|  Appendix B – Beneficial Ownership of Accounts and Securities | 23 |
|  Appendix C – Guide: Requirements by Security Types | 25 |
|  Appendix D – Country Specific Requirements | 27 |
|  Appendix E – Contacts | 28 |
|  Appendix F – Code of Ethics Reporting Requirements | 29 |
|  Appendix G – Code of Ethics FAQs | 30 |

---

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**The Purpose of this Code of Ethics** 

State Street Global Advisors<sup>+</sup> (the "Firm") will not tolerate misuse of information made available to us for the purpose of making investment decisions or providing advice to our clients. To do so would be a breach of trust that our clients place in us and may also breach securities laws.

**What is the Code of Ethics?** 

The State Street Global Advisors Code of Ethics (the "Code") is designed to promote compliance with regulations that apply to our business and to ensure Firm personnel meet expected standards of conduct. The Code is supplemental to the State Street Standard of Conduct, and Firm personnel are required to comply with both.

In certain countries outside the US, local laws, regulations or customs may impose additional requirements. **Personnel located in countries outside the US must also refer to Appendix D for information on those additional requirements.**

The Conduct Risk Management Office administers this Code in coordination with State Street Global Advisors' Chief Compliance Officer ("CCO").

&nbsp;&nbsp; <br> **Questions about the Code?**<br>Contact the Conduct Risk<br> Management Office**: <u>ethics@statestreet.com</u>**<br>

&nbsp;&nbsp; <br> **Definitions for some of the terms used in this Code of Ethics are provided in Appendix A.**<br>

**Who is subject to the Code of Ethics?** 

The Code of Ethics applies to you if:

• You are a full-time or part-time employee at State Street Global Advisors;

• You are a contingent worker at State Street Global Advisors and have been notified that you are subject to the Code of Ethics;

• You are an officer of the registered investment companies managed\* by SSGA Funds Management, Inc. ("SSGA FM") who is not employed by the Firm, but is employed by another business unit with access to Firm
data such as non-public information regarding any client's purchase or sale of securities, non-public information regarding any client's portfolio holdings,
or non-public securities recommendations made to clients; or

• The Conduct Risk Management Office has designated you as a person subject to the Code of Ethics.

For the purposes of the remainder of this document, those personnel who are subject the Code of Ethics will be called "Covered Persons".

**Your family members may also be subject to the Code of Ethics.** 

If you are a Covered Person, the requirements of this Code also apply to people related to you, such as spouses, domestic partners, minor children, financial dependents, including adult children and other relatives living in your household if they are financially dependent on you, as well as other persons designated as Covered Persons by the CCO or the Conduct Risk Management Office, or their designee(s).

+ For purposes of this Code of Ethics, "State Street Global Advisors" refers to all State Street Global Advisors legal entities globally.

\* This excludes registered investment companies for which SSGA FM serves as sub-adviser.

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**Covered Person Classifications** 

As a Covered Person, you are either an **Access Person**, **Investment Person**, or **Non-Access Person**. Your classification is determined by your access to information. The Conduct Risk Management Office will notify you of your classification. Your classification may change as your responsibilities and access to information change. It is your responsibility to notify the Conduct Risk Management Office if your role or level of access to information changes.

**Access Person** Access Persons are those Covered Persons who:

• as part of their regular functions or duties have access to non-public information about a client's holdings, or a client's previous securities transactions; have
access to non-public information about Firm portfolio holdings; or manage or are managed by employees who execute these functions;

• are officers of the funds; or

• have been designated as Access Persons by the Firm's CCO or the Conduct Risk Management Office.

**Investment Person** Investment Persons are Covered Persons who are involved in or have access to the investment decision-making process, or who have access to information regarding pending securities transactions, or decisions to buy or sell securities on behalf of clients. Investment Persons include those Covered Persons who:

• as part of their regular functions or duties, make investment recommendations or decisions on behalf of client portfolios; participate in making investment recommendations or decisions on behalf of client portfolios;
are responsible for day-to-day management of a client or proprietary fund portfolio; have knowledge of or access to investment decisions under consideration for a client
or proprietary fund portfolio; execute trades on behalf of client or proprietary fund portfolios; have access to information regarding pending trades; analyze and research securities on behalf of

client or proprietary fund portfolios; have access to information regarding pending trade orders for any client or proprietary fund portfolio; have access to or knowledge of changes in investment recommendations; have access to mathematical models used by the Firm as basis for investment strategy for client or proprietary fund portfolios; or manage or are managed by employees who execute those functions; or <br>

• other persons designated as Investment Persons by the Firm's CCO or the Conduct Risk Management Office.

&nbsp;&nbsp; <br> **Examples of Investment Persons** include, but are not limited to, portfolio managers, research analysts, IT and Operations professionals with certain systems access, and Investment Risk personnel.<br>

**Non-Access Persons** are Covered Persons who are not categorized as Access Persons or Investment Persons.

&nbsp;&nbsp; <br> **Unsure what classification applies to you?**<br>The Conduct Risk Management Office will notify you of your classification, which is based on your responsibilities and level of access to information at the Firm.<br>Dual employees may also be subject to the State Street Securities Trading policy and/or the Global Personal Investment Policy.<br>Contact the Conduct Risk Management Office at <u>ethics@StateStreet.com</u> if you have questions.<br>

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**Code of Ethics Rule Summary** 

Refer to the list below to understand which rules apply to you based on your Covered Person Classification. Read the full text of the Code of Ethics to fully understand the requirements and prohibitions, as well as any exceptions to these rules.

**All Covered Persons** 

**Required** 

• Ensure compliance with the Code on the part of your spouse, domestic partner or other Covered Persons [p. 3]

• Comply with applicable securities laws [p. 7]

• Acknowledge the Code of Ethics when you become a Covered Person and annually thereafter [p. 7]

• Report accounts and holdings when you become a Covered Person and annually thereafter [p. 8]

• Report or confirm transactions quarterly [p. 12]

• Maintain accounts at Approved Brokers if required in your region [p. 9]

• Provide duplicate statements and confirmations to the Conduct Risk Management Office [p. 8]

• Report any actual, attempted, or suspected violation of this policy as soon as you are aware of it [p. 7]

• Obtain pre-approval from the Conduct Risk Management Office before
participating in investment clubs [p. 13]

• Contact the Conduct Risk Management Office for any exemption to this Code of Ethics [p. 20]

• Understand if and how the State Street Securities Trading Policy applies to you [p. 15]

**Prohibited** 

• Do not misuse client or proprietary fund information, or State Street proprietary information for personal gain
[p. 14]

• Do not trade excessively [p. 13]

• Do not sell securities short [p. 13]

• Do not trade options or futures on Covered Securities or engage in spread-betting [p. 13]

Do not participate in Initial Public Offerings [p. 13]

**Access Persons** 

**Required** 

• Follow all above rules for Covered Persons

• Pre-Clear trades in Covered Securities [p. 16]

**Prohibited** 

• Do not sell or dispose of positions in Covered Securities for a profit that have been held for less than 60 days
[p. 14]

**Investment Persons** 

**Required** 

• Follow all the above rules for Covered Persons and for Access Persons

**Prohibited** 

• Do not personally trade Covered Securities when there is an open order on any trading desk for a client portfolio
or fund for the same or similar security (Open Order Rule) [p. 17]

• Do not personally trade Covered Securities within seven days (before or after) of a trade in the same or
equivalent security in a client portfolio with which you are associated (Blackout Period) [p. 17]

• Research Analysts: Do not personally trade Covered Securities in proximity to a recommendation you have made or
to which you have access (Research Analyst Waiting Period) [p. 18]. This Rule applies regardless of the direction of trade, nature of recommendation, or amount traded.

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**Statement of General Fiduciary Principles** 

State Street Global Advisors, its subsidiaries and affiliates, and the officers of the Funds owe a fiduciary duty to their advisory clients (including the Funds) and are subject to certain laws and regulations governing personal securities trading. As a Covered Person, you have an obligation to adhere to the following principles:

• At all times, avoid placing your personal interest ahead of the interests of the clients or Funds of the Firm;

• Avoid actual and potential conflicts of interests between personal activities and the activities of the Firm's clients or Funds;

• Do not misappropriate investment opportunities from clients or Funds;

• Do not employ or engage in any device, scheme, artifice, act, course of business, or manipulative practice to defraud clients or Funds; and

• Do not make untrue or misleading statements that defraud clients or Funds.

As such, your personal financial transactions and related activities, along with those of your family members and other Covered Persons, must be conducted consistently with this Code, including the principles herein, to avoid any actual or potential conflicts of interest with the Firm's clients or funds, or abuse of your position of trust and responsibility.

When making personal investment decisions, you must ensure that you do not violate the letter or the spirit of this Code. We have developed this Code to promote the highest standards of behavior and ensure compliance with applicable laws. The Code sets forth procedures and limitations that govern the personal securities transactions of every Covered Person.

**Related Policies and Procedures** 

All employees of the Firm are required to comply with the following key policies and procedures, which set forth ethical standards required of all Firm personnel. This is not an exhaustive list of State Street or State Street Global Advisors Policies or Procedures to which employees are subject.

**State Street Corporate Policies and Procedures** 

• Standard of Conduct

• Gifts and Entertainment Policy

• Political Contributions and Activities Policy

• Outside Activities Policy

• Conflicts of Interest Policy

• Anti-Corruption and Bribery Policy

• Conduct Standards Policy

• Inside Information Standard

**State Street Global Advisors Policies and Procedures** 

• Inside Information/Information Barriers Policy and Procedure

• Global Conflicts of Interest Procedure

• Anti-Corruption and Bribery Procedure

Note: Policies and related procedures or guidance may be revised from time to time. Employees will find the most up-to-date policies on the intranet.

It is not possible for this Code to address every situation involving the personal trading of Covered Persons. The Conduct Risk Management Office is charged with oversight and interpretation of the Code in a manner considered fair and equitable, in all cases placing the Firm's clients' interests first.

&nbsp;&nbsp; <br> It is not enough to only comply with the technical aspects of the Code – **it is every Covered Person's responsibility to ensure their personal investments do not, in any way, compromise the Firm's fiduciary duty to any client.**<br>If you are not certain whether it is appropriate to trade, then do not trade. If you are unsure whether a personal investment matter meets the required ethical standard, contact the Conduct Risk Management Office.<br>

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**Requirements of the Code** 

**General Requirements** 

Applicable to All Covered Persons

**001.** **Comply with Applicable Securities Laws** 

As a Covered Person, you must comply with securities laws and firm-wide policies and procedures, including this Code of Ethics. Securities laws include the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the SEC under these statutes, the Bank Secrecy Act and rules adopted there under by the SEC or the Department of the Treasury. Covered Persons outside the US may be subject to additional country-specific requirements and securities laws, which are included in Appendix D.

**002.** **Report Violations** 

Covered Persons are required to promptly report any violation of the Code, whether their own or another individual's, to the Conduct Risk Management Office. Alternatively, you may contact the Senior Compliance Officer in your region, the CCO, or, to report anonymously, The Speakup Line (see Appendix E for contact information).

Nothing in the Code is intended to or should be understood to prohibit or otherwise discourage certain disclosures of confidential information protected by "whistleblower" laws to appropriate government authorities. State Street will not tolerate any discipline or other retaliation against employees who properly make such legally-protected disclosures.

&nbsp;&nbsp; <br> **Keep in mind**<br>Our policies and procedures and the Code of Ethics may be more restrictive than applicable securities laws.<br>

**003.** **Certify Receipt and Compliance with the Code** 

*Initial Certification (New Covered Person)* 

Within 10 calendar days of becoming subject to the Code, each new Covered Person must certify in writing that they (i) have read, understand, and will comply with the Code, (ii) will promptly report violations or possible violations, and (iii) recognize that an employee conduct issue related to the Code may be grounds for action under the *State Street Conduct Standards Policy.*

*Annual Certification (All Covered Persons)* 

Each Covered Person is required to certify annually in writing that they (i) have read and understand the Code, (ii) have complied with the Code during the course of their association with the Advisor; (iii) will continue to comply with the Code in the future; (iv) will promptly report violations or possible violations, (iv) recognize that an employee conduct issue with the Code may be grounds for action under the *State Street Conduct Standards Policy*.

&nbsp;&nbsp; <br> **Certification Required**<br>Covered persons are required to certify to the Code of Ethics <u>within 10 days</u> of becoming subject to the Code of Ethics and on an <u>annual</u> basis.<br>

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**Personal Trading Requirements – Accounts and Holdings** 

Applicable to All Covered Persons

You must disclose all Reportable Accounts (as defined on page 10) when you become a Covered Person and continue to make accurate and timely account and holding reports. If you are an employee in the US, you must maintain your account(s) with an Approved Broker. Employees in other regions are encouraged to maintain accounts with "Preferred Brokers" where available. All Covered Persons must ensure the Conduct Risk Management Office receives timely and accurate reporting from your broker.

**004.** **File Initial and Annual Holding Reports** 

Covered Persons must file initial and annual holdings reports ("Holdings Reports") in StarCompliance as follows:

a. Content of Holdings Reports

i. The name of any broker, dealer or bank with whom the Covered Person maintained a Reportable Account. Please
note that all Reportable Accounts (see page 10) must be reported in StarCompliance.

ii. The title, number of shares and principal amount of each Covered Security.

b. Timing of Holdings Reports

i. Initial Report – No later than 10 calendar days after becoming a Covered Person. The information must be
current as of a date no more than 45 days prior to the date the Covered Person became an Access Person, Investment Person, or Non-Access Person.

ii. Annual Report – Annually, within 30 calendar days following calendar year end, and the information must
be current as of a date no more than 45 calendar days prior to the date the report is submitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

c. Exceptions from Holdings Report Requirements

i. Holdings in securities which are not Covered Securities are not required to be included in Holdings Reports
(please see Appendix C).

Any Reportable Accounts opened during the Covered Person's employment or engagement with the Firm must also be immediately disclosed in StarCompliance regardless of whether there is any activity in the account. Any Reportable Accounts and holdings that become newly associated with a Covered Person through marriage, gift, inheritance, or any other life event, must be disclosed within 30 days of the event.

**005.** **Provide Duplicate Statements and Confirms** 

Each Covered Person is responsible for ensuring the Conduct Risk Management Office receives timely reporting for their Reportable Accounts holdings, (as well as timely reporting for transactions of Covered Securities within the Reportable Account). This applies to any Reportable Accounts (including Fully Managed Accounts) active during the Covered Person's employment or engagement with the Firm. Covered Persons must ensure that on a regular basis the Conduct Risk Management Office or their designee(s) receives account statements (e.g. monthly, quarterly statements) listing all transactions for the reporting period. (See Section 007 – Filing Quarterly Transaction Reports.)

The Covered Person can accomplish this one of two ways:

a. Maintain Reportable Accounts at Approved Brokers (or Preferred Brokers for employees based in non-US jurisdictions, where available). Approved Brokers and Preferred Brokers send electronic feeds to the Conduct Risk Management Office; Covered Persons are not required to provide paper-based reporting for
accounts with Approved Brokers or Preferred Brokers. However, it

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is the responsibility of the Covered Person to verify the accuracy of these feeds through Quarterly Transaction Reports and Annual Holdings Reports. Employees in the US, with limited exceptions, are required to maintain their accounts at Approved Brokers. (See Section 006- Maintain Accounts with Approved Brokers.)

b. For accounts not on an electronic feed, the Covered Person must supply the Conduct Risk Management Office with
required duplicate documents. Please see Appendix D for regional requirements.

**006.** **Maintain Accounts with Approved Brokers (US Employees) or Preferred Brokers (Non-US employees)** 

Unless an exemption applies, Covered Persons must maintain accounts with Approved Brokers or Preferred Brokers if required in their region. Please refer to the Personal Securities Trading FAQs on the Conduct Risk Management sharepoint site for regional requirements and for a list of Approved Brokers. The Approved Brokers provide both the holdings and transaction activity in each account through an electronic feed into StarCompliance.

The categorical exemptions to the Approved Broker and Preferred Broker requirement are:

a. Accounts approved by the Conduct Risk Management Office as Fully Managed Accounts (also known as Discretionary
Accounts. See Appendix A.)

b. Accounts that are part of a former employer's retirement plan (such as a 401(k)); or accounts that are
part of a spouse's or other Covered family member's retirement plan at their employer.

c. Employees who are not US citizens and are working in the US on an ex-pat assignment or whose status is non-permanent resident.

d. Securities held in physical form.

e. Securities restricted from transfer.

f. Accounts held by employees, or any Covered Persons, in countries outside the

region where they are currently assigned, which are not eligible for transfer to an Approved or Preferred Broker in that region.

To apply for an exception to maintain an account outside of an Approved Broker, contact the Conduct Risk Management Office at <u>ethics@statestreet.com</u>.

Please see Appendix D for additional regional requirements.

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**Reportable Accounts Guide** 

To determine whether an account is a Reportable Account, determine who owns or benefits from the account *and* what types of investments the account can hold. If you have a beneficial interest in an account and the account can hold Covered Securities, it is likely a Reportable Account.

**What is a Beneficially Owned Account?** 

A Beneficially Owned Account is:

• An account where the Covered Person enjoys the benefits of ownership (even if title is held in another name); and/or

• An account where the Covered Person, either directly or indirectly, has investment control or the power to vote or influence the transaction decisions of the account.

Generally, an individual is considered to be a beneficial owner of accounts or securities when the individual has or shares direct or indirect pecuniary interest in the accounts or securities. Pecuniary interest means that an individual has the ability to profit, directly or indirectly, or share in any profit from a transaction. Indirect pecuniary interest extends to, but is not limited to:

• Accounts and securities held by immediate family members sharing the same household;

• Securities held in trust (certain restrictions may apply, see Appendix B for more details); and

• A right to acquire Covered Securities through the exercise or conversion of any derivative security, whether or not presently exercisable

**No Reporting Required** 

• Checking and savings accounts holding only cash

• Government-subsidized pension saving products

• Pension Accounts established under the Hong Kong regulation or Singapore Regulation with **no capacity** to invest in Covered Securities

• Savings Plans within the course of company pension schemes which only allow unaffiliated open-end mutual funds

• Educational Savings Plans which only allow unaffiliated open-end mutual funds

• Other Registered Commingled Funds (such as IRC 529 Plans in the US)

**When in doubt, contact the Conduct Risk Management Office <u>ethics@statestreet.com</u>** 

**What are Covered Securities?** 

For a complete list of Covered Securities, see Appendix C. Some of the most common types are listed below.

• Stocks, including State Street Corp. ("STT")

• Exchange-traded funds ("ETFs")

• Exchange-traded notes ("ETNs")

• Open-ended mutual funds advised by the Firm

• Municipal and Corporate bonds

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Do I Have to Report this Account?**<br>![LOGO](g79608g31g31.jpg) <br>**Common Reportable Account Types**<br>The list of account types below is not all-inclusive. Consult the Conduct Risk Management Office if you have questions about whether an account is a Reportable Account.<br>• **Brokerage Account**<br>All brokerage accounts are reportable, including but not limited to retirement accounts, non-retirement accounts, IRAs, RRSPs, UTMA and UGMA accounts. For further definition see Appendix A.<br>• **Employee Incentive Awards Deposit Account Provided by the Firm**<br>Accounts that are provided to employees into which their Employee Incentive Awards are deposited are reportable.<br>• **Employee Stock Ownership and Purchase Plans ("ESOPs"/ "ESPPs")**<br>• **Employer-sponsored Retirement Plans that invest/hold Covered Securities**<br>| **Practical Examples of Beneficial Ownership**<br>**See Appendix B for a more detailed discussion of Beneficial Ownership. For the purposes of this sidebar, "you" includes you, your spouse or domestic partner, or anyone else in your household who would be covered by the Code of Ethics, as discussed on page 3.**<br>**UGMA/UTMA Accounts**<br>If you are the custodian of an UGMA/UTMA account for a minor, and one or both of you is a parent of the minor, you are a beneficial owner. If you are the beneficiary of an UGMA/UTMA and are of majority age, you are a beneficial owner.<br>**Education Accounts**<br>If you are the custodian of an Education Savings Account (ESA), or Coverdell IRA, you are a beneficial owner.<br>**Trusts**<br>If you are a trustee <u>or</u> the settlor of the trust who can independently revoke the trust and participate in making investment decisions for the trust, you are a beneficial owner.<br>If you are a beneficiary of the trust but have no investment control, the account is beneficially owned as of the date the trust is distributed, not before.<br>**Investment Powers over an Account**<br>If you have any form of investment control, such as trading authorization or power of attorney, the account is beneficially owned as of the date you are able to direct or participate in the trading decisions. |

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Employer-sponsored retirement plans and accounts globally in which the employee/participant invests in or transacts in Covered Securities are reportable. Please see Appendix G "Code of Ethics FAQs" for further clarification on Reportable Retirement Plans.

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**Personal Trading Requirements – Transactions** 

Applicable to All Covered Persons

The Code of Ethics requires quarterly reporting of all Covered Transactions and imposes restrictions on certain types of transactions.

**007.** **Filing Quarterly Transaction Reports** 

Each Covered Person is required to submit a quarterly transaction report for and certify to transactions during the calendar quarter in all Covered Securities. Each Covered Person shall also certify that the Reportable Accounts listed in the transaction report are the only Reportable Accounts in which Covered Securities were traded during the quarter for their direct or indirect benefit. For the purposes of this report, transactions in Covered Securities that are effected in Automatic Investment Plans or accounts approved by the Conduct Risk Management Office as Fully Managed Accounts need not be reported.

Covered Persons must file quarterly transaction reports ("Transaction Reports") in StarCompliance

a. Quarterly Transactions Report For Transactions in Covered Securities are reported on a standardized form in
StarCompliance that identifies the date, security, price, volume, amount, and effecting broker of each Covered Security transaction.

b. Quarterly Transactions Report For Newly Established Reportable Accounts reported in StarCompliance Holding ANY
Securities (provided there were transactions during the quarter) include the broker dealer or bank with whom the reportable account is held, the date the account was opened, and the date the report was submitted to the Conduct Risk Management
Office.

c. Timing of Transactions Report: No later than 30 calendar days after the end of the calendar quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

d. Exception from Transactions Report Requirements

i. Transactions effected pursuant to an Automatic Investment Plan as well as transactions in securities that are
not Covered Securities,

ii. Transactions effected in accounts that are not Reportable Accounts are not required to be included in the
Quarterly Transaction Report (please see Appendix C), and

iii. Transactions effected in a previously-approved Fully Managed Account.

e. Confirmation of Trades

i. Employees must confirm their transactions in StarCompliance after execution and before or simultaneously with
their quarterly transaction certification.

ii. If an electronic feed has been set up for broker account (e.g. Fidelity account), the trading data will flow
automatically to StarCompliance overnight, however, it is still the employee's responsibility to maintain accurate data in StarCompliance and it is best practice to check whether electronic feeds were accurate by checking records in
StarCompliance prior to completing a quarterly certification.

f. State Street Employee Incentive Stock Awards

i. STT employee incentive stock awards must be treated as Covered Securities. Employees receiving awards during a
quarter should ensure any awards vested during the quarter are appropriately reflected in their holdings, and

ii. All employees must preclear  **<u>any</u>** transactions in STT (note, STT employee incentive awards are not
subject to the 60 day profit prohibition when they become vested).

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**008.** **Excessive Trading** 

Excessive trading may interfere with job performance or compromise the duty that the Firm owes to clients and consequently is not permitted. Levels of personal trading will be monitored by the Conduct Risk Management Office and high levels of personal trading will be reported to senior management. A pattern of excessive trading may lead to action under the *State Street Conduct Standards Policy*.

**009.** **Futures, Options, Contracts for Difference, and Spread Betting** 

Covered Persons are prohibited from buying or selling options and futures on Covered Securities (other than employee stock options). Covered Persons are also prohibited from engaging in Contracts for Difference ("CFDs") and spread betting related to Covered Securities.

**010.** **Shorting of Securities** 

Covered Persons are prohibited from selling securities short.

**011.** **Initial Public Offerings** 

Covered Persons are prohibited from acquiring securities through an allocation by an underwriter of an initial public offering ("IPO"). An exception may be considered for situations where the spouse/domestic partner/partner of a Covered Person ("PACs") is eligible to acquire shares in an IPO of his/her employer with prior written disclosure to and written approval from the Conduct Risk Management Office.

**012.** **Private Transactions** 

Covered Persons must obtain prior written approval from the Conduct Risk Management Office before participating in a Private Placement or any other private securities transaction. To request prior approval, Covered Persons must provide the Conduct Risk Management Office with a completed Private Placement Request form, which is available on StarCompliance.

If the request is approved, the Covered Person must confirm the transaction in StarCompliance, verify the details on the next

Quarterly Transaction Report, and report the holding on the Annual Holdings Report. If the transaction has already been loaded to the Covered Person's Transaction report, the Covered Person must confirm the transaction in the Quarterly Transaction Report.

Covered Persons may not invest in Private Transactions if the opportunity to invest could be considered a favor or gift designed to influence the Covered Person's judgment in the performance of his/her job duties, or as compensation for services rendered to the issuer, or if there are any other potential conflicts of interest with State Street business. In determining whether to grant approval for any investment for a Private Transaction, the Conduct Risk Management Office will consider, among other things, whether it would be possible (and appropriate) to reserve that investment opportunity for one or more of the Firm's clients, as well as whether the opportunity to invest has been offered to the Covered Person as a gift, or as compensation for services rendered.

See Appendix A for definitions.

**013.** **Investment Clubs and Investment Contests** 

Covered Persons must obtain prior written approval from the Conduct Risk Management Office before participating in an Investment Club. If approved, the brokerage account(s) of the Investment Club are subject to the Approved Broker, pre-clearance and reporting requirements of the Code. Sharing research or other proprietary information obtained through employment with State Street with Investment Club participants is prohibited.

Covered Persons are prohibited from direct or indirect participation in an investment contest. These prohibitions extend to the direct or indirect acceptance of payment or offers of payments of compensation, gifts, prizes, or winnings as a result of participation in such activities.

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**014.** **Use of the Firm's Proprietary Information** 

The Firm's investment recommendations and other Proprietary Information are for the exclusive use of the Firm and may not be used to inform employees' personal investment decisions. Examples of Proprietary Information include but are not limited to:

• Information about Firm or issuer business strategies, technologies, or ideas;

• client or proprietary transactions;

• changes to recommended portfolio weightings, portfolio composition, or target prices for any security;

• voluntary actions to be taken on any corporate actions;

• research produced by employees of the Firm that could influence client investment decisions, such as employees' recommendations maintained in internal databases ; or

• any other information that may reasonably be expected could influence an investor's decision-making that has not been made public without violation of law or our policies.

The definition of Proprietary Information does not include information that has been made public or comes from a service that broadly disseminates published information, such as Bloomberg. You should always assume that information is confidential, and treat it as such, unless it is clearly indicated otherwise. It is our responsibility to protect Proprietary Information and Confidential Information against unintentional, malicious, or unauthorized disclosure or misuse. Any pattern of personal trading suggesting misuse of proprietary information may be investigated. Any misuse or distribution of information that is proprietary, confidential, or non-public is prohibited.

Applicable to Access Persons and Investment Persons

**015.** **Short-Term Trading** 

All Access Persons and Investment Persons are prohibited from profiting from the purchase and sale (or sale and purchase) of the same or equivalent Covered Security within sixty (60) calendar days. Transactions that result in a profit will be considered an employee conduct issue and may result in action under *the State Street Conduct Standards Policy*. Any profit amount shall be calculated by the Conduct Risk Management Office or their designee(s), the calculation of which shall be binding. The following will not be matched with other purchases and sales for purposes of this provision:

a. Transactions in securities that are not Covered Securities such as money market funds (see Appendix C);

b. Transactions in ETFs, except certain actively-managed SSGA ETFs (see Appendix C);

c. Securities received as a gift or inheritance that cannot be matched to another transaction effected by a
Covered Person within 60 days;

d. Involuntary actions such as vested employer stock awards, dividend reinvestments, or other corporate actions;

e. Cashless exercise of a Covered Person's employer stock options

f. Transactions executed in Fully Managed Accounts that have been approved by the Conduct Risk Management Office;
or

g. Transactions effected through an Automatic Investment Plan, the details of which the Conduct Risk Management
Office has been notified of in advance.

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**Exempted Transactions** 

Pre-clearance is **not required** for certain common transactions.

**Automatic Investment Plans** 

*Prior Notification to Conduct Risk Management Office Required* 

Purchases or sales that are part of an Automatic Investment Plan where the investment decisions are non-discretionary after the initial selections by the account owner (although the initial selection requires pre-clearance). These include dividend reinvestment plans, payroll and employer contributions to retirement plans, transactions in Employee Stock Ownership Programs ("ESOPs") and similar services. Initiation of an Automatic Investment Plan must be disclosed to the Conduct Risk Management Office in advance.

**Certain Exempt Covered Securities**

Transaction(s) in Covered Securities for which the Conduct Risk Management Office has determined pre-clearance is not required (see Appendix C).

**Discretionary Accounts (Fully Managed Accounts)** 

*Prior Approval from Ethics Office Required* 

Subject to prior approval of the account from the Conduct Risk Management Office, transactions made in a Discretionary Account. An account will not be deemed a Discretionary Account until the Conduct Risk Management Office has approved the account as such.

**Certain Educational Savings Plans** 

Transactions in educational savings plans that only allow unaffiliated open-end mutual funds, unit-investment trusts, or other registered commingled products (such as IRC 529 Plans in the US).

**Involuntary Transactions** 

**Involuntary** purchases or sales such as mandatory tenders, dividend reinvestments, broker disposition of fractional shares, debt maturities. **Voluntary** tenders, transactions executed as a result of a margin call, and other non-mandatory corporate actions are to be pre-cleared, unless the timing of the action is outside the control of the Covered Person, or the Conduct Risk Management Office has determined pre-clearance is not required for a particular voluntary transaction.

**Gifts or Inheritance** 

Covered Securities received via a gift or inheritance, although such Covered Securities must be reported in StarCompliance. Note that pre-clearance is required prior to giving or donating Covered Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**016.** **State Street Securities** 

Each Covered Person must ensure that they have reported any Reportable Account holding State Street securities, and that they have reported in StarCompliance any vested State Street shares acquired through an employee incentive award. During certain trading windows, employees may be permitted to exercise Employee Incentive Awards without being subject to the Blackout and Open Order rules (page 17). **However, these transactions remain subject to the pre-clearance and reporting requirements of the Code at all times**. Employees will be notified when a trading window commences and terminates. During this period, all employees remain subject to the *State Street Global Advisors Inside Information/Information Barrier Policy and Procedure*, as well as the Personal Trading section of the State Street Standard of Conduct.

Additionally, certain employees of the Firm are subject to the State Street Securities Trading Policy ("SSTP") and will be notified of this by the Conduct Risk Management Office. Employees subject to SSTP must also comply with all notifications under that Policy.

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**Pre-Clearance** 

The Pre-Clearance requirement mitigates the risk of creating actual or perceived conflicts of interest with the trading activities made on behalf of Firm clients. **With limited exceptions, pre-clearance approval is required before you make any personal trades of Covered Securities.**

It applies to all your Reportable Accounts, including those belonging to, or in which, your spouse or other Covered family member has an economic interest or control. (See Appendix B)

It applies to transactions in most types of securities, including transactions in State Street Corp. stock (STT). (See Appendix C)

![LOGO](g79608g36g36.jpg)

**Personal Trading Requirements – Pre-Clearance** 

Applicable to Access Persons and Investment Persons

You are required to receive pre-clearance approval before trading in any Covered Security, with limited exceptions. This applies to transactions made by your spouse, other Covered family member and/or in any other accounts in which you or they have beneficial ownership or control.

**017.** **Pre-Clearance** 

Access Persons and Investment Persons must request and receive pre-clearance approval prior to effecting a personal transaction in all Covered Securities (see Appendix C).

a. All pre-clearance requests must be made by submitting a Trade Request
for the amount of shares to be transacted in StarCompliance.

b. Pre-clearance is required for donations and/or gifts of securities
made.

Trade requests may be approved or denied at the discretion of the Conduct Risk Management Office, In general, a transaction will be denied if the Covered Security is on any relevant Restricted List or if the Conduct Risk Management Office has reason to believe that the Covered Person has access to relevant information concerning the security or the issuer that is intended for the sole purpose of the Firm or its clients. **If the Covered Person has access to such information, it is the Covered Person's responsibility not to seek pre-clearance nor to trade in the security even if pre-clearance approval has been granted**. For Investment Persons, a transaction may also be denied if the Covered Security is actively being purchased or sold for a client account or account of a Fund, or the Covered Security has been traded within seven days in a portfolio for which they have management discretion.

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**018.** **Restricted List** 

To manage potential conflicts of interest, lists of issuers whose securities (including options and futures) may not be traded are integrated into the pre-clearance approval process. A security that you already own could be placed on a Restricted List at any time. If this happens, you may be unable to sell the security until it is removed from any Restricted List. Employees are not entitled to review any Restricted List.

The contents of any Restricted Lists shall be considered material non-public information and is subject to the considerations of the *Inside Information/Information Barrier Policy and Procedure*.

**019.** **Pre-Clearance Approval** 

Pre-clearance approval granted by the Conduct Risk Management Office is valid only for the same business day the approval is granted and is ineffective on all dates where the relevant Exchange is not open for business. Make note of any expiration time and date displayed on any approved Trade Request. Because approvals are strictly time-limited, place day orders only. "Good-till-cancelled" orders are not permitted, including stop-loss, limit, and stop-limit orders other than day orders. This is a result of the pre-clearance function relying upon point-in-time data in order to have any effect.

Applicable to Investment Persons

**020.** **Open Order Rule** 

Subject to the de minimis transaction threshold (Section 023-De Minimis Transactions), Investment Persons may not trade in a Covered Security, with the exception of ETFs, on any day that the Firm, globally, has a pending buy or sell order in the same Covered Security on any of the trading desk(s) for any client or proprietary fund portfolio until the order is executed or withdrawn (note: Executed trades are considered with regards to the Blackout Period, as outlined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **By seeking pre-clearance, you are attesting that you understand that the proposed trade:**<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Is not influenced by any non-public information that is proprietary or confidential to State Street or to our clients<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Does not create any conflict with State Street's responsibilities to its clients<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Is lawful<br>If you are not certain whether it is appropriate to trade, then do not trade. Contact the Conduct Risk Management Office at <u>Ethics@StateStreet.com</u> for guidance prior to placing any order to trade.<br>

**021.** **Blackout Period for Investment Persons** 

Subject to the de minimis transaction threshold described below, Investment Persons may not buy or sell a Covered Security for seven calendar days before or after a transaction in the same or equivalent security for a client or proprietary fund portfolio with which they are associated. An employee is considered "associated" with a client or proprietary fund portfolio if they have ability to exercise, or direct, trades for the portfolio.

All Covered Persons are required to avoid placing their personal interest ahead of the interests of the clients of the Firm. Investment Persons associated with portfolios must be particularly careful not to engage in personal trading that calls into question whether they have placed their interests ahead of the interest of their clients. Trading in securities personally in advance of similar trades made by the respective Portfolio may lead to questions about the Covered Person's priorities. In such cases, it will be incumbent upon the Covered Person to demonstrate that the clients' priorities were not subordinated to their own priorities. Similarly, failing to trade in a security for a Portfolio because of a personal trade that has recently been made is also a subordination of client interest. Covered Persons with responsibility for portfolios finding themselves needing to violate the Blackout Period in order to avoid placing their personal interest ahead of the clients' interest must inform the Conduct Risk Management Office. Such violations are subject to action under the State Street Conduct Standards Policy.

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**022.** **Waiting Period for Research Analysts** 

Research Analysts with access to tools containing proprietary buy or sell recommendations, who receive internal communications regarding buy or sell recommendations, or participate in investment meetings where buy or sell recommendations are discussed, must refrain from trading in securities that are the subject of such recommendations for their personal account if it could reasonably be presumed that such information was relevant to an investment decision. Examples of recommendations that could reasonably be presumed to be relevant to investment decisions on behalf of client portfolios include but are not limited to buy or sell recommendations, internal analyst upgrades or downgrades related to an issuer, changes to recommended portfolio weightings, portfolio composition, or target prices for any security, or recommendations regarding voluntary corporate actions. Examples of information that are not presumed to be relevant to investment decisions include market analyses, economic updates, or financial updates regarding an issuer that do not also include a buy/sell recommendation or ratings analysis. Research Analysts who trade Covered Securities for their personal account should expect heightened monitoring

of such trades. If there is a reason to question whether such trades were made on the basis of confidential or proprietary non-public information, it will be incumbent upon the Covered Person to demonstrate otherwise.

Please see Appendix D for additional regional requirements.

**023.** **De Minimis Transactions** 

De Minimis transactions are subject to the pre-clearance and reporting requirements of the Code, and must follow all holding period and Restricted List requirements of this Code. However, there is a limited exclusion applied for De Minimis transactions in that they are not subject to the Open Order Rule or the Blackout Rule as described above. This exclusion exists because of the breadth and frequency with which securities are being traded across all of the portfolios of the Firm, which would effectively prohibit almost all equity trading by Investment Persons.

A "De Minimis transaction" is a personal trade that meets one of the following conditions: A single transaction in a security with a value equal to or less than US $10,000 (or the local country equivalent) or multiple transactions in a security within a five business day window following the initial trade date (i.e. initial trade date plus five subsequent business days) that have an aggregate value equal to or less than US $10,000.

<u>De Minimis Transaction Examples: (*All values are in US Dollars)*</u>

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| | | |
|:---|:---|:---|
| **Status** | **Transaction(s)** | **Notes** |
| De minimis | Day One: Buy $10,000 of ABC, Inc. | No subsequent transactions in the following five business days |
| De minimis | Day One: Sell $4,000 of XYZ Corp.<br> Day Two: Sell $3,000 of XYZ Corp.<br> Day Four: Sell $800 of XYZ Corp. | Within five business days, less than $10,000 worth of XYZ Corp. is sold; all transactions in the aggregate are under the de minimis threshold |
| NOT de minimis | Day One: Buy $9,500 of PQR, Inc.<br> Day Three: Buy $1,000 of PQR, Inc. | Day Three transaction is not considered de minimis, as it brings the total for the five business day window after the initial trade date over $10,000 |
| NOT de minimis\* | Day One: Sell $9,000 of Acme Corp.<br> Day Six: Sell $1,500 of Acme Corp. | Day Six transaction is not considered de minimis, as it brings the total for the five business day window following the initial trade date over $10,000 |

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\* Day One is the initial trade date and Day 6 is the fifth business day following the initial trade date.

StarCompliance will calculate whether a transaction meets the De Minimis thresholds and will take this into account when determining whether to approve or deny a personal trade.

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**024.** **Additional Requirements for Fundamental Equity Investment Persons** 

Investment Persons on Fundamental Equity Teams are required to obtain the respective Asset Class CIO's approval before transacting in single name equities and securities that can convert to single name equities for their personal accounts, including but not limited to transactions in stock, preferred stock, warrants, and any security convertible to an equity. This additional preapproval requirement includes the purchase of new positions and purchase of additional shares of existing positions, with the exception of dividend reinvestments and other involuntary corporate actions. With prior approval from the Conduct Risk Management Office, exceptions from the additional preapproval requirement may be allowed for Fully Managed Accounts. Prior approval can also be requested to transact in securities directly through an employer stock plan or employer stock options, or in circumstances of hardship.

Pre-approvals provided by Asset-Class CIOs will be effected after a trade pre-clearance request has been approved in StarCompliance. Upon receipt of the StarCompliance approval email, the employee shall forward the approval to the appropriate CIO and cc GA_Compliance_CIO_CodeReview. The employee shall provide the Asset Class CIO with any relevant information regarding the trade request. The CIO will review the request and "reply all" when approving or denying the request. Employees may not trade if the request has been denied by Conduct Risk Management Office via StarCompliance or by the CIO. Pre-approvals provided by Asset-Class CIOs expire at the same time and date noted on the StarCompliance pre-approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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**Administration and Enforcement of the Code** 

The Code of Ethics is administered by the Conduct Risk Management Office and reviewed and approved by State Street Global Advisors' Global Fiduciary and Conduct Committee. Violations of the Code are subject to consideration under the conduct standards framework and the *State Street Conduct Standards Policy.*

**025.** **Distribution of the Code** 

Each new Covered Person will be given a copy of the Code. Each new employee's offer letter will include a statement advising the individual that he/she will be subject to the Code if he/she accepts the offer or employment. If, outside the US due to local employment practices it is necessary to modify this approach, then the offer letters will be revised in accordance with local law.

**026.** **Applicability of the Code of Ethics' Provisions** 

The Conduct Risk Management Office has the discretion to determine that the provisions of the Code do not apply to a specific transaction or activity and may exempt any transaction from one or more trading prohibitions. The Conduct Risk Management Office will review applicable facts and circumstances of such situations, such as specific legal requirements, contractual obligations or financial hardship. Any Covered Person who would like such consideration must submit a request in writing to the Conduct Risk Management Office. Further, all granted exemptions must be in writing.

**027.** **Review of Reports** 

The Conduct Risk Management Office shall review and monitor reports filed by Covered Persons. Covered Persons and their supervisors may or may not be notified of the Conduct Risk Management Office's review.

<sup>1</sup> In the US, recordkeeping requirements for code of ethics are set forth in Rule 17j-1 of the Investment Company Act of 1940 and Rule 204-2 of the Investment Advisers Act of 1940.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**028.** **Violations and Sanctions** 

Any potential employee conduct issues related to the provisions of the Code may be investigated. If a determination is made that an employee conduct issue occurred, the issue will be addressed under the *State Street Conduct Standards Policy*. Where consistent with applicable law, and among other appropriate sanctions that should be considered, sanctions may include a requirement to disgorge an amount equivalent to profits earned or losses avoided as a result of personal trading made in egregious violation of the Code. Material violations will be reported promptly to the respective Firm Committees, boards of trustees/managers of the Reportable Funds or relevant committees of the boards and, when relevant, impacted clients. Please see Appendix D for additional regional requirements.

**029.** **Amendments and Committee Procedures** 

The Global Fiduciary and Conduct Committee ("the Committee") will review and approve the Code, including appendices and exhibits, and any amendments thereto. The Committee may, from time to time, amend the Code and any appendices and exhibits to the Code to reflect updated business practice or changes in applicable law and regulation. In addition, the Committee, or its designee, shall submit any material amendments to this Code to the respective boards of trustees/managers of the Reportable Funds, or their designee(s), for ratification no later than six months after adoption of the material change.

**030.** **Recordkeeping** 

The Conduct Risk Management Office shall maintain records in accordance with the requirements set forth in applicable securities laws.<sup>1</sup>

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Appendix A

Terms and Definitions

These definitions are designed to help you, as a Covered Person, understand and apply the Code. These definitions are integral and a proper comprehension of them is necessary to comply with the Code.

Please contact the Conduct Risk Management Office (<u>ethics@statestreet.com</u>) if you have any questions.

**Covered Person** employees of the Firm, including full-time and part-time, exempt and non-exempt employees (where applicable); officers of the Funds who are not employed by the Firm; and other such persons as designated by the Conduct Risk Management Office. Covered Person also includes certain designated contingent workers engaged at the Firm, including but not limited to consultants, contractors, and temporary help, as well as an employee of another business unit with access to Firm data such as non-public information regarding any client's purchase or sale of securities, non-public information regarding any client's portfolio holdings, or non-public securities recommendations made to clients (SSGS APAC, corporate functions, etc.).

Covered Persons are subject to the provisions of this Code. The personal trading requirements of the Code also apply to related persons of Covered Persons, such as spouses, domestic partners, minor children, adult children and other relatives living in the Covered Person's household, as well as other persons designated as a Covered Person by the CCO or the Conduct Risk Management Office, or their designee(s).

**Automatic Investment Plan** means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. This includes a dividend reinvestment plan and some payroll or employer contributions to retirement plans.

**Brokerage Account** means an account with a financial institution in which the account owner can hold or trade a wide variety of securities and

exercises brokerage capabilities. Covered Persons should contact their financial institution(s) to verify whether or not their account(s) can hold Covered Securities.

**Covered Securities** are those securities subject to certain provisions of the Code. See Appendix C - Guide: Requirements by Security Types.

**Contract for Difference** ("CFD") a financial derivative, a contract between two parties typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. If the difference is negative, then the buyer pays instead to the seller. CFD allows investors to take advantage of prices moving up (long positions) or prices moving down (short positions) on underlying financial instruments and are often used to speculate on those markets.

**Employees Incentive Awards** means Firm Performance Equity Plan ("PEP") Awards in State Street Corporation ("STT") stock, Deferred Stock Awards ("DSAs"), Restricted Stock Awards ("RSAs"), STT stock options which are granted to employees, and any other awards that are convertible into or otherwise based on STT common stock.

**Fully Managed Account (also known as Discretionary Account)** means an account Beneficially Owned by you or your Related Persons in which you or your Related Persons have ceded all direct control, influence, and approval, and have contractually assigned responsibility for the timing and nature of all trades and all day-to-day investment management decisions to an independent party. For the purpose of this Policy, the Conduct Risk Management Office is required to approve in advance account arrangements qualifying as Fully Managed Accounts.

**Private Transaction** means a securities offering that is executed outside of a recognized securities exchange. Examples of private transactions include private placements, co-operative investments in real estate, commingled investment vehicles such as hedge funds, investments in family owned or privately held businesses, private company shares, and Initial Coin or Token Offerings promoted by a

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Decentralized Autonomous Organization ("DAO")<sup>2</sup> where there is investment in a venture or project for expectation of profit. Time-shares and cooperative investments in real estate used as a primary or secondary residence are not considered to be private placements.

**Reportable Fund** means any commingled investment vehicle (except money market funds), or Exchange Traded Note ("ETN") for which the Firm act as investment advisor, sub-advisor, principal underwriter, or marketing agent.

**Selling Short** is the practice of selling a stock that is not currently owned, while simultaneously borrowing the shares from a lending party and delivering the borrowed shares to the buyer.

**State Street Global Advisors Compliance Department** means all global Firm compliance staff, including those in local offices, in charge of ensuring compliance with the laws and regulations in force worldwide and who report up to the Chief Compliance Officer of the Firm.

**Spread Betting** is any of various types of wagering, such as on sports, financial instruments or house prices for example, on the outcome of an event where the pay-off is based on the accuracy of the wager, rather than a simple "win or lose" outcome. As an example, spread betting on a stock allows the investor to speculate on the price movement of the stock.

<sup>2</sup> A "virtual" organization embodied in computer code and executed on a distributed ledger of blockchain.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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Appendix B

Beneficial Ownership of Accounts and Securities

**A Beneficially Owned Account is:** 

• An account where the Covered Person enjoys the benefits of ownership (even if title is held in another name); and/or

• An account where the Covered Person either directly or indirectly, has investment control or the power to vote or influence the transaction decisions of the account.

The Code's provisions apply to accounts beneficially owned by the Covered Person, as well as accounts under direct or indirect influence or control of the Covered Person.

Generally, an individual is considered to be a beneficial owner of accounts or securities when the individual has or shares direct or indirect pecuniary interest in the accounts or securities. Pecuniary interest means that an individual has the ability to profit, directly or indirectly, or share in any profit from a transaction. Indirect pecuniary interest extends to, but is not limited to:

• Accounts and securities held by immediate family members sharing the same household;

• Securities held in trust (certain restrictions may apply); and

• A right to acquire Covered Securities through the exercise or conversion of any derivative security, whether or not presently exercisable.

Practical Application

**If an adult child is living with his or her parents:** If the child is living in the parents' house, but does not financially support the parent, the parents' accounts and securities are not beneficially owned by the child. If the child works for the Firm and does not financially support the parents, accounts and securities owned by the parents are not subject to the Code, with the exception of UGMA/UTMA, or similar types of accounts, which are legally owned by the child. If one or both parents work for the Firm, and the child is supported by the parent(s), the child's accounts and securities are subject to the Code because the parent(s) is a beneficial owner of the child's accounts and securities.

**Co-habitation (domestic partnership or PACS):** Domestic partnerships or PACS are generally considered to be permanent, committed arrangements. Accounts where the Covered Person is a joint owner are subject to the Code. If the Covered Person contributes to the maintenance of the household and the financial support of the partner, the partner's accounts and securities are beneficially owned by the Covered Person and are therefore subject to the Code.

**Co-habitation (roommate):** Generally, roommates are presumed to be temporary and have no beneficial interest in one another's accounts and securities.

**UGMA/UTMA and similar types of accounts:** If the Covered Person or the Covered Person's spouse or other Covered family member is the custodian for a minor child, the account is beneficially owned by the Covered Person. If someone other than the Covered Person, or the Covered Person's spouse or other Covered family member, is the custodian for the Covered Person's minor child, the account is not beneficially owned by the Covered Person. If a Covered Person is the minor/beneficiary of the account, the account is a Reportable Account.

**Transfer on Death accounts ("TOD accounts"):** TOD accounts where the Covered Person receives the interest of the account upon death of the account owner are not beneficially owned by the

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Covered Person until the account transfer occurs (this particular account registration is not common).

**Trusts** 

• If the Covered Person is the trustee for an account where the beneficiaries are not immediate family members, the position should be reviewed in light of outside business activity reporting requirements and generally
will be subject to a case-by-case review for Code applicability.

• If the Covered Person is a beneficiary and does not share investment control with a trustee, the Covered Person is not a beneficial owner until the Trust assets are distributed.

• If a Covered Person is a beneficiary and can make investment decisions without consultation with a trustee, the trust is beneficially owned by the Covered Person.

• If the Covered Person is a trustee and a beneficiary, the trust is beneficially owned by the Covered Person.

• If the Covered Person is a trustee, and a family member is beneficiary, then the account is beneficially owned by the Covered Person.

• If the Covered Person is a settler of a revocable trust, the trust is beneficially owned by the Covered Person.

• If the Covered Person's spouse/domestic partner is trustee and beneficiary, a case-by-case review will be performed to determine
applicability of the Code.

**College age children:** If a Covered Person has a child in college and still claims the child as a dependent for tax purposes, the Covered Person is a beneficial owner of the child's accounts and securities.

**Powers of Attorney:** If a Covered Person has been granted durable or conditional power of attorney over an account, the Covered Person is not the beneficial owner of the account until such time as the power of attorney is exercised. If a Covered Person has been granted full power of attorney over an account, the account is a

Reportable Account. Beneficial ownership runs until revocation/termination of the power of attorney.

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![LOGO](g79608g45g45.jpg)

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![LOGO](g79608g46g46.jpg)

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Appendix D

Country Specific Requirements

All Countries

**Personal Data**

Refer to the Global Privacy and Personal Data Protection Standard (Standard) for the minimum requirements on how to handle and protect personal data in all jurisdictions in which State Street operates. Also reference the regional addenda to the Standard for any laws of a specific country that may require additional privacy or data protection measures.

Australia

**Additional Blackout Period** 

From time to time the Responsible Entity ("RE") of the Australian domiciled Exchange Traded Funds (ETFs) may determine certain Covered Persons could be in possession of material, non-public information relating to one or more ETFs for which State Street Global Advisors, Australia, Limited is the investment advisor, and request a blackout period covering the securities be implemented, whether due to consideration of Australian Securities Exchange listing rules, the insider trading provisions of the Corporations Act 2001 or similar. Typically this may occur during the two weeks prior to the public announcement of income distributions for an ETF.

Upon receipt of a request from the RE, Compliance will review the request and may initiate a blackout period over the relevant ETFs on such terms as are deemed appropriate. Covered Persons to whom a blackout period applies will be advised of the commencement, duration and other specifics of any such blackout period. Any trading in contravention of the blackout period will be treated as an employee conduct issue.

Japan

**Holding Period** 

Covered Persons in Japan are subject to a minimum holding period of 6 months regardless of whether a transaction would result in the Covered Person realizing a loss or profit. (Section V. B. Short - Term Trading) This requirement applies to equities, equity warrants, convertible bonds and other equity related products, and does not apply to ETFs, mutual funds, and non-convertible bonds.

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Appendix E

Contacts

Questions or Concerns about Policies or Situations:

The Conduct Risk Management Office *(<u>ethics@statestreet.com</u>)*

Actual or Possible Violations of Policy:

The Conduct Risk Management Office *(<u>ethics@statestreet.com</u>)*

Speak Up Line

<u>https://secure.ethicspoint.com/domain/media/en/gui/55139/index.html</u> 

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Appendix F

Code of Ethics Reporting Requirements

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| | | | |
|:---|:---|:---|:---|
| **Report** | **Frequency** | **Requirements** | **Notes** |
| **Initial Holdings Report** | Once; completed after becoming Covered Person | Disclose all Reportable Accounts and Holdings in StarCompliance (See Page 8) | Remember to set up duplicate statements and confirmations from your broker, if necessary (See 005. Duplicate Statements and Confirms on Page 8). |
| **Annual Holdings Report** | Annually in January | Ensure all holdings in Covered Securities (See Appendix C) are correctly reflected in StarCompliance. This includes updating holdings to account for involuntary transactions that have occurred, such as mergers, stock splits, and other corporate actions. | **You are responsible for ensuring the data in this report is accurate.** If you hold an account at an Approved Broker and holdings data is fed to StarCompliance (See 006. Maintain Accounts with Approved Brokers), you must still review the data on the report for accuracy. |
| **Quarterly Transaction Report** | Quarterly | Ensure all Reportable Transactions for the quarter are correctly reflected in StarCompliance.<br>Transactions in accounts previously approved by the Conduct Risk Management Office as Fully Managed Accounts or Automatic Investment Plans are not Reportable Transactions. | **You are responsible for ensuring the data in this report is accurate.** If you hold an account at an Approved Broker and holdings data is fed to StarCompliance (See 006. Maintain Accounts with Approved Brokers), you must still review the data on the report for accuracy. |
| **Ad Hoc Holdings Report** | Ad hoc<br>*Marriage, new children, inheritance, and financial planning activities may cause accounts and holdings to be opened or associated to you.* | Disclose any newly opened or newly associated Reportable Accounts and Holdings in StarCompliance within 30 days of opening or association. | Remember to set up Duplicate Statements and Confirms (See 005. Duplicate Statements and Confirms on Page 8). |

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Appendix G

Code of Ethics FAQs

The Conduct Risk Management Office has additional FAQ and How-To documents related to using Star and completing required reporting (e.g., Initial and Annual Holdings Reports) available on its sharepoint site.

I work in the United States. Do I have to report my State Street 401(k)?

No, you are not required to disclose your State Street 401(k) at this time unless you have chosen to participate in the linked brokerage account option, in which case the linked brokerage account, and the holdings in the account, do need to be reported. 401(k) and other self-invested workplace pension accounts are reportable where you or your Covered Persons have investment discretion beyond that of allocating a monthly value to a specific risk profile or sector, or selecting from a limited number of pre-selected funds.

However, if you have activated the Brokerage Link feature for your 401(k), you must report that account and ensure that all transactions and holdings are reflected accurately in Quarterly Transaction Reports and Annual Holdings Reports, respectively.

**My spouse (or I) has a company- or government-sponsored retirement plan** (such as a 401(k) in the US, or a superannuation plan in Australia). How do I determine what accounts, holdings, and transactions must be disclosed and pre-cleared?

*Due to the wide variety of plans available globally, it's important to check with the Conduct Risk Management Office if you have any questions about how this applies to you.* 

**Accounts** 

If the account or plan currently holds Covered Securities (see Appendix C), you must disclose the account.

Retirement plans usually have a "line up" of available investments from which the account owner can choose; if there is a Covered Security in the lineup of available investments, but you do not currently invest in Covered Securities, you are not required to disclose the account. If at any point, your retirement plan invests in Covered Securities, you must disclose the account, the holdings in Covered Securities, and the Transactions in Covered Securities, as described below.

**Holdings** 

You must disclose <u>any</u> holdings in Covered Securities (see Appendix C).

**Transactions** 

<u>Usually</u>, transactions in a retirement plan you are actively participating in fall under the Automatic Investment Plan definition (see Appendix A) and are treated as such. However, you must pre-clear and disclose any transactions over which you exercised discretion. For example, the following types of transactions must be pre-cleared and disclosed:

• A change in future investment allocations in Covered Securities, such as increasing your automatic payroll investment in Security XYX from 15% to 20%. Note: only the initial change must be pre-cleared and reported.

• Re-allocating your existing holdings in Covered Securities, such as changing your portfolio from 50% Security XYZ and 50% Security ABC to 75% Security XYZ and 25% Security ABC.

If you or your Covered Person are automatically enrolled in a plan with default investment percentages (e.g., 7% of salary) and investment options, any transactions made as a result of your automatic enrollment are not subject to disclosure or pre-clearance.

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**I have an account with an Approved or Preferred Broker** which feeds my transactions to Star. Can you tell me what I have to do with regards to pre-clearance and reporting whenever I make personal trades?

In order to ensure your trades are properly pre-cleared and reported, make sure that you:

(1) Pre-clear the trade by submitting a Trade Request in StarCompliance.
Trade Requests:

• Must be for the correct security, account, and trade direction (buy vs. sell).

• Must be for at least the amount of shares that you plan on trading. You may always trade **fewer** shares than you were approved for, but you may not trade **more**.

(2) Are valid only for the day they are approved. Wait for the result (Approved or Denied) from Star before
trading. You'll typically receive the result within seconds on screen and will receive an email with the results. Trade Request approvals are valid only for the day they are approved. Make note of the expiration time and date for any approved
Trade Request.

(3) Ensure your transactions are accurately reflected in Star.

• You are **required** to do this on a quarterly basis (known as the Quarterly Transactions Report), but many people find it easier to compare their transactions in Star with their broker's records (e.g., a
statement or trade confirmations) more frequently.

• When you submit your Quarterly Transactions Report, it must accurately reflect all Reportable Transactions for the quarter.

• The Approved Broker feeds are tools to help keep accurate records in Star; you are responsible for the accuracy of the data in your Code of Ethics reports.

**My account is not with an Approved Broker.** Can you tell me what I have to do with regards to pre-clearance and reporting whenever I make personal trades?

In order to ensure your trades are properly pre-cleared and reported, make sure that you:

(1) Pre-clear the trade by submitting a Trade Request in StarCompliance.
Trade Requests:

• Must be for the correct security, account, and trade direction (buy vs. sell).

• Must be for at least the amount of shares that you plan on trading. You may always trade **fewer** shares than you were approved for, but you may not trade **more**.

• Are valid only for the day they are approved.

(2) Wait for the result (Approved or Denied) from Star before trading. You'll typically receive the result
within seconds on screen and will receive an email with the results. Trade Request approvals are valid only for the day they are approved. Make note of any expiration time and date for any approved Trade Request.

(3) Ensure your transactions are accurately reflected in Star.

• You are **required** to do this on a quarterly basis (known as the Quarterly Transactions Report), but many people find it easier to use the StarCompliance "Execute" function after they trade. The <u>StarCompliance User Guide</u> on the Conduct Risk Management sharepoint site provides step-by-step instructions.

• When you submit your Quarterly Transactions Report, it must accurately reflect all Reportable Transactions for the quarter.