Trust Funds

Procedures and Guidelines for Voting Proxies

  1. For internally managed assets, the Trust Officer or Assistant Trust Officer studies all proxies and votes routine proposals in accordance with management's recommendations. For externally managed assets, proxies dealing with routine issues will be voted by the respective portfolio managers in accordance with each manager's proxy voting guidelines.

    Routine issues are defined as:

    1. Election of directors, unless there is knowledge that a nominee has been found guilty or has pleaded guilty or nolo contendere in a criminal action;
    2. Election of auditors;
    3. Elimination of preemptive rights;
    4. Management recommendations regarding adding or amending indemnification provisions in charters or by‑laws;
    5. Authorization to issue common stock under option and incentive plans provided that:
      1. an actual or equivalent lowering in the exercise price is not being recommended for shares covered by existing plans, and
      2. the maximum increase in shares outstanding over the life of the plan(s) does not exceed an average of 1 per cent per year based on the number of shares outstanding on the date of notice of the meeting.
    6. Issuance of additional shares of stock for corporate purposes provided the issuance is supported by the portfolio manager and shares are not expressly issued to prevent a takeover.
    7. Changes to the Board of Directors, proposals relating to cumulative voting, annual election of directors, and staggered Boards; provided the proposal is supported by the portfolio manager.
    8. Outside director compensation (cash plus stock plans) provided the compensation of the outside directors does not exceed 1% of net income.
  2. For both internally and externally managed assets, non-routine issues will be reviewed with the Business and Finance Committee to develop a position on how the proposals should be voted.

    Non-routine issues are defined as:

    1. Acquisitions and mergers;
    2. Stockholder proposals opposed by management and not supported by the portfolio managers;
    3. Amendments to corporate charter or by‑laws which might materially affect shareholder rights;
    4. All issues where the tentative recommendation is to vote against management's position;
    5. Issues dealing with discrimination (per Ch 36.29 WI STATS and Regent Policies 78-1 and 78-2), the environment (per Regent Policy 74-3(a)), or with substantial social injury (per Regent Policy 97-1);
    6. Any other issue not covered in I.
  3. The Trust Funds Office will regularly identify non-routine issues for and provide analyses to the Committee to assist it in its review. In analyzing proxy proposals, a variety of information sources may be used, including: our portfolio managers, the proxy statement, the corporation management, the resolution sponsor, the investment community, media reports, and special services such as the Investor Responsibility Research Center.
  4. To ensure that non-routine proxy proposals are identified, analyzed and reviewed, and that the Committee's voting position is properly determined, conveyed to portfolio managers and then tracked for compliance, the following procedures will generally be followed:

    1. During the first quarter of each year, the Trust Funds Office will identify all non-routine shareholder proposals for the upcoming proxy season (primarily March through May). To the extent possible, these proposals will be grouped into identifiable "issues" (or themes).
    2. Trust Funds will research and analyze any new non-routine, controversial issues or company-specific proposals. These analyses will consider, among other things, the following factors:
      • Application/interpretation of Regent policies
      • Background and technical requirements of shareholder proposals
      • Expected impact on firms' financial position
    3. Trust Funds will present the following to the Committee annually for its review (generally at the March Board of Regents meeting; for "off-season" proxies, these will be brought to the Committee at the nearest monthly meeting where possible):
      • A list of new non-routine issues and any company-specific proposals for the upcoming proxy season, to which an existing Regent policy (may) apply
      • A list of previously approved non-routine issues
      • Write-ups/analyses of new and previously approved issues (approved for affirmative voting)
      • A list showing each specific upcoming proposal, by company, and the relevant Regent policy which (may) apply, and the recommended vote (if the shareholder proposal is consistent with Regent policy, does not impose unnecessary or burdensome requirements on the firm, and is not expected to have a highly negative impact on the firm's financial position, an affirmative vote will generally always be recommended)
    4. The Committee will then vote on all upcoming shareholder proposals presented to them.
    5. Based on the Committee's approvals, Trust Funds will vote the proxies accordingly or will provide the specific voting instructions to the external portfolio managers where necessary.
    6. Portfolio managers will provide quarterly reports of all proxy voting activity for their Trust Funds' portfolios. This reporting will include a summary of each issue, the management recommendation, and the actual vote cast by the manager. Trust Funds staff will review these reports to verify compliance with instructions. Annual notification letters will also be sent to managers reminding them of the Trust Funds proxy voting policy and summarizing its requirements. (In addition, as part of the investment manager search and procurement process, manager candidates will be informed that complying with the proxy voting policy is a mandatory requirement.)
    7. The Trust Funds Office will maintain all supporting research and documentation of proxy votes cast on behalf of the Trust Funds.
    8. Trust Funds will present to the Committee at least annually, the results of the proxy voting season (generally at the September or October Board of Regents meeting).