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Mellon Investments Corporation

PRI reporting framework 2019

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(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

          Clients who adopt our Proxy Voting Policy and guidelines have their shares voted by the Committee.  Alternatively, clients may utilize their own policy with approval.
        

12.2. Provide an overview of how you ensure your voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

Through its participation in the BNY Mellon Proxy Voting and Governance Committee, Mellon retains Institutional Shareholder Services ("ISS") to provide various services related to proxy voting, such as research, analysis, vote recommendations, vote agency services, proxy vote tracking, recordkeeping, and reporting. Through the same mechanism, Mellon also retains Glass Lewis for research, analysis, and vote recommendations only and Equilar to evaluate executive compensation utilizing a proprietary model.

Mellon, through its participation on the Committee, has adopted the Committee's Voting Guidelines, Proxy Voting Policy, and related procedures, which are applied to those client accounts over which it has been delegated the authority to vote proxies. In voting proxies, Mellon seeks to act in the best financial and economic interest of the applicable client. Mellon carefully reviews proposals that would limit shareholder control or could affect the value of a client's investment. The Committee generally will oppose proposals designed to insulate an issuer's management unnecessarily from the wishes of a majority of shareholders and will generally support proposals designed to provide management with short-term insulation from outside influences so as to enable them to bargain effectively with potential suitors and otherwise achieve long-term goals.

12.3. Additional information.[Optional]

Mellon recognizes its duty to vote proxies in the best interests of its clients.  In all cases, the ultimate decision and responsibility for voting shares held for Mellon's clients rests with with Mellon. 

The Committee, within which Mellon has a leadership role, developed its Voting Guidelines with the assistance of internal and external research and recommendations provided by third party vendors but without consideration of any BNY Mellon client relationship factors.  All proxy voting proposals are reviewed, categorized, analyzed and voted in accordance with the Voting Guidelines.  As a Committee member, Mellon participates in the application of detailed, pre-determined proxy voting guidelines (the “Voting Guidelines”) in an objective and consistent manner across client accounts.

The guidelines are reviewed at least annually, but more frequently if necessary, and updated to reflect new issues in the marketplace and any changes in our policies on specific issues.  Under the guidelines, voting proposals that can be categorized will be voted accordingly: proposals less easily categorized will be referred to the Committee for a vote discussion and decision.  Additionally, the Committee may review any proposal type, company, industry for special scrutiny.

 


LEA 13. Percentage of voting recommendations reviewed (Not Applicable)


LEA 14. Securities lending programme (Private)


LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes where you or the service providers acting on your behalf have raised concerns with companies ahead of voting.

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

15.3. Additional information. [Optional]

Companies are informed of the vote decisions after the execution is complete at quarter end based on their report request.

Generally, the Committee supports the right to vote “For,” “Against,” or “Withhold” with respect to proposals received on proxy statements in all markets.  In limited circumstances where non-U.S. markets may set the vote choice and in instances where sufficient proxy voting information has been received to determine a vote decision, the Committee may exercise their right to “Abstain” on a particular proposal or meeting.


LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes participated in within the reporting year in which, you and/or the service provider(s) acting on your behalf, have communicated to companies the rationale for abstaining or voting against management recommendations.

16.2. Indicate the reasons your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

Explain

          Vote against management communicated to issuers after the vote decision.
        

16.3. In cases where your organisation does communicate the rationale for the abstention or the vote against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities where you and/or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

99 %

Specify the basis on which this percentage is calculated

17.2. Explain your reason(s) for not voting on certain holdings

17.3. Additional information. [Optional]

With regard to voting proxies of non-U.S. issuers, the Committee, and by extension Mellon, weighs the cost of voting and the potential inability to sell the securities (which may occur during the voting process) against the benefit of voting the proxies. In cases where shareblocking and/or power of attorney requirements are impediments, the Committee may not exercise its right to vote the shares. Further, timing concerns or costs associated with voting prohibit the Committee from executing the vote on behalf of our clients as we consider the costs associated with voting relative to the assets held or in the geographic market. The annual percentage of issuers, and the corresponding ballots un-voted, is less than 1% of Mellon's investment universe of securities each year.


LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate if you track the voting instructions that you and/or your service provider on your behalf have issued.

18.2. Of the voting instructions that you and/or third parties on your behalf issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
90 %
Against (opposing) management recommendations
10 %
Abstentions
0 %
100%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies you have engaged.

4

18.4. Additional information. [Optional]

The Committee's focus on shareholder value transfer via the excessive granting of equity and cash compensation relative to performance results in votes “against” management at nearly 20% of S&P 500 firms and at over 40% of Russell 3000 firms.  Leveraging a proprietary executive compensation data set allows our firm to discern between issuers who are paying for performance and those that overpay.  Using a metric based model to compare pay and performance, has resulted in the highest percentage of votes “against” compensation proposals for a trillion plus asset manager/institutional investor.


LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.3. Additional information. [Optional]

Unnecessary due to vote % completed.


LEA 20. Shareholder resolutions (Private)


LEA 21. Examples of (proxy) voting activities (Private)


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