performance and board responsiveness

Question 1

We typically recommend that shareholders vote against directors who have served on boards or as executives
of companies with records of poor performance, inadequate risk oversight, excessive compensation, audit-
or accounting-related issues, and/or other indicators of mismanagement or actions against the interests of
shareholders. We will reevaluate such directors based on

Answer 1

the length of time passed since the incident giving rise to the concern, shareholder support for the director, the severity of the issue, the director’s role (e.g., committee membership), director tenure at the subject company, whether ethical lapses accompanied the oversight lapse, and evidence of strong oversight at other companies. Likewise, we examine the backgrounds of those who serve on key board committees to ensure that they have the required skills and diverse backgrounds to make informed judgments about the subject matter for which the committee is responsible.

Question 2

We believe shareholders should avoid electing directors who have a record of not fulfilling their responsibilities
to shareholders at any company where they have held a board or executive position. We typically recommend
voting against:

Answer 2

1. A director who fails to attend a minimum of 75% of board and applicable committee meetings, calculated in the aggregate.12
2. A director who belatedly filed a significant form(s) 4 or 5, or who has a pattern of late filings if the late filing was the director’s fault (we look at these late filing situations on a case-by-case basis).
3. A director who is also the CEO of a company where a serious and material restatement has occurred after the CEO had previously certified the pre-restatement financial statements.
4. A director who has received two against recommendations from Glass Lewis for identical reasons within the prior year at different companies (the same situation must also apply at the company being analyzed).

Question 3

where a director has served for less than one full year, we will typically

Answer 3

not recommend voting against for failure to attend 75% of meetings. Rather, we will note the poor attendance with a recommendation to track this issue going forward. We will also refrain from recommending to vote against directors when the proxy discloses that the director missed the meetings due to serious illness or other extenuating circumstances.

Question 4

Furthermore, with consideration given to the company’s overall corporate governance, pay-for-performance
alignment and board responsiveness to shareholders

Answer 4

we may recommend voting against directors who served throughout a period in which the company performed significantly worse than peers and the directors have
not taken reasonable steps to address the poor performance

Question 5

As a general framework, our evaluation of board responsiveness involves a review of

Answer 5

publicly available disclosures (e.g., the proxy statement, annual report, 8-Ks, company website, etc.) released following the date of the company’s last annual meeting up through the publication date of our most current Proxy Paper. Depending on the specific issue, our focus typically includes, but is not limited to, the following:
• At the board level, any changes in directorships, committee memberships, disclosure of related party transactions, meeting attendance, or other responsibilities;
• Any revisions made to the company’s articles of incorporation, bylaws or other governance documents;
• Any press or news releases indicating changes in, or the adoption of, new company policies, business practices or special reports; and
• Any modifications made to the design and structure of the company’s compensation program, as well as an assessment of the company’s engagement with shareholders on compensation issues as discussed in the Compensation Discussion & Analysis (“CD&A”), particularly following a material vote against a company’s say-on-pay.

Question 6

when determining whether board responsiveness is warranted, With regard to companies where voting control is held through a multi-class share structure with dispropor-
tionate voting and economic rights

Answer 6

we will carefully examine the level of approval or disapproval attributed to unaffiliated shareholders. Where vote results indicate that a majority of unaffiliated shareholders supported a shareholder proposal or opposed a management proposal, we believe the board should demonstrate an appropriate level of responsiveness.