TT exercises its voting power in good faith and uses reasonable care in reaching its voting decisions. Each vote requires individual consideration according to the circumstances of the case. Particular circumstances may lead to a departure from TT’s general practice. However, without detracting from TT’s discretion, the following guidelines should be generally followed:
Board of Directors and Chairman/CEO
At least half of the board, excluding the Chairman, should be comprised of non-executive directors determined by the board to be independent. Where the presence of one (or more) non-independent non-executive Directors prevents this, then a full explanation should be given as to why the Company believes the continued presence of those non-independent non-executive directors is important. Subject to the merits of that explanation, a vote against a non-independent non-executive director should be placed in order to achieve board balance.
Audit and Remuneration Committees should be comprised of non-executive directors and especially the role of the Chairman should be filled on both committees by a non-executive director. The Company Chairman (if independent) can be a member of the Remuneration Committee but not Chair the Committee.
The Chairman can only chair one FTSE 100 company or the equivalent if outside the UK.
The Chairman should be independent. The CEO should not be promoted to be Chairman of the Company. A vote against the board should be made where the Chair and CEO is the same person.
In determining whether a director is independent, in general over nine years service leads the director to be considered no longer independent. Likewise, in general, a director is not independent when a board member of two or more boards of companies within the same Group or is acting as a representative of a shareholder in the Company.
Directors should be re-elected at regular intervals.
Subject to paragraph 2 below, consider routine and vote in favour of authorisation to allot new shares, in the amount of up to one third of existing issued share capital. In addition, and again subject to paragraph 2, consider routine and vote in favour of a further one third applied to fully pre-emptive rights issues only, it should be noted authorisation shall be valid for one year only. Pricing and other terms of issue should be decided by the board.
(2) Vote in favour of resolutions seeking authority to issue non-pre-emptively, no more than 5% of ordinary capital in any one year. Furthermore, companies should not issue more than 7.5% of the company’s ordinary share capital for cash other than to existing shareholders in any rolling three year period. This paragraph takes precedence over paragraph 1 above.
Vote in favour of share-based incentives that align the interest of the executive directors with that of shareholders and link reward to performance over the longer term. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance. Performance conditions should be disclosed.
Vote against incentive awards to be awarded to Chairman or independent directors.
Vote against guaranteed, pensionable or discretionary annual bonuses.
Vote against grants of matching shares without attendant performance conditions.
Vote against long term incentives featuring a performance period of less than three years. In addition, options should not be exercisable more than 10 years from the date of the grant.
Vote against any provision of re-testing of performance conditions.
Vote against the grant of options at a discount to market value with the exception of HMRC approved savings-related share option plans.
Vote against early vesting of share awards where pro-rating (for both time and performance) is not applied.
Vote against change in control provisions triggering earlier and/or larger payments and rewards and vote against transaction-related bonuses.
Vote in favour of the Remuneration Committee retaining discretion to reduce or reclaim payments if performance achievements are subsequently found to have been significantly mis-stated.
Vote against any arrangements that guarantee pensions with limited or no abatement on severance or early retirement.
Vote against share based incentive schemes which lead to dilution of more than 10% of the issued ordinary share capital in any rolling 10 year period.
Vote in favour of all-employee schemes such as savings-related share option plans, SAYE schemes and other share incentive plans that are approved by HMRC and work within an appropriate best practice framework.
Abstain on any proposal that is not supported by sufficient information in the resolution or supporting papers/website to enable an appropriate decision to be made.
Consider routine and vote in favour of share buy back schemes up to 10% of issued share capital, to allow the directors flexibility to use the shares to settle share based incentive schemes, to cancel the shares or re-sell the stock for use in the event of a corporate action such as a takeover/merger.
Vote in favour of donations to political organisations as defined by the UK Companies Act only if; (1) a cap is set on the level of donations, (2) the recipient is a body concerned with policy review and law reform, with the representation of the business community or sections of it or with the representation of other communities or special interest groups, and (3) it is clearly in the company’s interest to support the recipient.
Vote against anti-takeover defences unless a particular case is considered by the COO to be in the best interest of shareholders.
TT must deliver to each client for which it has proxy voting authority, no later than the time it accepts such authority, a written summary of its Proxy Voting Policy. Upon receipt of any oral or written client request for information on how TT voted for a client’s own account, TT must promptly provide the client with the requested information in writing.