2008 U.S. Proxy Voting Manual

Copyright © 2002, 2008 by RiskMetrics Group

Table of Contents

1. Operational Items

Adjourn Meeting
Amend Quorum Requirements
Amend Minor Bylaws
Change Company Name
Change Date, Time, or Location of Annual Meeting
Ratify Auditors
Transact Other Business

2. Board of Directors

Voting on Director Nominees in Uncontested Elections
Mutual Funds: Election of Directors
Advance Notice Requirements for Shareholder Proposals/Nominations
Age Limits
Board Diversity
Board Size
Classification/Declassification of the Board
Cumulative Voting
Director and Officer Indemnification and Liability Protection
Establish/Amend Nominee Qualifications
Establishment of Committees
Filling Vacancies/Removal of Directors
Independent Chairman (Separate Chairman/CEO)
Majority of Independent Directors Majority Voting for Director Elections
Open Access
Stock Ownership Requirements
Term Limits
Voting on Director Nominees in Contested Elections

3. Proxy Contests

Voting on Director Nominees in Contested Elections
Reimbursing Proxy Solicitation Expenses
Advance Notice Requirements for ShareholderProposals/Nominations
Amend Bylaws without Shareholder Consent
Blank Check Preferred Stock (White Squire)
Board Size
Bundled Proposals
Classification/Declassification of the Board
Confidential Voting
Control Share Acquisition Provisions
Cumulative Voting
Dual-class Stock
Fair Price Provisions
Filling Vacancies/Removal of Directors
Golden Parachutes and Executive Severance Agreements
Greenmail
Issue Stock for Use with Rights Plan
Poison Pills (Shareholder Rights Plans)
Shareholders' Ability to Act by Written Consent
Shareholders' Ability to Call Special Meetings
Stakeholder Provisions
Supermajority Vote Requirements
Value Maximization Proposals

4. Antitakeover Defenses and Voting Related Issues

Advance Notice Requirements for Shareholder Proposals/Nominations
Amend Bylaws without Shareholder Consent
Blank Check Preferred Stock (White Squire)
Board Size
Bundled Proposals
Classification/Declassification of the Board
Confidential Voting
Control Share Acquisition Provisions
Control Share Cashout Provisions
Cumulative Voting
Disgorgement Provisions
Dual-class Stock
Fair Price Provisions
Filling Vacancies/Removal of Directors
Freezeout Provisions
Golden Parachutes and Executive Severance Agreements
Greenmail
Issue Stock for Use with Rights Plan
Poison Pills (Shareholder Rights Plans)
Shareholders' Ability to Act by Written Consent
Shareholders' Ability to Call Special Meetings
Stakeholder Provisions
Supermajority Vote Requirements

5. Mergers and Corporate Restructuring

Appraisal Rights
Asset Purchases
Asset Sales
Bundled Proposals
Control Share Cashout Provisions
Conversion of Securities
Corporate Reorganization (Including Pre-Packaged Bankruptcy Plans)
Disgorgement Provisions
Fair Price Provisions
Formation of Holding Company
Freezeout Provisions
Going Private Transactions (LBOs and Minority Squeezeouts)
Golden Parachutes and Executive Severance Agreements
Greenmail
Joint Ventures
Liquidations
Mergers and Acquisitions (Including Share Issuance for M&A)
Poison Pill Endorsements
Private Placements / Issue of Warrants or Convertible Debentures
Recapitalization
Reincorporation Proposals
Reverse Stock Splits
Spinoffs
Stakeholder Provisions
State Antitakeover Statutes
Stock Distributions: Splits and Dividends
Supermajority Vote Requirements
Value Maximization Proposals

6. State of Incorporation

Control Share Acquisition Provisions
Control Share Cashout Provisions
Disgorgement Provisions
Fair Price Provisions
Freezeout Provisions
Greenmail
Poison Pills (Shareholder Rights Plans)
Poison Pill Endorsements
Reincorporation Proposals
Severance Pay and Labor Contract Provisions
Stakeholder Provisions
State Antitakeover Statutes

7. Capital Structure

Adjustments to Par Value of Common Stock
Common Stock Authorization
Conversion of Securities
Debt Restructuring
Dual-class Stock
Issue Stock for Use with Rights Plan
Preemptive Rights
Blank Check Preferred Stock (White Squire)
Prepackaged Bankruptcy Plans
Private Placements
Recapitalization
Reverse Leveraged Buyouts
Reverse Stock Splits
Share Repurchase Programs
Stock Distributions: Splits and Dividends
Tracking Stock
Warrants/Convertible Debentures
Wrap Plans

8. Executive and Director Compensation Cost of Equity Plans Shareholder Value Transfer Model Inputs Impacting Average Award Value Voting Power Dilution Reasonableness/Allowable Cap Plan Specific Models General Model Inputs Quarterly Data Download A Primer on Binomial Model Why Use a Binomial Model? Re-pricing Provisions Three-Year Burn Rate Application of Burn Rate Policy for Special Circumstances Burn Rate Commitment Updated SEC Disclosure Requirements on Executive and Director Pay Pay for Performance Policy Pay for Performance Commitment Options Backdating Poor Pay Practices Advisory Votes on Pay Programs Supplemental Topics Impacting Equity-Based Compensation Plan Amendments Employment Inducement Grant Exemption Impact of Share Buybacks Impact of Dual Class Capital Structures Multiple Compensation Plans Evergreen Plans Granted But Unexercised Shares (Overhang) Companies that Do Not Pay Dividends Concentration Ratio Director Compensation Stock Plans in Lieu of Cash Director Retirement Plans Management Proposals Seeking Approval to Reprice Options Qualified Employee Stock Purchase Plans Nonqualified Employee Stock Purchase Plans Incentive Bonus Plans and Tax Deductibility Proposals Employee Stock Ownership Plans (ESOPs) 401(k) Employee Benefit Plans Shareholder Proposals Regarding Executive and Director Pay Pay for Performance Supplemental Executive Retirement Plans Stock Ownership or Holding Period Guidelines Recoup Bonuses (“Claw-Back”) Link Pay to Social Criteria Disclosure of Compensation for Executives and Directors Advisory Vote on Executive Compensation Limit Executive or Director Pay Compensation Consultants Pension Plan Income Accounting 10b5-1 Plans Share Buyback Holding Periods Tax Gross-Ups Golden Parachutes and Executive Severance Agreements Evaluating Incentive Bonus Plans and Other OBRA-Related Proposals

9. Corporate Social Responsibility (CSR) Issues

Evaluation of CSR Shareholder Proposals

Animal Welfare

Animal Testing
Animal Welfare Policies
Controlled Atmosphere Killing (CAK)

Consumer Issues

Genetically Modified Ingredients
Consumer Lending
Pharmaceutical Pricing
Pharmaceutical Product Reimportation
Product Safety and Toxic Materials
Tobacco

Climate Change and the Environment

Climate Change
Concentrated Area Feeding Operations (CAFO)
Energy Efficiency
Facility Safety (Nuclear and Chemical Plant Safety)
General Environmental Reporting
Greenhouse Gas Emissions
Operations in Protected Areas
Recycling
Renewable Energy

Board Diversity
Equality of Opportunity and Glass Ceiling
Sexual Orientation and Domestic Partner Benefits

General Corporate Issues

Charitable Contributions
CSR Compensation-Related Proposals
HIV/AIDS
Lobbying Expenditures/Initiatives
Political Contributions and Trade Associations Spending

International Issues, Labor Issues, and Human Rights

China Principles
Codes of Conduct
Community Impact Assessments
Foreign Military Sales/Offsets
Internet Privacy and Censorship
MacBride Principles
Nuclear and Depleted Uranium Weapons
Operations in High Risk Markets
Outsourcing/Offshoring
Vendor Standards

Sustainability

Sustainability Reporting

10. Mutual Funds

Investment Objectives

Equity
Mixed
Fixed Income
Fund Structure
Shareholder Rights
Governing Regulations

Closed-End Funds

Election of Directors
Convert Closed-End Fund to Open-End
Proxy Contests
Investment Advisory Agreements
Approve New Classes or Series of Shares
Preferred Stock Proposals
1940 Act Policies
Change Fundamental Restriction to Nonfundamental Restriction
Change Fundamental Investment Objective to Nonfundamental
Name Change Proposals
Change in Fund's Subclassification
Disposition of Assets/Termination/Liquidation
Changes to the Charter Document
Change the Fund's Domicile

Open-End Funds

Election of Directors
Proxy Contests
Investment Advisory Agreements
Approve New Classes or Series of Shares
1940 Act Policies
Change Fundamental Restriction to Nonfundamental Restriction
Change Fundamental Investment Objective to Nonfundamental
Name Change Proposals
Change in Fund's Subclassification
Disposition of Assets/Termination/Liquidation
Authorize the Board to Hire/Terminate Subadvisors Without Shareholder Approval
Distribution Agreements
Master-Feeder Structure
Mergers
Changes to the Charter Document
Change the Fund's Domicile
Shareholder Proposals to Establish Director Ownership Requirement
Shareholder Proposals to Reimburse Shareholders for Expenses Incurred
Shareholder Proposals to Terminate Investment Advisor

Appendix: ICI Recommendations on Board Independence

Appendix A. Exhibits (PDF format)

Appendix B. Fiduciary Obligations

Pre-ERISA Law

The Walker Speech
The Avon Letter
The Proxy Project Report
The Monks Letter
Other Labor Department Actions
Global Proxy Voting
Labor Secretary Reich and Shareholder Activism
Labor Department Regulations on Proxy Voting
ISS Analysis of DOL Guidelines

Creeping ERISA

Internal Revenue Service Requirements
Bank Regulatory Agencies
Securities and Exchange Commission
State Action

Appendix C. Proxy Operations and Voting Procedures

Proxy Policy

Delegating or Retaining Voting Authority
Establishing a Proxy Committee
Establishing Voting Guidelines
Statements of Procedures and Principles
Blanket Policy vs. Case-by-Case Voting
Defining Internal Voting Authority
Proxy Card Reconciliation Procedures
Recordkeeping Considerations
Conflicts of Interest
Disclosing the Vote
Implementing Proxy Voting Guidelines

Proxy Operations

Season Calendar and "Tickler" System
Custodian Bank Arrangements
Co-Voting Arrangements
Documenting the Voting Process
Automating Proxy Operations
Work Flow Considerations
Stock on Loan
Trade vs. Settlement Date

Post-Season and Periodic Procedures

Policy and Operations Review
Proxy Monitoring

Appendix D. 2007 US Proxy Voting Policy Guidelines Summary (PDF format)

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