I. INTRODUCTION
Proxy voting policies and procedures (Exhibit A) are required by Rule 206(4)-6 of the Investment Advisers Act of 1940. Integrated Wealth Management, Inc.’s (IWM) Proxy Voting Policy and Procedures will be effective August 6, 2003.
II. GLOSSARY OF TERMS
Non-Routine Proxy Proposals shall mean proxy proposals that are to be considered on a case-by-case basis, proxy proposals that IWM generally abstains from voting on, and proxy proposals that are not addressed by the Principles and Guidelines section of the Proxy Voting Policy and Procedures.
Proxy Manager shall be designated as Heather Santana.
Proxy Committee shall be comprised of:
1) James M. Casey
2) Heather J. Santana
A quorum of the Proxy Committee shall be comprised of at least one member.
Routine Proxy Proposals shall mean proxy proposals that the Proxy Manager shall cast either yes or no votes in accordance with the Principles and Guidelines noted below.
III. PRINCIPLES AND GUIDELINES
A. Principles
IWM’s primary purpose and fiduciary responsibility is to maximize shareholder value, which is defined as share price and dividend appreciation. IWM will vote proxies in the best interests of clients and will generally vote for, against, consider on a case-by-case basis, or abstain from voting as indicated below. Because of the extenuating circumstances associated with specific proxy issues, IWM’s votes may differ from time to time from the indications noted. In addition, the list may not include all proxies on which IWM votes.
IWM will also act, in its best judgment, on behalf of clients on certain corporate actions that impact shareholder value, such as tender offers and bankruptcy proceedings.
B. Voting Guidelines
1. Routine Business Decisions and Director Related Proposals
IWM votes for:
a) Approval of auditors
b) Name changes
c) Directors in uncontested elections
d) Elimination/limitation of directors’ liability
e) Indemnification of directors
f) Reincorporation that is not a takeover defense
IWM considers on a case-by-case basis:
g) Directors in contested elections
2. Corporate Governance
IWM votes for:
a) Majority independent board
b) Audit, compensation & nominating committees that are comprised exclusively of independent directors
c) Minimum director share ownership
d) Separate offices of chairperson and CEO
e) Limitation on number of other board seats
f) Confidential voting
g) Shareholders’ ability to remove directors
h) Shareholder right to call special meetings
IWM votes against:
i) Supermajority vote requirements
j) Limiting directors’ tenure
k) Restrictions on shareholders to act by written consent
IWM considers on a case-by-case basis:
l) Shareholder proposals
m) Dissident proxy battle
3. Director and Executive Compensation
IWM votes for:
a) Disclosure of executive compensation
IWM votes against:
b) Restricting executive compensation
c) Golden and tin parachutes
IWM considers on a case-by-case basis:
d) Executive compensation plans
e) Establish/Increase share option plans for directors and executives
4. Take-Over Defense
IWM votes against:
a) Reincorporation to prevent takeover
b) Issue new class of common stock with unequal voting rights
c) Adoption of fair price amendments
d) Establish a classified (or ‘staggered’) board of directors
e) Eliminating cumulative voting
f) Poison pills
g) Blank check preferred stock
5. Capital Structure
IWM votes for:
a) Increase authorized common stock (unless additional stock is a takeover defense, i.e., poison pill).
b) Share repurchase programs (when all shareholders may participate on equal terms)
IWM votes against:
c) Unequal voting rights, such as dual class of stock
d) Pre-emptive rights
IWM considers on a case-by-case basis:
e) Increase preferred stock
f) Blank check preferred stock (not for takeover defense)
g) Restructuring plans
6. Other Shareholder Value Issues
IWM votes for:
a) Employee stock ownership plans (ESOPs)
b) Employee stock purchase plans
c) 401(k) plans
IWM votes against:
d) Greenmail
IWM considers on a case-by-case basis:
e) Mergers and acquisitions
f) Spinoffs and asset sales
7. Corporate, Social and Environmental Policy Proposals
As noted above, IWM’s fiduciary responsibility is the maintenance and growth of clients’ assets. Accordingly, IWM will typically vote in accordance with management’s recommendations or abstain from voting on proposals concerning corporate policy and social and environmental issues. When such proposals impact shareholder value, IWM may vote on a case-by-case basis.
8. Proposals Specific to Mutual Funds
In addition to proposals noted above, IWM will consider significant mutual fund proposals on a case-by-case basis. Examples of such proposals are noted below. Regarding fees, IWM generally opposes increases and management must present a compelling argument for IWM to support such proposals. Regarding non-shareholder value issues, IWM will generally vote in accordance with management’s recommendations or abstain.
IWM votes against:
a) Management fees increases
b) Distribution fee (12b-1) increases
IWM considers on a case-by-case basis:
c) Changes to investment advisory contracts
d) Shareholder proposals to terminate investment advisor
e) Changes to investment policies
IV. Conflicts of Interest
On occasion, a conflict of interest may exist between IWM and client(s) regarding the outcome of certain proxy votes. In such cases, IWM is committed to resolving the conflict in the best interest of clients before it votes the proxy in question.
If the proxy proposal is a Routine Proxy Proposal, IWM will adhere to the standard procedure of referring to the principles and guidelines described herein in deciding how to vote. Alternatively, IWM may disclose the conflict to clients and obtain their consent before voting or seek the recommendation of an independent third party in deciding how to vote.
If the proxy proposal is a Non-Routine Proxy Proposal, IWM will take any of the following courses of action to resolve the conflict:
1) Disclose the conflict to clients and obtain consent before voting;
2) Suggest that client(s) engage another party to determine how the proxy should be voted; or
3) Vote according to the recommendation of an independent third party, such as a:
- proxy consultant;
- research analyst;
- proxy voting department of a mutual fund or pension fund; or
- compliance consultant.
V. Obtaining More Information
Clients may obtain, free of charge, a record of how IWM voted proxy issues on their behalf by submitting a written request or calling (800) 852-3284.