Supplement to Summary
Prospectus dated June 1, 2019 and Prospectus dated June 1, 2019
The Fund is managed by Eaton Vance Management (“EVM”), a wholly-owned
subsidiary of Eaton Vance Corp. (“EVC”). Members of EVM’s Tax Advantaged Bond Strategies (“TABS”)
division are portfolio managers of the Fund. In connection with a strategic initiative being implemented by EVC, members of EVM’s
TABS division will join Parametric Portfolio Associates LLC (“Parametric”). Parametric is an indirect wholly-owned
subsidiary of EVC. The TABS division will continue to operate from their current offices in New York and there will be no changes
to the manner in which they conduct portfolio management activities for the Fund in connection with the foregoing changes.
In connection with the foregoing, the Board of Trustees of the Fund has
approved EVM’s delegation of the day-to-day investment management of the Fund to Parametric effective January 15, 2020. On
such date, Parametric will become sub-adviser of the Fund. Accordingly, the following changes are effective January 15, 2020:
1. References to “investment
adviser”, with respect to the day-to-day management of the Fund or Portfolio, including implementation of the Fund or Portfolio’s
investment strategies shall mean Parametric. Additionally, references to “investment adviser” with respect to any expense
reimbursement shall also include “sub-adviser”.
Management
Investment
Adviser. Eaton Vance Management (“Eaton Vance”) serves as investment adviser to the Fund. Boston Management
and Research (“BMR”) serves as investment adviser to the Portfolio(s).
Investment
Sub-Adviser. Parametric Portfolio Associates LLC
(“Parametric”) serves as investment sub-adviser to the Fund and Portfolio(s).
Portfolio Managers
The portfolio managers of the Fund and Portfolio are
part of Parametric’s Tax-Advantaged Bond Strategies (“TABS”) division.
James
H. Evans, (lead portfolio manager) Chief Investment Officer, Fixed Income of Parametric, has managed the Fund and the Portfolio
since their inception in March 2016.
Brian
C. Barney, Managing Director, Institutional Portfolio Management of Parametric, has managed the Fund and the Portfolio since
their inception in March 2016.
Christopher
J. Harshman, Director, Portfolio Management of Parametric, has managed the Fund and the Portfolio since their inception
in March 2016.
3. The following replaces
the third paragraph under “Management and Organization”:
Pursuant to investment sub-advisory agreements, Eaton Vance has delegated
the investment management of the Fund and BMR has delegated investment management of the Portfolio to Parametric, an indirect wholly–owned
subsidiary of Eaton Vance Corp., with offices at 800 Fifth Avenue, Suite 2800, Seattle, WA 98104. Eaton Vance and BMR pay Parametric
a portion of the advisory fee for sub-advisory services provided to the Fund and Portfolio, respectively.
The Fund’s semiannual report covering the fiscal period ending July
31 provides information regarding the basis for the Trustees’ approval of the Fund’s investment advisory and administrative
agreement and the Portfolio’s investment advisory agreement. The Fund’s annual report covering the fiscal period ended
January 31 will provide information regarding the basis for the Trustees’ approval of the Fund’s and the Portfolio’s
investment sub-advisory agreements.
4. The following replaces
the eighth paragraph under “Management and Organization”:
The Fund is managed by members of Parametric’s Tax-Advantaged Bond
Strategies division (“TABS”) led by James H. Evans. James H. Evans, Brian C. Barney and Chrstopher J. Harshman have
served as portfolio managers of the Fund and Portfolio since each commenced operations in March 2016. Mr. Evans is Chief Investment
Officer, Fixed Income of Parametric and has been employed by the Eaton Vance organization for more than five years. Mr. Barney
is a Managing Director, Institutional Portfolio Management of Parametric. Mr. Harshman is a Director, Portfolio Management of Parametric.
Mr. Barney and Mr. Harshman have each been employed by the Eaton Vance organization for more than five years.
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December 13, 2019
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34046 12.13.19
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EATON VANCE TABS 5-to-15 YEAR
LADDERED MUNICIPAL BOND NEXTSHARES
Supplement to Statement
of Additional Information dated June 1, 2019
The Fund is managed by Eaton Vance Management (“EVM”), a wholly-owned
subsidiary of Eaton Vance Corp. (“EVC”). Members of EVM’s Tax Advantaged Bond Strategies (“TABS”)
division are portfolio managers of the Fund. In connection with a strategic initiative being implemented by EVC, members of EVM’s
TABS division will join Parametric Portfolio Associates LLC (“Parametric”). Parametric is an indirect wholly-owned
subsidiary of EVC. The TABS division will continue to operate from their current offices in New York and there will be no changes
to the manner in which they conduct portfolio management activities for the Fund in connection with the foregoing changes.
In connection with the foregoing, the Board of Trustees of the Fund has
approved EVM’s delegation of the day-to-day investment management of the Fund to Parametric effective January 15, 2020. On
such date, Parametric will become sub-adviser of the Fund. Accordingly, the following changes are effective January 15, 2020:
1. The following replaces the
first paragraph under “Investment Advisory and Administrative Services”:
Investment Advisory
Services. The investment adviser manages the investments and affairs of the Fund and the Portfolio and provides related
office facilities and personnel subject to the supervision of the Trust’s Board, in the case of the Fund, or the Portfolio’s
Board. The investment sub-adviser furnishes investment research, advice and supervision, furnishes an investment program and determines
what securities will be purchased, held or sold by the Fund or Portfolio and what portion, if any, of the Fund’s or
Portfolio’s assets will be held uninvested. The Fund’s and Portfolio’s Investment Advisory Agreements and Investment
Sub-Advisory Agreements require the investment adviser or sub-adviser, as the case may be, to pay the compensation and expenses
of all officers and Trustees of the Trust who are members of the investment adviser's or sub-adviser’s organization and all
personnel of the investment adviser or sub-adviser performing services relating to research and investment activities.
2. The following replaces “Proxy
Voting Policies.” under “Management and Organization”:
Proxy Voting Policy.
The Board adopted a proxy voting policy and procedures (the “Fund Policy”), pursuant to which the Board has delegated
proxy voting responsibility to the investment sub-adviser and adopted the proxy voting policies
and procedures of the investment sub-adviser (the “Adviser Policies”). An independent proxy voting service has been
retained to assist in the voting of Fund proxies through the provision of vote analysis, implementation and recordkeeping and disclosure
services. The members of the Board will review the Fund’s and the Portfolio’s proxy voting records from time to time
and will annually consider approving the Adviser Policies for the upcoming year. For a copy of the Fund Policy and Adviser Policies,
see Appendix E and F, respectively. Pursuant to certain provisions of the 1940 Act and certain exemptive orders relating to funds
investing in other funds, the Fund or Portfolio may be required or may elect to vote its interest in another fund in the same proportion
as the holders of all other shares of that fund. Information on how the Fund and the Portfolio voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling 1-800-262-1122,
and (2) on the SEC’s website at http://www.sec.gov.
3. The following replaces the
third paragraph under “Investment Advisory and Administrative Services”:
Each Investment Advisory and Administrative Agreement and Investment Sub-Advisory
Agreement with the investment adviser or sub-adviser continues in effect from year to year so long as such continuance is approved
at least annually (i) by the vote of a majority of the noninterested Trustees of the Trust, in the case of the Fund, or the Portfolio
cast in person at a meeting specifically called for the purpose of voting on such approval and (ii) by the Board of the Trust,
in the case of the Fund, or the Portfolio or by vote of a majority of the outstanding voting securities of the Fund or Portfolio.
Each Agreement may be terminated at any time without penalty on sixty (60) days’ written notice by either party, or by vote
of the majority of the outstanding voting securities of the Fund or Portfolio, and each Agreement will terminate automatically
in the event of its assignment. Each Agreement provides that the investment adviser or sub-adviser may render services to
others. Each Agreement also provides that the investment adviser or sub-adviser shall not be liable for any loss incurred in connection
with the performance of its duties, or action taken or omitted under the Agreement, in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties thereunder, or for any losses sustained in the acquisition,
holding or disposition of any security or other investment. Each Agreement is not intended to, and does not, confer upon any person
not a party to it any right, benefit or remedy of any nature.
4. The following paragraph is
inserted after “Information About BMR and Eaton Vance.” under “Investment Advisory and Administrative Services”:
Information About
Parametric. Parametric is a Seattle, Washington based investment manager that has been providing investment advisory services
since its formation in 1987. Parametric serves its clients through its offices located in Seattle, WA, Minneapolis, MN, Boston,
MA, New York, NY, Westport, CT and Sydney, Australia. As of June 30, 2019, Parametric’s assets under management totaled approximately
$246.1 billion. Parametric is a wholly-owned subsidiary of EVC.
5. The following replaces
“Code of Ethics.” under “Investment Advisory and Administrative Services”:
Code of Ethics.
The investment adviser, sub-adviser, principal underwriter, and the Fund and the Portfolio
have adopted Codes of Ethics governing personal securities transactions pursuant to Rule 17j-1
under the 1940 Act. Under the Codes, employees of the investment adviser, the sub-adviser and the principal underwriter may purchase
and sell securities (including securities held or eligible for purchase by a Fund [or the Portfolio])
subject to the provisions of the Codes and certain employees are also subject to pre-clearance, reporting requirements and/or
other procedures.
6. The following replaces
“Compensation Structure for Eaton Vance and BMR.” and “Method to Determine Compensation.”
under “Portfolio Managers.” under “Investment Advisory and Administrative Services”:
Compensation Structure
for Parametric. Compensation of Parametric portfolio managers and other investment professionals has three primary
components: (1) a base salary, (2) an annual cash bonus, and (3) annual equity-based compensation awards that generally are subject
to a vesting schedule. Stock-based compensation awards and adjustments in base salary and bonuses are typically paid and/or put
into effect at or shortly after, the firm’s fiscal year-end, October 31.
Method to Determine
Compensation. Parametric seeks to compensate portfolio managers commensurate with their responsibilities and performance
while remaining competitive with other firms within the investment management industry.
Salaries, bonuses and stock-based compensation are also influenced by
the operating performance of Parametric and its parent company, EVC. While the salaries of Parametric portfolio managers are comparatively
fixed, cash bonuses and stock-based compensation may fluctuate from year to year, based on changes in financial performance and
other factors.
Parametric participates in compensation surveys that benchmark salaries,
total cash and total compensation against other firms in the industry. This data is reviewed, along with a number of other factors,
to ensure that compensation remains competitive with other firms in the industry.
7. The following replaces
“Appendix D: Adviser Proxy Voting Policies and Procedures”:
PARAMETRIC PORTFOLIO ASSOCIATES LLC
PROXY VOTING POLICIES AND PROCEDURES
Policy
Parametric Portfolio Associates LLC (“Parametric”) has adopted
and implemented these policies and procedures which it believes are reasonably designed to ensure that proxies are voted in the
best interests of clients, in accordance with its fiduciary obligations and applicable regulatory requirements. When it has been
delegated the responsibility to vote proxies on behalf a client, Parametric will generally vote them in accordance with its Proxy
Voting Guidelines, attached hereto as Exhibit A. The Proxy Voting Guidelines are set and annually reviewed by the firm’s
Stewardship Committee. Parametric will consider potential conflicts of interest when voting proxies and disclose material conflicts
to clients. Parametric will promptly provide these policies and procedures, as well as proxy voting records, to its clients upon
request. As required, Parametric will retain appropriate proxy voting books and records. In the event that Parametric engages a
third party proxy adviser to administer and vote proxies, it will evaluate its conflicts of interest procedures and confirm its
abilities to vote proxies in the client’s best interest.
Regulatory Requirements
Rule 206(4)-6 under the Investment Advisers Act requires that an investment
adviser that exercises voting authority over client proxies to adopt and implement policies and procedures that are reasonably
designed to ensure that the adviser votes proxies in the best interest of the client. The rule specifically requires that the policies
and procedures describe how the adviser addresses material conflicts of interest with respect to proxy voting. The rule also requires
an adviser to disclose to its clients information about those policies and procedures, and how the client may obtain information
on how the adviser has voted the client’s proxies. In addition, Rule 204-2 under the Act requires an adviser to retain certain
records related to proxy voting.
Responsibility
The Associate, Investment Strategy (the “Coordinator”) is
responsible for the day-to-day administration of the firm’s proxy voting practices. One or more Investment Strategy personnel
are responsible for ensuring proxy ballots are received and voted in accordance with the firm’s Proxy Voting Guidelines (the
“Guidelines”). The Director of Responsible Investing (the “Director”) is responsible for providing guidance
with regard to the Proxy Voting Guidelines. The Proxy Voting Committee (the “Committee”) is responsible for monitoring
Parametric’s proxy voting practices and evaluating proxy advisers engaged to vote proxies on behalf of clients. The Stewardship
Committee is responsible for setting and annually reviewing the firm’s Proxy Voting Policies and Procedures and Proxy Voting
Guidelines. The Compliance Department is responsible for annually reviewing these policies and procedures to verify that they are
adequate, appropriate and effective.
Procedures
Parametric has adopted and implemented procedures to ensure the firm’s
proxy voting policies are observed, executed properly and amended or updated, as appropriate. The procedures are summarized as
follows:
New Accounts
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Parametric is generally delegated the responsibility to vote proxies on behalf of clients. (This responsibility is typically
established in the investment advisory agreement between the client and Parametric. If not set forth in the advisory agreement,
Parametric will assume the responsibility to vote proxies on the client’s behalf unless it has received written instruction
from the client not to.
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When a new client account is established, Parametric will instruct the client’s custodian to forward all proxy materials
to Institutional Shareholder Services (ISS).
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On a weekly basis, the Coordinator performs a reconciliation to ensure that ISS is receiving the proxy ballots for all client
accounts over which Parametric has voting authority.
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Proxy Voting Administration
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Parametric’s proxy voting is administered on a daily basis by the Coordinator, who is a member of Parametric’s
Investment Strategy. The Coordinator is responsible for ensuring proxies are voted in accordance with Parametric’s Proxy
Voting Guidelines.
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The Director will review research and guidance issued by third party proxy voting analysts regarding proxy voting issues relevant
to Parametric’s clients and monitor upcoming shareholder meetings and votes. The Director will provide guidance to the Coordinator
with regard to the Proxy Voting Guidelines and how they apply to proxy ballots. The Director will ensure that rationale for votes
cast is properly documented and reviewed by other Committee members, as warranted.
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Parametric utilizes the ISS ProxyExchange platform to manage, track, reconcile and report proxy voting. Parametric relies on
this application to ensure that all proxies are received and voted in timely manner.
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In the unlikely event that a ballot proposal is not addressed by the Guidelines, the Coordinator will consult with the Director
to confirm that the Proxy Voting Guidelines do not address the proxy issue. If confirmed, the Director may escalate the issue to
the Committee for their consideration. The Committee can review research and guidance issued by third party proxy adviser when
making a vote determination. A vote determination must be approved in writing by not less than two Committee members. The rationale
for making the determination will be documented.
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The Coordinator may abstain from voting a proxy on behalf of a client account if the economic effect on shareholders’
interests or the value of the holding is indeterminable or insignificant (e.g., the security is no longer held in the client portfolio)
or if the cost of voting the proxy outweighs the potential benefit (e.g., international proxies which share blocking practices
may impose trading restrictions).
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In the rare occasions that accounts that do not hold public equities receive ballots, the Operations Team is responsible for
monitoring those ballots. The Operations Team may work with the Coordinator or the Portfolio Management team to vote the ballots
in the best interest of their holders.
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Proxy Voting Committee
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Parametric has established a Committee which shall meet on a quarterly basis to oversee and monitor the firm’s proxy
voting practices.
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On an annual basis, Parametric will monitor the performance of the proxy adviser and assess if changes have impacted their
conflict of interest procedures. Initial and ongoing due diligence evaluations shall be documented in writing.
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Proxy Adviser Due Diligence
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In the event that Parametric deems it to be in a client’s best interest to engage a third party proxy adviser, Parametric
will exercise due diligence to ensure that it can provide objective research and recommendations. This evaluation will consider
the proxy adviser’s business and conflict of interest procedures, and confirm that the procedures address the firm’s
conflicts.
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On an annual basis, Parametric will monitor the performance of the proxy adviser and assess if changes have impacted their
conflict of interest procedures. Initial and ongoing due diligence evaluations shall be documented in writing.
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Conflicts of interest
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The Compliance Department will identify and actively monitor potential conflicts of interest which may compromise the firm’s
ability to vote a proxy ballot in the best interest of clients. Compliance will maintain a List of Potentially Conflicted Companies
and provide it to Investment Strategy whenever it is updated. The list shall identify potential conflicts resulting from business
relationships with clients, potential clients, service providers, and the firm’s affiliates.
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All proxies are voted by Parametric in accordance with the firm’s Proxy Voting Guidelines. If a proxy ballot is received
from an issuer on the List of Conflicted Companies and a proposal is not addressed by the Guidelines, the Coordinator will forward
the issue to the Director to confirm that the Guidelines do not address the proposal. If confirmed, the Director will escalate
the proposal to the Committee.
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If the Committee determines a material conflict exists and a proposal is not addressed by the Guidelines, it will make a good
faith determination as how to vote the proxy (which may include voting abstain on the proposal not covered by the Proxy Voting
Guidelines). The Committee will provide appropriate instructions to the Coordinator.
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Proxy Voting Disclosure Responsibilities
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As a sub-adviser to various mutual funds registered under the Investment Company Act of 1940, Parametric will, upon each fund’s
request, compile and transmit in a timely manner all data required to be filed on Form N-PX to the appropriate fund’s administrator
or third party service provider designated by the fund’s administrator.
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Parametric will promptly report any material changes to these policies and procedures to its mutual fund clients to ensure
that the revised policies and procedures may be properly reviewed by the funds’ Boards of Trustees and included in the funds’
annual registration statements.
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Solicitations and Information Requests
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Parametric’s proxy voting policies and procedures are summarized and described to clients in Item 17 of the firm’s
Form ADV Brochure (Form ADV Part 2A). Parametric will promptly provide a copy of these proxy voting policies and procedures, which
may be updated from time to time, to a client upon their request.
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Parametric’s Form ADV Brochure discloses to clients how they may obtain information from Parametric about how it voted
proxies on their behalf. Parametric will provide proxy voting information free of charge upon written request.
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Parametric will not reveal or disclose to any third-party how it may have voted or intends to vote a proxy until its vote has
been counted at the respective shareholder’s meeting. Parametric may in any event disclose its general voting guidelines.
No employee of Parametric may accept any benefit in the solicitation of proxies.
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Compliance Review
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On an annual basis, the Compliance Department will review the firm’s proxy voting policies and procedures, as required
per Rule 206(4)-7, to confirm that they are adequate, effective, and designed to ensure that proxies are voted in clients’
best interests.
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Recordkeeping
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Parametric will maintain, in an easily accessible place for a period of seven years, all requisite proxy voting books and records,
including but not limited to: (1) proxy voting policies and procedures, (2) proxy statements received on behalf of client accounts,
(3) proxies voted, (4) copies of any documents that were material to making a decision how to vote proxies, and (5) client requests
for proxy voting records and Parametric’s written response to any client request.
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EXHIBIT A
PARAMETRIC PORTFOLIO ASSOCIATES LLC
PROXY VOTING GUIDELINES
Dated: February 1, 2018
Stock ownership represents an opportunity to participate in the economic
rewards of a long-lived asset and shareholder rights represent an important path to maximizing these benefits. Given this, Parametric
expects the companies in which we invest to adhere to effective governance practices and consider their impact on the environment
and the communities in which they operate. Our Proxy Voting Guidelines (the Guidelines) are designed to safeguard investor capital
over the long-run by supporting qualified, independent boards that show accountability and responsiveness to shareholders and shareholder
proposals that are prudent and relevant. In this effort, we consider the work of recognized corporate governance experts and outside
research providers, as well as collaborative investor groups.
The Guidelines are reviewed annually and updated as needed. Below we summarize
our guiding principles and key considerations for certain types of proposals. In addition to the guiding principles set forth below,
Parametric will review research and guidance issued by third party proxy voting service providers in making voting determinations.
Proposals that are not addressed by the Guidelines will be reviewed by the Proxy Committee and voted in the manner that best meets
our guiding principles.
Board of Directors
Investors rely on the board of directors to oversee management and address
reasonable shareholder concerns. Therefore, the independence, competence, and responsiveness of directors is paramount and assessing
nominees is a major area of focus in our voting. We expect the board be free of conflicts of interest that would impair their ability
to fairly represent the interests of shareholders and to have appropriate expertise. We believe that competent board members can
be found throughout the wider population and a high degree of homogeneity on a board may signal the need for systematic improvement
in the nomination process. Responsiveness includes a willingness to consider labor, human rights, and environmental issues pertinent
to the business, in addition to more routine corporate governance issues. Parametric will vote for nominees who demonstrate these
qualities and against individual directors, or the entire board, in their absence. We will generally support shareholder proposals
for independent chairman/CEO roles and proxy access, with reasonable requirements.
Conditions that could trigger an against or withhold vote for individual
directors or the entire board include:
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Majority non-independent board, or lack of independence on key committees
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Insufficient attendance at meetings (generally less than 75%), or excessive number of outside boards
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Failure to act on shareholder proposals that have received majority support
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Poor governance practices such as actions to classify the board, or adopt a poison pill or amend bylaws or charter without
shareholder approval
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We believe that chairman of the board and CEO are different jobs that
are best fulfilled by separate individuals, particularly for larger, more complex companies. We expect companies with combined
roles to provide a clear rationale for the benefits and to put governance structures in place to protect against compromised oversight,
such as a lead or presiding director.
In the case of contested elections, nominees will be subjected to similar
analysis and expectations. In particular, dissident directors should present a more compelling strategy for improving company returns
than the incumbent board.
Auditors
Investors rely on auditors to attest to the integrity of a company’s
financial statements, without which the business could not be properly evaluated. It is essential that auditors be independent,
accurate, fair in the fees charged, and not subject to conflicts of interest. Non-audit fees are expected to generally be no more
than a quarter of all fees paid. Parametric will generally vote for ratification of auditors that meet this criteria and vote case-by-case
on shareholder proposals for mandatory rotation.
Executive Compensation
Executive compensation is an especially complex issue. Properly structured
compensation is essential to attracting and retaining effective corporate management. Poorly structured compensation can create
perverse incentives and contribute to the erosion of public trust. Achieving an ideal compensation package is complicated by questions
around how to measure performance and the extent to which management should be penalized or rewarded by factors outside of their
control. In light of this, our primary concern is to be attuned to packages that are truly outside of generally accepted practices,
in either magnitude or structure, and may incentivize perverse behavior or result in paying for failure. We believe that total
shareholder return as well as other financial metrics can be an appropriate basis for measurement. We generally support compensation
that is well-disclosed, reasonably in line with peers and total shareholder returns, and reflects longer-term strategic company
goals. We support annual frequency for say on pay votes. In the case of equity based pay, we may oppose plans with the potential
dilution of greater than 15%. In the case of severance agreements, we prefer arrangements that are triggered by both a change in
control and termination, and are limited to no more than three times recent annual compensation.
Mergers & Acquisitions
Business combinations can be valuable strategic tool but many fail to
live up to expectations. Each must be evaluated on a case by case basis. In addition to considering valuation, strategic rationale,
any conflicts of interest and potential changes to the governance profile, we may also consider the impact on community stakeholders.
We will generally support combinations that appear to have a high chance of improving shareholder value over the long-run.
Capital Structure
Obtaining additional capital may be necessary to finance vital projects
and take advantage of opportunities for growth but this potential value must be weighed any potentially negative impact on existing
shareholders. Considerations for authorization of certain types of capital are as follows:
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Common Stock – Voted case-by-case. The rationale for the increase and opportunity cost of not approving the request must
overcome the dilutive impact. Prior use of authorized shares will also be considered. Requests for increases more than 100% of
the existing authorization will generally be opposed, in the absence of a clear need. In the case of dual-class structure, increases
in the class of stock with superior voting rights will be opposed.
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Preferred Stock – Requests for preferred stock with clearly specified and reasonable terms will be supported. Requests
for stock with unspecified terms (blank check) will be opposed.
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Debt Restructuring – supported if bankruptcy is expected without restructuring, considered on a case by case otherwise.
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Shareholder Rights
Without certain shareholder rights, investors’ votes can become
useless. Broadly, we support proposals that enhance voting rights and against those that seek to undermine them, and we will vote
against/withhold for directors that take actions to abridge shareholder rights. We believe that in most cases each common share
should have one vote, and that a simple majority of voting shares should be all that is required to effect change.
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Majority Voting Standard – In almost all cases we prefer a majority vote standard for binding votes. We also expect management
to be responsive to non-binding votes that have received majority support. In the case that there are more nominees than board
seats, we support a plurality vote requirement.
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Supermajority Requirements – We are generally opposed to supermajority vote requirements. However, in select cases we
might actually support maintaining existing supermajority requirements as a means to protect minority shareholders if new owners
seek to change charter or bylaws after a dilutive stock or warrant issuance.
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Cumulative Voting – Although we do not generally prefer cumulative voting, it may be warranted in certain cases as a
safeguard for shareholders and will therefore be evaluated on a case by case basis.
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Confidential Voting – We support confidential voting systems in which management and shareholders receive only vote totals
and individual proxies and ballots are made available only to vote tabulators and inspectors.
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Right to call meetings and act by written consent – We support proposals that enhance shareholders’ ability to
act independently of management, with reasonable requirements, and oppose any that preclude it.
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Unequal Voting Rights – Dual-class capitalization structure with unequal voting rights is at odds with the principle
that voting rights be commensurate with economic interest. We expect companies with unequal voting rights structures to have a
clear rationale for the benefits and an overall governing structure that avoids potential issues related to management or board
entrenchment.
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Bundled Proposals – Individual proposals should never be bundled, however, in the case that they are, we will support
the bundle if the combined effect is expected to be beneficial to shareholders and against if not.
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Poison Pills – Although poison pills can be used legitimately, we are more concerned about their potential to be used
as a management entrenchment device. We expect the board to provide clear rationale for the pill and submit it to a shareholder
vote. We generally prefer shorter terms for pills and unequivocally oppose any features that limit the ability of future boards
to eliminate it. We will support reasonably designed pills to protect net operating loss tax assets.
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Access to the Proxy – We support providing shareholders the right to nominate director candidates on management’s
proxy card, with certain requirements to help prevent abuse of this right.
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Greenmail – Targeted share repurchases of stock from investors seeking control of the company is an inappropriate use
of resources and discriminates against other shareholders. We support anti-greenmail provisions in a charter or bylaws. However,
we vote against anti-greenmail proposals that have been bundled with proposals that we do not support.
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Environmental and Social Shareholder Resolutions:
Shareholder resolutions are an important communication mechanism between
the board and shareholders. In addition to supporting any of the shareholder resolutions on general governance mentioned previously,
we also support resolutions that encourage the board to improve relevant policies and disclosures as well as take action on certain
matters. Our guiding principles are that businesses must adhere to internationally recognized labor and human rights standards;
be transparent around corporate practices involving weapons, repressive governments, public health and product safety; maintain
accountability for lobbying and political contributions; and set and report on environmental performance goals related to the firm’s
long-term strategy. We will not support resolutions on matters best left to the board’s discretion or addressed via legislation
or regulation, or that would be unduly burdensome.
December 13, 2019