DWS Strategic
Municipal INcome TRust
form n-csr disclosure
re: AUDIT FEES
The following table shows the amount of fees
that Ernst & Young LLP (“EY”), the Fund’s Independent Registered Public Accounting Firm, billed to the Fund
during the Fund’s last two fiscal years. The Audit Committee approved in advance all audit services and non-audit services that
EY provided to the Fund.
Services that the Fund’s Independent
Registered Public Accounting Firm Billed to the Fund
Fiscal Year
Ended
November 30, |
Audit Fees Billed to Fund |
Audit-Related
Fees Billed to Fund |
Tax Fees Billed to Fund |
All
Other Fees Billed to Fund |
| 2021 |
$55,933 |
$0 |
$7,880 |
$0 |
| 2020 |
$55,933 |
$0 |
$7,880 |
$0 |
The above “Tax
Fees” were billed for professional services rendered for tax preparation.
Services that the Fund’s Independent
Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers
The following table shows the amount of fees billed
by EY to DWS Investment Management Americas, Inc. (“DIMA” or the “Adviser”), and any entity controlling, controlled
by or under common control with DIMA (“Control Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund
Service Provider”), for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s
last two fiscal years.
Fiscal Year
Ended
November 30, |
Audit-Related
Fees Billed to Adviser and Affiliated Fund Service Providers |
Tax Fees Billed to Adviser and Affiliated Fund Service Providers |
All
Other Fees Billed to Adviser and Affiliated Fund Service Providers |
| 2021 |
$0 |
$461,717 |
$0 |
| 2020 |
$0 |
$650,763 |
$0 |
The above “Tax Fees” were billed in connection with
tax compliance services and agreed upon procedures.
Non-Audit Services
The following table shows the amount of fees that
EY billed during the Fund’s last two fiscal years for non-audit services. The Audit Committee pre-approved all non-audit services
that EY provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Fund’s operations and financial
reporting. The Audit Committee requested and received information from EY about any non-audit services that EY rendered during the Fund’s
last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating EY’s
independence.
Fiscal Year
Ended
November 30, |
Total
Non-Audit Fees Billed to Fund
(A) |
Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund)
(B) |
Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements)
(C) |
Total of
(A), (B) and (C) |
| 2021 |
$7,880 |
$461,717 |
$0 |
$469,597 |
| 2020 |
$7,880 |
$650,763 |
$0 |
$658,643 |
All other engagement fees were billed for services in connection
with agreed upon procedures and tax compliance for DIMA and other related entities.
Audit Committee Pre-Approval Policies and Procedures. Generally,
each Fund’s Audit Committee must pre approve (i) all services to be performed for a Fund by a Fund’s Independent Registered
Public Accounting Firm and (ii) all non-audit services to be performed by a Fund’s Independent Registered Public Accounting Firm
for the DIMA Entities with respect to operations and financial reporting of the Fund, except that the Chairperson or Vice Chairperson
of each Fund’s Audit Committee may grant the pre-approval for non-audit services described in items (i) and (ii) above for non-prohibited
services for engagements of less than $100,000. All such delegated pre approvals shall be presented to each Fund’s Audit Committee
no later than the next Audit Committee meeting.
There were no amounts that were approved by the Audit Committee
pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
According to the registrant’s principal Independent Registered
Public Accounting Firm, substantially all of the principal Independent Registered Public Accounting Firm's hours spent on auditing the
registrant's financial statements were attributed to work performed by full-time permanent employees of the principal Independent Registered
Public Accounting Firm.
***
In connection with the audit of the 2020 and 2021 financial statements,
the Fund entered into an engagement letter with EY. The terms of the engagement letter required by EY, and agreed to by the Audit Committee,
include a provision mandating the use of mediation and arbitration to resolve any controversy or claim between the parties arising out
of or relating to the engagement letter or services provided thereunder.
***
Pursuant to PCAOB Rule 3526, EY is required to describe in writing
to the Fund’s Audit Committee, on at least an annual basis, all relationships between EY, or any of its affiliates, and the DWS
Funds, including the Fund, or persons in financial reporting oversight roles at the DWS Funds that, as of the date of the communication,
may reasonably be thought to bear on EY’s independence. Pursuant to PCAOB Rule 3526, EY has reported the matters set forth below
that may reasonably be thought to bear on EY’s independence. With respect to each reported matter in the aggregate, EY advised the
Audit Committee that, after careful consideration of the facts and circumstances and the applicable independence rules, it concluded that
the matters do not and will not impair EY’s ability to exercise objective and impartial judgement in connection with the audits
of the financial statements for the Fund and a reasonable investor with knowledge of all relevant facts and circumstances would conclude
that EY has been and is capable of exercising objective and impartial judgment on all issues encompassed within EY’s audit engagements.
EY also confirmed to the Audit Committee that it can continue to act as the Independent Registered Public Accounting Firm for the Fund.
| · | EY advised the Fund’s Audit Committee that various covered persons within EY and EY’s affiliates
held investments in, or had other financial relationships with, entities within the DWS Funds “investment company complex”
(as defined in Regulation S-X) (the “DWS Funds Complex”). EY informed the Audit Committee that these investments and financial
relationships were inconsistent with Rule 2-01(c)(1) of Regulation S-X. EY reported that all breaches have been resolved and that none
of the breaches involved any professionals who were part of the audit engagement team for the Fund or in the position to influence the
audit engagement team for the Fund. |
| |
|
| ITEM 5. |
AUDIT COMMITTEE OF LISTED REGISTRANTS |
| |
|
| |
The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The registrant's audit committee consists of William McClayton (Chair), Henry P. Becton, Jr., Richard J. Herring (Vice Chair) and John W. Ballantine. |
| |
|
| ITEM 6. |
SCHEDULE OF INVESTMENTS |
| |
|
| |
Not applicable |
| |
|
| ITEM 7. |
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
| |
|
Scope
DWS has adopted and implemented the
following Policies and Guidelines, which it believes are reasonably designed to ensure that proxies are voted in the best economic interest
of clients and in accordance with its fiduciary duties and local regulation. This Proxy Voting Policy and Guidelines – DWS (“Policy
and Guidelines”) shall apply to all accounts managed by US domiciled advisers and to all US client accounts managed by non-US regional
offices. Non-US regional offices are required to maintain procedures and to vote proxies as may be required by law on behalf of their
non-US clients. In addition, DWS’s proxy policies reflect the fiduciary standards and responsibilities for ERISA accounts.
The attached guidelines represent
a set of global recommendations that were determined by the Global Proxy Voting Sub-Committee (the “GPVSC”). These guidelines
were developed to provide DWS with a comprehensive list of recommendations that represent how DWS will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines are not intended to influence the various DWS legal entities
either directly or indirectly by parent or affiliated companies. In addition, the organizational structures and documents of the various
DWS legal entities allows, where necessary or appropriate, the execution by individual DWS subsidiaries of the proxy voting rights independently
of any parent or affiliated company. This applies in particular to non US fund management companies. The individuals that make proxy
voting decisions are also free to act independently, subject to the normal and customary supervision by the Management/Boards of these
DWS legal entities.
Capitalised terms have the meaning
ascribed to them in the Glossary.
DWS’S Proxy Voting Responsibilities
Proxy votes are the property of DWS’s
advisory clients.1 As such, DWS’s authority and responsibility to vote such proxies depend upon its contractual relationships
with its clients or other delegated authority. DWS has delegated responsibility for effecting its advisory clients’ proxy votes
to Institutional Shareholder Services (“ISS”), an independent third-party proxy voting specialist. ISS votes DWS’s
advisory clients’ proxies in accordance with DWS’s proxy guidelines or DWS’s specific instructions. Where a client
has given specific instructions as to how a proxy should be voted, DWS will notify ISS to carry out those instructions. Where no specific
instruction exists, DWS will follow the procedures in voting the proxies set forth in this document. Certain Taft-Hartley clients may
direct DWS to have ISS vote their proxies in accordance with Taft-Hartley Voting Guidelines.
Clients may in certain instances
contract with their custodial agent and notify DWS that they wish to engage in securities lending transactions. In such cases, it is
the responsibility of the custodian to deduct the number of shares that are on loan so that they do not get voted twice. To the extent
a security is out on loan and DWS determines that a proxy vote (or other shareholder action) is materially important to the client’s
account, DWS may request, on a best efforts basis, that the agent recall the security prior to the record date to allow DWS to vote the
securities.
1 For purposes of this
document, “clients” refers to persons or entities: (i) for which DWS serves as investment adviser or sub-adviser; (ii) for
which DWS votes proxies; and (iii) that have an economic or beneficial ownership interest in the portfolio securities of issuers soliciting
such proxies.
POLICIES
Proxy Voting Activities are
Conducted in the Best Economic Interest of Clients
DWS has adopted the following Policies
and Guidelines to ensure that proxies are voted in accordance with the best economic interest of its clients, as determined by DWS in
good faith after appropriate review. DWS believes that responsibility including environmental, social and governance factors, and profitability,
complement each other in many respects and has adopted Policies and Guidelines consistent with this belief.
The Global Proxy Voting Sub-Committee
The Global Proxy Voting Sub-Committee
is an internal working group established by the applicable DWS’s Investment Risk Oversight Committee pursuant to a written charter.
The GPVSC is responsible for overseeing DWS’s proxy voting activities, including:
| ■ | Adopting, monitoring and updating
guidelines, attached as Attachment A (the “Guidelines”), that provide how DWS
will generally vote proxies pertaining to a comprehensive list of common proxy voting matters; |
| ■ | Voting proxies where: (i) the issues
are not covered by specific client instruction or the Guidelines; or (ii) where an exception
to the Guidelines may be in the best economic interest of DWS’s clients; |
| ■ | Review recommendations for proxies
where the Guidelines specify that the issues are to be determined on a case-by-case basis
and ensure such proxies are voted in accordance with these Policies and Guidelines; and |
| ■ | Monitoring Proxy Vendor Oversight’s
proxy voting activities (see below). |
DWS’s Proxy Vendor Oversight,
a function of DWS’s Operations Group, is responsible for coordinating with ISS to administer DWS’s proxy voting process and
for voting proxies in accordance with any specific client instructions or, if there are none, the Guidelines, and overseeing ISS’
proxy responsibilities in this regard.
Availability of Proxy Voting
Policies and Proxy Voting Record
Copies of this Policy, as it may
be updated from time to time, is made available to clients as required by law and otherwise at DWS’s discretion. Clients may also
obtain information on how their proxies were voted by DWS as required by law and otherwise at DWS’s discretion. Note, however,
that DWS must not selectively disclose its investment company clients’ proxy voting records. Proxy Vendor Oversight will make proxy
voting reports available to advisory clients upon request. The investment companies’ proxy voting records will be disclosed to
shareholders by means of publicly-available annual filings of each company’s proxy voting record for the 12-month periods ending
June 30 (see Section 6 below), if so required by relevant law.
Procedures
The key aspects of DWS’s proxy
voting process are delineated below.
The GPVSC’s Proxy Voting
Guidelines
The Guidelines set forth the GPVSC’s
standard voting positions on a comprehensive list of common proxy voting matters. The GPVSC has developed and continues to update the
Guidelines based on consideration of current corporate governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.
The GPVSC will review the Guidelines
as necessary to support the best economic interests of DWS’s clients and, in any event, at least annually. The GPVSC will make
changes to the Guidelines, whether as a result of the annual review or otherwise, taking solely into account the best economic interests
of clients. Before changing the Guidelines, the GPVSC will thoroughly review and evaluate the proposed change and the reasons therefore,
and the GPVSC Chair will ask GPVSC members whether anyone outside of the DWS organization (but within Deutsche Bank and its affiliates)
or any entity that identifies itself as an DWS advisory client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If any such matter is reported to the GPVSC Chair, the Chair
will promptly notify the Conflicts of Interest Management Sub-Committee (see Section 5.4) and will defer the approval, if possible. Lastly,
the GPVSC will fully document its rationale for approving any change to the Guidelines.
The Guidelines may reflect a voting
position that differs from the actual practices of the public company(ies) within the Deutsche Bank organization or of the investment
companies for which DWS or an affiliate serves as investment adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences may call for differences in the actual practices of
the investment company and the voting positions of the investment company on the same or similar matters. Further, the manner in which
DWS votes proxies on behalf investment company proxies may differ from the voting recommendations made by a DWS-advised or sponsored
investment company soliciting proxies from its shareholders. Proxies solicited by closed-end (and open-end) investment companies are
voted in accordance with the Guidelines.
Specific Proxy Voting Decisions
Made by the GPVSC
Proxy Vendor Oversight will refer
to the GPVSC all proxy proposals: (i) that are not covered by specific client instructions or the Guidelines; or (ii) that, in accordance
with the Guidelines, should be evaluated and voted on a case-by-case basis.
Additionally, if Proxy Vendor Oversight,2
the GPVSC Chair or any member of the GPVSC, a Portfolio Manager, a Research Analyst or a sub-adviser believes that voting a particular
proxy in accordance with the Guidelines may not be in the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or Proxy Vendor Oversight.
2 Proxy Vendor Oversight
generally monitors upcoming proxy solicitations for heightened attention from the press or the industry and for novel or unusual proposals
or circumstances, which may prompt Proxy Vendor Oversight to bring the solicitation to the attention of the GPVSC Chair. DWS Portfolio
Managers, DWS Research Analysts and sub-advisers also may bring a particular proxy vote to the attention of the GPVSC Chair, as a result
of their ongoing monitoring of portfolio securities held by advisory clients and/or their review of the periodic proxy voting record
reports that the GPVSC Chair distributes to DWS portfolio managers and DWS research analysts.
If Proxy Vendor Oversight refers
a proxy proposal to the GPVSC or the GPVSC determines that voting a particular proxy in accordance with the Guidelines is not in the
best economic interests of clients, the GPVSC will evaluate and vote the proxy, subject to the procedures below regarding conflicts.
The GPVSC endeavours to hold meetings
to decide how to vote particular proxies sufficiently before the voting deadline so that the procedures below regarding conflicts can
be completed before the GPVSC’s voting determination.
Proxies that Cannot Be Voted
or Instances When DWS Abstains From Voting
In some cases, the GPVSC may determine
that it is in the best economic interests of its clients not to vote certain proxies, or that it may not be feasible to vote certain
proxies. If the conditions below are met with regard to a proxy proposal, DWS will abstain from voting:
| 1. | Neither the Guidelines nor specific client instructions
cover an issue; |
| 2. | ISS does not make a recommendation on the issue;
and |
| 3. | The GPVSC cannot convene on the proxy proposal
at issue to make a determination as to what would be in the client’s best interest.
(This could happen, for example, if the Conflicts of Interest Management Sub-Committee found
that there was a material conflict or if despite all best efforts being made, the GPVSC quorum
requirement could not be met). |
In addition, it is DWS’s policy
not to vote proxies of issuers subject to laws of those jurisdictions that impose restrictions upon selling shares after proxies are
voted, in order to preserve liquidity. In other cases, it may not be possible to vote certain proxies, despite good faith efforts to
do so. For example, some jurisdictions do not provide adequate notice to shareholders so that proxies may be voted on a timely basis.
Voting rights on securities that have been loaned to third-parties transfer to those third-parties, with loan termination often being
the only way to attempt to vote proxies on the loaned securities. Lastly, the GPVSC may determine that the costs to the client(s) associated
with voting a particular proxy or group of proxies outweighs the economic benefits expected from voting the proxy or group of proxies.
Proxy Vendor Oversight will coordinate
with the GPVSC Chair regarding any specific proxies and any categories of proxies that will not or cannot be voted. The reasons for not
voting any proxy shall be documented.
Conflict of Interest Procedures
Procedures to Address Conflicts
of Interest and Improper Influence
Overriding Principle. In the
limited circumstances where the GPVSC votes proxies,3 the GPVSC will vote those proxies in accordance with what it, in good
faith, determines to be the best economic interests of DWS’s clients.4
3 As mentioned above, the
GPVSC votes proxies where: (i) neither a specific client instruction nor a Guideline directs how the proxy should be voted; or (ii) where
voting in accordance with the Guidelines may not be in the best economic interests of clients. Further, the GPVSC will review recommendations
for proxies where the Guidelines specify that the issues are to be determined on a case-by-case basis and ensure such proxies are voted
in accordance with these Policies and Guidelines.
4 Proxy Vendor Oversight,
who serves as the non-voting secretary of the GPVSC, may receive routine calls from proxy solicitors and other parties interested in
a particular proxy vote. Any contact that attempts to exert improper pressure or influence shall be reported to the Conflicts of Interest
Management Sub-Committee.
Independence of the GPVSC.
As a matter of Compliance policy, the GPVSC and Proxy Vendor Oversight are structured to be independent from other parts of Deutsche
Bank. Members of the GPVSC and the employee responsible for Proxy Vendor Oversight are employees of DWS. As such, they may not be subject
to the supervision or control of any employees of Deutsche Bank Corporate and Investment Banking division (“CIB”). Their
compensation cannot be based upon their contribution to any business activity outside of DWS without prior approval of Legal and Compliance.
They can have no contact with employees of Deutsche Bank outside of DWS regarding specific clients, business matters, or initiatives
without the prior approval of Legal and Compliance. They furthermore may not discuss proxy votes with any person outside of DWS (and
within DWS only on a need to know basis).
Conflict Review Procedures.
The “Conflicts of Interest Management Sub-Committee” within DWS monitors for potential material conflicts of interest in
connection with proxy proposals that are to be evaluated by the GPVSC. The Conflicts of Interest Management Sub-Committee members include
DWS Compliance, the chief compliance officers of the advisors and the DWS Funds. Promptly upon a determination that a proxy vote shall
be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of Interest Management Sub-Committee. The Conflicts of Interest
Management Sub-Committee shall promptly collect and review any information deemed reasonably appropriate to evaluate, in its reasonable
judgment, if DWS or any person participating in the proxy voting process has, or has the appearance of, a material conflict of interest.
For the purposes of this policy, a conflict of interest shall be considered “material” to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC’s decision on the particular vote at issue. GPVSC should
provide the Conflicts of Interest Management Sub-Committee a reasonable amount of time (no less than 24 hours) to perform all necessary
and appropriate reviews. To the extent that a conflicts review cannot be sufficiently completed by the Conflicts of Interest Management
Sub-Committee the proxies will be voted in accordance with the standard Guidelines.
The information considered by the
Conflicts of Interest Management Sub-Committee may include without limitation information regarding: (i) DWS client relationships; (ii)
any relevant personal conflict known by the Conflicts of Interest Management Sub-Committee or brought to the attention of that sub-committee;
and (iii) any communications with members of the GPVSC (or anyone participating or providing information to the GPVSC) and any person
outside of the DWS organization (but within Deutsche Bank and its affiliates) or any entity that identifies itself as an DWS advisory
client regarding the vote at issue. In the context of any determination, the Conflicts of Interest Management Sub-Committee may consult
with and shall be entitled to rely upon all applicable outside experts, including legal counsel.
Upon completion of the investigation,
the Conflicts of Interest Management Sub-Committee will document its findings and conclusions. If the Conflicts of Interest Management
Sub-Committee determines that: (i) DWS has a material conflict of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent; or (ii) certain individuals should be recused from participating in the proxy vote at issue,
the Conflicts of Interest Management Sub-Committee will so inform the GPVSC Chair.
If notified that DWS has a material
conflict of interest as described above, the GPVSC chair will obtain instructions as to how the proxies should be voted either from:
(i) if time permits, the affected clients; or (ii) in accordance with the standard Guidelines. If notified that certain individuals should
be recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance with the procedures set forth below.
Note: Any DWS employee who becomes
aware of a potential, material conflict of interest in respect of any proxy vote to be made on behalf of clients shall notify Compliance
or the Conflicts of Interest Management Sub-Committee. Compliance shall call a meeting of the Conflicts of Interest Management Sub-Committee
to evaluate such conflict and determine a recommended course of action.
Procedures to be followed by the
GPVSC. At the beginning of any discussion regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will inquire
as to whether any GPVSC member (whether voting or ex officio) or any person participating in the proxy voting process has a personal
conflict of interest or has actual knowledge of an actual or apparent conflict that has not been reported to the Conflicts of Interest
Management Sub-Committee.
The GPVSC Chair also will inquire
of these same parties whether they have actual knowledge regarding whether any Director, officer, or employee outside of the DWS organization
(but within Deutsche Bank and its affiliates) or any entity that identifies itself as an DWS advisory client, has: (i) requested that
DWS, Proxy Vendor Oversight (or any member thereof), or a GPVSC member vote a particular proxy in a certain manner; (ii) attempted to
influence DWS, Proxy Vendor Oversight (or any member thereof), a GPVSC member or any other person in connection with proxy voting activities;
or (iii) otherwise communicated with a GPVSC member, or any other person participating or providing information to the GPVSC regarding
the particular proxy vote at issue and which incident has not yet been reported to the Conflicts of Interest Management Sub-Committee.
If any such incidents are reported
to the GPVSC Chair, the Chair will promptly notify the Conflicts of Interest Management Sub-Committee and, if possible, will delay the
vote until the Conflicts of Interest Management Sub-Committee can complete the conflicts report. If a delay is not possible, the Conflicts
of Interest Management Sub-Committee will instruct the GPVSC (i) whether anyone should be recused from the proxy voting process or (ii)
whether DWS should vote the proxy in accordance with the standard guidelines, seek instructions as to how to vote the proxy at issue
from ISS or, if time permits, the affected clients. These inquiries and discussions will be properly reflected in the GPVSC’s minutes.
Duty to Report. Any DWS employee,
including any GPVSC member (whether voting or ex officio), that is aware of any actual or apparent conflict of interest relevant to,
or any attempt by any person outside of the DWS organization (but within Deutsche Bank and its affiliates) or any entity that identifies
itself as an DWS advisory client to influence how DWS votes its proxies has a duty to disclose the existence of the situation to the
GPVSC Chair (or his or her designee) and the details of the matter to the Conflicts of Interest Management Sub-Committee. In the case
of any person participating in the deliberations on a specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.
Recusal of Members. The GPVSC
will recuse from participating in a specific proxy vote any GPVSC members (whether voting or ex officio) and/or any other person who:
(i) are personally involved in a material conflict of interest; or (ii) who, as determined by the Conflicts of Interest Management Sub-Committee,
have actual knowledge of a circumstance or fact that could affect their independent judgment, in respect of such vote. The GPVSC will
also exclude from consideration the views of any person (whether requested or volunteered) if the GPVSC or any member thereof knows,
or if the Conflicts of Interest Management Sub-Committee has determined, that such other person has a material conflict of interest with
respect to the particular proxy or has attempted to influence the vote in any manner prohibited by these policies.
If, after excluding all relevant
GPVSC voting members pursuant to the paragraph above, there are three or more GPVSC voting members remaining, those remaining GPVSC members
will determine how to vote the proxy in accordance with these Policies and Guidelines. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard Guidelines or will obtain instructions as to how to have
the proxy voted from, if time permits, the affected clients and otherwise from ISS.
Investment Companies and Affiliated
Public Companies
Investment Companies. As reflected
in the Guidelines, all proxies solicited by open-end and closed-end investment companies are voted in accordance with the Guidelines,
unless the client directs DWS to vote differently on a specific proxy or specific categories of proxies. However, regarding investment
companies for which DWS or an affiliate serves as investment adviser or principal underwriter, such proxies are voted in the same proportion
as the vote of all other shareholders (i.e., “mirror” or “echo” voting). Master Fund proxies solicited from feeder
Funds are voted in accordance with applicable provisions of Section 12 of the Investment Company Act of 1940 (“Investment Company
Act”).
Subject to participation agreements
with certain Exchange Traded Funds (“ETF”) issuers that have received exemptive orders from the US Securities and Exchange
Commission (“SEC”) allowing investing DWS Funds to exceed the limits set forth in Section 12(d)(1)(A) and (B) of the Investment
Company Act, DWS will echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of outstanding voting shares globally when
required to do so by participation agreements and SEC orders.
Affiliated Public Companies.
For proxies solicited by non-investment company issuers of or within the DWS or Deutsche Bank organization (e.g., shares of DWS or Deutsche
Bank), these proxies will be voted in the same proportion as the vote of other shareholders (i.e., “mirror” or “echo”
voting). In markets where mirror voting is not permitted, DWS will “Abstain” from voting such shares.
Note: With respect to the DWS Central
Cash Management Government Fund (registered under the Investment Company Act), the Fund is not required to engage in echo voting and
the investment adviser will use these Guidelines and may determine, with respect to the DWS Central Cash Management Government Fund,
to vote contrary to the positions in the Guidelines, consistent with the Fund’s best interest.
Other Procedures that Limit
Conflicts of Interest
DWS and other entities in the Deutsche
Bank organization have adopted a number of policies, procedures, and internal controls that are designed to avoid various conflicts of
interest, including those that may arise in connection with proxy voting, including but not limited to:
| 1. | Code of Conduct– DB Group; |
| 2. | Conflicts of Interest Policy – DWS Group; |
| 3. | Code of Ethics – DWS US; |
| 4. | Code of Ethics – DWS ex US |
| 5. | Code of Professional Conduct – US. |
The GPVSC expects that these policies,
procedures, and internal controls will greatly reduce the chance that the GPVSC (or its members) would be involved in, aware of, or influenced
by an actual or apparent conflict of interest.
All impacted business units are required
to adopt, implement, and maintain procedures to ensure compliance with this Section. At a minimum, such procedures must: (i) assign roles
and responsibilities for carrying out the procedures, including responsibility for periodically updating the procedures; (ii) identify
clear escalation paths for identified breaches of the procedures; and (iii) contain a legend or table mapping the procedures to this
Section (e.g., cross-referencing Section or page numbers).
RECORDKEEPING
At a minimum, the following records
must be properly maintained and readily accessible in order to evidence compliance with this Policy.
| ■ | DWS will maintain a record of each
proxy vote cast by DWS that includes among other things, company name, meeting date, proposals
presented, vote cast, and shares voted. |
| ■ | Proxy Vendor Oversight maintains
records for each of the proxy ballots it votes. Specifically, the records include, but are
not limited to: |
The
proxy statement (and any additional solicitation materials) and relevant portions of annual statements;
Any
additional information considered in the voting process that may be obtained from an issuing company, its agents, or proxy research firms;
Analyst
worksheets created for stock option plan and share increase analyses; and
Proxy
Edge print-screen of actual vote election.
| ■ | DWS will: (i) retain this Policy
and the Guidelines; (ii) will maintain records of client requests for proxy voting information;
and (iii) will retain any documents Proxy Vendor Oversight or the GPVSC prepared that were
material to making a voting decision or that memorialized the basis for a proxy voting decision. |
| ■ | The GPVSC also will create and maintain
appropriate records documenting its compliance with this Policy, including records of its
deliberations and decisions regarding conflicts of interest and their resolution. |
| ■ | With respect to DWS’s investment
company clients, ISS will create and maintain records of each company’s proxy voting
record for the 12-month periods ending June 30. DWS will compile the following information
for each matter relating to a portfolio security considered at any shareholder meeting held
during the period covered by the report (and with respect to which the company was entitled
to vote): |
The
name of the issuer of the portfolio security;
The
exchange ticker symbol of the portfolio security (if symbol is available through reasonably practicable means);
The
Council on Uniform Securities Identification Procedures (“CUSIP”) number for the portfolio security (if the number is available
through reasonably practicable means);
The
shareholder meeting date;
A brief
identification of the matter voted on;
Whether
the matter was proposed by the issuer or by a security holder;
Whether
the company cast its vote on the matter;
How
the company cast its vote (e.g., for or against proposal, or abstain; for or withhold regarding election of Directors); and
Whether
the company cast its vote for or against Management.
Note: This list is intended to provide
guidance only in terms of the records that must be maintained in accordance with this policy. In addition, please note that records must
be maintained in accordance with the Records Management Policy – Deutsche Bank Group and applicable policies and procedures thereunder.
With respect to electronically stored
records, “properly maintained” is defined as complete, authentic (unalterable), usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if necessary to comply with applicable regulatory requirements),
the first three years in an appropriate DWS office.
OVERSIGHT RESPONSIBILITIES
Proxy Vendor Oversight will review
a reasonable sampling of votes on a regular basis to ensure that ISS has cast the votes in a manner consistent with the Guidelines. Proxy
Vendor Oversight will provide the GPVSC with a quarterly report of its review and identify any issues encountered during the period.
Proxy Vendor Oversight will also perform a post season review once a year on certain proposals to assess whether ISS voted consistent
with the Guidelines.
In addition, the GPVSC will, in cooperation
with Proxy Vendor Oversight and DWS Compliance, consider, on at least an annual basis, whether ISS has the capacity and competence to
adequately analyze the matters for which it is responsible. This includes whether ISS has effective polices, and methodologies and a
review of ISS’s policies and procedures with respect to conflicts.
The GPVSC also monitors the proxy
voting process by reviewing summary proxy information presented by ISS to determine, among other things, whether any changes should be
made to the Guidelines. This review will take place at least quarterly and is documented in the GPVSC’s minutes.
ANNUAL REVIEW
The GPVSC, in cooperation with Proxy
Vendor Oversight, will review and document, no less frequently than annually, the adequacy of the Guidelines, including whether the Guidelines
continue to be reasonably designed to ensure that DWS votes in the best interest of its clients.
GLOSSARY
| Term |
Definition |
| Business
Allocation Plan |
Documents
the allocation of responsibilities amongst the members of the Management Board of DB AG |
| Committee |
Decision-making
forum established pursuant to the “Committee Governance Policy – Deutsche Bank Group” for a specific purpose and
an unlimited period of time |
| CUSIP |
Council
on Uniform Securities Identification Procedures |
| Employee |
Any
individual with an employment contract directly with a Legal Entity of DB Group |
| ETF |
Exchange
Traded Funds |
| GPVSC |
Global
Proxy Voting Sub-Committee |
| Integrated
Consequence Management Framework (iCMF) |
Refers
to the framework established and published by HR that helps managers and employees in DB AG understand how positive and poor performance
are addressed, as well as how related controls work |
| Investment
Company Act |
Investment
Company Act of 1940 |
| ISS |
Institutional
Shareholder Services |
| Management
Board [of DB AG] |
Governing
body of DB AG responsible for managing DB AG |
| Risk
Type Controller (RTC) |
Global
Head of a Risk Control Function; formally representing the respective Risk Control Function and accountable for designing, implementing
and maintaining an effective risk type management / control and policy framework for all risk types within their mandate. |
| RTC
Contact |
Individual(s)
authorised by the Risk Type Controller to fulfil tasks in relation to the respective RTC mandate including authorisation of other
Units to issue a Policy or Procedure regulating the respective risk type |
| SEC |
Securities
and Exchange Commission |
| Unit |
Refers
to the organisational areas within DB Group, such as corporate divisions and infrastructure functions, as per the DB Business Allocation
Plan. |
9. LIST
OF ANNEXES AND ATTACHMENTS
Attachment A – DWS Proxy Voting
Guidelines – DWS Americas
Attachment A – DWS PROXY
VOTING GUIDELINES
DWS
Proxy Voting Guidelines
Effective March 1, 2021
Table of Contents
| |
Board
of Directors |
| |
Independence |
| |
Composition |
| |
Responsiveness |
| |
Accountability |
| |
Voting
on Director Nominees in Contested Elections |
| |
Vote-No
Campaigns |
| |
Proxy
Contests/Proxy Access |
| |
Other
Board Related Proposals |
| |
Adopt
Anti-Hedging/Pledging/Speculative Investments Policy |
| |
Board
Refreshment |
| |
Term/Tenure
Limits |
| |
Age
Limits |
| |
Board
Size |
| |
Classification/Declassification
of the Board |
| |
CEO
Succession Planning |
| |
Cumulative
Voting |
| |
Director
and Officer Indemnification and Liability Protection |
| |
Establish/Amend
Nominee Qualifications |
| |
Establish
Other Board Committee Proposals |
| |
Filling
Vacancies/Removal of Directors |
| |
Independent
Board Chair |
| |
Majority
of Independent Directors/Establishment of Independent Committees |
| |
Majority
Vote Standard for the Election of Directors |
| |
Proxy
Access |
| |
Require
More Nominees than Open Seats |
| |
Shareholder
Engagement Policy (Shareholder Advisory Committee) |
| |
Audit-Related |
| |
Auditor
Indemnification and Limitation of Liability |
| |
Auditor
Ratification |
| |
Shareholder
Proposals Limiting Non-Audit Services |
| |
Shareholder
Proposals on Audit Firm Rotation |
| |
Shareholder
Rights & Defenses |
| |
Advance
Notice Requirements for Shareholder Proposals/Nominations |
| |
Amend
Bylaws without Shareholder Consent |
| |
Control
Share Acquisition Provisions |
| |
Control
Share Cash—Out Provisions |
| |
Disgorgement
Provisions |
| |
Fair
Price Provisions |
| |
Freeze-Out
Provisions |
| |
Greenmail |
| |
Shareholder
Litigation Rights Federal Forum Selection Provisions |
| |
Exclusive
Forum Provisions for State Law Matters |
| |
Fee
shifting |
| |
Net
Operating Loss (NOL) Protective Amendments |
| |
Poison
Pills (Shareholder Rights Plans) |
| |
Shareholder
Proposals to Put Pill to a Vote and/or Adopt a Pill Policy |
| |
Management
Proposals to Ratify a Poison Pill |
| |
Management
Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs) |
| |
Proxy
Voting Disclosure, Confidentiality, and Tabulation |
| |
Ratification
Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions |
| |
Reimbursing
Proxy Solicitation Expenses |
| |
Reincorporation
Proposals |
| |
Shareholder
Ability to Act by Written Consent |
| |
Shareholder
Ability to Call Special Meetings |
| |
Stakeholder
Provisions |
| |
State
Antitakeover Statutes |
| |
Supermajority
Vote Requirements |
| |
Virtual
Shareholder Meetings |
| |
Capital
/ Restructuring |
| |
Capital |
| |
Adjustments
to Par Value of Common Stock |
| |
Common
Stock Authorization |
| |
Dual
Class Structure |
| |
Issue
Stock for Use with Rights Plan |
| |
Preemptive
Rights |
| |
Preferred
Stock Authorization |
| |
Recapitalization
Plans |
| |
Reverse
Stock Splits |
| |
Share
Repurchase Programs |
| |
Share
Repurchase Programs Shareholder Proposals |
| |
Stock
Distributions: Splits and Dividends |
| |
Tracking
Stock |
| |
Restructuring |
| |
Appraisal
Rights |
| |
Asset
Purchases |
| |
Asset
Sales |
| |
Bundled
Proposals |
| |
Conversion
of Securities |
| |
Corporate
Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans |
| |
Formation
of Holding Company |
| |
Going
Private and Going Dark Transactions (LBOs and Minority Squeeze-outs) |
| |
Joint
Ventures |
| |
Liquidations |
| |
Mergers
and Acquisitions |
| |
Private
Placements/Warrants/Convertible Debentures |
| |
Reorganization/Restructuring
Plan (Bankruptcy) |
| |
Special
Purpose Acquisition Corporations (SPACs) |
| |
Special
Purpose Acquisition Corporations (SPACs) - Proposals for Extensions |
| |
Spin-offs |
| |
Value
Maximization Shareholder Proposals |
| |
Compensation |
| |
Executive
Pay Evaluation |
| |
Advisory
Votes on Executive Compensation—Management Proposals (Say-on-Pay) |
| |
Frequency
of Advisory Vote on Executive Compensation ("Say When on Pay") |
| |
Voting
on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale |
| |
Equity-Based
and Other Incentive Plans |
| |
Further
Information on certain EPSC Factors: |
| |
Egregious
Factors |
| |
Liberal
Change in Control Definition |
| |
Repricing
Provisions |
| |
Problematic
Pay Practices or Significant Pay-for-Performance Disconnect |
| |
Amending
Cash and Equity Plans (including Approval for Tax Deductibility (162(m)) |
| |
Specific
Treatment of Certain Award Types in Equity Plan Evaluations |
| |
Dividend
Equivalent Rights |
| |
Operating
Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs) |
| |
Other
Compensation Plans |
| |
401(k)
Employee Benefit Plans |
| |
Employee
Stock Ownership Plans (ESOPs) |
| |
Employee
Stock Purchase Plans—Qualified Plans |
| |
Employee
Stock Purchase Plans—Non-Qualified Plans |
| |
Option
Exchange Programs/Repricing Options |
| |
Stock
Plans in Lieu of Cash |
| |
Transfer
Stock Option (TSO) Programs |
| |
Director
Compensation |
| |
Shareholder
Ratification of Director Pay Programs |
| |
Equity
Plans for Non-Employee Directors |
| |
Non-Employee
Director Retirement Plans |
| |
Shareholder
Proposals on Compensation |
| |
Bonus
Banking/Bonus Banking “Plus” |
| |
Compensation
Consultants—Disclosure of Board or Company’s Utilization |
| |
Disclosure/Setting
Levels or Types of Compensation for Executives and Directors |
| |
Golden
Coffins/Executive Death Benefits |
| |
Hold
Equity Past Retirement or for a Significant Period of Time |
| |
Pay
Disparity |
| |
Pay
for Performance/Performance-Based Awards |
| |
Pay
for Superior Performance |
| |
Pre-Arranged
Trading Plans (10b5-1 Plans) |
| |
Prohibit
Outside CEOs from Serving on Compensation Committees |
| |
Recoupment
of Incentive or Stock Compensation in Specified Circumstances |
| |
Severance
Agreements for Executives/Golden Parachutes |
| |
Share
Buyback Impact on Incentive Program Metrics |
| |
Supplemental
Executive Retirement Plans (SERPs) |
| |
Tax
Gross-Up Proposals |
| |
Termination
of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity |
| |
Routine
/ Miscellaneous |
| |
Adjourn
Meeting |
| |
Amend
Quorum Requirements |
| |
Amend
Minor Bylaws |
| |
Change
Company Name |
| |
Change
Date, Time, or Location of Annual Meeting |
| |
Other
Business |
| |
Social
and Environmental Issues |
| |
Global
Approach |
| |
Endorsement
of Principles |
| |
Animal
Welfare |
| |
Animal
Welfare Policies |
| |
Animal
Testing |
| |
Animal
Slaughter |
| |
Consumer
Issues |
| |
Genetically
Modified Ingredients |
| |
Reports
on Potentially Controversial Business/Financial Practices |
| |
Pharmaceutical
Pricing, Access to Medicines, and Prescription Drug Reimportation |
| |
Product
Safety and Toxic/Hazardous Materials |
| |
Tobacco-Related
Proposals |
| |
Climate
Change |
| |
Climate
Change/Greenhouse Gas (GHG) Emissions |
| |
Energy
Efficiency |
| |
Renewable
Energy |
| |
Diversity |
| |
Board
Diversity |
| |
Equality
of Opportunity |
| |
Gender
Identity, Sexual Orientation, and Domestic Partner Benefits |
| |
Gender,
Race / Ethnicity Pay Gap |
| |
Environment
and Sustainability |
| |
Facility
and Workplace Safety |
| |
General
Environmental Proposals and Community Impact Assessments |
| |
Hydraulic
Fracturing |
| |
Operations
in Protected Areas |
| |
Recycling |
| |
Sustainability
Reporting |
| |
Water
Issues |
| |
General
Corporate Issues |
| |
Charitable
Contributions |
| |
Data
Security, Privacy, and Internet Issues |
| |
Environmental,
Social, and Governance (ESG) Compensation-Related Proposals |
| |
Human
Rights, Human Capital Management, and International Operations |
| |
Human
Rights Proposals |
| |
Mandatory
Arbitration |
| |
Operations
in High Risk Markets |
| |
Outsourcing/Offshoring |
| |
Sexual
Harassment |
| |
Weapons
and Military Sales |
| |
Political
Activities |
| |
Lobbying |
| |
Political
Contributions |
| |
Political
Ties |
| |
Registered
Investment Company Proxies |
| |
Election
of Directors |
| |
Closed
End Fund - Unilateral Opt-In to Control Share Acquisition Statutes |
| |
Converting
Closed-end Fund to Open-end Fund |
| |
Proxy
Contests |
| |
Investment
Advisory Agreements |
| |
Approving
New Classes or Series of Shares |
| |
Preferred
Stock Proposals |
| |
1940
Act Policies |
| |
Changing
a Fundamental Restriction to a Nonfundamental Restriction |
| |
Change
Fundamental Investment Objective to Nonfundamental |
| |
Name
Change Proposals |
| |
Change
in Fund's Subclassification |
| |
Business
Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value |
| |
Disposition
of Assets/Termination/Liquidation |
| |
Changes
to the Charter Document |
| |
Changing
the Domicile of a Fund |
| |
Authorizing
the Board to Hire and Terminate Subadvisers Without Shareholder Approval |
| |
Distribution
Agreements |
| |
Master-Feeder
Structure |
| |
Mergers |
| |
Shareholder
Proposals for Mutual Funds |
| |
Establish
Director Ownership Requirement |
| |
Reimburse
Shareholder for Expenses Incurred |
| |
Terminate
the Investment Advisor |
| |
Appendix
I |
NOTE: Because of the unique
oversight structure and regulatory scheme applicable to closed-end and open-end investment companies, except as otherwise noted, these
voting guidelines are not applicable to holdings of shares of closed-end and open-end investment companies (except Real Estate Investment
Trusts).
In voting proxies that are noted
case-by-case, DWS will give significant weight to ISS recommendation.
BOARD OF DIRECTORS
DWS’s policy is to generally
vote for director nominees, except under the following circumstances (with new nominees5 considered on case-by-case basis):
Independence
General Recommendation: DWS’s
policy is to generally vote against6 or withhold from non-independent directors when (See Appendix 1 for Classification of
Directors):
| ■ | 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. |
Composition
Attendance at Board and Committee
Meetings: DWS’s policy is to generally vote against or withhold from directors (except nominees who served only part of the fiscal
year7) 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:
| ■ | 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: DWS’s
policy is to generally vote against or withhold from individual directors who:
| ■ | Sit on more than five public company
boards; or |
| ■ | Are CEOs of public companies who
sit on the boards of more than two public companies besides their own—withhold only
at their outside boards8 |
5 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.
6 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.
7 Nominees who served for
only part of the fiscal year are generally exempted from the attendance policy.
8 Although all of a CEO’s
subsidiary boards with publicly-traded common stock will be counted as separate boards, DWS 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.
Gender Diversity: For companies
in the Russell 3000 or S&P 1500 indices, DWS’s policy is to 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 a 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, highlight boards with no apparent racial and/or ethnic diversity9.
| ■ | For companies in the Russell 3000
or S&P 1500 indices, effective for meetings on or after Feb. 1, 2022, 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. An exception
will be made if (i) 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; or (ii) there are no new nominees proposed for election
to the board. |
Responsiveness
DWS’s policy is to generally
vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:
| ■ | 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; |
| ■ | 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; |
| ■ | 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. |
DWS’s policy is to generally
vote case-by-case on Compensation Committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:
| ■ | 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; |
| ■ | 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 |
| ■ | 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. |
Accountability
Problematic Takeover Defenses/Governance
Structure
Poison Pills: DWS’s
policy is to generally vote against or withhold from all nominees (except new nominees5, who should be considered case-by-case)
if:
| ■ | The company has a poison pill that
was not approved by shareholders10. However, vote case-by-case on nominees if
the board adopts an initial pill with a term of one year or less, depending on the disclosed
rationale for the adoption, and other factors as relevant (such as a commitment to put any
renewal to a shareholder vote); |
| ■ | 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 pill, whether short-term11
or long-term, has a deadhand or slowhand feature. |
9 Aggregate diversity statistics
provided by the board will only be considered if specific to racial and/or ethnic diversity.
10 Public shareholders
only, approval prior to a company’s becoming public is insufficient.
11 If the short-term pill
with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, DWS will generally still vote withhold or
against nominees at the next shareholder meeting following its adoption.
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; |
| ■ | 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. |
Unilateral Bylaw/Charter Amendments
and Problematic Capital Structures: DWS’s policy is to generally vote against or withhold from directors individually, committee
members, or the entire board (except new nominees5, 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. DWS’s policy is to generally
vote against (except new nominees, who should be considered case-by-case) if the directors:
| ■ | Adopted supermajority vote requirements
to amend the bylaws or charter; or |
| ■ | Eliminated shareholders' ability
to amend bylaws. |
Problematic Capital Structure
- Newly Public Companies: For newly public companies6, DWS’s policy is to generally vote against or withhold from
the entire board (except new nominees5, who should be considered case-by-case) if, prior to or in connection with the company's
public offering, the company or its board implemented a multi-class capital structure in which the classes have unequal voting rights
without subjecting the multi-class capital structure to a reasonable time-based sunset. In assessing the reasonableness of a time-based
sunset provision, consideration will be given to the company’s lifespan, its post-IPO ownership structure and the board’s
disclosed rationale for the sunset period selected. No sunset period of more than seven years from the date of the IPO will be considered
to be reasonable.
Continue to vote against or withhold
from incumbent directors in subsequent years, unless the problematic capital structure is reversed or removed.
Problematic Governance Structure
- Newly Public Companies: For newly public companies12, DWS’s policy is to generally vote against or withhold from
directors individually, committee members, or the entire board (except new nominees5, 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 reasonable sunset provision will
be considered a mitigating factor.
Unless the adverse provision is reversed
or removed, vote case-by-case on director nominees in subsequent years.
12 Newly-public companies
generally include companies that emerge from bankruptcy, spin-offs, direct listings, and those who complete a traditional initial public
offering.
Management Proposals to Ratify
Existing Charter or Bylaw Provisions: DWS’s policy is to generally 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. |
Restrictions on Shareholders’
Rights
Restricting Binding Shareholder
Proposals: DWS’s policy is to generally vote against or withhold from the 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 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. DWS’s policy is to 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
DWS’s policy is to 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. |
DWS’s policy is to generally
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, DWS’s policy is to generally 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. |
DWS’s policy is to 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. |
DWS’s policy is to 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:
DWS’s policy is to generally
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; |
| ■ | 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. |
Governance Failures
Under extraordinary circumstances,
DWS’s policy is to generally vote case-by-case on directors individually, committee members, or the entire board, due to:
| ■ | Material failures of governance,
stewardship, risk oversight13, or fiduciary responsibilities at the company, including
failures 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. |
13 Examples of failure
of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor
oversight of environmental and social issues, including climate change; significant adverse legal judgments or settlement; or hedging
of company stock.
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: DWS’s
policy is to generally 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, DWS’s policy is to generally 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: DWS’s
policy is to 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
DWS believes 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote against management and shareholder proposals to limit the tenure of independent directors through mandatory
retirement ages. DWS’s policy is to generally vote for proposals to remove mandatory age limits.
Board Size
General Recommendation: DWS’s
policy is to generally vote for proposals seeking to fix the board size or designate a range for the board size. DWS’s policy is
to generally 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: DWS’s
policy is to 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: DWS’s
policy is to 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: DWS’s
policy is to 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 access14,
thereby allowing shareholders to nominate directors to the company’s ballot; and |
| ■ | 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. |
DWS’s policy is to generally
vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).
14 A proxy access right
that meets the recommended guidelines.
Director and Officer Indemnification
and Liability Protection
General Recommendation: DWS’s
policy is to generally vote case-by-case on proposals on director and officer indemnification and liability protection.
Vote against proposals that would:
| ■ | Eliminate entirely directors' and
officers' liability for monetary damages for violating the duty of care. |
| ■ | Expand coverage beyond just legal
expenses to liability for acts that are more serious violations of fiduciary obligation than
mere carelessness. |
| ■ | 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. |
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 director was found to have
acted in good faith and in a manner that s/he 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
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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.
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: DWS’s
policy is to 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.
DWS’s policy is to 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: DWS’s
policy is to generally vote for management and shareholder proposals for proxy access with the following provisions:
| ■ | Ownership threshold: maximum
requirement not more than three percent (3%) of the voting power; |
| ■ | Ownership duration: maximum
requirement not longer than three (3) years of continuous ownership for each member of the
nominating group; |
| ■ | Aggregation: minimal or no
limits on the number of shareholders permitted to form a nominating group; |
| ■ | Cap: cap on nominees of generally
twenty-five percent (25%) of the board. |
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: DWS’s
policy is to generally 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: DWS’s
policy is to 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; |
| ■ | 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. |
AUDIT-RELATED
Auditor Indemnification and
Limitation of Liability
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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. |
SHAREHOLDER RIGHTS & DEFENSES
Advance Notice Requirements
for Shareholder Proposals/Nominations
General Recommendation: DWS’s
policy is to generally 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. 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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.
DWS’s policy is to generally
vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.
Freeze-Out Provisions
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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.
General Recommendation: DWS’s
policy is to 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: DWS’s
policy is to 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 |
| ■ | 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 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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:
| ■ | 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); |
| ■ | 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: DWS’s
policy is to generally 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 |
| ■ | 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, DWS’s policy is to generally 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: DWS’s
policy is to generally 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:
| ■ | 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; |
| ■ | 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. |
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: DWS’s
policy is to generally 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.
DWS’s policy is to 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:
| ■ | The ownership threshold to transfer
(NOL pills generally have a trigger slightly below 5 percent); |
| ■ | 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: DWS’s
policy is to generally 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; |
| ■ | 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; |
| ■ | 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; |
| ■ | 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; |
| ■ | 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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.
DWS’s policy is to 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:
| ■ | The election of fewer than 50 percent
of the directors to be elected is contested in the election; |
| ■ | One or more of the dissident’s
candidates is elected; |
| ■ | Shareholders are not permitted to
cumulate their votes for directors; and |
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. |
DWS’s policy is to generally
vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.
Shareholder Ability to Act by
Written Consent
General Recommendation: DWS’s
policy is to generally vote against management and shareholder proposals to restrict or prohibit shareholders' ability to act by written
consent.
DWS’s policy is to 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 inclusion of exclusionary or
prohibitive language; |
| ■ | Investor ownership structure; and |
| ■ | Shareholder support of, and management's
response to, previous shareholder proposals. |
DWS’s policy is to vote case-by-case
on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:
| ■ | An unfettered15 right
for shareholders to call special meetings at a 10 percent threshold; |
| ■ | A majority vote standard in uncontested
director elections; |
| ■ | No non-shareholder-approved pill;
and |
| ■ | An annually elected board. |
15 "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.
Shareholder Ability to Call
Special Meetings
General Recommendation: DWS’s
policy is to generally vote against management or shareholder proposals to restrict or prohibit shareholders’ ability to call special
meetings.
DWS’s policy is to 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; |
| ■ | Minimum ownership threshold necessary
to call special meetings (10 percent preferred); |
| ■ | 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: DWS’s
policy is to generally 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: DWS’s
policy is to 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: DWS’s
policy is to 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: |
| ■ | Quorum requirements; and |
Virtual Shareholder Meetings
General Recommendation: DWS’s
policy is to 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-only16
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. |
16 Virtual-only shareholder
meeting” refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.
CAPITAL / RESTRUCTURING
Capital
Adjustments to Par Value of
Common Stock
General Recommendation: DWS’s
policy is to 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 Recommendation: DWS’s
policy is to 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 a transaction on the same ballot that warrants support.
DWS’s policy is to generally
vote against proposals at companies with more than one class of common stock to increase the number of authorized shares of the class
of common stock that has superior voting rights.
DWS’s policy is to generally
vote against proposals to increase the number of authorized common shares if a vote for a reverse stock split on the same ballot is warranted
despite the fact that the authorized shares would not be reduced proportionally.
DWS’s policy is to vote case-by-case
on all other proposals to increase the number of shares of common stock authorized for issuance. Take into account company-specific factors
that include, at a minimum, the following:
| ■ | The company's use of authorized shares
during the last three years; |
| ■ | Disclosure in the proxy statement
of the specific purposes of the proposed increase; |
| ■ | Disclosure in the proxy statement
of specific and severe risks to shareholders of not approving the request; and |
| ■ | The dilutive impact of the request
as determined relative to an allowable increase calculated by typically 100 percent of existing
authorized shares that reflects the company's need for shares and total shareholder returns. |
Dual Class Structure
General Recommendation: DWS’s
policy is to 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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 Recommendation: DWS’s
policy is to 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 a transaction on the same ballot that warrants support.
DWS’s policy is to vote against
proposals at companies with more than one class or series of preferred stock to increase the number of authorized shares of the class
or series of preferred stock that has superior voting rights.
DWS’s policy is to vote case-by-case
on all other proposals to increase the number of shares of preferred stock authorized for issuance. Take into account company-specific
factors that include, at a minimum, the following:
| ■ | The company's use of authorized preferred
shares during the last three years; |
| ■ | Disclosure in the proxy statement
of the specific purposes for the proposed increase; |
| ■ | Disclosure in the proxy statement
of specific and severe risks to shareholders of not approving the request; |
| ■ | In cases where the company has existing
authorized preferred stock, the dilutive impact of the request as determined by an allowable
increase calculated by typically 100 percent of existing authorized shares that reflects
the company's need for shares and total shareholder returns; and |
| ■ | Whether the shares requested are
blank check preferred shares that can be used for antitakeover purposes. |
Recapitalization Plans
General Recommendation: DWS’s
policy is to generally vote case-by-case on recapitalizations (reclassifications of securities), taking into account the following:
| ■ | More simplified capital structure; |
| ■ | 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: DWS’s
policy is to generally 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. |
DWS’s policy is to generally
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
General Recommendation: For
U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, DWS’s policy
is to generally 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:
| ■ | 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. |
DWS’s policy is to generally
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: DWS’s
policy is to 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote for proposals to restore or provide shareholders with rights of appraisal.
Asset Purchases
General Recommendation: DWS’s
policy is to generally vote case-by-case on asset purchase proposals, considering the following factors:
| ■ | Financial and strategic benefits; |
| ■ | How the deal was negotiated; |
| ■ | Other alternatives for the business; |
Asset Sales
General Recommendation: DWS’s
policy is to generally 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; |
| ■ | How the deal was negotiated; |
Bundled Proposals
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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.
DWS’s policy is to 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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; |
| ■ | 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: DWS’s
policy is to generally vote case-by-case on going private transactions, taking into account the following:
| ■ | How the deal was negotiated; |
| ■ | Other alternatives/offers considered;
and |
DWS’s policy is to 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: DWS’s
policy is to generally vote case-by-case on proposals to form joint ventures, taking into account the following:
| ■ | Percentage of assets/business contributed; |
| ■ | Financial and strategic benefits; |
Liquidations
General Recommendation: DWS’s
policy is to generally 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. |
DWS’s policy is to vote for
the liquidation if the company will file for bankruptcy if the proposal is not approved.
Mergers and Acquisitions
General Recommendation: DWS’s
policy is to generally 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:
| ■ | 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. |
| ■ | Market reaction - How has
the market responded to the proposed deal? A negative market reaction should cause closer
scrutiny of a deal. |
| ■ | 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. |
| ■ | 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. |
| ■ | 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. |
| ■ | 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. |
Private Placements/Warrants/Convertible
Debentures
General Recommendation: DWS’s
policy is to generally vote case-by-case on proposals regarding private placements, warrants, and convertible debentures taking into
consideration:
| ■ | 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. |
| ■ | 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 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.
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.
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.
| ■ | 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. |
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 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?
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: DWS’s
policy is to generally 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; |
| ■ | Percentage ownership of current shareholders
in the reorganized company; |
| ■ | 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: DWS’s
policy is to generally 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 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. |
| ■ | 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. |
| ■ | 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. |
| ■ | 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. |
| ■ | 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? |
| ■ | 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: DWS’s
policy is to generally 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. |
| ■ | 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. |
| ■ | 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. |
| ■ | Prior extension requests:
Some SPACs request additional time beyond the extension period sought in prior extension
requests. |
Spin-offs
General Recommendation: DWS’s
policy is to generally vote case-by-case on spin-offs, considering:
| ■ | Tax and regulatory advantages; |
| ■ | Planned use of the sale proceeds; |
| ■ | Benefits to the parent company; |
| ■ | Corporate governance changes; |
| ■ | Changes in the capital structure. |
Value Maximization Shareholder
Proposals
General Recommendation: DWS’s
policy is to generally vote case-by-case on shareholder proposals seeking to maximize shareholder value by:
| ■ | Hiring a financial advisor to explore
strategic alternatives; |
| ■ | 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. |
COMPENSATION
Executive Pay Evaluation
Advisory Votes on Executive
Compensation—Management Proposals (Say-on-Pay)
General Recommendation: DWS’s
policy is to generally vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside
director compensation.
DWS’s policy is to 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. |
DWS’s policy is to generally
vote against or withhold from the members of the Compensation Committee and potentially the full board if:
| ■ | 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; |
| ■ | The board fails to respond adequately
to a previous SOP proposal that received less than 70 percent support of votes cast; |
| ■ | The company has recently practiced
or approved problematic pay practices, such as option repricing or option backdating; or |
| ■ | The situation is egregious. |
Frequency of Advisory Vote on
Executive Compensation ("Say When on Pay")
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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; |
| ■ | Excessive golden parachute payments
(on an absolute basis or as a percentage of transaction equity value); or |
| ■ | 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 |
| ■ | The company's assertion that a proposed
transaction is conditioned on shareholder approval of the golden parachute advisory vote. |
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), DWS 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
General Recommendation: DWS’s
policy is to generally vote case-by-case on certain equity-based compensation plans17 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:
| ■ | 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: |
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.
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.
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.
17 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.
DWS’s policy is to 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 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 benchmark18.
18 For plans evaluated
under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.
Three-Year Burn Rate
Burn-rate benchmarks (utilized in
Equity Plan Scorecard evaluations) are calculated as the greater of: (1) the mean (μ) plus one standard deviation (σ) of the
company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P500), and non-Russell 3000 index; and (2) two percent
of weighted common shares outstanding. In addition, year-over-year burn-rate benchmark changes will be limited to a maximum of two (2)
percentage points plus or minus the prior year's burn-rate benchmark.
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. |
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: DWS’s
policy is to generally vote case-by-case on amendments to cash and equity incentive plans.
DWS’s policy is to vote for
proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:
| ■ | Addresses administrative features
only; or |
| ■ | Seeks approval for Section 162(m)
purposes only and the plan administering committee consists entirely of independent 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). |
DWS’s policy is to 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. |
Vote case-by-case on all other proposals
to amend c ash 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 equity 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. |
| ■ | 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. |
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: DWS’s
policy is to generally vote for proposals to implement a 401(k) savings plan for employees.
Employee Stock Ownership Plans
(ESOPs)
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all
of the following apply:
| ■ | Purchase price is at least 85 percent
of fair market value; |
| ■ | Offering period is 27 months or less;
and |
| ■ | The number of shares allocated to
the plan is 10 percent or less of the outstanding shares. |
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: DWS’s
policy is to generally 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; |
| ■ | Limits on employee contribution,
which may be a fixed dollar amount or expressed as a percent of base salary; |
| ■ | Company matching contribution up
to 25 percent of employee’s contribution, which is effectively a discount of 20 percent
from market value; and |
| ■ | No discount on the stock price on
the date of purchase when there is a company matching contribution. |
DWS’s policy is to generally
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, DWS may evaluate the SVT cost of the plan as part of the assessment.
Option Exchange Programs/Repricing
Options
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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, DWS will not make any adjustments to carve out the in-lieu-of cash compensation.
Transfer Stock Option (TSO)
Programs
General Recommendation: One-time
Transfers: DWS’s policy is to generally 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:
| ■ | Cost of the program and impact of
the TSOs on company’s total option expense; and |
| ■ | 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on compensation plans for non-employee directors, based on:
| ■ | 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; |
| ■ | 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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; |
| ■ | 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 |
| ■ | Whether the company has a rigorous
claw-back policy in place. |
Compensation Consultants—Disclosure
of Board or Company’s Utilization
General Recommendation: DWS’s
policy is to 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: DWS’s
policy is to 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.
DWS’s policy is to 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.
DWS’s policy is to 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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:
| ■ | The percentage/ratio of net shares
required to be retained; |
| ■ | 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: DWS’s
policy is to generally 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. |
DWS’s policy is to 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: DWS’s
policy is to generally 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:
| ■ | 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. |
| ■ | 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. |
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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote for shareholder proposals calling for certain principles regarding the use of prearranged trading plans (10b5-1
plans) for executives. These principles include:
| ■ | Adoption, amendment, or termination
of a 10b5-1 Plan must be disclosed within two business days in a Form 8-K; |
| ■ | Amendment or early termination of
a 10b5-1 Plan is allowed only under extraordinary circumstances, as determined by the board; |
| ■ | Ninety days 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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, DWS 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: DWS’s
policy is to generally 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.
DWS’s policy is to generally
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; |
| ■ | 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); |
| ■ | 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: DWS’s
policy is to generally 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: DWS’s
policy is to 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: DWS’s
policy is to 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: DWS’s
policy is to generally 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. |
DWS’s policy is to 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).
ROUTINE / MISCELLANEOUS
Adjourn Meeting
General Recommendation: DWS’s
policy is to 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: DWS’s
policy is to generally vote against proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding
unless there are compelling reasons to support the proposal.
Amend Minor Bylaws
General Recommendation: DWS’s
policy is to generally vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).
Change Company Name
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote against proposals to approve other business when it appears as a voting item.
SOCIAL AND ENVIRONMENTAL ISSUES
General Recommendation: DWS’s
policy will consider the Coalition for Environmentally Responsible Economies (“CERES”) recommendation on Environmental matters
contained in the CERES Roadmap for Sustainability as well as the recommendations of ISS Socially Responsible Investment “SRI”
Policy on social and sustainability issues. DWS supports CERES and as such generally considers the CERES recommendation, but will vote
on a case-by-case basis.
Global Approach
General Recommendation: DWS’s
policy is to 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 more 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 environmental or social practices; |
| ■ | 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: DWS’s
policy is to generally vote case-by-case on 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: DWS’s
policy is to generally vote case-by-case on proposals seeking a report on a company’s animal welfare standards, or animal welfare-related
risks, considering whether:
| ■ | 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
General Recommendation: DWS’s
policy is to generally vote case-by-case on proposals to phase out the use of animals in product testing, considering whether:
| ■ | 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: DWS’s
policy is to generally vote case-by-case on 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: DWS’s
policy is to generally vote case-by-case on 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 and will be taken
into account.
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. |
DWS’s policy is to generally
vote case-by-case on 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 and will be taken into account.
DWS’s policy is to generally
vote case-by-case on 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on 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. |
DWS’s policy is to 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.
DWS’s policy is to generally
vote case-by-case on 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: DWS’s
policy is to generally vote case-by-case on 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, considering whether:
| ■ | 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 case-by-case on resolutions
requiring that a company reformulate its products.
Tobacco-Related Proposals
General Recommendation: DWS’s
policy is to generally 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. |
DWS’s policy is to generally
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. |
DWS’s policy is to generally
vote case-by-case on 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.
DWS’s policy is to generally
vote case-by-case on proposals regarding tobacco product warnings. Such decisions are better left to public health authorities and will
be taken into account.
Climate Change
Climate Change/Greenhouse Gas
(GHG) Emissions
General Recommendation: DWS’s
policy is to 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. |
DWS’s policy is to generally
vote case-by-case on proposals requesting a report on greenhouse gas (GHG) emissions from company operations and/or products and operations,
considering whether:
| ■ | 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: DWS’s
policy is to generally vote case-by-case on proposals requesting that a company report on its energy efficiency policies, considering
whether:
| ■ | 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: DWS’s
policy is to 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 case-by-case on 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 case-by-case on 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: DWS’s
policy is to generally vote case-by-case on requests for reports on a company's efforts to diversify the board, considering whether:
| ■ | 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: DWS’s
policy is to generally vote case-by-case on 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, considering whether:
| ■ | 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 case-by-case on 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: DWS’s
policy is to 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 case-by-case on proposals
to extend company benefits to, or eliminate benefits from, domestic partners. Decisions regarding benefits should be left to the discretion
of the company and will be taken into account.
Gender, Race / Ethnicity Pay
Gap
General Recommendation: DWS’s
policy is to 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 is compared to its industry peers;
and |
| ■ | Local laws regarding categorization
of race and/or ethnicity and definitions of ethnic and/or racial minorities. |
Environment and Sustainability
Facility and Workplace Safety
General Recommendation: DWS’s
policy is to generally 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. |
General Environmental Proposals
and Community Impact Assessments
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to 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: DWS’s
policy is to generally vote case-by-case on requests for reports on potential environmental damage as a result of company operations
in protected regions, considering whether:
| ■ | 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on proposals requesting that a company report on its policies, initiatives, and oversight mechanisms
related to social, economic, and environmental sustainability, considering whether:
| ■ | 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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
General Recommendation: DWS’s
policy is to generally vote case-by-case on proposals to link, or report on linking, executive compensation to sustainability (environmental
and social) criteria, considering:
| ■ | The scope and prescriptive nature
of the proposal; |
| ■ | Whether the company has significant
and/or persistent controversies or regulatory violations regarding social and/or environmental
issues; |
| ■ | Whether the company has management
systems and oversight mechanisms in place regarding its social and environmental performance; |
| ■ | The degree to which industry peers
have incorporated similar non-financial performance criteria in their executive compensation
practices; and |
| ■ | The company's current level of disclosure
regarding its environmental and social performance. |
Human Rights, Human Capital
Management, and International Operations
Human Rights Proposals
General Recommendation: DWS’s
policy is to 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on 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 case-by-case on 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 and will be taken into account.
Political Activities
Lobbying
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to 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 case-by-case on 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 case-by-case on 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
General Recommendation: DWS’s
policy is to generally vote case-by-case on proposals asking a company to affirm political nonpartisanship in the workplace, considering
whether:
| ■ | 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 case-by-case on 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 and will be taken into account.
REGISTERED INVESTMENT COMPANY
PROXIES
Election of Directors
General Recommendation: DWS’s
policy is to generally vote case-by-case on the election of directors and trustees.
Closed End Fund - Unilateral
Opt-In to Control Share Acquisition Statutes
General Recommendation: For
closed-end management investment companies (CEFs), DWS’s policy is to generally vote on a case-by-case basis for 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on investment advisory agreements, considering the following factors:
| ■ | Proposed and current fee schedules; |
| ■ | Fund category/investment objective; |
| ■ | Share price performance as compared
with peers; |
| ■ | Resulting fees relative to peers; |
| ■ | Assignments (where the advisor undergoes
a change of control). |
Approving New Classes or Series
of Shares
General Recommendation: DWS’s
policy is to generally vote case-by-case on the establishment of new classes or series of shares.
Preferred Stock Proposals
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on proposals to change a fund’s fundamental investment objective to non-fundamental.
Name Change Proposals
General Recommendation: DWS’s
policy is to generally 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. |
Change in Fund's Subclassification
General Recommendation: DWS’s
policy is to generally vote case-by-case on changes in a fund's sub-classification, considering the following factors:
| ■ | Potential competitiveness; |
| ■ | Current and potential returns; |
| ■ | Consolidation in target industry. |
Business Development Companies—Authorization
to Sell Shares of Common Stock at a Price below Net Asset Value
General Recommendation: DWS’s
policy is to generally vote case-by-case on 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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. |
Changing the Domicile of a Fund
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on 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: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on the establishment of a master-feeder structure.
Mergers
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally vote case-by-case on 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.
Reimburse Shareholder for Expenses
Incurred
General Recommendation: DWS’s
policy is to generally 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: DWS’s
policy is to generally 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. |
Appendix I
Classification of Directors
– U.S.
1. Executive
Director
| 1.1. | Current employee or current officer1
of the company or one of its affiliates2. |
2. Non-Independent
Non-Executive Director
Board
Identification
| 2.1. | Director identified as not independent
by the board. |
Controlling/Significant
Shareholder
| 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). |
Current
Employment at Company or Related Company
| 2.3. | Non-officer employee of the firm (including
employee representatives). |
| 2.4. | Officer1, former officer,
or general or limited partner of a joint venture or partnership with the company. |
Former
Employment
| 2.5. | Former CEO of the company.3, 4 |
| 2.6. | Former non-CEO officer1 of
the company or an affiliate2 within the past five years. |
| 2.7. | Former officer1 of an acquired
company within the past five years.4 |
| 2.8. | Officer1 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.5 |
Family
Members
| 2.10. | Immediate family member6
of a current or former officer1 of the company or its affiliates2 within
the last five years. |
| 2.11. | Immediate family member6
of a current employee of company or its affiliates2 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). |
Professional,
Transactional, and Charitable Relationships
Director
who (or whose immediate family member6) currently provides professional services7 in excess of the $10,000 per
year to the company, an affiliate2 or an individual officer of the company or
| 2.12. | (an affiliate; or who is (or whose immediate
family member6 is) a partner, employee or controlling shareholder of, an organization
which provides services. |
Director
who (or whose immediate family member6) currently has any material transactional relationship8 with the company
or its affiliates2.
| 2.13. | ; or who is (or whose immediate family
member6 is) a partner in, or a controlling shareholder or an executive officer
of, an organization which has the material transactional relationship8 (excluding
investments in the company through a private placement). |
| 2.14. | Director who (or whose immediate family
member6) is) a trustee, director, or employee of a charitable or non-profit organization
that receives material grants or endowments8 from the company or its affiliates2. |
Other
Relationships
| 2.15. | Party to a voting agreement9
to vote in line with management on proposals being brought to shareholder vote. |
| 2.16. | Has (or an immediate family member6
has) an interlocking relationship as defined by the SEC involving members of the board of
directors or its Compensation Committee.10 |
| 2.17. | Founder11 of the company
but not currently an employee. |
| 2.18. | Director with pay comparable to Named
Executive Officers. |
| 2.19. | Any material12 relationship
with the company. |
3. Independent
Director
| 3.1. | No material12 connection to
the company other than a board seat. |
Footnotes:
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 2.19: “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.
2 “Affiliate”
includes a subsidiary, sibling company, or parent company. 50 percent control ownership is used 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.
3 Includes any former CEO
of the company prior to the company’s initial public offering (IPO).
4 When there is a former
CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, DWS 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.
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. DWS will also consider if a formal
search process was under way for a full-time officer at the time.
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.
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.
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, DWS will apply the NASDAQ-based materiality test.
(The recipient is the party receiving the financial proceeds from the transaction).
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.
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).
11 The operating involvement
of the founder with the company will be considered; if the founder was never employed by the company, DWS may deem him or her an Independent
Director.
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.
| |
|
| ITEM 8. |
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
| |
|
Portfolio Manager Team Disclosure:
As of the date of this report the Fund is managed by a Team of investment
professionals who collaborate to develop and implement the Fund’s investment strategy. Each Portfolio Manager on the Team has authority
over all aspects of the Fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio
construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings.
The following individuals handle the day-to-day management of the Fund.
Chad Farrington, CFA, Head of Investment Strategy Fixed Income and Portfolio
Manager of the Fund.
- Joined DWS and the Fund in 2018 with 20 years of industry experience; previously, worked as Portfolio
Manager, Head of Municipal Research & Senior Credit Analyst at Columbia Threadneedle
- Co-Head of Municipal Bond Department
- BS, Montana State University
Michael J. Generazo, Senior Portfolio Manager Fixed Income and Portfolio
Manager of the Fund.
- Joined DWS in 1999 and the Fund in 2018.
- BS, Bryant College; MBA, Suffolk University
Compensation of Portfolio Managers
The Advisor and its affiliates are part of DWS. The brand DWS represents
DWS Group GmbH & KGaA (“DWS Group”) and any of its subsidiaries such as DWS Investment Management Americas, Inc. and RREEF
America L.L.C. which offer advisory services. DWS seeks to offer its investment professionals competitive short-term and long-term compensation
based on continuous, above average, fund performance relative to the market. This includes measurement of short and long-term performance
against industry and portfolio benchmarks. As employees of DWS, portfolio managers are paid on a total compensation basis, which includes
Fixed Pay (base salary) and Variable Compensation, as set forth below. The compensation information below is provided as of the Fund’s
most recent annual report dated November 30, 2021.
| · | Fixed Pay (FP) is the key and primary element of
compensation for the majority of DWS employees and reflects the value of the individual’s role and function within the organization.
It rewards factors that an employee brings to the organization such as skills and experience, while reflecting regional and divisional
(i.e. DWS) specifics. FP levels play a significant role in ensuring competitiveness of the Advisor and its affiliates in the labor market,
thus benchmarking provides a valuable input when determining FP levels. |
| · | Variable Compensation (VC) is a discretionary compensation
element that enables DWS Group to provide additional reward to employees for their performance and behaviors, while reflecting DWS Group’s
affordability and financial situation. VC aims to: |
| o | Recognize that every employee contributes to DWS’s
success through the franchise component of Variable Compensation (Franchise Component), |
| o | Reflect individual performance, investment performance,
behaviours and culture through discretionary individual VC (Individual Component), and |
| o | Reward outstanding contributions at the junior levels through
the discretionary Recognition Award. |
Employee seniority as well as divisional and regional specifics
determine which VC elements are applicable for a given employee and the conditions under which they apply. Both Franchise and Individual
Components may be awarded in shares or other share-based instruments and other deferral arrangements.
| · | VC can be delivered via cash, restricted equity awards,
and/or restricted incentive awards or restricted compensation. Restricted compensation may include: |
| o | notional fund investments |
| o | restricted equity, notional equity, |
| o | or such other form as DWS may decide in its sole discretion |
| · | VC comprises a greater proportion of total compensation
as an employee’s seniority and total compensation level increase. Proportion of VC delivered via a long-term incentive award, which
is subject to performance conditions and forfeiture provisions, will increase significantly as the amount of the VC increases. |
| · | Additional forfeiture and claw back provisions, including
complete forfeiture and claw back of VC may apply in certain events if an employee is an InstVV [CRD IV EU Directive4] Material Risk Taker. |
| · | For key investment professionals, in particular, a portion
of any long-term incentives will be in the form of notional investments aligned, where possible, to the funds they manage. |
In general, each of the Advisor and its advisory affiliates seek to
offer their investment professionals competitive short-term and long-term compensation based on continuous, above average, fund performance
relative to the market. This includes measurement of short and long-term performance against industry and portfolio benchmarks. To
evaluate their investment professionals in light of and consistent with the compensation principles set forth above, the Advisor and its
affiliates review investment performance for all accounts managed in relation to the appropriate Morningstar peer group universe with
respect to a fund, iMoneyNet peer group with respect to a money market fund or relevant benchmark index(es) set forth in the governing
documents with respect to each other account type. The ultimate goal of this process is to evaluate the degree to which investment
professionals deliver investment performance that meets or exceeds their clients’ risk and return objectives. When determining total
compensation, the Advisor and its affiliates consider a number of quantitative, qualitative and other factors:
| - | Quantitative measures (e.g. one-, three- and five-year pre-tax
returns versus the appropriate Morningstar peer group universe for a fund, or versus the appropriate iMoneyNet peer group for a money
market fund or relevant benchmark index(es) set forth in the governing documents with respect to each other account type, taking risk
targets into account) are utilized to measure performance. |
| - | Qualitative measures (e.g. adherence to, as well as contributions
to, the enhancement of the investment process) are included in the performance review. |
| - | Other factors (e.g. non-investment related performance,
teamwork, adherence to compliance rules, risk management and "living the values" of the Advisor and its affiliates) are included
as part of a discretionary component of the review process, giving management the ability to consider additional markers of performance
on a subjective basis. |
| - | Furthermore, it is important to note that DWS Group functions
within a controlled environment based upon the risk limits established by DWS Group’s Risk division, in conjunction with DWS Group
management. Because risk consideration is inherent in all business activities, performance assessment factors in an employee’s ability
to assess and manage risk. |
Fund Ownership of Portfolio Managers
The following table shows the dollar range of Fund shares owned beneficially
and of record by each member of the Fund’s portfolio management team as well as in all US registered DWS Funds advised by DWS Investment
Management Americas, Inc.
(Advisor) as a group, including investments by their immediate family members
sharing the same household and amounts invested through retirement and deferred compensation plans. This information is provided as of
the Fund’s most recent annual report dated November 30, 2021.
Name of
Portfolio Manager |
Dollar Range of
Fund Shares Owned |
Dollar Range of All DWS Fund Shares Owned |
| Chad Farrington |
- |
$100,001-$500,000 |
| Michael J. Generazo |
- |
- |
Conflicts of Interest
In addition to managing the assets of the Fund, the Fund’s portfolio
managers may have responsibility for managing other client accounts of the Advisor or its affiliates. The tables below show, for each
portfolio manager, the number and asset size of (1) SEC registered investment companies (or series thereof) other than the Fund, (2) pooled
investment vehicles that are not registered investment companies and (3) other accounts (e.g., accounts managed for individuals or organizations)
managed by each portfolio manager. Total assets attributed to each portfolio manager in the tables below include total assets of each
account managed by them, although the manager may only manage a portion of such account’s assets. For Funds subadvised by subadvisors
unaffiliated with the Advisor, total assets of Funds managed may only include assets allocated to the portfolio manager and not the total
assets of each Fund managed. The tables also show the number of performance-based fee accounts, as well as the total assets of the accounts
for which the advisory fee is based on the performance of the account. This information is provided as of the Fund’s most recent
annual report dated November 30, 2021.
Other SEC Registered Investment Companies Managed:
| Name of Portfolio Manager |
Number of Registered Investment Companies |
Total Assets of Registered Investment Companies |
Number of Investment Company Accounts with Performance Based Fee |
Total Assets of Performance- Based Fee Accounts |
| Chad Farrington |
4 |
$6,086,107,333 |
- |
- |
| Michael J. Generazo |
6 |
$6,364,383,904 |
- |
- |
Other Pooled Investment Vehicles Managed:
| Name of Portfolio Manager |
Number of Pooled Investment Vehicles |
Total Assets of Pooled Investment Vehicles |
Number of Pooled Investment Vehicle Accounts with Performance-Based Fee |
Total Assets of Performance- Based Fee Accounts |
| Chad Farrington |
- |
- |
- |
- |
| Michael J. Generazo |
- |
- |
- |
- |
Other Accounts Managed:
| Name of Portfolio Manager |
Number of Other Accounts |
Total Assets of Other Accounts |
Number of Other Accounts with Performance- Based Fee |
Total Assets of Performance- Based Fee Accounts |
| Chad Farrington |
- |
- |
- |
- |
| Michael J. Generazo |
3 |
$69,270,429 |
- |
- |
In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to, or the same as, those of the Funds. The Advisor or Subadvisor,
as applicable, has in place a Code of Ethics that is designed to address conflicts of interest and that, among other things, imposes restrictions
on the ability of portfolio managers and other “access persons” to invest in securities that may be recommended or traded
in the Funds and other client accounts.
Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to more than one fund or account, including the following:
| · | Certain investments may be appropriate for the Fund and
also for other clients advised by the Advisor and their affiliates, including other client accounts managed by the Fund’s portfolio
management team. Investment decisions for the Fund and other clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability of cash for investment and the size of their investments
generally. A particular security may be bought or sold for only one client or in different amounts and at different times for more than
one but less than all clients. Likewise, because clients of the Advisor and their affiliates may have differing investment strategies,
a particular security may be bought for one or more clients when one or more other clients are selling the security. The investment results
achieved for the Fund may differ from the results achieved for other clients of the Advisor and their affiliates. In addition, purchases
or sales of the same security may be made for two or more clients on the same day. In such event, such transactions will be allocated
among the clients in a manner believed by the Advisor and their affiliates to be most equitable to each client, generally utilizing a
pro rata allocation methodology. In some cases, the allocation procedure could potentially have an adverse effect or positive effect on
the price or amount of the securities purchased or sold by the Fund. Purchase and sale orders for the Fund may be combined with those
of other clients of the Advisor and their affiliates in the interest of achieving the most favorable net results to the Fund and the other
clients. |
| · | To the extent that a portfolio manager has responsibilities
for managing multiple client accounts, a portfolio manager will need to divide time and attention among relevant accounts. The Advisor
and their affilates attempt to minimize these conflicts by aligning its portfolio management teams by investment strategy and by employing
similar investment models across multiple client accounts. |
| · | In some cases, an apparent conflict may arise where the Advisor has an incentive, such as a performance-based
fee, in managing one account and not with respect to other accounts it manages. The Advisor and their affiliates will not determine allocations
based on whether it receives a performance-based fee from the client. Additionally, the Advisor has in place supervisory oversight processes
to periodically monitor performance deviations for accounts with like strategies. |
| · | The Advisor and its affiliates and the investment team of each Fund may
manage other mutual funds and separate accounts on a long only or a long-short basis. The simultaneous management of long and short portfolios
creates potential conflicts of interest including the risk that short sale activity could adversely affect the market value of the long
positions (and vice versa), the risk arising from sequential orders in long and short positions, and the risks associated with receiving
opposing orders at the same time. The Advisor has adopted procedures that it believes are reasonably designed to mitigate these and other
potential conflicts of interest. Included in these procedures are specific guidelines developed to provide fair and equitable treatment
for all clients whose accounts are managed by each Fund’s portfolio management team. The Advisor and the portfolio management team
have established monitoring procedures, a protocol for supervisory reviews, as well as compliance oversight to ensure that potential conflicts
of interest relating to this type of activity are properly addressed. |
The Advisor is owned by the DWS Group, a multinational
global financial services firm that is a majority owned subsidiary of Deutsche Bank AG. Therefore, the Advisor is affiliated with a variety
of entities that provide, and/or engage in commercial banking, insurance, brokerage, investment banking, financial advisory, broker-dealer
activities (including sales and trading), hedge funds, real estate and private equity investing, in addition to the provision of investment
management services to institutional and individual investors. Since Deutsche Bank AG, its affiliates, directors, officers and employees
(the “Firm”) are engaged in businesses and have interests in addition to managing asset management accounts, such wide ranging
activities involve real, potential or apparent conflicts of interest. These interests and activities include potential advisory, transactional
and financial activities and other interests in securities and companies that may be directly or indirectly purchased or sold by the Firm
for its clients’ advisory accounts. The Advisor and their affiliates may take investment positions in securities in which other
clients or related persons within the Firm have different investment positions. There may be instances in which the Advisor is purchasing
or selling for their client accounts, or pursuing an outcome in the context of a workout or restructuring with respect to, securities
in which the Firm is undertaking the same or differing strategy in other businesses or other client accounts. These are considerations
of which advisory clients should be aware and which will cause conflicts that could be to the disadvantage of the Advisor’s advisory
clients, including the Fund. The Advisor and their affiliates have instituted business and compliance policies, procedures and disclosures
that are designed to identify, monitor and mitigate conflicts of interest and, as appropriate, to report them to a Fund’s Board.
| |
|
| ITEM 9. |
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
| |
|
| |
(a) |
(b) |
(c) |
(d) |
| Period |
Total Number of
Shares Purchased |
Average Price Paid
per Share |
Total Number of
Shares Purchased as
Part of Publicly Announced
Plans or Programs |
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs |
| |
|
|
|
|
| December 1 through December 31 |
- |
n/a |
n/a |
n/a |
| January 1 through January 31 |
- |
n/a |
n/a |
n/a |
| February 1 through February 29 |
- |
n/a |
n/a |
n/a |
| March 1 through March 31 |
- |
n/a |
n/a |
n/a |
| April 1 through April 30 |
- |
n/a |
n/a |
n/a |
| May 1 through May 31 |
- |
n/a |
n/a |
n/a |
| |
|
|
|
|
| Total |
- |
n/a |
n/a |
n/a |
| |
|
|
|
|
| The Fund may from time to time repurchase shares in the open market. |
| |
|
|
|
|
| On September 25, 2020, the Fund announced that the Fund's Board of Trustees extended the Fund's existing open market share repurchase program for an additional 12 month period. The Fund may continue to purchase outstanding shares of common stock in open-market transactions over the period December 1, 2020 until November 30, 2021, when the Fund's shares trade at a discount to net asset value. The Board's authorization of the repurchase program extension follows the previous repurchase program, which commenced on December 1, 2019 and ran until November 30, 2020. |
| |
|
|
|
|
On September 24, 2021, the Fund announced that the Fund’s Board of
Trustees had extended the Fund’s existing open market share repurchase program for an additional 12-month period. The Fund may continue to purchase outstanding shares of common stock in open-market transactions over the period from December 1, 2021 until November 30,2022, when the Fund’s shares trade at a discount to net asset value. The Board's authorization of the repurchase program extension follows the previous repurchase program, which commenced on December 1, 2020 and ran until November 30, 2021. |
| |
|
| ITEM 10. |
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
| |
|
| |
There were no material changes to the procedures by which shareholders
may recommend nominees to the Fund’s Board. The primary function of the Nominating and Governance Committee is to identify and recommend
individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend
candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Keith R. Fox, DWS Funds Board Chair,
c/o Thomas R. Hiller, Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600.
|
| |
|
| ITEM 11. |
CONTROLS AND PROCEDURES |
| |
|
| |
(a) |
The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. |
| |
|
| |
(b)
|
There have been no changes in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting. |
| |
|
| ITEM 12. |
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
| |
|
| |
Not applicable |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| Registrant: |
DWS Strategic Municipal Income Trust |
| |
|
| |
|
| By: |
/s/Hepsen Uzcan
Hepsen Uzcan
President |
| |
|
| Date: |
2/28/2022 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
| By: |
/s/Hepsen Uzcan
Hepsen Uzcan
President |
| |
|
| Date: |
2/28/2022 |
| |
|
| |
|
| |
|
| By: |
/s/Diane Kenneally
Diane Kenneally
Chief Financial Officer and Treasurer |
| |
|
| Date: |
2/28/2022 |
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