UNDER THE SECURITIES ACT OF 1933 |
☒ |
Post-Effective Amendment No. 52 |
☒ |
UNDER THE INVESTMENT COMPANY ACT OF 1940 |
☒ |
Amendment No. 55 |
☒ |
☐ |
immediately upon filing pursuant to Rule 485, paragraph (b) |
☒ |
on |
☐ |
60 days after filing pursuant to Rule 485, paragraph (a)(1) |
☐ |
on _________________ pursuant to Rule 485, paragraph (a)(1) |
☐ |
75 days after filing pursuant to Rule 485, paragraph (a)(2) |
☐ |
on _________________ pursuant to Rule 485, paragraph (a)(2) |
☐ |
This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
Fund Summaries |
|
The Communication Services Select Sector SPDR Fund |
|
The Consumer Discretionary Select Sector SPDR Fund |
|
The Consumer Staples Select Sector SPDR Fund |
|
The Energy Select Sector SPDR Fund |
|
The Financial Select Sector SPDR Fund |
|
The Health Care Select Sector SPDR Fund |
|
The Industrial Select Sector SPDR Fund |
|
The Materials Select Sector SPDR Fund |
|
The Real Estate Select Sector SPDR Fund |
|
The Technology Select Sector SPDR Fund |
|
The Utilities Select Sector SPDR Fund |
|
Additional Strategies Information |
|
Additional Risk Information |
|
Management |
|
Additional Index Information |
|
Additional Purchase and Sale Information |
|
Distribution and Service Plan |
|
Distributions |
|
Portfolio Holdings Disclosure |
|
Additional Tax Information |
|
General Information |
|
Financial Highlights |
|
Where to Learn More About the Funds |
Back Cover |
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Since Inception |
Return Before Taxes |
- |
- |
Return After Taxes on Distributions |
- |
- |
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
Communication Services Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Consumer Discretionary Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Consumer Staples Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
|
|
|
Return After Taxes on Distributions |
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
|
|
|
Energy Select Sector Index (reflects no deduction for fees, expenses or taxes) |
|
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Financial Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Health Care Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Industrial Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Materials Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Since Inception |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Real Estate Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
- |
|
|
Return After Taxes on Distributions |
- |
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
Technology Select Sector Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Management fees |
|
Distribution and service (12b-1) fees1 |
|
Other expenses |
|
Total annual Fund operating expenses1 |
|
Year 1 |
Year 3 |
Year 5 |
Year 10 |
$ |
$ |
$ |
$ |
|
One Year |
Five Years |
Ten Years |
Return Before Taxes |
|
|
|
Return After Taxes on Distributions |
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
|
|
|
Utilities Select Sector Index (reflects no deduction for fees, expenses or taxes) |
|
|
|
S&P 500 Index (reflects no deduction for fees, expenses or taxes) |
- |
|
|
Fund Name |
XLC |
XLY |
XLP |
XLE |
XLF |
XLV |
XLI |
XLB |
XLRE |
XLK |
XLU |
Communication Services Sector Risk |
x |
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary Sector Risk |
|
x |
|
|
|
|
|
|
|
|
|
Consumer Staples Sector Risk |
|
|
x |
|
|
|
|
|
|
|
|
Energy Sector Risk |
|
|
|
x |
|
|
|
|
|
|
|
Equity Investing Risk |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
Financial Sector Risk |
|
|
|
|
x |
|
|
|
|
|
|
Fluctuation of Net Asset Value, Share Premiums and Discounts Risk |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
Health Care Sector Risk |
|
|
|
|
|
x |
|
|
|
|
|
Indexing Strategy/Index Tracking Risk |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
Industrial Sector Risk |
|
|
|
|
|
|
x |
|
|
|
|
Large-Capitalization Securities Risk |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
Market Risk |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
Materials Sector Risk |
|
|
|
|
|
|
|
x |
|
|
|
Non-Diversification Risk |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
x |
Real Estate Sector Risk |
|
|
|
|
|
|
|
|
x |
|
|
REIT Risk |
|
|
|
|
|
|
|
|
x |
|
|
Technology Sector Risk |
|
|
|
|
|
|
|
|
|
x |
|
Utilities Sector Risk |
|
|
|
|
|
|
|
|
|
|
x |
Portfolio Managers |
Fund |
Michael Feehily, Karl Schneider and Amy Cheng |
The Real Estate Select Sector SPDR Fund |
Karl Schneider, David Chin and Kala O'Donnell |
The Technology Select Sector SPDR Fund |
Michael Feehily, Karl Schneider and Dwayne Hancock |
The Consumer Staples Select Sector SPDR Fund, The Health Care Select Sector SPDR Fund, The Utilities Select Sector SPDR Fund |
Michael Feehily, Karl Schneider and Ted Janowsky |
The Energy Select Sector SPDR Fund, The Materials Select Sector SPDR Fund |
Karl Schneider, Dwayne Hancock and Kala O'Donnell |
The Financial Select Sector SPDR Fund |
Michael Feehily, Karl Schneider and Kala O'Donnell |
The Communication Services Select Sector SPDR Fund, The Consumer Discretionary Select Sector SPDR Fund |
Michael Feehily, Karl Schneider, Emiliano Rabinovich and Amy Cheng |
The Industrial Select Sector SPDR Fund |
|
The Communication Services Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
For the Period 06/19/18* - 9/30/18(a) |
Net asset value, beginning of period |
$80.15 |
$59.40 |
$49.50 |
$48.98 |
$50.00 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
0.58 |
0.54 |
0.47 |
0.44 |
0.09 |
Net realized and unrealized gain (loss) (c) |
(32.25) |
20.73 |
9.88 |
0.51 |
(1.17) |
Total from investment operations |
(31.67) |
21.27 |
10.35 |
0.95 |
(1.08) |
Net equalization credits and charges (b) |
(0.02) |
(0.00)(d) |
0.02 |
0.02 |
0.19 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(0.57) |
(0.52) |
(0.47) |
(0.45) |
(0.05) |
Return of Capital |
— |
— |
— |
— |
(0.08) |
Total distributions |
(0.57) |
(0.52) |
(0.47) |
(0.45) |
(0.13) |
Net asset value, end of period |
$47.89 |
$80.15 |
$59.40 |
$49.50 |
$48.98 |
Total return (e) |
(39.71)% |
35.88% |
21.05% |
2.07% |
(1.78)% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$7,578,050 |
$15,176,057 |
$10,106,071 |
$6,039,403 |
$2,035,011 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.15%(f) |
Net expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13%(f) |
Net investment income (loss) |
0.88% |
0.73% |
0.86% |
0.93% |
0.62%(f) |
Portfolio turnover rate (g) |
21% |
15% |
15% |
16% |
7%(h) |
|
|
* |
Commencement of operations. |
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(f) |
The ratios for periods less than one year are annualized. |
(g) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
(h) |
Period less than one year are not annualized. |
|
The Consumer Discretionary Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$179.54 |
$146.99 |
$120.69 |
$117.19 |
$90.09 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.23 |
1.09 |
1.46 |
1.58 |
1.49 |
Net realized and unrealized gain (loss) (c) |
(37.06) |
32.54 |
26.34 |
3.51 |
26.81 |
Total from investment operations |
(35.83) |
33.63 |
27.80 |
5.09 |
28.30 |
Net equalization credits and charges (b) |
(0.01) |
0.01 |
(0.06) |
(0.02) |
0.09 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.22) |
(1.09) |
(1.44) |
(1.57) |
(1.29) |
Net asset value, end of period |
$142.48 |
$179.54 |
$146.99 |
$120.69 |
$117.19 |
Total return (d) |
(20.06)% |
22.93% |
23.25% |
4.45% |
31.63% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$14,098,639 |
$19,633,737 |
$15,809,198 |
$13,928,314 |
$16,218,942 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
0.70% |
0.65% |
1.17% |
1.40% |
1.43% |
Portfolio turnover rate (e) |
22% |
23% |
11% |
6% |
23% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(e) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Consumer Staples Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$68.83 |
$64.13 |
$61.41 |
$53.92 |
$53.99 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.84 |
1.85 |
1.66 |
1.60 |
1.52 |
Net realized and unrealized gain (loss) (c) |
(2.16) |
4.67 |
2.70 |
7.41 |
(0.17) |
Total from investment operations |
(0.32) |
6.52 |
4.36 |
9.01 |
1.35 |
Net equalization credits and charges (b) |
0.03 |
(0.01) |
0.00(d) |
0.05 |
0.08 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.82) |
(1.81) |
(1.64) |
(1.57) |
(1.50) |
Net asset value, end of period |
$66.72 |
$68.83 |
$64.13 |
$61.41 |
$53.92 |
Total return (e) |
(0.63)% |
10.19% |
7.32% |
17.14% |
2.70% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$14,465,958 |
$11,757,576 |
$13,687,240 |
$14,015,004 |
$9,256,716 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
2.49% |
2.71% |
2.73% |
2.84% |
2.84% |
Portfolio turnover rate (f) |
11% |
4% |
5% |
10% |
12% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(f) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Energy Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$52.12 |
$29.97 |
$59.18 |
$75.75 |
$68.46 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
2.91 |
2.11 |
2.19 |
4.01 |
1.95 |
Net realized and unrealized gain (loss) (c) |
20.07 |
22.11 |
(27.49) |
(18.36) |
7.32 |
Total from investment operations |
22.98 |
24.22 |
(25.30) |
(14.35) |
9.27 |
Net equalization credits and charges (b) |
(0.06) |
0.09 |
0.08 |
(0.04) |
(0.02) |
Contribution from Affiliate |
— |
— |
0.00(d)(e) |
— |
— |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(3.06) |
(2.16) |
(3.99) |
(2.18) |
(1.96) |
Net asset value, end of period |
$71.98 |
$52.12 |
$29.97 |
$59.18 |
$75.75 |
Total return (f) |
44.34% |
81.93% |
(44.68)%(g) |
(19.08)% |
13.64% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$33,531,192 |
$25,084,339 |
$8,430,789 |
$10,014,781 |
$18,435,159 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
4.14% |
4.54% |
5.08% |
6.25% |
2.71% |
Portfolio turnover rate (h) |
9% |
14% |
13% |
10% |
8% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Contribution paid by an Affiliate in the amount of $290,417. |
(f) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(g) |
The contribution from an Affiliate had no impact on total return. |
(h) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Financial Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$37.53 |
$24.06 |
$28.02 |
$27.58 |
$25.84 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
0.68 |
0.61 |
0.60 |
0.57 |
0.48 |
Net realized and unrealized gain (loss) (c) |
(7.21) |
13.44 |
(3.94) |
0.46 |
1.73 |
Total from investment operations |
(6.53) |
14.05 |
(3.34) |
1.03 |
2.21 |
Net equalization credits and charges (b) |
(0.02) |
0.02 |
(0.02) |
(0.03) |
0.01 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(0.67) |
(0.60) |
(0.60) |
(0.56) |
(0.48) |
Net asset value, end of period |
$30.31 |
$37.53 |
$24.06 |
$28.02 |
$27.58 |
Total return (d) |
(17.67)% |
58.79% |
(11.98)% |
3.81% |
8.58% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$26,953,933 |
$40,412,690 |
$16,646,404 |
$22,552,204 |
$31,053,806 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
1.83% |
1.80% |
2.30% |
2.13% |
1.72% |
Portfolio turnover rate (e) |
4% |
3% |
4% |
4% |
3% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(e) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Health Care Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$127.26 |
$105.56 |
$90.13 |
$95.11 |
$81.76 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.95 |
1.85 |
1.66 |
2.29 |
1.31 |
Net realized and unrealized gain (loss) (c) |
(6.27) |
21.65 |
16.08 |
(5.75) |
13.34 |
Total from investment operations |
(4.32) |
23.50 |
17.74 |
(3.46) |
14.65 |
Net equalization credits and charges (b) |
0.04 |
0.01 |
(0.00)(d) |
(0.02) |
0.01 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.96) |
(1.81) |
(2.31) |
(1.50) |
(1.31) |
Net asset value, end of period |
$121.02 |
$127.26 |
$105.56 |
$90.13 |
$95.11 |
Total return (e) |
(3.47)% |
22.37% |
19.90% |
(3.65)% |
18.10% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$35,805,067 |
$30,358,856 |
$23,873,455 |
$16,818,717 |
$19,632,378 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
1.48% |
1.54% |
1.67% |
2.53% |
1.54% |
Portfolio turnover rate (f) |
2% |
4% |
3% |
2% |
5% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(f) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Industrial Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$97.77 |
$76.98 |
$77.66 |
$78.37 |
$70.99 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.52 |
1.27 |
1.39 |
1.52 |
1.30 |
Net realized and unrealized gain (loss) (c) |
(14.94) |
20.81 |
(0.68) |
(0.63) |
7.49 |
Total from investment operations |
(13.42) |
22.08 |
0.71 |
0.89 |
8.79 |
Net equalization credits and charges (b) |
(0.04) |
0.01 |
0.02 |
(0.03) |
(0.02) |
Contribution from Affiliate |
— |
— |
— |
0.00(d)(e) |
— |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.52) |
(1.30) |
(1.41) |
(1.57) |
(1.39) |
Net asset value, end of period |
$82.79 |
$97.77 |
$76.98 |
$77.66 |
$78.37 |
Total return (f) |
(13.95)% |
28.74% |
1.12% |
1.25%(g) |
12.43% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$11,104,720 |
$17,367,182 |
$12,179,734 |
$9,802,368 |
$12,925,332 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
1.54% |
1.33% |
1.87% |
2.07% |
1.74% |
Portfolio turnover rate (h) |
7% |
2% |
3% |
3% |
6% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Contribution paid by an Affiliate in the amount of $60,421. |
(f) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(g) |
The contribution from an Affiliate had no impact on total return. |
(h) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Materials Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$79.11 |
$63.62 |
$58.17 |
$57.92 |
$56.80 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.64 |
1.45 |
1.23 |
1.20 |
1.09 |
Net realized and unrealized gain (loss) (c) |
(11.02) |
15.43 |
5.47 |
0.28 |
1.09 |
Total from investment operations |
(9.38) |
16.88 |
6.70 |
1.48 |
2.18 |
Net equalization credits and charges (b) |
(0.06) |
(0.00)(d) |
(0.03) |
(0.03) |
0.02 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.69) |
(1.39) |
(1.22) |
(1.20) |
(1.08) |
Net asset value, end of period |
$67.98 |
$79.11 |
$63.62 |
$58.17 |
$57.92 |
Total return (e) |
(12.23)% |
26.60% |
11.76% |
2.64% |
3.84% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$4,702,427 |
$7,501,906 |
$3,917,044 |
$4,201,473 |
$4,547,766 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
1.97% |
1.83% |
2.15% |
2.18% |
1.84% |
Portfolio turnover rate (f) |
2% |
5% |
4% |
20% |
17% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(f) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Real Estate Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$44.47 |
$35.30 |
$39.35 |
$32.62 |
$32.26 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
0.86 |
0.85 |
0.88 |
0.95 |
0.95 |
Net realized and unrealized gain (loss) (c) |
(7.99) |
9.66 |
(3.78) |
6.91 |
0.58 |
Total from investment operations |
(7.13) |
10.51 |
(2.90) |
7.86 |
1.53 |
Net equalization credits and charges (b) |
0.03 |
0.05 |
(0.05) |
0.01 |
0.00(d) |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.37) |
(1.39) |
(1.10) |
(1.14) |
(1.17) |
Net asset value, end of period |
$36.00 |
$44.47 |
$35.30 |
$39.35 |
$32.62 |
Total return (e) |
(16.46)% |
30.42% |
(7.46)% |
24.64% |
4.87% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$4,612,173 |
$4,282,141 |
$2,264,406 |
$3,884,273 |
$2,732,078 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
1.90% |
2.05% |
2.42% |
2.69% |
2.94% |
Portfolio turnover rate (f) |
11% |
4% |
5% |
3% |
7% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(f) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Technology Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$149.35 |
$116.76 |
$80.51 |
$75.30 |
$59.13 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.24 |
1.11 |
1.20 |
1.05 |
0.93 |
Net realized and unrealized gain (loss) (c) |
(30.62) |
32.60 |
36.24 |
5.18 |
16.17 |
Total from investment operations |
(29.38) |
33.71 |
37.44 |
6.23 |
17.10 |
Net equalization credits and charges (b) |
(0.00)(d) |
(0.02) |
(0.00)(d) |
0.01 |
0.04 |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(1.24) |
(1.10) |
(1.19) |
(1.03) |
(0.97) |
Net asset value, end of period |
$118.73 |
$149.35 |
$116.76 |
$80.51 |
$75.30 |
Total return (e) |
(19.82)% |
28.93% |
46.88% |
8.44% |
29.14% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$35,656,531 |
$43,022,516 |
$34,095,026 |
$22,417,160 |
$22,959,484 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
0.83% |
0.81% |
1.24% |
1.44% |
1.37% |
Portfolio turnover rate (f) |
9% |
4% |
3% |
6% |
19% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Amount is less than $0.005 per share. |
(e) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(f) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
|
The Utilities Select Sector SPDR Fund | ||||
|
Year Ended 9/30/22 |
Year Ended 9/30/21 |
Year Ended 9/30/20 |
Year Ended 9/30/19(a) |
Year Ended 9/30/18(a) |
Net asset value, beginning of period |
$63.88 |
$59.40 |
$64.73 |
$52.68 |
$53.05 |
Income (loss) from investment operations: |
|
|
|
|
|
Net investment income (loss) (b) |
1.96 |
1.86 |
2.00 |
1.90 |
1.76 |
Net realized and unrealized gain (loss) (c) |
1.61 |
4.61 |
(5.36) |
12.01 |
(0.28) |
Total from investment operations |
3.57 |
6.47 |
(3.36) |
13.91 |
1.48 |
Net equalization credits and charges (b) |
0.04 |
(0.01) |
(0.02) |
0.01 |
(0.04) |
Distributions to shareholders from: |
|
|
|
|
|
Net investment income |
(2.03) |
(1.98) |
(1.95) |
(1.87) |
(1.81) |
Net asset value, end of period |
$65.46 |
$63.88 |
$59.40 |
$64.73 |
$52.68 |
Total return (d) |
5.46% |
10.95% |
(5.12)% |
26.85% |
2.89% |
Ratios and Supplemental Data: |
|
|
|
|
|
Net assets, end of period (in 000s) |
$16,119,053 |
$11,956,669 |
$11,405,751 |
$11,296,483 |
$7,642,260 |
Ratios to average net assets: |
|
|
|
|
|
Total expenses |
0.10% |
0.11% |
0.13% |
0.13% |
0.13% |
Net investment income (loss) |
2.76% |
2.89% |
3.29% |
3.30% |
3.37% |
Portfolio turnover rate (e) |
4% |
3% |
3% |
5% |
5% |
|
|
(a) |
Beginning with the year ended September 30, 2020, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm. |
(b) |
Per share numbers have been calculated using average shares outstanding, which more appropriately presents the per share data for the year. |
(c) |
Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund. |
(d) |
Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of each period reported. Distributions are assumed, for the purpose of this calculation, to be reinvested at net asset value per share on the respective payment dates of each distribution. Total returns for periods of less than one year are not annualized. Broker commission charges are not included in this calculation. |
(e) |
Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions on Select Sector SPDR shares. |
FUND |
TICKER |
THE COMMUNICATION SERVICES SELECT SECTOR SPDR® FUND |
XLC |
THE CONSUMER DISCRETIONARY SELECT SECTOR SPDR® FUND |
XLY |
THE CONSUMER STAPLES SELECT SECTOR SPDR® FUND |
XLP |
THE ENERGY SELECT SECTOR SPDR® FUND |
XLE |
THE FINANCIAL SELECT SECTOR SPDR® FUND |
XLF |
THE HEALTH CARE SELECT SECTOR SPDR® FUND |
XLV |
THE INDUSTRIAL SELECT SECTOR SPDR® FUND |
XLI |
THE MATERIALS SELECT SECTOR SPDR® FUND |
XLB |
THE REAL ESTATE SELECT SECTOR SPDR® FUND |
XLRE |
THE TECHNOLOGY SELECT SECTOR SPDR® FUND |
XLK |
THE UTILITIES SELECT SECTOR SPDR® FUND |
XLU |
4 | |
8 | |
15 | |
20 | |
22 | |
22 | |
31 | |
39 | |
41 | |
42 | |
46 | |
50 | |
51 | |
52 | |
58 | |
59 | |
59 | |
A-1 | |
B-1 |
Name, Address and Year of Birth |
Position(s) With Trust |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
Number of Portfolios in Fund Complex Overseen by Trustee† |
Other Directorships Held by Trustee During Past Five Years |
INDEPENDENT TRUSTEES | |||||
ASHLEY T. RABUN c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1952 |
Trustee, Chair of the Board; Member of the Audit Committee, Member of the Nominating and Governance Committee |
Term: Indefinite Appointed: October 2015 Elected: October 2021 |
Retired; President and Founder, InvestorReach, Inc., a financial services consulting firm (1996 - 2015). |
11 |
Chairperson of the Board and Member of the Audit, Nominating and Valuation Committees, Investment Managers Series Trust (2007 - present). |
ALLISON GRANT WILLIAMS c/o The Select Sector SPDR Trust |
Trustee; Member of the Audit |
Term: Indefinite Elected: |
Retired; Practice Executive, Global Strategic Relationship |
11 |
Leadership Advisory Committee (2019 - present) and |
Name, Address and Year of Birth |
Position(s) With Trust |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
Number of Portfolios in Fund Complex Overseen by Trustee† |
Other Directorships Held by Trustee During Past Five Years |
One Iron Street Boston, MA 02210 1956 |
Committee, Member of the Nominating and Governance Committee |
October 2021 |
Management/Asset Management - Corporate & Institutional Services (C&IS) Division, Northern Trust Corporation (2017 - 2021); and Chief Operating Officer & Chief Administrative Officer, Institutional Investor Group, N.A., C&IS Division, Northern Trust Corporation (2016 - 2017). |
|
Membership Committee Chair (2021 - present), Art Institute of Chicago; Academic Affairs Chair and Executive Committee Member (2018 - Present) and Board of Trustees and Investment Committee Member (2012 - present), Columbia College Chicago. |
SHEILA HARTNETT-DEVLIN c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1958 |
Trustee; Member of the Audit Committee, Member of the Nominating and Governance Committee |
Term: Indefinite Elected: October 2021 |
Retired; Senior Vice President and Head of the U.S. Institutional Business, American Century Investments, Inc. (2008 - 2017). |
11 |
Director, South Jersey Industries, Inc. (energy services) (1999 - present) and Director, Mannington Mills (flooring products) (2005 - present). |
JAMES JESSEE c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1958 |
Trustee; Member of the Audit Committee, Member of the Nominating and Governance Committee |
Term: Indefinite Elected: October 2021 |
Retired; Strategic Advisor, MFS Investment Management (2018); and Co-Head, Global Distribution and President MFS Fund Distributors, Inc. (2011 - 2017). |
11 |
Trustee, Yieldstreet Prism Fund (investment company) (2019 - present); Board Member, Board of Governors, Investment Company Institute (2014 - 2018); Director, Waddell & Reed Financial, Inc. (investment management) (2019 - 2021). |
TERESA POLLEY c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1960 |
Trustee; Chair of the Audit Committee, Member of the Nominating and Governance Committee |
Term: Indefinite Elected: October 2021 |
Retired. Terri Polley Consulting (2019 to 2021); President and Chief Executive Officer of the Financial Accounting Foundation (FAF) (2008 - 2019). |
11 |
Director, Fairfield County Band (2023 – Present); Trustee (2018 to present), Academic Affairs Committee Member (2018 - present), Audit Committee Chair (2021 - present), Executive Committee Member (2021 - present), Finance and Operations Committee Member (2018 - present), St. Francis University. |
R. CHARLES TSCHAMPION c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1946 |
Trustee, Member of the Audit Committee, Chair of the Nominating and Governance Committee |
Term: Indefinite Elected: October 1998 |
Retired. |
11 |
Trustee Emeritus of Lehigh University. |
Name, Address and Year of Birth |
Position(s) With Trust |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
Number of Portfolios in Fund Complex Overseen by Trustee† |
Other Directorships Held by Trustee During Past Five Years |
INTERESTED TRUSTEES | |||||
JAMES E. ROSS* c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1965 |
Trustee |
Term: Indefinite Appointed: November 2005 Elected: October 2021 |
President, Winnisquam Capital LLC (December 2022 – present); Non-Executive Chairman, Fusion Acquisition Corp. (June 2020 - September 2021); Non-Executive Chairman, Fusion Acquisition Corp II (February 2020 - present): Retired Chairman and Director, SSGA Funds Management, Inc. (2005 - March 2020); Retired Executive Vice President, State Street Global Advisors (2012 - March 2020); Retired Chief Executive Officer and Manager, State Street Global Advisors Funds Distributors, LLC (May 2017 - March 2020); Director, State Street Global Markets, LLC (2013 - April 2017); President, SSGA Funds Management, Inc. (2005 - 2012); Principal, State Street Global Advisors (2000 - 2005). |
136 |
Investment Managers Series Trust (December 2022 – present); SSGA SPDR ETFs Europe I plc (Director) (November 2016 – March 2020); SSGA SPDR ETFs Europe II plc (Director) (November 2016 – March 2020); State Street Navigator Securities Lending Trust (July 2016 – March 2020); SSGA Funds (January 2014 – March 2020); SSGA Active Trust (2011 - March 2020); State Street Institutional Investment Trust (February 2007 – March 2020); State Street Master Funds (February 2007 – March 2020); SPDR Series Trust (November 2005 - December 2009; April 2010 - March 2020); SPDR Index Shares Funds (November 2005 - December 2009; April 2010 - March 2020); Elfun Funds (July 2016 – December 2018). |
RORY TOBIN* c/o The Select Sector SPDR Trust One Iron Street Boston, MA 02210 1965 |
Trustee |
Term: Indefinite Elected: October 2021 |
Executive Vice President and Head of Business EMEA, Head of Global SPDR ETF, Member of the SSGA Global Executive Management Group (2014 - present). |
11 |
None |
Name, Address and Year of Birth |
Position(s) With Trust |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
ELLEN M. NEEDHAM SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1967 |
President and Principal Executive Officer |
Term: Indefinite Served: since May 2013 |
Chairman, SSGA Funds Management, Inc. (March 2020 - present); President and Director, SSGA Funds Management, Inc. (2001 - present)*; Senior Managing Director, State Street Global Advisors (1992 - present)*; Manager, State Street Global Advisors Funds Distributors, LLC (May 2017 - present). |
Name, Address and Year of Birth |
Position(s) With Trust |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
MICHAEL P. RILEY SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1969 |
Vice President |
Term: Indefinite Served: since February 2005 |
Managing Director, State Street Global Advisors (2005 - present).* |
CHAD C. HALLETT SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1969 |
Treasurer and Principal Financial Officer |
Term: Indefinite Served: since November 2007 |
Vice President, State Street Global Advisors and SSGA Funds Management, Inc. (November 2014 - present). |
ANN M. CARPENTER SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1966 |
Deputy Treasurer |
Term: Indefinite Served: since April 2015 |
Chief Operating Officer, SSGA Funds Management, Inc. (April 2005 - present)*; Managing Director, State Street Global Advisors (April 2005 - present).* |
BRUCE S. ROSENBERG SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1961 |
Deputy Treasurer |
Term: Indefinite Served: since February 2016 |
Managing Director, State Street Global Advisors and SSGA Funds Management, Inc. (July 2015 - present); Director, Credit Suisse (April 2008 - July 2015). |
DARLENE ANDERSON-VASQUEZ SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1968 |
Deputy Treasurer |
Term: Indefinite Served: since February 2017 |
Managing Director, State Street Global Advisors and SSGA Funds Management, Inc. (May 2016 - present); Senior Vice President, John Hancock Investments (September 2007 - May 2016). |
ARTHUR A. JENSEN SSGA Funds Management, Inc. 1600 Summer Street Stamford, CT 06905 1966 |
Deputy Treasurer |
Term: Indefinite Served: since November 2017 |
Vice President, State Street Global Advisors and SSGA Funds Management, Inc. (July 2016 - present); Mutual Funds Controller, GE Asset Management Incorporated (April 2011 - July 2016). |
DAVID LANCASTER SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1971 |
Assistant Treasurer |
Term: Indefinite Served: since November 2020 |
Vice President, State Street Global Advisors and SSGA Funds Management, Inc. (July 2017 – present); Assistant Vice President, State Street Bank and Trust Company (November 2011 – July 2017).* |
RYAN HILL SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1982 |
Assistant Treasurer |
Term: Indefinite Served: since May 2022 |
Vice President, State Street Global Advisors and SSGA Funds Management Inc. (May 2017 – present); Assistant Vice President, State Street Bank and Trust Co. (May 2014 – May 2017). |
JOHN BETTENCOURT SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1976 |
Assistant Treasurer |
Term: Indefinite Served: since May 2022 |
Vice President, State Street Global Advisors and SSGA Funds Management Inc. (March 2020 – present); Assistant Vice President, State Street Global Advisors (June 2007 – March 2020). |
SEAN O'MALLEY SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1969 |
Chief Legal Officer |
Term: Indefinite Served: since August 2019 |
Senior Vice President and Deputy General Counsel, State Street Global Advisors (November 2013 – present). |
DAVID BARR SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1974 |
Assistant Secretary |
Term: Indefinite Served: since November 2020 |
Vice President and Senior Counsel, State Street Global Advisors (October 2019 - present); Vice President and Counsel, Eaton Vance Corp. (October 2010 - October 2019). |
DAVID URMAN SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1985 |
Secretary |
Term: Indefinite Served: since August 2022 |
Vice President and Senior Counsel, State Street Global Advisors (April 2019 - present); Vice President and Counsel, State Street Global Advisors (August 2015 - April 2019); Associate, Ropes & Gray LLP (November 2012 - August 2015). |
Name, Address and Year of Birth |
Position(s) With Trust |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
BRIAN HARRIS SSGA Funds Management, Inc. One Iron Street Boston, MA 02210 1973 |
Chief Compliance Officer, Anti-Money Laundering Officer and Code of Ethics Compliance Officer |
Term: Indefinite Served: since November 2013 |
Managing Director, State Street Global Advisors and SSGA Funds Management, Inc. (June 2013 - present).* |
Name of Trustee |
Aggregate Compensation from the Trust |
Pension or Retirement Benefits Accrued as Part of Trust Expenses |
Estimated Annual Benefits Upon Retirement |
Total Compensation from the Trust and Fund Complex Paid to Trustees |
Independent Trustees: | ||||
Cheryl Burgermeister(1) |
$327,000 |
N/A |
N/A |
$327,000 |
Allison Grant Williams(2) |
$292,000 |
N/A |
N/A |
$292,000 |
Sheila Hartnett-Devlin(2) |
$292,000 |
N/A |
N/A |
$292,000 |
James Jessee(2) |
$292,000 |
N/A |
N/A |
$292,000 |
Teresa Polley(2) |
$304,500 |
N/A |
N/A |
$304,500 |
Ashley T. Rabun |
$352,000 |
N/A |
N/A |
$352,000 |
Ernest J. Scalberg(3) |
$55,750 |
N/A |
N/A |
$55,750 |
R. Charles Tschampion |
$302,500 |
N/A |
N/A |
$302,500 |
Interested Trustees: | ||||
James E. Ross |
$272,000 |
N/A |
N/A |
$272,000 |
Rory Tobin(2),(4) |
N/A |
N/A |
N/A |
N/A |
Fund |
Amount |
The Communication Services Select Sector SPDR Fund |
$132,457 |
The Consumer Discretionary Select Sector SPDR Fund |
$202,874 |
The Consumer Staples Select Sector SPDR Fund |
$143,894 |
The Energy Select Sector SPDR Fund |
$318,933 |
The Financial Select Sector SPDR Fund |
$427,784 |
Fund |
Amount |
The Health Care Select Sector SPDR Fund |
$353,026 |
The Industrial Select Sector SPDR Fund |
$172,079 |
The Materials Select Sector SPDR Fund |
$80,387 |
The Real Estate Select Sector SPDR Fund |
$52,456 |
The Technology Select Sector SPDR Fund |
$465,129 |
The Utilities Select Sector SPDR Fund |
$140,731 |
Name of Trustee |
Fund |
Dollar Range of Equity Securities in the Trust |
Aggregate Dollar Range of Equity Securities in All Funds Overseen by Trustee in Family of Investment Companies |
Independent Trustees: |
|
|
|
Allison Grant Williams |
The Financial Select Sector SPDR Fund |
$1 - $10,000 |
$1 - $10,000 |
Sheila Hartnett-Devlin |
The Technology Select Sector SPDR Fund |
Over $100,000 |
Over $100,000 |
James Jessee |
The Energy Select Sector SPDR Fund |
$10,001 - $50,000 |
$10,001 - $50,000 |
Teresa Polley |
The Communication Services Select Sector SPDR Fund |
$1 - $10,000 |
$10,001 - $50,000 |
|
The Consumer Discretionary Select Sector SPDR Fund |
$1 - $10,000 |
|
|
The Consumer Staples Select Sector SPDR Fund |
$1 - $10,000 |
|
|
The Energy Select Sector SPDR Fund |
$1 - $10,000 |
|
|
The Financial Select Sector SPDR Fund |
$1 - $10,000 |
|
|
The Health Care Select Sector SPDR Fund |
$1 - $10,000 |
|
|
The Industrial Select Sector SPDR Fund |
$1 - $10,000 |
|
|
The Materials Select Sector SPDR Fund |
$1 - $10,000 |
|
Ashley T. Rabun |
None |
None |
None |
R. Charles Tschampion |
The Utilities Select Sector SPDR Fund |
Over $100,000 |
Over $100,000 |
Interested Trustees: |
|
|
|
James E. Ross |
The Consumer Discretionary Select Sector SPDR Fund |
Over $100,000 |
Over $100,000 |
|
The Energy Select Sector SPDR Fund |
$10,001 - $50,000 |
|
|
The Financial Select Sector SPDR Fund |
Over $100,000 |
|
|
The Health Care Select Sector SPDR Fund |
$50,001 - $100,000 |
|
|
The Technology Select Sector SPDR Fund |
$50,001 - $100,000 |
|
Rory Tobin |
None |
None |
None |
Fund |
2022 |
2021 |
2020 |
The Communication Services Select Sector SPDR Fund |
$3,566,909 |
$4,078,380 |
$2,652,472 |
The Consumer Discretionary Select Sector SPDR Fund |
$5,742,805 |
$5,961,510 |
$4,577,683 |
The Consumer Staples Select Sector SPDR Fund |
$4,473,735 |
$3,852,682 |
$4,565,846 |
The Energy Select Sector SPDR Fund |
$10,297,847 |
$6,014,735 |
$3,255,205 |
The Financial Select Sector SPDR Fund |
$11,983,348 |
$10,617,796 |
$6,718,402 |
The Health Care Select Sector SPDR Fund |
$10,951,801 |
$8,480,719 |
$7,131,363 |
The Industrial Select Sector SPDR Fund |
$4,688,537 |
$5,560,310 |
$3,298,512 |
The Materials Select Sector SPDR Fund |
$2,194,112 |
$2,225,224 |
$1,231,222 |
The Real Estate Select Sector SPDR Fund |
$1,635,946 |
$909,394 |
$1,181,266 |
The Technology Select Sector SPDR Fund |
$13,589,572 |
$12,433,163 |
$9,334,180 |
The Utilities Select Sector SPDR Fund |
$4,476,805 |
$3,803,234 |
$3,779,441 |
Portfolio Management Team |
Fund |
Michael Feehily1, Karl Schneider and Amy Cheng |
The Real Estate Select Sector SPDR Fund |
Karl Schneider, David Chin and Kala O'Donnell |
The Technology Select Sector SPDR Fund |
Michael Feehily1, Karl Schneider and Dwayne Hancock |
The Consumer Staples Select Sector SPDR Fund The Health Care Select Sector SPDR Fund The Utilities Select Sector SPDR Fund |
Michael Feehily1, Karl Schneider and Ted Janowsky |
The Energy Select Sector SPDR Fund The Materials Select Sector SPDR Fund |
Karl Schneider, Dwayne Hancock and Kala O'Donnell |
The Financial Select Sector SPDR Fund |
Michael Feehily1, Karl Schneider and Kala O'Donnell |
The Communication Services Select Sector SPDR Fund The Consumer Discretionary Select Sector SPDR Fund |
Michael Feehily1, Karl Schneider, Emiliano Rabinovich and Amy Cheng |
The Industrial Select Sector SPDR Fund |
Portfolio Manager |
Registered Investment Company Accounts |
Assets Managed (billions)* |
Other Pooled Investment Vehicle Accounts |
Assets Managed (billions)* |
Other Accounts |
Assets Managed (billions)* |
Total Assets Managed (billions) |
Michael Feehily** |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Karl Schneider |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Amy Cheng |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
David Chin |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Dwayne Hancock |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Ted Janowsky |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Kala O'Donnell |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Emiliano Rabinovich |
123 |
$550.00 |
379 |
$633.69 |
517 |
$420.11 |
$1,603.80 |
Portfolio Manager |
Fund |
Dollar Range of Fund Shares Beneficially Owned |
Dwayne Hancock |
The Utilities Select Sector SPDR Fund |
$50,001 - $100,000 |
Fund |
2022 |
2021 |
2020 |
The Communication Services Select Sector SPDR Fund |
$70,172 |
$78,057 |
$47,992 |
The Consumer Discretionary Select Sector SPDR Fund |
$112,998 |
$113,971 |
$82,800 |
The Consumer Staples Select Sector SPDR Fund |
$87,921 |
$73,490 |
$82,500 |
The Energy Select Sector SPDR Fund |
$202,367 |
$115,529 |
$58,867 |
The Financial Select Sector SPDR Fund |
$235,848 |
$203,874 |
$121,464 |
The Health Care Select Sector SPDR Fund |
$215,215 |
$162,257 |
$128,932 |
The Industrial Select Sector SPDR Fund |
$92,235 |
$106,453 |
$59,675 |
Fund |
2022 |
2021 |
2020 |
The Materials Select Sector SPDR Fund |
$43,164 |
$42,706 |
$22,262 |
The Real Estate Select Sector SPDR Fund |
$32,167 |
$17,449 |
$21,330 |
The Technology Select Sector SPDR Fund |
$267,272 |
$237,786 |
$168,852 |
The Utilities Select Sector SPDR Fund |
$87,939 |
$72,645 |
$68,295 |
|
Gross income earned by the Fund from securities lending activities |
Fees and/or compensation paid by the Fund for securities lending activities and related services |
Aggregate fees and/or compensation paid by the Fund for securities lending activities and related services |
Net income from securities lending activities | |||||
|
Fees paid to State Street from a revenue split |
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in a revenue split |
Admini- strative fees not included in a revenue split |
Indemnifi- cation fees not included in a revenue split |
Rebate (paid to borrower) |
Other fees not included in a revenue split | |||
The Communication Services Select Sector SPDR Fund |
$1,145,275 |
$54,144 |
$45,833 |
$0 |
$0 |
$738,469 |
$0 |
$838,446 |
$306,829 |
The Consumer Discretionary Select Sector SPDR Fund |
$1,266,292 |
$65,885 |
$41,988 |
$0 |
$0 |
$785,032 |
$0 |
$892,905 |
$373,387 |
The Consumer Staples Select Sector SPDR Fund |
$176,623 |
$6,861 |
$7,341 |
$0 |
$0 |
$123,543 |
$0 |
$137,745 |
$38,878 |
The Energy Select Sector SPDR Fund |
$971,436 |
$28,409 |
$28,707 |
$0 |
$0 |
$753,331 |
$0 |
$810,448 |
$160,988 |
The Financial Select Sector SPDR Fund |
$917,840 |
$32,870 |
$23,922 |
$0 |
$0 |
$674,775 |
$0 |
$731,567 |
$186,273 |
The Health Care Select Sector SPDR Fund |
$872,870 |
$28,940 |
$24,241 |
$0 |
$0 |
$655,684 |
$0 |
$708,865 |
$164,005 |
The Industrial Select Sector SPDR Fund |
$2,198,989 |
$174,199 |
$34,647 |
$0 |
$0 |
$1,002,998 |
$0 |
$1,211,845 |
$987,144 |
The Materials Select Sector SPDR Fund |
$167,777 |
$15,419 |
$3,629 |
$0 |
$0 |
$61,350 |
$0 |
$80,398 |
$87,379 |
The Real Estate Select Sector SPDR Fund |
$27,362 |
$2,328 |
$3,170 |
$0 |
$0 |
$8,667 |
$0 |
$14,166 |
$13,196 |
The Technology Select Sector SPDR Fund |
$1,636,764 |
$95,336 |
$38,919 |
$0 |
$0 |
$962,261 |
$0 |
$1,096,517 |
$540,247 |
The Utilities Select Sector SPDR Fund |
$722,628 |
$19,048 |
$22,444 |
$0 |
$0 |
$573,178 |
$0 |
$614,671 |
$107,957 |
Fund |
Distributor's Fee (including 12b-1 Administration Fee) |
Advertising |
Other* |
The Communication Services Select Sector SPDR Fund |
$1,720,171 |
$922,459 |
$60,440 |
The Consumer Discretionary Select Sector SPDR Fund |
$2,764,559 |
$1,474,745 |
$97,699 |
The Consumer Staples Select Sector SPDR Fund |
$2,110,677 |
$1,016,137 |
$78,682 |
The Energy Select Sector SPDR Fund |
$4,847,200 |
$2,387,016 |
$181,585 |
The Financial Select Sector SPDR Fund |
$5,746,975 |
$3,031,548 |
$202,921 |
The Health Care Select Sector SPDR Fund |
$5,185,455 |
$2,576,251 |
$192,899 |
The Industrial Select Sector SPDR Fund |
$2,250,717 |
$1,200,793 |
$79,855 |
The Materials Select Sector SPDR Fund |
$1,051,185 |
$562,869 |
$37,439 |
The Real Estate Select Sector SPDR Fund |
$777,366 |
$386,359 |
$28,463 |
The Technology Select Sector SPDR Fund |
$6,499,081 |
$3,353,897 |
$234,175 |
The Utilities Select Sector SPDR Fund |
$2,112,888 |
$1,032,262 |
$79,454 |
Fund |
2022 |
2021 |
2020 |
The Communication Services Select Sector SPDR Fund |
$225,060 |
$174,492 |
$203,941 |
The Consumer Discretionary Select Sector SPDR Fund |
$172,216 |
$300,700 |
$143,858 |
The Consumer Staples Select Sector SPDR Fund |
$96,695 |
$54,167 |
$79,167 |
The Energy Select Sector SPDR Fund |
$431,232 |
$471,073 |
$306,342 |
The Financial Select Sector SPDR Fund |
$98,086 |
$90,945 |
$104,833 |
The Health Care Select Sector SPDR Fund |
$28,774 |
$38,252 |
$72,955 |
The Industrial Select Sector SPDR Fund |
$53,171 |
$29,059 |
$30,014 |
The Materials Select Sector SPDR Fund |
$13,546 |
$26,817 |
$17,786 |
The Real Estate Select Sector SPDR Fund |
$58,817 |
$14,078 |
$17,394 |
The Technology Select Sector SPDR Fund |
$217,884 |
$123,255 |
$67,103 |
The Utilities Select Sector SPDR Fund |
$113,818 |
$44,356 |
$42,091 |
JPMorgan Chase & Co. |
$4,741,969,166 |
Bank of America Corp. |
$3,047,492,759 |
Citigroup, Inc. |
$1,378,967,592 |
Morgan Stanley |
$1,377,012,694 |
Goldman Sachs Group, Inc. |
$1,235,361,591 |
Fund |
Name and Address |
% Ownership |
THE COMMUNICATION SERVICES SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
25.49% |
|
National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
7.59% |
|
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
5.93% |
|
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
5.66% |
THE CONSUMER DISCRETIONARY SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
23.00% |
|
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
8.51% |
|
National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
8.34% |
|
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
5.15% |
THE CONSUMER STAPLES SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
13.81% |
|
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
10.59% |
|
National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
10.42% |
|
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
7.27% |
Fund |
Name and Address |
% Ownership |
|
TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
5.42% |
THE ENERGY SELECT SECTOR SPDR FUND |
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
11.35% |
|
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
10.53% |
|
National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
9.93% |
|
JPMorgan Chase Bank, National Association 14201 Dallas Parkway Chase International Plaza Dallas, TX 75254 |
8.17% |
|
TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
5.45% |
THE FINANCIAL SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
8.97% |
|
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
8.84% |
|
National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
8.29% |
|
Citibank, N.A. 3800 Citigroup Center Tampa Tampa, FL 33610 |
6.43% |
|
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
5.71% |
THE HEALTH CARE SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
14.43% |
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National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
9.12% |
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Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
8.92% |
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Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
6.19% |
Fund |
Name and Address |
% Ownership |
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JPMorgan Chase Bank, National Association 14201 Dallas Parkway Chase International Plaza Dallas, TX 75254 |
5.90% |
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Citibank, N.A. 3800 Citigroup Center Tampa Tampa, FL 33610 |
5.02% |
THE INDUSTRIAL SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
12.76% |
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Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
10.81% |
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National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
8.39% |
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JPMorgan Chase Bank, National Association 14201 Dallas Parkway Chase International Plaza Dallas, TX 75254 |
7.46% |
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Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
6.44% |
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TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
5.64% |
THE MATERIALS SELECT SECTOR SPDR FUND |
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
12.44% |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
9.91% |
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National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
8.10% |
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Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
6.37% |
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TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
5.59% |
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Wells Fargo Clearing Services, LLC 1 North Jefferson Avenue St. Louis, MO 63103 |
5.20% |
THE REAL ESTATE SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
16.48% |
Fund |
Name and Address |
% Ownership |
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Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
12.06% |
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National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
9.44% |
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TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
6.48% |
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LPL Financial Corporation 4707 Executive Drive San Diego, CA 92121 |
6.15% |
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Citibank, N.A. 3800 Citigroup Center Tampa Tampa, FL 33610 |
5.51% |
THE TECHNOLOGY SELECT SECTOR SPDR FUND |
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
12.58% |
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National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
10.96% |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
6.60% |
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TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
5.58% |
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Wells Fargo Clearing Services, LLC 1 North Jefferson Avenue St. Louis, MO 63103 |
5.27% |
THE UTILITIES SELECT SECTOR SPDR FUND |
JPMorgan Chase Bank, National Association 14201 Dallas Parkway Chase International Plaza Dallas, TX 75254 |
16.60% |
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National Financial Services Corporation 200 Liberty Street New York, NY 10281 |
11.75% |
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Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 |
9.92% |
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Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 |
8.48% |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
8.43% |
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TD Ameritrade Clearing, Inc. 4211 South 102nd Street Omaha, NE 68127 |
5.28% |
Fund |
Name and Address |
% Ownership |
THE COMMUNICATION SERVICES SELECT SECTOR SPDR FUND |
Merrill Lynch, Pierce, Fenner & Smith Incorporated 4803 Deer Lake Drive W Jacksonville, FL 32246 |
25.49% |
Adopted: |
May 1, 2006 |
Amended: |
May 12, 2009 |
Amended: |
November 9, 2010 |
Amended: |
February 9, 2016 |
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December 2022 |
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Global Proxy Voting and Engagement Principles |
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State Street Global Advisors, one of the industry's largest institutional asset managers, is the investment management arm of State Street Corporation, a leading provider of financial services to institutional investors. As an investment manager, State Street Global Advisors has discretionary proxy voting authority over most of its client accounts, and State Street Global Advisors votes these proxies in the manner that we believe will most likely protect and promote the long-term economic value of client investments, as described in this document.i |
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State Street Global Advisors' Authority and Duties to Vote Client and Fund Securities |
Where State Street Global Advisors' clients have asked it to vote their shares on their behalf or where a commingled fund fiduciary has delegated the responsibility to vote the fund's securities to State Street Global Advisors, State Street Global Advisors votes those client and fund-owned securities in a unified manner, consistent with the Principles described in this document. Exceptions to this unified voting policy are: (1) where State Street Global Advisors has made proxy voting choices (i.e., the proxy voting program) available to investors within a commingled fund, in which case a pro rata portion of shares held by the fund attributable to investors who choose to participate in the proxy voting program would be voted consistent with the third-party proxy voting policies selected by the investors, and (2) in the limited circumstances where a pooled investment vehicle managed by State Street Global Advisors utilizes a third party proxy voting guideline as set forth in that fund's organizational and/or offering documents. With respect to such funds utilizing third-party proxy voting guidelines, the terms of the applicable third-party proxy voting guidelines shall apply in place of the Principles described herein and the proxy votes implemented with respect to such a fund may differ from and be contrary to those votes implemented for other portfolios managed by State Street Global Advisors pursuant to its proprietary proxy voting guidelines. |
The Principles - State Street Global Advisors' Approach to Proxy Voting and Issuer Engagement |
At State Street Global Advisors, we take our fiduciary duties as an asset manager very seriously. We have a dedicated team of corporate governance professionals who help us carry out our duties as a responsible investor. These duties include engaging with companies, developing and enhancing in-house corporate governance guidelines, analyzing corporate governance issues on a case-by-case basis at the company level, and exercising voting rights. The underlying goal is to maximize shareholder value. |
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The Principles may take different perspectives on common governance issues that vary from one market to another. Similarly, engagement activity may take different forms in order to best achieve long-term engagement goals. Rather than divesting from portfolio companies, our approach is to engage with such companies. We believe that proxy voting and engagement with portfolio companies is often the most direct and productive way for shareholders to exercise their ownership rights. This comprehensive toolkit is an integral part of the overall investment process. |
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We believe engagement and voting activity have a direct relationship. As a result, the integration of our engagement activities, while leveraging the exercise of voting rights, provides a meaningful shareholder tool that we believe protects and enhances the long-term economic value of the holdings in our clients' accounts. We maximize voting power and engagement by maintaining a centralized proxy voting and active ownership process covering all holdings, regardless of strategy. Despite the vast array of investment strategies and objectives across State Street Global Advisors, the fiduciary responsibilities of share ownership and voting for which State Street Global Advisors has voting discretion are carried out with a single voice and objective. |
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The Principles support governance structures that we believe add to, or maximize, shareholder value for the companies held in our clients' portfolios. We conduct issuer specific engagements with companies to discuss our principles, including sustainability- related risks. In addition, we encourage issuers to find ways to increase the amount of direct communication board members have with shareholders. Direct communication with executive board members and independent non-executive directors is critical to helping companies understand shareholder concerns. |
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In conducting our engagements, we also evaluate the various factors that influence the corporate governance framework of a country, including the macroeconomic conditions and broader political system, the quality of regulatory oversight, the enforcement of property and shareholder rights, and the independence of the judiciary. We understand that regulatory requirements and investor expectations relating to governance practices and engagement activities differ from country to country. As a result, we engage with issuers, regulators, or a combination of the two depending upon the market. We are also a member of various investor associations that seek to address broader corporate governance-related policy at the country level. |
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The State Street Global Advisors Asset Stewardship Team may consult with members of various investment teams to engage with companies on corporate governance issues and to address any specific concerns. This facilitates our comprehensive approach to information gathering as it relates to shareholder items that are to be voted upon at upcoming shareholder meetings. We also conduct issuer-specific engagements with companies, covering various corporate governance and sustainability-related topics outside of proxy season. |
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The Asset Stewardship Team employs a blend of quantitative and qualitative research, analysis and data in order to support screens that identify issuers where active engagement may be necessary to protect and promote shareholder value. Issuer engagement may also be event driven, focusing on issuer-specific corporate governance, sustainability concerns, or broader industry-related trends. We also consider the size of our total position in the issuer in question and/or the potential negative governance, performance profile, and circumstance at hand. As a result, we believe issuer engagement can take many forms and be triggered by numerous circumstances. The following approaches represent how we define engagement methods: |
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Active |
We use screening tools designed to capture a mix of company-specific data, including governance and sustainability profiles, to help us focus our voting and engagement activity. |
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We will actively seek direct dialogue with the board and management of companies that we have identified through our screening processes. Such engagements may lead to further monitoring to ensure that the company improves its governance or sustainability practices. In these cases, the engagement process represents the most meaningful opportunity for us to protect long-term shareholder value from excessive risk due to poor governance and sustainability practices. |
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Reactive |
Reactive engagement is initiated by issuers. We routinely discuss specific voting issues and items with the issuer community. Reactive engagement is an opportunity to address not only voting items, but also a wide range of governance and sustainability issues. |
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We have established an engagement protocol that further describes our approach to issuer engagement. |
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Measurement |
Assessing the effectiveness of our issuer engagement process is often difficult. In order to limit the subjectivity of effectiveness measurement, we actively seek issuer feedback and monitor the actions issuers take post-engagement in order to identify tangible changes. Thus, we are able to establish indicators to gauge how issuers respond to our concerns and to what degree these responses satisfy our requests. It is also important to note that successful engagement activity can be measured over differing time periods depending upon the relevant facts and circumstances. Engagements can last as briefly as a single meeting or span multiple years. |
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Depending upon the issue and whether the engagement activity is reactive, active, one-time, or recurring, engagement with issuers can take the form of written communication, conference calls, or in-person meetings. We believe active engagement is best conducted directly with company management or board members. |
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Proxy Voting Procedure |
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Oversight |
The Asset Stewardship Team is responsible for developing and implementing State Street Global Advisors' proprietary Proxy Voting and Engagement Guidelines (the “Guidelines”), the implementation of third-party proxy voting guidelines where applicable, case-by-case voting items, issuer engagement activities, and research and analysis of governance- related issues. The Asset Stewardship Team's activities are overseen by the State Street Global Advisors ESG Committee. The ESG Committee is responsible for reviewing State Street Global Advisors' stewardship strategy, engagement priorities, and proxy voting guidelines and monitoring the delivery of voting objectives. |
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Proxy Voting Process |
In order to facilitate our proxy voting process, we retain Institutional Shareholder Services Inc. (“ISS”), a firm with expertise in proxy voting and corporate governance. We utilize ISS to: (1) act as our proxy voting agent (providing State Street Global Advisors with vote execution and administration services), (2) assist in applying the Guidelines, (3) provide research and analysis relating to general corporate governance issues and specific proxy items, and (4) provide proxy voting guidelines in limited circumstances. |
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The Asset Stewardship Team reviews with ISS its Guidelines and the services that ISS provides to State Street Global Advisors on an annual or case-by-case basis. As part of its role as proxy agent and prior to providing vote execution services, ISS pre-populates on an electronic platform certain preliminary proxy votes in accordance with the proxy voting guidelines identified by State Street Global Advisors. On most routine proxy voting items (e.g., ratification of auditors), ISS will shortly before applicable submission deadlines use an automated process to affect the pre-populated proxy votes. To the extent the Asset Stewardship Team becomes aware of material new information within a reasonable period of time before ISS affects such votes, the Asset Stewardship Team will assess whether the pre-populated votes should be updated. |
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In other cases, the Asset Stewardship Team will evaluate the proxy solicitation to determine how to vote based upon the facts and circumstances, consist with our Principles and accompanying Guidelines. |
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In some instances, the Asset Stewardship Team may refer significant issues to the ESG Committee for a determination of the proxy vote. In addition, in determining whether to refer a proxy vote to the ESG Committee, the Asset Stewardship Team will consider whether a material conflict of interest exists between the interests of our client and those of State Street Global Advisors or its affiliates (as explained in greater detail in our Conflict Mitigation Guidelines). |
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We vote in all markets where it is feasible; however, we may refrain from voting when power of attorney documentation is required, where voting will have a material impact on our ability to trade the security, where voting is not permissible due to sanctions affecting a company or an individual, where issuer-specific special documentation is required, or where various market or issuer certifications are required. We are unable to vote proxies when certain custodians, used by our clients, do not offer proxy voting in a jurisdiction or when they charge a meeting specific fee in excess of the typical custody service agreement. |
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Conflict of Interest |
See our standalone Conflict Mitigation Guidelines. |
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Proxy Voting and Engagement Principles |
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Directors and Boards |
The election of directors is one of the most important fiduciary duties we perform on behalf of our clients. We believe that well-governed companies can protect and pursue shareholder interests better and withstand the challenges of an uncertain economic environment. As such, we seek to vote director elections in a way that we believe will maximize long-term value. |
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Principally, a board acts on behalf of shareholders by protecting their interests and preserving their rights. This concept establishes the standard by which board and director performance is measured. In order to achieve this fundamental principle, the role of the board is to carry out its responsibilities in the best long-term interest of the company and its shareholders. An independent and effective board oversees management, provides guidance on strategic matters, selects the CEO and other senior executives, creates a succession plan for the board and management, provides risk oversight, and assesses the performance of the CEO and management. In contrast, management implements the business and capital allocation strategies and runs the company's day-to-day operations. As part of our engagement process, we routinely discuss the importance of these responsibilities with the boards of issuers. |
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We believe the quality of a board is a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. In voting to elect nominees, we consider many factors. We believe independent directors are crucial to good corporate governance; they help management establish sound corporate governance policies and practices. A sufficiently independent board will effectively monitor management, maintain appropriate governance practices, and perform oversight functions necessary to protect shareholder interests. We also believe the right mix of skills, independence, diversity, and qualifications among directors provides boards with the knowledge and direct experience to manage risks and operating structures that are often complex and industry-specific. |
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Accounting and Audit-Related Issues |
We believe audit committees are critical and necessary as part of the board's risk oversight role. The audit committee is responsible for setting out an internal audit function that provides robust audit and internal control systems designed to effectively manage potential and emerging risks to the company's operations and strategy. We believe audit committees should have independent directors as members, and we will hold the members of the audit committee responsible for overseeing the management of the audit function. |
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The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. As a result, board oversight of the internal controls and the independence of the audit process are essential if investors are to rely upon financial statements. It is important for the audit committee to appoint external auditors who are independent from management; we expect auditors to provide assurance of a company's financial condition. |
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Capital Structure, Reorganization and Mergers |
The ability to raise capital is critical for companies to carry out strategy, to grow, and to achieve returns above their cost of capital. The approval of capital raising activities is fundamental to a shareholder's ability to monitor the amounts of proceeds and to ensure capital is deployed efficiently. Altering the capital structure of a company is a critical decision for boards. When making such a decision, we believe the company should disclose a comprehensive business rationale that is consistent with corporate strategy and not overly dilutive to its shareholders. |
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Mergers or reorganization of the structure of a company often involve proposals relating to reincorporation, restructurings, liquidations, and other major changes to the corporation. |
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Proposals that are in the best interests of shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations, will be supported. In evaluating mergers and acquisitions, we consider the impact of the corporate governance provisions to shareholders. In all cases, we use our discretion in order to maximize shareholder value. |
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Occasionally, companies add anti-takeover provisions that reduce the chances of a potential acquirer to make an offer, or to reduce the likelihood of a successful offer. We do not support proposals that reduce shareholders' rights, entrench management, or reduce the likelihood of shareholders' right to vote on reasonable offers. |
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Compensation |
We consider it the board's responsibility to identify the appropriate level of executive compensation. Despite the differences among the types of plans and the awards possible, there is a simple underlying philosophy that guides our analysis of executive compensation: we believe that there should be a direct relationship between executive compensation and company performance over the long term. |
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Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration reports, we consider factors such as adequate disclosure of various remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests, as well as with corporate strategy and performance. We may oppose remuneration reports where pay seems misaligned with shareholders' interests. We may also consider executive compensation practices when re-electing members of the remuneration committee. |
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We recognize that compensation policies and practices are unique from market to market; often there are significant differences between the level of disclosures, the amount and forms of compensation paid, and the ability of shareholders to approve executive compensation practices. As a result, our ability to assess the appropriateness of executive compensation is often dependent on market practices and laws. |
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Environmental and Social Issues |
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (together, “sustain- ability”) issues. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics relating to the promotion of long-term shareholder value creation that are designed to build long-term relationships with the issuers in which our clients invest. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustain- ability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and our Frameworks for Voting Environmental and Social Shareholder Proposals, both available at ssga.com/about-us/asset-stewardship.html. |
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General/Routine |
Although we do not seek involvement in the day-to-day operations of an organization, we recognize the need for conscientious oversight and input into management decisions that may affect a company's value. We support proposals that encourage economically advantageous corporate practices and governance, while leaving decisions that are deemed to be routine or constitute ordinary business to management and the board of directors. |
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Fixed Income Stewardship |
The two elements of our fixed income stewardship program are: |
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Proxy Voting: |
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While matters that arise for a vote at bondholder meetings vary by jurisdiction, examples of common proxy voting resolutions at bondholder meetings include: |
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•Approving amendments to debt covenants and/or terms of issuance |
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•Authorizing procedural matters, such as filing of required documents/other formalities |
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•Approving debt restructuring plans |
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•Abstaining from challenging the bankruptcy trustees |
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•Authorizing repurchase of issued debt security |
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•Approving the placement of unissued debt securities under the control of directors |
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•Approving spin-off/absorption proposals |
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Given the nature of the items that arise for vote at bondholder meetings, we take a case-by-case approach to voting bondholder resolutions. Where necessary, we will engage with issuers on voting matters prior to arriving at voting decisions. All voting decisions will be made in the best interest of our clients. |
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Issuer Engagement: |
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We recognize that debt holders have limited leverage with companies on a day-to-day basis. Our guidelines for engagement with fixed income issuers broadly follow the engagement guidelines for our equity holdings as described above. |
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Securities on Loan |
For funds in which we act as trustee, we may recall securities in instances where we believe that a particular vote will have a material impact on the fund(s). Several factors shape this process. First, we must receive notice of the vote in sufficient time to recall the shares on or before the record date. In many cases, we do not receive timely notice, and we are unable to recall the shares on or before the record date. Second, State Street Global Advisors may exercise its discretion and recall shares if it believes that the benefit of voting shares will outweigh the foregone lending income. This determination requires State Street Global Advisors, with the information available at the time, to form judgments about events or outcomes that are difficult to quantify. Given our expertise and vast experience, we believe that the recall of securities will rarely provide an economic benefit that outweighs the cost of the foregone lending income. |
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Reporting |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of index and active strategies to create cost-effective solutions. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $3.26 trillion† under our care. |
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November 2022 |
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Managing Conflicts of Interest Arising From State Street Global Advisors' Proxy Voting and Engagement Activity |
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State Street Corporation has a comprehensive standalone Conflicts of Interest Policy and other policies that address a range of identified conflicts of interests. In addition, State Street Global Advisors, the asset management business of State Street Corporation, maintains a conflicts register that identifies key conflicts and describes systems in place to mitigate the conflicts. This documenti is designed to act in conjunction with related policies and practices employed by other groups within the organization. Further, it complements those policies and practices by providing information about managing the conflicts of interests that may arise through State Street Global Advisors' proxy voting and engagement activities. |
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Managing Conflicts of Interest Related to Proxy Voting and Engagement |
State Street Global Advisors has implemented processes designed to prevent undue influence on State Street Global Advisors' voting and engagement activities that may arise from relationships between proxy issuers or companies and State Street Corporation, State Street Global Advisors, State Street Global Advisors affiliates, State Street Global Advisors Funds or State Street Global Advisors Fund affiliates. |
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State Street Global Advisors assigns sole responsibility for the implementation of proxy voting guidelines to members of its Asset Stewardship Team, a team that is independent from other functions within the organization, such as sales and marketing, investment, or client facing teams. Proxy voting is undertaken in accordance with the Proxy Voting Guidelines, which are reviewed and overseen by our internal governance body, State Street Global Advisors' ESG Committee (the “ESG Committee”). Any changes to the guidelines are communicated to Asset Stewardship employees in a timely manner to ensure that they understand the potential impact to their proxy voting activities. In rare circumstances where nuances within specific resolutions fall outside of the scope of existing voting guidelines, requiring case-by-case analysis, such resolutions are escalated to the head of Asset Stewardship and reported to the ESG Committee. Voting consistently with guidelines helps mitigate potential conflicts of interest, as the guidelines are determined without reference to any specific entities or relationships. |
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Members of the Asset Stewardship Team may from time to time discuss views on proxy voting matters, company performance, strategy, etc. with other State Street Corporation or State Street Global Advisors employees, including portfolio managers, senior executives, and relationship managers. However, final voting decisions are made solely by the Asset Stewardship Team, in accordance with the Proxy Voting Guidelines and in a manner consistent with the best interest of its clients, taking into account various perspectives on risks and opportunities with the goal of maximizing the value of client assets. Furthermore, Asset Stewardship employees are prohibited from disclosing voting decisions prior to the meetings. In addition, State Street Global Advisors generally exercises a singular vote decision for each ballot item regardless of investment strategy.ii In certain cases, where a material conflict of interest is identified, the matter may be referred to the ESG Committee, for review. |
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Types of Potential Conflict |
Stewardship Conflict of Interest Description |
Typical Conflict Mitigation Protocols That We Employ |
Business Relationships |
A conflict of interest may arise where, for example, we hold investments in companies with which we, or our affiliates, have material business relationships. |
Assigning sole responsibility for the implementation of proxy voting guidelines to members of Asset Stewardship Team and voting in accordance with the Proxy Voting Guidelines are our primary conflict mitigation protocols. Furthermore, the voting rationale is recorded to provide transparency. |
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Additional mitigation steps may be implemented on a case-by-case basis. This may include, for example, blackout periods for communications with issuers/clients. |
Equity Investments |
A conflict of interest may arise where client accounts and/or State Street Global Advisors pooled funds, where State Street Global Advisors acts as trustee, may hold shares in State Street Corporation or other State Street Global Advisors affiliated entities, such as mutual funds affiliated with State Street Global Advisors Funds Management, Inc. |
Mitigants may include, for example, outsourcing voting decisions relating to a shareholder meeting of State Street Corporation or other State Street Global Advisors affiliated entities to independent outside third parties. In such cases, delegated third parties exercise vote decisions based upon State Street Global Advisors' Proxy Voting and Engagement Guidelines. |
Outside Business Interest |
A conflict of interest may arise where an Asset Stewardship employee or a key employee in the firm has an outside business interest (such as a director role in a company we invest in, or in the same industry as we invest). |
State Street Global Advisors maintains an Outside Activities Policy and employees must submit a request requiring approval before undertaking any outside activities that are captured by the Outside Activities Policy. The request will be reviewed by the employee's manager and the Conduct Risk Management Office to ensure compliance with applicable policies and procedures (such as the Global Anti-Corruption Policy and the Standard of Conduct) and ensure potential conflicts are mitigated. |
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Additional mitigation steps may be implemented on a case-by-case basis. This may include, for example, retaining an independent fiduciary to make a voting decision where we believe we may be conflicted from voting due to an outside business interest. |
Other Personal Conflicts |
A conflict of interest may arise where a family member or other personal contact of an employee is employed by a company in which we invest. |
Mitigation steps may be implemented for personal conflicts on a case-by-case basis. This may include, for example, filing a Personal Conflicts declaration with a mitigation strategy to document how the conflict will be avoided. Such strategies may include, for example, a member of the Asset Stewardship Team with a conflict recusing him/herself from voting and participating in engagement activities at the relevant company, and implementing blackout periods for communications with issuers/clients. |
Securities Lending |
We may lend securities that we hold in one of our portfolios to another financial counterparty. This may create a conflict of interest when deciding whether to recall those securities to enable us to vote in a shareholder resolution, which may impact the intended securities lending income. |
Our approach to securities lending, and any potential conflicts that may be created through our securities lending activity, is governed by the Proxy Voting/Securities Lending Recall Procedure, which is owned by the Asset Stewardship Team and Proxy Operations Group. The conflict mitigation protocols include periodical review of the procedure by relevant stakeholders, designating Asset Stewardship Team to make the final decision whether or not to recall shares, and escalation of any overrides to the procedure. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of index and active strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $3.26 trillion† under our care. |
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March 2022 |
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Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues |
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Overview |
Our primary fiduciary obligation to our clients is to maximize the long-term returns of their investments. It is our view that material environmental and social (sustainability) issues can present risks and/or opportunities that impact long-term value creation. This philosophy provides the foundation for our value-based approach to Asset Stewardship. |
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We use our voice and our vote through engagement, proxy voting, and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. |
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Our stewardship efforts are rooted in the three pillars of ESG and their intersections. We regularly identify E, S, and G focus areas that guide our proxy voting and engagement efforts. Within these focus areas, we elevate outcome-oriented stewardship priorities each year based on factors including client demand, stakeholder interest, market trends, financial materiality, and portfolio impact. |
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In limited circumstances, State Street Global Advisors may act as investment manager to pooled investment vehicles that, pursuant to their governing documents, utilize guidelines developed by a third-party advisor. With respect to such funds utilizing third-party guidelines, the voting practices described in the applicable third-party guidelines will apply in place of the voting practices described herein. |
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Our Approach to Assessing Materiality and Relevance of Sustain- ability Issues |
While we believe that sustainability-related factors can expose potential investment risks as well as drive long-term value creation, the materiality of specific sustainability issues varies from industry to industry and company by company. With this in mind, we leverage several distinct frameworks as well as additional resources to inform our views on the materiality of a sustainability issue at a given company, including: |
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•The Sustainability Accounting Standards Board's (SASB) Industry Standards |
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•The Task Force on Climate-related Financial Disclosures (TCFD) Framework |
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•Disclosure expectations in a company's given regulatory environment |
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•Market expectations for the sector and industry |
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•Other existing third party frameworks, such as the CDP (formally the Carbon Disclosure Project) or the Global Reporting Initiative |
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•Our proprietary R-FactorTM1 score |
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We expect companies to disclose information regarding their approach to identifying material sustainability-related risks and the management policies and practices in place to address such issues. We support efforts by companies to demonstrate the ways in which sustainability is incorporated into operations, business activities, and most importantly, long-term business strategy. |
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Our Approach to Sustain- ability Through Engagements |
Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Our approach is driven by: |
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1.Proprietary Screens |
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We have developed proprietary in-house sustainability screens to help identify companies for proactive engagement. These screens leverage our proprietary R-FactorTM score to identify sector and industry outliers for engagement and voting on sustainability issues. |
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2.Thematic Prioritization |
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As part of our annual stewardship planning process we identify thematic sustainability priorities that will be addressed during most engagement meetings. We develop our priorities based upon several factors, including client feedback, emerging sustainability trends, developing macroeconomic conditions, and evolving regulations. These engagements not only inform our voting decisions but also allow us to monitor improvement over time and to contribute to our evolving perspectives on priority areas. |
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During the ‘voting season,' we prioritize conversations with companies that have triggered our E&S director voting policies or have received an E&S shareholder proposal on their proxy. In the ‘off-season,' we discuss our thematic focus areas and stewardship priorities with companies for which these topics are most material. |
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Through engagement, we address a broad range of topics that align with our thematic priorities and seek to build long-term relationships with issuers. We view engagements as part of an ongoing dialogue, versus a series of one-off conversations. During conversations with issuers, we share expectations and perspectives on of key dimensions of E&S, and seek to understand how companies and their boards manage and oversee related risks. |
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We also pursue proactive, targeted engagement campaigns with companies for which our focus areas are most material, and/or where improvement is most needed. Through these campaigns, we might make specific asks of companies and measure their progress against our expectations. If we feel a company is making insufficient progress on effective E&S risk management, we will consider taking voting action through relevant shareholder proposals or by targeting directors responsible for oversight. |
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Analyzing Sustainability Proposals |
We take a case-by-case approach to analyzing shareholder proposals related to sustain- ability topics and consider the following factors: |
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•The materiality of the sustainability topic in the proposal to the company's business and sector (see “Our Approach to Assessing Materiality and Relevance of Sustain- ability Issues” above) |
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•The content and intent of the proposal |
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•Whether the adoption of such a proposal would promote long-term shareholder value in the context of the company's disclosure and practices |
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•The strength of board oversight of the company's relevant sustainability practices |
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•Quality of public disclosures on the topic |
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•Quality of engagement and responsiveness to our feedback |
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•Binding nature of proposal or prescriptiveness of proposal |
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We also leverage frameworks to analyze certain E&S shareholder proposals. These frameworks, which are not considered formal voting guidelines, can be found on our website. |
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Vote Options for Sustain- ability Proposals |
•For (support for proposal) if the issue is material and the company has poor disclosure and/or practices relative to our expectations |
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•Abstain (some reservations) if the issue is material and the company's disclosure and/or practices could be improved relative to our expectations. |
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•Against (no support for proposal) if the issue is non-material and/or the company's disclosure and/or practices meet our expectations. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
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March 2022 |
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Australia and New Zealand |
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Proxy Voting and Engagement Guidelines |
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State Street Global Advisors' Australia and New Zealand Proxy Voting and Engagement Guidelinesi outline our expectations of companies listed on stock exchanges in Australia and New Zealand. These Guidelines complement and should be read in conjunction with State Street Global Advisors' Global Proxy Voting and Engagement Principles, which provide a detailed explanation of our approach to voting and engaging with companies, and State Street Global Advisors' Conflict Mitigation Guidelines. |
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State Street Global Advisors' Australia and New Zealand Proxy Voting and Engagement Guidelines address areas including board structure, audit related issues, capital structure, remuneration, environmental, social, and other governance related issues. |
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When voting and engaging with companies in global markets, we consider market specific nuances in the manner that we believe will best protect and promote the long-term economic value of client investments. We expect companies to observe the relevant laws and regulations of their respective markets as well as country specific best practice guidelines, and corporate governance codes. We may hold companies in such markets to our global standards when we feel that a country's regulatory requirements do not address some of the key philosophical principles that we believe are fundamental to our global voting guidelines. |
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In our analysis and research into corporate governance issues in Australia and New Zealand, we expect all companies at a minimum to comply with the ASX Corporate Governance Principles and proactively monitor companies' adherence to the principles. Consistent with the ‘comply or explain' expectations established by the Principles, we encourage companies to proactively disclose their level of compliance with the Principles. In instances of non-compliance when companies cannot explain the nuances of their governance structure effectively, either publicly or through engagement, we may vote against the independent board leader. |
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State Street Global Advisors' Proxy Voting and Engagement Philosophy |
In our view, corporate governance and sustainability issues are an integral part of the investment process. The Asset Stewardship Team consists of investment professionals with expertise in corporate governance and company law, remuneration, accounting, and environmental and social issues. We have established robust corporate governance principles and practices that are backed with extensive analytical expertise in order to understand the complexities of the corporate governance landscape. We engage with companies to provide insight on the principles and practices that drive our voting decisions. We also conduct proactive engagement to address significant shareholder concerns and environmental, social and governance (“ESG”) issues in a manner consistent with maximizing shareholder value. |
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The team works alongside members of State Street Global Advisors' Active Fundamental and Asia-Pacific (“APAC”) investment teams, collaborating on issuer engagement and providing input on company specific fundamentals. We are also a member of various investor associations that seek to address broader corporate governance related policy issues in the region. |
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State Street Global Advisors is a signatory to the United Nations Principles of Responsible Investment (“UNPRI”). We are committed to sustainable investing and are working to further integrate ESG principles into investment and corporate governance practices where applicable and consistent with our fiduciary duty. |
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Directors and Boards |
Principally we believe the primary responsibility of the board of directors is to preserve and enhance shareholder value and protect shareholder interests. In order to carry out their primary responsibilities, directors have to undertake activities that range from setting strategy and overseeing executive management to monitoring the risks that arise from a company's business, including risks related to sustainability issues. Further, good corporate governance necessitates the existence of effective internal controls and risk management systems, which should be governed by the board. |
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State Street Global Advisors believes that a well constituted board of directors with a good balance of skills, expertise, and independence provides the foundations for a well governed company. We view board quality as a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. We vote for the (re-)election of directors on a case-by-case basis after considering various factors including board quality, general market practice, and availability of information on director skills and expertise. In our analysis of boards, we consider whether board members have adequate skills to provide effective oversight of corporate strategy, operations, and risks, including environmental and social issues. Boards should also have a regular evaluation process in place to assess the effectiveness of the board and the skills of board members to address issues, such as emerging risks, changes to corporate strategy, and diversification of operations and geographic footprint. We may also consider board performance and directors who appear to be remiss in the performance of their oversight responsibilities when analyzing their suitability for reappointment (e.g. fraud, criminal wrongdoing and breach of fiduciary responsibilities). |
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Board Independence |
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In principle, we believe independent directors are crucial to corporate governance and help management establish sound ESG policies and practices. A sufficiently independent board will most effectively monitor management and perform oversight functions necessary to protect shareholder interests. We expect boards of ASX 300 and New Zealand listed companies to be comprised of at least a majority of independent directors. At all other Australian listed companies, we expect boards to be comprised of at least one-third independent directors. |
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Our broad criteria for director independence in Australia and New Zealand include factors such as: |
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•Participation in related-party transactions and other business relations with the company |
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•Employment history with company |
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•Relations with controlling shareholders |
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Family ties with any of the company's advisers, directors, or senior employees |
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While we are generally supportive of having the roles of chairman and CEO separated in the Australian and New Zealand markets, we assess the division of responsibilities between chairman and CEO on a case-by-case basis, giving consideration to factors such as company-specific circumstances, overall level of independence on the board and general corporate governance standards in the company. Similarly, we will monitor for circumstances in which a combined chairman/CEO is appointed or where a former CEO becomes chairman. |
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Director Time Commitments |
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When voting on the election or re-election of a director, we also consider the number of outside board directorships that a non-executive and an executive may undertake. Thus, State Street Global Advisors may take voting action against a director who exceeds the number of board mandates listed below: |
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•Named Executive Officers (NEOs) of a public company who sit on more than two public company boards |
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•Non-executive board chairs or lead independent directors who sit on more than three public company boards |
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•Director nominees who sit on more than four public company boards |
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For non-executive board chairs/lead independent directors and director nominees who hold excessive commitments, as defined above, we may consider waiving our policy and vote in support of a director if a company discloses its director commitment policy in a publicly available manner (e.g., corporate governance guidelines, proxy statement, company website). This policy or associated disclosure must include: |
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•A numerical limit on public company board seats a director can serve on |
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•This limit cannot exceed our policy by more than one seat |
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•Consideration of public company board leadership positions (e.g., Committee Chair) |
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•Affirmation that all directors are currently compliant with the company policy |
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•Description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments |
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If a director is imminently leaving a board and this departure is disclosed in a written, time-bound and publicly-available manner, we may consider waiving our withhold vote when evaluating the director for excessive time commitments. |
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Service on a mutual fund board, the board of a UK investment trust or a Special Purpose Acquisition Company (SPAC) board is not considered when evaluating directors for excessive commitments. However, we do expect these roles to be considered by nominating committees when evaluating director time commitments. |
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Director Attendance at Board Meetings |
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We also consider attendance at board meetings and may withhold votes from directors who attend less than 75 percent of board meetings without appropriate explanation or providing reason for their failure to meet the attendance threshold. In addition, we monitor other factors that may influence the independence of a non-executive director, such as performance-related pay, cross-directorships, significant shareholdings, and tenure. We support the annual election of directors and encourage Australian and New Zealand companies to adopt this practice. |
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Board Committees |
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We believe companies should have committees for audit, remuneration, and nomination oversight. The audit committee is responsible for monitoring the integrity of the financial statements of the company, appointing external auditors, monitoring their qualifications and independence, and their effectiveness and resource levels. ASX Corporate Governance Principles requires listed companies to have an audit committee of at least three members all of whom are non-executive directors and a majority of whom are independent directors. It also requires that the committee be chaired by an independent director who is not the chair of the board. We hold Australian and New Zealand companies to our global standards for developed financial markets by requiring that all members of the audit committee be independent directors. |
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The nomination committee is responsible for evaluating and reviewing the balance of skills, knowledge, and experience of the board. It also ensures that adequate succession plans are in place for directors and the CEO. We may vote against the re-election of members of the nomination committee if the board has failed to address concerns over board structure or succession. |
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Board Gender Diversity |
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We expect boards of all listed companies to have at least one female board member. If a company fails to meet this expectation, State Street Global Advisors may vote against the Chair of the board's nominating committee or the board leader in the absence of a nominating committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee. |
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Board Responsiveness to High Dissent against Pay |
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Proposals |
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Executive pay is another important aspect of corporate governance. We believe that executive pay should be determined by the board of directors. We expect companies to have in place remuneration committees to provide independent oversight over executive pay. ASX Corporate Governance Principles require listed companies to have a remuneration committee of at least three members all of whom are non-executive directors and a majority of whom are independent directors. Since Australia has a non-binding vote on pay with a two-strike rule requiring a board spill vote in the event of a second strike, we believe that the vote provides investors a mechanism to address concerns they may have on the quality of oversight provided by the board on remuneration issues. Accordingly, our voting guidelines accommodate local market practice. |
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Poorly structured executive compensation plans pose increasing reputational risk to companies. Ongoing high level of dissent against a company's compensation proposals may indicate that the company is not receptive to investor concerns. If the level of dissent against a company's remuneration report and/or remuneration policy is consistently high, and we have determined that a vote against a pay-related proposal is warranted in the third consecutive year, we will vote against the Chair of the remuneration committee. |
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Incorporating R-Factor™ into Director Votes |
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R-Factor™ is a scoring system created by State Street Global Advisors that measures the performance of a company's business operations and governance as it relates to financially material ESG factors facing the company's industry. R-Factor™ encourages companies to manage and disclose material, industry-specific ESG risks and opportunities, thereby reducing investment risk across our own portfolio and the broader market. State Street Global Advisors may take voting action against the independent board leader at companies on the ASX 100 that are R-Factor™ laggards1 and momentum underperformers2 and cannot articulate how they plan to improve their score. |
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Climate-related Disclosure |
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We believe climate change poses a systemic risk to all companies in our portfolio. |
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State Street Global Advisors has publicly supported the global regulatory efforts to establish a mandatory baseline of climate risk disclosures for all companies. Until these consistent disclosure standards are established, we find that the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) provide the most effective framework by which companies can develop strategies to plan for climate-related risks and make their businesses more resilient to the impacts of climate change. |
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As such, we may vote against the independent board leader at companies in the ASX 100 that fail to provide sufficient disclosure in accordance with the TCFD framework, including: |
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•Board oversight of climate-related risks and opportunities |
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•Total Scope 1 and Scope 2 greenhouse gas emissions |
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•Targets for reducing greenhouse gas emissions |
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Indemnification and Limitations on Liability |
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Generally, State Street Global Advisors supports proposals to limit directors' liability and/or expand indemnification and liability protection up to the limit provided by law, if he or she has not acted in bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office. |
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Audit-Related Issues |
Companies should have robust internal audit and internal control systems designed for effective management of any potential and emerging risks to company operations and strategy. The responsibility of setting out an internal audit function lies with the audit committee, which should have independent non-executive directors designated as members. |
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Appointment of External Auditors |
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State Street Global Advisors believes that a company's auditor is an essential feature of an effective and transparent system of external supervision. Shareholders should be given the opportunity to vote on their appointment or to re-appoint at the annual meeting. When appointing external auditors and approving audit fees, we will take into consideration the level of detail in company disclosures. We will generally not support resolutions if adequate breakdown is not provided and if non-audit fees are more than 50 percent of audit fees. In addition, we may vote against members of the audit committee if we have concerns with audit-related issues or if the level of non-audit fees to audit fees is significant. In certain circumstances, we may consider auditor tenure when evaluating the audit process. |
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Approval of Financial Statements |
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The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. We expect external auditors to provide assurance of a company's financial condition. Hence, we will vote against the approval of financial statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/ adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not disclosed. |
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Shareholder Rights and Capital-Related Issues |
Share Issuances |
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The ability to raise capital is critical for companies to carry out strategy, to grow, and to achieve returns above their cost of capital. The approval of capital raising activities is fundamental to shareholders' ability to monitor the returns and to ensure capital is deployed efficiently. State Street Global Advisors supports capital increases that have sound business reasons and are not excessive relative to a company's existing capital base. |
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Pre-emption rights are a fundamental right for shareholders to protect their investment in a company. Where companies seek to issue new shares without pre-emption rights, we may vote against if such authorities are greater than 20 percent of the issued share capital. We may also vote against resolutions seeking authority to issue capital with pre-emption rights if the aggregate amount allowed seems excessive and is not justified by the board. Generally, we are against capital issuance proposals greater than 100 percent of the issued share capital when the proceeds are not intended for specific purpose. |
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Share Repurchase Programs |
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We generally support proposals to repurchase shares, unless the issuer does not clearly state the business purpose for the program, a definitive number of shares to be repurchased, and the timeframe for the repurchase. We may vote against share repurchase requests that allow share repurchases during a takeover period. |
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Dividends |
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We generally support dividend payouts that constitute 30 percent or more of net income. We may vote against the dividend payouts if the dividend payout ratio has been consistently below 30 percent without adequate explanation. We may also vote against if the payout is excessive given the company's financial position. Particular attention will be warranted when the payment may damage the company's long-term financial health. |
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Mergers and Acquisitions |
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Mergers or reorganization of the company structure often involve proposals relating to reincorporation, restructurings, liquidations, and other major changes to the corporation. Proposals that are in the best interests of shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations, will be supported. In general, provisions that are not viewed as financially sound or are thought to be destructive to shareholders' rights are not supported. We will generally support transactions that maximize shareholder value. Some of the considerations include: |
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•Offer premium |
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•Strategic rationale |
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•Board oversight of the process for the recommended transaction, including, director and/ or management conflicts of interest |
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•Offers made at a premium and where there are no other higher bidders |
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•Offers in which the secondary market price is substantially lower than the net asset value |
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We may vote against a transaction considering the following: |
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•Offers with potentially damaging consequences for minority shareholders because of illiquid stock |
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•Offers where we believe there is a reasonable prospect for an enhanced bid or other bidders |
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•The current market price of the security exceeds the bid price at the time of voting |
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Anti-Takeover Measures |
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We oppose anti-takeover defenses, such as authorities for the board to issue warrants convertible into shares to existing shareholders during a hostile takeover. |
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Remuneration |
Executive Pay |
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There is a simple underlying philosophy that guides State Street Global Advisors' analysis of executive pay; there should be a direct relationship between remuneration and company performance over the long term. Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration reports, we consider various factors, such as adequate disclosure of different remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests as well as with corporate strategy and performance. SSGA may oppose remuneration reports in which there seems to be a misalignment between pay and shareholders' interests and where incentive policies and schemes have a re-test option or feature. We may also vote against the re-election of members of the remuneration committee if we have serious concerns about remuneration practices and if the company has not been responsive to shareholder pressure to review its approach. |
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Equity Incentive Plans |
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We may not support proposals on equity-based incentive plans where insufficient information is provided on matters, such as grant limits, performance metrics, performance, and vesting periods and overall dilution. Generally, we do not support options under such plans being issued at a discount to market price nor plans that allow for re-testing of performance metrics. |
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Non-Executive Director Pay |
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Authorities that seek shareholder approval for non-executive directors' fees generally are not controversial. We generally support resolutions regarding directors' fees unless disclosure is poor and we are unable to determine whether the fees are excessive relative to fees paid by other comparable companies. We will evaluate any non-cash or performance-related pay to non-executive directors on a company-by-company basis. |
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Risk Management |
State Street Global Advisors believes that risk management is a key function of the board, which is responsible for setting the overall risk appetite of a company and for providing oversight on the risk management process established by senior executives at a company. We allow boards to have discretion over the ways in which they provide oversight in this area. However, we expect companies to disclose ways in which the board provides oversight on its risk management system and to identify key risks facing the company. Boards should also review existing and emerging risks that evolve in tandem with the political and economic landscape or as companies diversify or expand their operations into new areas. |
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Environmental and Social Issues |
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As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (sustainability) issues. We use our voice and our vote through engagement, proxy voting, and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics that align with our stewardship priorities and build long-term relationships with issuers. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustainability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and our Frameworks for Voting Environmental and Social Shareholder Proposals available at ssga.com/about-us/asset-stewardship.html. |
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More Information |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
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March 2022 |
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Europe |
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Proxy Voting and Engagement Guidelines |
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State Street Global Advisors' European Proxy Voting and Engagement Guidelinesi cover different corporate governance frameworks and practices in European markets, excluding the United Kingdom and Ireland. These guidelines complement and should be read in conjunction with State Street Global Advisors' Global Proxy Voting and Engagement Principles, which provide a detailed explanation of our approach to voting and engaging with companies, and State Street Global Advisors' Conflict Mitigation Guidelines. |
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State Street Global Advisors' Proxy Voting and Engagement Guidelines in European markets address areas such as board structure, audit-related issues, capital structure, remuneration, as well as environmental, social and other governance-related issues. |
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When voting and engaging with companies in European markets, we consider market-specific nuances in the manner that we believe will most likely protect and promote the long-term financial value of client investments. We expect companies to observe the relevant laws and regulations of their respective markets, as well as country-specific best practice guidelines and corporate governance codes. We may hold companies in some markets to our global standards when we feel that a country's regulatory requirements do not address some of the key philosophical principles that we believe are fundamental to our global voting guidelines. |
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In our analysis and research into corporate governance issues in European companies, we also consider guidance issued by the European Commission and country-specific governance codes. We proactively monitor companies' adherence to applicable guidance and requirements. Consistent with the diverse “comply-or-explain” expectations established by guidance and codes, we encourage companies to proactively disclose their level of compliance with applicable provisions and requirements. In cases of non-compliance, when companies cannot explain the nuances of their governance structures effectively, either publicly or through engagement, we may vote against the independent board leader. |
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State Street Global Advisors' Proxy Voting and Engagement Philosophy |
Corporate governance and sustainability issues are an integral part of the investment process. The Asset Stewardship Team consists of investment professionals with expertise in corporate governance and company law, remuneration, accounting, and environmental and social issues. We have established robust corporate governance principles and practices that are backed with extensive analytical expertise in order to understand the complexities of the corporate governance landscape. We engage with companies to provide insight on the principles and practices that drive our voting decisions. We also conduct proactive engagements to address significant shareholder concerns and environmental, social, and governance (“ESG”) issues in a manner consistent with maximizing shareholder value. |
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The team works alongside members of State Street Global Advisors' Active Fundamental and Europe, Middle East and Africa (“EMEA”) investment teams, collaborating on issuer engagements and providing input on company-specific fundamentals. |
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State Street Global Advisors is a signatory to the United Nations Principles for Responsible Investment (“UNPRI”). We are committed to sustainable investing, and are working to further integrate ESG principles into investment and corporate governance practices where applicable and consistent with our fiduciary duty. |
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Directors and Boards |
Principally, we believe the primary responsibility of the board of directors is to preserve and enhance shareholder value, and to protect shareholder interests. In order to carry out their primary responsibilities, directors have to undertake activities that range from setting strategy and overseeing executive management, to monitoring the risks that arise from a company's business, including risks related to sustainability issues. Further, good corporate governance necessitates the existence of effective internal controls and risk management systems, which should be governed by the board. |
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We believe that a well-constituted board of directors with a balance of skills, expertise and independence, provides the foundations for a well governed company. We view board quality as a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. We vote for the (re-)election of directors on a case-by-case basis after considering various factors, including board quality, general market practice, and availability of information on director skills and expertise. |
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In our analysis of boards, we consider whether board members have adequate skills to provide effective oversight of corporate strategy, operations, and risks, including environmental and social issues. Boards should also have a regular evaluation process in place to assess the effectiveness of the board and the skills of board members to address issues such as emerging risks, changes to corporate strategy, and diversification of operations and geographic footprint. |
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We may also consider factors such as board performance and directors who appear to be remiss in the performance of their oversight responsibilities (e.g. fraud, criminal wrongdoing and/or breach of fiduciary responsibilities). |
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Board Independence |
In principle, we believe independent directors are crucial to good corporate governance and help management establish sound corporate governance policies and practices. A sufficiently independent board will most effectively monitor management and perform oversight functions necessary to protect shareholder interests. |
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Our broad criteria for director independence in European companies include factors such as: |
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•Participation in related–party transactions and other business relations with the company |
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•Employment history with the company |
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•Relations with controlling shareholders |
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•Family ties with any of the company's advisers, directors or senior employees |
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•Serving as an employee or government representative |
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•Overall average board tenure and individual director tenure at issuers with classified and de-classified boards, respectively, and |
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•Company classification of a director as non-independent |
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While overall board independence requirements and board structures differ from market to market, we consider voting against directors we deem non-independent if overall board independence is below 33 percent or if overall independence level is below 50 percent after excluding employee representatives and/or directors elected in accordance with local laws who are not elected by shareholders. We may withhold support for a proposal to discharge the board if a company fails to meet adequate governance standards or board level independence. |
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We also assess the division of responsibilities between chair and CEO on a case-by-case basis, giving consideration to factors such as overall level of independence on the board and general corporate governance standards in the company. However, we may take voting action against the chair or members of the nominating committee at the STOXX Europe 600 companies that have combined the roles of chair and CEO and have not appointed an independent deputy chair or a lead independent director. |
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Director Time Commitments |
When voting on the election or re-election of a director, we also consider the number of outside board directorships a non-executive and an executive may undertake. Thus, State Street Global Advisors may take voting action against a director who exceeds the number of board mandates listed below: |
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•Named Executive Officers (NEOs) of a public company who sit on more than two public company boards |
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•Non-executive board chairs or lead independent directors who sit on more than three public company boards |
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•Director nominees who sit on more than four public company boards |
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For non-executive board chairs/lead independent directors and director nominees who hold excessive commitments, as defined above, we may consider waiving our policy and vote in support of a director if a company discloses its director commitment policy in a publicly available manner (e.g., corporate governance guidelines, proxy statement, company website). This policy or associated disclosure must include: |
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•A numerical limit on public company board seats a director can serve on |
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•This limit cannot exceed our policy by more than one seat |
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•Consideration of public company board leadership positions (e.g., Committee Chair) |
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•Affirmation that all directors are currently compliant with the company policy |
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•Description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments |
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If a director is imminently leaving a board and this departure is disclosed in a written, time-bound and publicly-available manner, we may consider waiving our withhold vote when evaluating the director for excessive time commitments. |
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Service on a mutual fund board, the board of a UK investment trust or a Special Purpose Acquisition Company (SPAC) board is not considered when evaluating directors for excessive commitments. However, we do expect these roles to be considered by nominating committees when evaluating director time commitments. |
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Director Attendance at Board Meetings |
We also consider attendance at board meetings and may withhold votes from directors who attend less than 75 percent of board meetings without appropriate explanation or providing reason for their failure to meet the attendance threshold. In addition, we monitor other factors that may influence the independence of a non-executive director, such as performance-related pay, cross-directorships and significant shareholdings. Moreover, we may vote against the election of a director whose biographical disclosures are insufficient to assess his or her role on the board and/or independence. |
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Board Gender Diversity |
We expect boards of all listed companies to have at least one female board member. If a company fails to meet this expectation, State Street Global Advisors may vote against the Chair of the board's nominating committee or the board leader in the absence of a nominating committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee. |
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Length of Board Terms |
Although we generally are in favour of the annual election of directors, we recognise that director terms vary considerably in different European markets. We may vote against article/bylaw changes that seek to extend director terms. In addition, we may vote against directors in certain markets if their terms extend beyond four years. |
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Board Committees |
We believe companies should have relevant board level committees for audit, remuneration and nomination oversight. The audit committee is responsible for monitoring the integrity of the financial statements of the company, appointing external auditors, monitoring their qualifications and independence, and assessing effectiveness and resource levels. Similarly, executive pay is an important aspect of corporate governance, and it should be determined by the board of directors. We expect companies to have remuneration committees to provide independent oversight of executive pay. We may vote against nominees who are executive members of audit or remuneration committees. |
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In certain European markets, it is not uncommon for the election of directors to be presented in a single slate. In these cases, where executives serve on the audit or the remuneration committees, we may vote against the entire slate. |
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Board Responsiveness to High Dissent Against Pay Proposals |
Poorly-structured executive remuneration plans pose increasing reputational risk to companies. Ongoing high levels of dissent against a company's remuneration proposals may indicate that the company is not receptive to investor concerns. If the level of dissent against a company's remuneration report and/or remuneration policy is consistently high, and we have determined that a vote against a remuneration-related proposal is warranted in the third consecutive year, we will vote against the Chair of the remuneration committee. |
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Incorporating R-FactorTM into Director Votes |
R-FactorTM is a scoring system created by State Street Global Advisors that measures the performance of a company's business operations and governance as it relates to financially material ESG factors facing the company's industry. R-FactorTM encourages companies to manage and disclose material, industry-specific ESG risks and opportunities, thereby reducing investment risk across our own portfolio and the broader market. State Street Global Advisors may take voting action against the independent board leader at companies on the STOXX 600 that are R-FactorTM laggards1 and momentum underperformers2 and cannot articulate how they plan to improve their score. |
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Climate-related Disclosure |
We believe climate change poses a systemic risk to all companies in our portfolio. |
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State Street Global Advisors has publicly supported the global regulatory efforts to establish a mandatory baseline of climate risk disclosures for all companies. Until these consistent disclosure standards are established, we find that the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) provide the most effective framework (with?) which companies can develop strategies to plan for climate-related risks and make their businesses more resilient to the impacts of climate change. |
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As such, we may vote against the independent board leader at companies in the STOXX 600 that fail to provide sufficient disclosure in accordance with the TCFD framework, including: |
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•Board oversight of climate-related risks and opportunities |
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•Total Scope 1 and Scope 2 greenhouse gas emissions |
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•Targets for reducing greenhouse gas emissions |
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Indemnification and Limitations on Liability |
Generally, we support proposals to limit directors' liability and/or expand indemnification and liability protection up to the limit provided by law if a director has not acted in bad faith, with gross negligence, or with reckless disregard of the duties involved in the conduct of his or her office. |
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Audit-Related Issues |
Companies should have robust internal audit and internal control systems designed for effective management of any potential and emerging risks to company operations and strategy. The responsibility of setting up an internal audit function lies with the audit committee, which should have as members independent non-executive directors. |
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Appointment of External Auditors |
We believe that a company's auditor is an essential feature of an effective and transparent system of external supervision. Shareholders should be given the opportunity to vote on their appointment or re-appoint them at the annual meeting. When appointing external auditors and approving audit fees, we consider the level of detail in company disclosures; we will generally not support such resolutions if adequate breakdown is not provided and if non-audit fees are more than 50 percent of audit fees. In addition, we may vote against members of the audit committee if we have concerns with audit-related issues or if the level of non-audit fees to audit fees is significant. We may consider auditor tenure when evaluating the audit process in certain circumstances. |
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Limit Legal Liability of External Auditors |
We generally oppose limiting the legal liability of audit firms as we believe this could create a negative impact on the quality of the audit function. |
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Approval of Financial Statements |
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The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. We expect external auditors to provide assurance of a company's financial condition. Hence, we will vote against the approval of financial statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/ adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not disclosed. |
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Shareholder Rights and Capital-Related Issues |
In some European markets, differential voting rights continue to exist. State Street Global Advisors supports the one-share, one-vote policy and favors a share structure where all shares have equal voting rights. We believe pre-emption rights should be introduced for shareholders in order to provide adequate protection from excessive dilution from the issuance of new shares or convertible securities to third parties or a small number of select shareholders. |
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Unequal Voting Rights |
We generally oppose proposals authorizing the creation of new classes of common stock with superior voting rights. We will generally oppose the creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution and other rights. In addition, we will not support capitalization changes that add classes of stock with undefined voting rights or classes that may dilute the voting interests of existing shareholders. We support proposals to abolish voting caps and capitalization changes that eliminate other classes of stock and/or unequal voting rights. |
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Increase in Authorized Capital |
The ability to raise capital is critical for companies to carry out strategy, to grow, and to achieve returns above their cost of capital. The approval of capital raising activities is fundamental to shareholders' ability to monitor returns and to ensure capital is deployed efficiently. We support capital increases that have sound business reasons and are not excessive relative to a company's existing capital base. |
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Pre-emption rights are a fundamental right for shareholders to protect their investment in a company. Where companies seek to issue new shares whilst disapplying pre-emption rights, we may vote against if such authorities are greater than 20 percent of the issued share capital. We may also vote against resolutions that seek authority to issue capital with pre-emption rights if the aggregate amount allowed seems excessive and is not justified by the board. Generally, we oppose capital issuance proposals greater than 100 percent of the issued share capital when the proceeds are not intended for a specific purpose. |
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Share Repurchase Programs |
We typically support proposals to repurchase shares; however, there are exceptions in some cases. We do not support repurchases if the issuer does not clearly state the business purpose for the program, a definitive number of shares to be repurchased, the range of premium/discount to market price at which the company can repurchase shares, and the timeframe for the repurchase. We may vote against share repurchase requests that allow share repurchases during a takeover period. |
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Dividends |
We generally support dividend payouts that constitute 30 percent or more of net income. We may vote against the dividend payouts if the dividend payout ratio has been consistently below 30 percent without adequate explanation or the payout is excessive given the company's financial position. Particular attention will be paid to cases in which the payment may damage the company's long-term financial health. |
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Related-Party Transactions |
Some companies in European markets have a controlled ownership structure and complex cross-shareholdings between subsidiaries and parent companies (“related companies”). Such structures may result in the prevalence of related-party transactions between the company and its various stakeholders, such as directors and management, subsidiaries and shareholders. In markets where shareholders are required to approve such transactions, we expect companies to provide details of the transaction, such as the nature, the value and the purpose of such a transaction. We also encourage independent directors to ratify such transactions. Further, we encourage companies to describe the level of independent board oversight and the approval process, including details of any independent valuations provided by financial advisors on related-party transactions. |
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Mergers and Acquisitions |
Mergers or restructurings often involve proposals relating to reincorporation, restructurings, mergers, liquidation and other major changes to the corporation. Proposals will be supported if they are in the best interest of the shareholders, which is demonstrated by enhancing share value or improving the effectiveness of the company's operations. In general, provisions that are not viewed as financially sound or are thought to be destructive to shareholders' rights are not supported. |
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We will generally support transactions that maximize shareholder value. Some of the considerations include: |
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•Offer premium |
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•Strategic rationale |
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•Board oversight of the process for the recommended transaction, including director and/ or management conflicts of interest |
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•Offers made at a premium and where there are no other higher bidders |
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•Offers in which the secondary market price is substantially lower than the net asset value |
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We may vote against a transaction considering the following: |
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•Offers with potentially damaging consequences for minority shareholders because of illiquid stock |
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•Offers where we believe there is a reasonable prospect for an enhanced bid or other bidders |
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•The current market price of the security exceeds the bid price at the time of voting |
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Anti–Takeover Measures |
European markets have diverse regulations concerning the use of share issuances as takeover defenses, with legal restrictions lacking in some markets. We support the one-share, one-vote policy. For example, dual-class capital structures entrench certain shareholders and management, insulating them from possible takeovers. We oppose unlimited share issuance authorizations because they can be used as anti-takeover devices. They have the potential for substantial voting and earnings dilution. We also monitor the duration of time for authorities to issue shares, as well as whether there are restrictions and caps on multiple issuance authorities during the specified time periods. We oppose antitakeover defenses, such as authorities for the board when subject to a hostile takeover to issue warrants convertible into shares to existing shareholders. |
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Remuneration |
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Executive Pay |
Despite the differences among the various types of plans and awards, there is a simple underlying philosophy that guides our analysis of executive pay: there should be a direct relationship between remuneration and company performance over the long term. |
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Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration reports, we consider factors such as adequate disclosure of remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests, corporate strategy and performance. We may oppose remuneration reports where pay seems misaligned with shareholders' interests. We may also vote against the re-election of members of the remuneration committee if we have serious concerns about remuneration practices and if the company has not been responsive to shareholder pressure to review its approach. |
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Equity Incentives Plans |
We may not support proposals regarding equity-based incentive plans where insufficient information is provided on matters, including grant limits, performance metrics, performance and vesting periods, and overall dilution. Generally, we do not support options under such plans being issued at a discount to market price or plans that allow for retesting of performance metrics. |
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Non–Executive Director Pay |
In European markets, proposals seeking shareholder approval for non-executive directors' fees are generally not controversial. We typically support resolutions regarding directors' fees unless disclosure is poor and we are unable to determine whether the fees are excessive relative to fees paid by comparable companies. We will evaluate any non-cash or performance-related pay to non-executive directors on a company-by-company basis. |
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Risk Management |
We believe that risk management is a key function of the board, which is responsible for setting the overall risk appetite of a company and for providing oversight on the risk management process established by senior executives at a company. We allow boards to have discretion regarding the ways in which they provide oversight in this area. However, we expect companies to disclose how the board provides oversight on its risk management system and risk identification. Boards should also review existing and emerging risks, as they can change with a changing political and economic landscape or as companies diversify or expand their operations into new areas. |
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Environmental and Social Issues |
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (sustainability) issues. We use our voice and our vote through engagement, proxy voting and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics that align with our stewardship priorities and build long-term relationships with issuers. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustainability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and our Frameworks for Voting Environmental and Social Shareholder Proposals, both available at ssga.com/about-us/asset-stewardship.html. |
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More Information |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
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March 2022 |
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Japan |
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Proxy Voting and Engagement Guidelines |
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State Street Global Advisors' Japan Proxy Voting and Engagement Guidelinesi outline our expectations of companies listed on stock exchanges in Japan. These Guidelines complement and should be read in conjunction with State Street Global Advisors' overarching Global Proxy Voting and Engagement Guidelines, which provide a detailed explanation of our approach to voting and engaging with companies, and State Street Global Advisors' Conflict Mitigation Guidelines. |
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State Street Global Advisors' Proxy Voting and Engagement Guidelines in Japan address areas including: board structure, audit related issues, capital structure, remuneration, environmental, social, and other governance-related issues. |
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When voting and engaging with companies in Japan, State Street Global Advisors takes into consideration the unique aspects of Japanese corporate governance structures. We recognize that under Japanese corporate law, companies may choose between two structures of corporate governance: the statutory auditor system or the committee structure. Most Japanese boards predominantly consist of executives and non-independent outsiders affiliated through commercial relationships or cross-shareholdings. Nonetheless, when evaluating companies, State Street Global Advisors expects Japanese companies to address conflicts of interest and risk management and to demonstrate an effective process for monitoring management. In our analysis and research regarding corporate governance issues in Japan, we expect all companies at a minimum to comply with Japan's Corporate Governance Principles and proactively monitor companies' adherence to the principles. Consistent with the ‘comply or explain' expectations established by the Principles, we encourage companies to proactively disclose their level of compliance with the Principles. In instances of non-compliance when companies cannot explain the nuances of their governance structure effectively, either publicly or through engagement, we may vote against the board leader. |
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State Street Global Advisors' Proxy Voting and Engagement Philosophy |
In our view, corporate governance and sustainability issues are an integral part of the investment process. The Asset Stewardship Team consists of investment professionals with expertise in corporate governance and company law, remuneration, accounting, and environmental and social issues. We have established robust corporate governance principles and practices that are backed with extensive analytical expertise to understand the complexities of the corporate governance landscape. We engage with companies to provide insight on the principles and practices that drive our voting decisions. We also conduct proactive engagement to address significant shareholder concerns and environmental, social, and governance (“ESG”) issues in a manner consistent with maximizing shareholder value. |
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The team works alongside members of State Street Global Advisors' Active Fundamental and Asia-Pacific (“APAC”) Investment Teams; the teams collaborate on issuer engagement and provide input on company specific fundamentals. We are also a member of various investor associations that seek to address broader corporate governance related policy issues in Japan. |
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State Street Global Advisors is a signatory to the United Nations Principles of Responsible Investment (“UNPRI”) and is compliant with Japan's Stewardship Code and Corporate Governance Code. We are committed to sustainable investing and are working to further integrate ESG principles into investment and corporate governance practices where applicable and consistent with our fiduciary duty. |
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Directors and Boards |
Principally, we believe the primary responsibility of the board of directors is to preserve and enhance shareholder value and protect shareholder interests. In order to carry out their primary responsibilities, directors have to undertake activities that range from setting strategy and overseeing executive management to monitoring the risks that arise from a company's business, including risks related to sustainability issues. Further, good corporate governance necessitates the existence of effective internal controls and risk management systems, which should be governed by the board. |
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State Street Global Advisors believes that a well constituted board of directors with a balance of skills, expertise, and independence, provides the foundation for a well governed company. We view board quality as a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. We vote for the (re-)election of directors on a case-by-case basis after considering various factors, including board quality, general market practice, and availability of information on director skills and expertise. In principle, we believe independent directors are crucial to robust corporate governance and help management establish sound corporate governance policies and practices. A sufficiently independent board will most effectively monitor management and perform oversight functions that are necessary to protect shareholder interests. |
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Japanese companies have the option of having a traditional board of directors with statutory auditors, a board with a committee structure, or a hybrid board with a board level audit committee. We will generally support companies that seek shareholder approval to adopt a committee or hybrid board structure. |
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Most Japanese issuers prefer the traditional statutory auditor structure. Statutory auditors act in a quasi-compliance role, as they are not involved in strategic decision-making nor are they part of the formal management decision process. Statutory auditors attend board meetings but do not have voting rights at the board; however, they have the right to seek an injunction and conduct broad investigations of unlawful behavior in the company's operations. |
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State Street Global Advisors will support the election of statutory auditors, unless the outside statutory auditor nominee is regarded as non-independent based on our criteria, the outside statutory auditor has attended less than 75 percent of meetings of the board of directors or board of statutory auditors during the year under review, or the statutory auditor has been remiss in the performance of their oversight responsibilities (fraud, criminal wrong doing, and breach of fiduciary responsibilities). |
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For companies with a statutory auditor structure there is no legal requirement that boards have outside directors; however, we believe there should be a transparent process of independent and external monitoring of management on behalf of shareholders. |
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•We believe that boards of TOPIX 500 companies should have at least three independent directors or be at least one-third independent, whichever requires fewer independent directors. Otherwise, we may oppose the board leader who is responsible for the director nomination process. |
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•For controlled, non-TOPIX 500 companies with a statutory auditor structure or hybrid structure, we may oppose the board leader if the board does not have at least two independent directors. |
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•For non-controlled, non-TOPIX 500 companies with a statutory auditor structure or hybrid structure, State Street Global Advisors may oppose the board leader if the board does not have at least two independent directors. |
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For companies with a committee structure or a hybrid board structure, we also take into consideration the overall independence level of the committees. In determining director independence, we consider the following factors: |
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•Participation in related-party transactions and other business relations with the company |
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•Past employment with the company |
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•Professional services provided to the company |
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•Family ties with the company |
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Regardless of board structure, we may oppose the election of a director for the following reasons: |
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•Failure to attend board meetings |
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•In instances of egregious actions related to a director's service on the board |
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Board Gender Diversity |
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We expect boards of all listed companies to have at least one female board member. If a company fails to meet this expectation, State Street Global Advisors may vote against the Chair of the board's nominating committee or the board leader in the absence of a nominating committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee or those persons deemed responsible for the nomination process. |
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Incorporating R-Factor™ into Director Votes |
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R-Factor™ is a scoring system created by State Street Global Advisors that measures the performance of a company's business operations and governance as it relates to financially material ESG factors facing the company's industry. R-Factor™ encourages companies to manage and disclose material, industry-specific ESG risks and opportunities, thereby reducing investment risk across our own portfolio and the broader market. State Street Global Advisors may take voting action against board members at companies on the TOPIX 100 that are R-Factor™ laggards1 and momentum underper- formers2 and cannot articulate how they plan to improve their score. |
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Indemnification and Limitations on Liability |
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Generally, State Street Global Advisors supports proposals to limit directors' and statutory auditors' liability and/or expand indemnification and liability protection up to the limit provided by law, if he or she has not acted in bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office. We believe limitations and indemnification are necessary to attract and retain qualified directors. |
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Audit-Related Items |
State Street Global Advisors believes that a company's auditor is an essential feature of an effective and transparent system of external supervision. Shareholders should have the opportunity to vote on the appointment of the auditor at the annual meeting. |
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Ratifying External Auditors |
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We generally support the appointment of external auditors unless the external auditor is perceived as being non-independent and there are concerns about the accounts presented and the audit procedures followed. |
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Approval of Financial Statements |
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The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. We expect external auditors to provide assurance of a company's financial condition. Hence, we will vote against the approval of financial statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/ adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not disclosed. |
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Limiting Legal Liability of External Auditors |
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We generally oppose limiting the legal liability of audit firms as we believe this could create a negative impact on the quality of the audit function. |
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Capital Structure, Reorganization, and Mergers |
State Street Global Advisors supports the “one share one vote” policy and favors a share structure where all shares have equal voting rights. We support proposals to abolish voting caps or multiple voting rights and will oppose measures to introduce these types of restrictions on shareholder rights. |
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We believe pre-emption rights should be introduced for shareholders. This can provide adequate protection from excessive dilution due to the issuance of new shares or convertible securities to third parties or a small number of select shareholders. |
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Unequal Voting Rights |
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We generally oppose proposals authorizing the creation of new classes of common stock with superior voting rights. We will generally oppose new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights. In addition, we will not support capitalization changes that add classes of stock with undefined voting rights or classes that may dilute the voting interests of existing shareholders. |
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However, we will support capitalization changes that eliminate other classes of stock and/ or unequal voting rights. |
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Increase in Authorized Capital |
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We generally support increases in authorized capital where the company provides an adequate explanation for the use of shares. In the absence of an adequate explanation, we may oppose the request if the increase in authorized capital exceeds 100 percent of the currently authorized capital. Where share issuance requests exceed our standard threshold, we will consider the nature of the specific need, such as mergers, acquisitions and stock splits. |
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Dividends |
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We generally support dividend payouts that constitute 30 percent or more of net income. We may vote against the dividend payouts if the dividend payout ratio has been consistently below 30 percent without adequate explanation; or, the payout is excessive given the company's financial position. Particular attention will be paid where the payment may damage the company's long-term financial health. |
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Share Repurchase Programs |
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Companies are allowed under Japan Corporate Law to amend their articles to authorize the repurchase of shares at the board's discretion. We will oppose an amendment to articles allowing the repurchase of shares at the board's discretion. We believe the company should seek shareholder approval for a share repurchase program at each year's AGM, providing shareholders the right to evaluate the purpose of the repurchase. |
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We generally support proposals to repurchase shares, unless the issuer does not clearly state the business purpose for the program, a definitive number of shares to be repurchased, and the timeframe for the repurchase. We may vote against share repurchase requests that allow share repurchases during a takeover period. |
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Mergers and Acquisitions |
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Mergers or reorganizing the structure of a company often involve proposals relating to reincorporation, restructurings, mergers, liquidations, and other major changes to the corporation. We will support proposals that are in the best interests of the shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations. In general, provisions that are deemed to be destructive to shareholders' rights or financially detrimental are not supported. |
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We evaluate mergers and structural reorganizations on a case-by-case basis. We will generally support transactions that maximize shareholder value. Some of the considerations include, but are not limited to the following: |
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•Offer premium |
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•Strategic rationale |
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•Board oversight of the process for the recommended transaction, including director and/or management conflicts of interest |
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•Offers made at a premium and where there are no other higher bidders |
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•Offers in which the secondary market price is substantially lower than the net asset value |
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We may vote against a transaction considering the following: |
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•Offers with potentially damaging consequences for minority shareholders because of illiquid stock |
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•Offers where we believe there is a reasonable prospect for an enhanced bid or other bidders |
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•Offers in which the current market price of the security exceeds the bid price at the time of voting |
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Anti-Takeover Measures |
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In general, State Street Global Advisors believes that adoption of poison pills that have been structured to protect management and to prevent takeover bids from succeeding is not in shareholders' interest. A shareholder rights plan may lead to management entrenchment. It may also discourage legitimate tender offers and acquisitions. Even if the premium paid to companies with a shareholder rights plan is higher than that offered to unprotected firms, a company's chances of receiving a takeover offer in the first place may be reduced by the presence of a shareholder rights plan. |
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Proposals that reduce shareholders' rights or have the effect of entrenching incumbent management will not be supported. |
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Proposals that enhance the right of shareholders to make their own choices as to the desirability of a merger or other proposal are supported. |
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Shareholder Rights Plans |
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In evaluating the adoption or renewal of a Japanese issuer's shareholder rights plans (“poison pill”), we consider the following conditions: (i) release of proxy circular with details of the proposal with adequate notice in advance of meeting, (ii) minimum trigger of over 20 percent, (iii) maximum term of three years, (iv) sufficient number of independent directors, (v) presence of an independent committee, (vi) annual election of directors, and (vii) lack of protective or entrenchment features. Additionally, we consider the length of time that a shareholder rights plan has been in effect. |
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In evaluating an amendment to a shareholder rights plan (“poison pill”), in addition to the conditions above, we will also evaluate and consider supporting proposals where the terms of the new plans are more favorable to shareholders' ability to accept unsolicited offers. |
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Compensation |
In Japan, excessive compensation is rarely an issue. Rather, the problem is the lack of connection between pay and performance. Fixed salaries and cash retirement bonuses tend to comprise a significant portion of the compensation structure while performance-based pay is generally a small portion of the total pay. State Street Global Advisors, where possible, seeks to encourage the use of performance-based compensation in Japan as an incentive for executives and as a way to align interests with shareholders. |
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Adjustments to Aggregate Compensation Ceiling for Directors |
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Remuneration for directors is generally reasonable. Typically, each company sets the director compensation parameters as an aggregate thereby limiting the total pay to all directors. When requesting a change, a company must disclose the last time the ceiling was adjusted, and management provides the rationale for the ceiling increase. We will generally support proposed increases to the ceiling if the company discloses the rationale for the increase. We may oppose proposals to increase the ceiling if there has been corporate malfeasance or sustained poor performance. |
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Annual Bonuses for Directors/Statutory Auditors |
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In Japan, since there are no legal requirements that mandate companies to seek shareholder approval before awarding a bonus, we believe that existing shareholder approval of the bonus should be considered best practice. As a result, we support management proposals on executive compensation where there is a strong relationship between executive pay and performance over a five-year period. |
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Retirement Bonuses for Directors/Statutory Auditors |
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Retirement bonuses make up a sizeable portion of directors' and auditors' lifetime compensation and are based upon board tenure. While many companies in Japan have abolished this practice, there remain many proposals seeking shareholder approval for the total amounts paid to directors and statutory auditors as a whole. In general, we support these payments unless the recipient is an outsider or in instances where the amount is not disclosed. |
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Stock Plans |
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Most option plans in Japan are conservative, particularly at large companies. Japanese corporate law requires companies to disclose the monetary value of the stock options for directors and/or statutory auditors. Some companies do not disclose the maximum number of options that can be issued per year and shareholders are unable to evaluate the dilution impact. In this case, we cannot calculate the dilution level and, therefore, we may oppose such plans for poor disclosure. We also oppose plans that allow for the repricing of the exercise price. |
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Deep Discount Options |
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As Japanese companies move away from the retirement bonus system, deep discount options plans have become more popular. Typically, the exercise price is set at JPY 1 per share. We evaluate deep discount options using the same criteria used to evaluate stock options as well as considering the vesting period. |
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Environmental and Social Issues |
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (sustainability) issues. We use our voice and our vote through engagement, proxy voting, and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics that align with our stewardship priorities and build long-term relationships with issuers. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustainability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and our Frameworks for Voting Environmental and Social Shareholder Proposals, both available at ssga.com/about-us/asset-stewardship.html. |
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Miscellaneous/ Routine Items |
Expansion of Business Activities |
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Japanese companies' articles of incorporation strictly define the types of businesses in which a company is permitted to engage. In general, State Street Global Advisors views proposals that expand and diversify the company's business activities as routine and non-contentious. We will monitor instances in which there has been an inappropriate acquisition and diversification away from the company's main area of competence that resulted in a decrease of shareholder value. |
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More Information |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
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March 2022 |
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North America (United States & Canada) |
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Proxy Voting and Engagement Guidelines |
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State Street Global Advisors' North America Proxy Voting and Engagement Guidelinesi outline our expectations of companies listed on stock exchanges in the US and Canada. These Guidelines complement and should be read in conjunction with State Street Global Advisors' Global Proxy Voting and Engagement Principles, which provide a detailed explanation of our approach to voting and engaging with companies, and State Street Global Advisors' Conflict Mitigation Guidance. |
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State Street Global Advisors' North America Proxy Voting and Engagement Guidelines address areas, including board structure, director tenure, audit related issues, capital structure, executive compensation, as well as environmental, social, and other governance-related issues of companies listed on stock exchanges in the US and Canada (“North America”). |
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When voting and engaging with companies in global markets, we consider market specific nuances in the manner that we believe will most likely protect and promote the long-term economic value of client investments. We expect companies to observe the relevant laws and regulations of their respective markets, as well as country specific best practice guidelines and corporate governance codes. When we feel that a country's regulatory requirements do not address some of the key philosophical principles that we believe are fundamental to its global voting guidelines, we may hold companies in such markets to our global standards. |
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In its analysis and research about corporate governance issues in North America, we expect all companies to act in a transparent manner and to provide detailed disclosure on board profiles, related-party transactions, executive compensation, and other governance issues that impact shareholders' long-term interests. Further, as a founding member of the Investor Stewardship Group (“ISG”), we proactively monitor companies' adherence to the Corporate Governance Principles for US listed companies. Consistent with the “comply-or- explain” expectations established by the principles, we encourage companies to proactively disclose their level of compliance with the principles. In instances of non-compliance when companies cannot explain the nuances of their governance structure effectively, either publicly or through engagement, we may vote against the independent board leader. |
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State Street Global Advisors' Proxy Voting and Engagement Philosophy |
Corporate governance and sustainability issues are an integral part of the investment process. The Asset Stewardship Team consists of investment professionals with expertise in corporate governance and company law, remuneration, accounting, and environmental and social issues. We have established robust corporate governance principles and practices that are backed with extensive analytical expertise to understand the complexities of the corporate governance landscape. We engage with companies to provide insight on the principles and practices that drive our voting decisions. We also conduct proactive engagements to address significant shareholder concerns and environmental, social, and governance (“ESG”) issues in a manner consistent with maximizing shareholder value. |
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The team works alongside members of State Street Global Advisors' Active Fundamental and various other investment teams, collaborating on issuer engagements and providing input on company specific fundamentals. We are also a member of various investor associations that seek to address broader corporate governance related policy issues in North America. |
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State Street Global Advisors is a signatory to the United Nations Principles of Responsible Investment (“UNPRI”) and is compliant with the US Investor Stewardship Group Principles. We are committed to sustainable investing and are working to further integrate ESG principles into investment and corporate governance practices, where applicable and consistent with our fiduciary duty. |
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Directors and Boards |
Principally, we believe the primary responsibility of the board of directors is to preserve and enhance shareholder value and protect shareholder interests. In order to carry out their primary responsibilities, directors have to undertake activities that range from setting strategy and overseeing executive management to monitoring the risks that arise from a company's business, including risks related to sustainability issues. Further, good corporate governance necessitates the existence of effective internal controls and risk management systems, which should be governed by the board. |
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State Street Global Advisors believes that a well constituted board of directors, with a balance of skills, expertise, and independence, provides the foundations for a well governed company. We view board quality as a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. We vote for the election/re-election of directors on a case-by-case basis after considering various factors, including board quality, general market practice, and availability of information on director skills and expertise. In principle, we believe independent directors are crucial to robust corporate governance and help management establish sound corporate governance policies and practices. A sufficiently independent board will most effectively monitor management and perform oversight functions necessary to protect shareholder interests. |
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Director-related proposals include issues submitted to shareholders that deal with the composition of the board or with members of a corporation's board of directors. In deciding the director nominee to support, we consider numerous factors. |
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Director Elections |
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Our director election guideline focuses on companies' governance profile to identify if a company demonstrates appropriate governance practices or if it exhibits negative governance practices. Factors we consider when evaluating governance practices include, but are not limited to the following: |
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•Shareholder rights |
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•Board independence |
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•Board structure |
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If a company demonstrates appropriate governance practices, we believe a director should be classified as independent based upon the relevant listing standards or local market practice standards. In such cases, the composition of the key oversight committees of a board should meet the minimum standards of independence. Accordingly, we will vote against a nominee at a company with appropriate governance practices if the director is classified as non-independent under relevant listing standards or local market practice and serves on a key committee of the board (compensation, audit, nominating, or committees required to be fully independent by local market standards). |
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Conversely, if a company demonstrates negative governance practices, State Street Global Advisors believes the classification standards for director independence should be elevated. In such circumstances, we will evaluate all director nominees based upon the following classification standards: |
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•Is the nominee an employee of or related to an employee of the issuer or its auditor? |
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•Does the nominee provide professional services to the issuer |
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•Has the nominee attended an appropriate number of board meetings? |
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•Has the nominee received non-board related compensation from the issuer? |
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In the US market where companies demonstrate negative governance practices, these stricter standards will apply not only to directors who are a member of a key committee but to all directors on the board as market practice permits. Accordingly, we will vote against a nominee (with the exception of the CEO) where the board has inappropriate governance practices and is considered not independent based on the above independence criteria. |
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Additionally, we may withhold votes from directors based on the following: |
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•Overall average board tenure is excessive. In assessing excessive tenure, we consider factors such as the preponderance of long tenured directors, board refreshment practices, and classified board structures |
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•Directors attend less than 75 percent of board meetings without appropriate explanation or providing reason for their failure to meet the attendance threshold |
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•Directors of companies that have not been responsive to a shareholder proposal that received a majority shareholder support at the last annual or special meeting |
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•Consideration can be warranted if management submits the proposal(s) on the ballot as a binding management proposal, recommending shareholders vote for the particular proposal(s) |
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•Directors of companies have unilaterally adopted/ amended company bylaws that negatively impact our shareholder rights (such as fee-shifting, forum selection, and exclusion service bylaws) without putting such amendments to a shareholder vote |
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•Compensation committee members where there is a weak relationship between executive pay and performance over a five-year period |
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•Audit committee members if non-audit fees exceed 50 percent of total fees paid to the auditors |
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•Directors who appear to have been remiss in their duties |
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Board Gender Diversity |
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We expect boards of all listed companies to have at least one female board member. If a company fails to meet this expectation, State Street Global Advisors may vote against the Chair of the board's nominating committee or the board leader in the absence of a nominating committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee. |
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Board Racial/Ethnic Diversity |
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We believe that companies have a responsibility to effectively manage and disclose risks and opportunities related to racial and ethnic diversity. If a company in the S&P 500 does not disclose, at minimum, the gender, racial and ethnic composition of its board, we may vote against the Chair of the nominating committee. We may withhold support from the Chair of the nominating committee also when a company in the S&P 500 does not have at least one director from an underrepresented community on its board. |
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Workforce Diversity |
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We may vote against the Chair of the compensation committee at companies in the S&P 500 that do not disclose their EEO-1 reports. Acceptable disclosures include: |
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•The original EEO-1 report response |
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•The exact content of the report translated into custom graphics |
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Director Time Commitments |
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When voting on the election or re-election of a director, we also consider the number of outside board directorships a non-executive and an executive may undertake. Thus, State Street Global Advisors may take voting action against a director who exceeds the number of board mandates listed below: |
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•Named Executive Officers (NEOs) of a public company who sit on more than two public company boards |
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•Non-executive board chairs or lead independent directors who sit on more than three public company boards |
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•Director nominees who sit on more than four public company boards |
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For non-executive board chairs/lead independent directors and director nominees who hold excessive commitments, as defined above, we may consider waiving our policy and vote in support of a director if a company discloses its director commitment policy in a publicly available manner (e.g., corporate governance guidelines, proxy statement, company website). This policy or associated disclosure must include: |
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•A numerical limit on public company board seats a director can serve on |
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•This limit cannot exceed our policy by more than one seat |
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•Consideration of public company board leadership positions (e.g., Committee Chair) |
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•Affirmation that all directors are currently compliant with the company policy |
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•Description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments |
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If a director is imminently leaving a board and this departure is disclosed in a written, time-bound and publicly-available manner, we may consider waiving our withhold vote when evaluating the director for excessive time commitments. |
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Service on a mutual fund board, the board of a UK investment trust or a Special Purpose Acquisition Company (SPAC) board is not considered when evaluating directors for excessive commitments. However, we do expect these roles to be considered by nominating committees when evaluating director time commitments. |
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Incorporating R-Factor™ into Director Votes |
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R-Factor™ is a scoring system created by State Street Global Advisors that measures the performance of a company's business operations and governance as it relates to financially material ESG factors facing the company's industry. R-Factor™ encourages companies to manage and disclose material, industry-specific ESG risks and opportunities, thereby reducing investment risk across our own portfolio and the broader market. State Street Global Advisors may take voting action against the senior independent board leader at companies on the S&P 500 that are R-Factor™ laggards1 and momentum underperformers2 and cannot articulate how they plan to improve their score. |
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Climate-related Disclosure |
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We believe climate change poses a systemic risk to all companies in our portfolio. |
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State Street Global Advisors has publicly supported the global regulatory efforts to establish a mandatory baseline of climate risk disclosures for all companies. Until these consistent disclosure standards are established, we find that the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) provide the most effective framework by which companies can develop strategies to plan for climate-related risks and make their businesses more resilient to the impacts of climate change. |
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As such, we may vote against the independent board leader at companies in the S&P 500 and S&P/TSX Composite that fail to provide sufficient disclosure in accordance with the TCFD framework, including: |
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•Board oversight of climate-related risks and opportunities |
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•Total Scope 1 and Scope 2 greenhouse gas emissions |
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•Targets for reducing greenhouse gas emissions |
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Director-Related Proposals |
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We generally vote for the following director-related proposals: |
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•Discharge of board members' duties, in the absence of pending litigation, regulatory investigation, charges of fraud, or other indications of significant concern |
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•Proposals to restore shareholders' ability in order to remove directors with or without cause |
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•Proposals that permit shareholders to elect directors to fill board vacancies |
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•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 |
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We generally vote against the following director-related proposals: |
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•Requirements that candidates for directorships own large amounts of stock before being eligible to be elected |
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•Proposals that relate to the “transaction of other business as properly comes before the meeting,” which extend “blank check” powers to those acting as proxy |
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•Proposals requiring two candidates per board seat |
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Majority Voting |
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We will generally support a majority vote standard based on votes cast for the election of directors. |
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We will generally vote to support amendments to bylaws that would require simple majority of voting shares (i.e. shares cast) to pass or to repeal certain provisions. |
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Annual Elections |
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We generally support the establishment of annual elections of the board of directors. Consideration is given to the overall level of board independence and the independence of the key committees, as well as the existence of a shareholder rights plan. |
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Cumulative Voting |
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We do not support cumulative voting structures for the election of directors. |
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Separation Chair/CEO |
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We analyze proposals for the separation of Chair/CEO on a case-by-case basis taking into consideration numerous factors, including the appointment of and role played by a lead director, a company's performance, and the overall governance structure of the company. |
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However, we may take voting action against the chair or members of the nominating committee at S&P 500 companies that have combined the roles of chair and CEO and have not appointed a lead independent director. |
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Proxy Access |
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In general, we believe that proxy access is a fundamental right and an accountability mechanism for all long-term shareholders. We will consider proposals relating to proxy access on a case-by-case basis. We will support shareholder proposals that set parameters to empower long-term shareholders while providing management the flexibility to design a process that is appropriate for the company's circumstances. |
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We will review the terms of all other proposals and will support those proposals that have been introduced in the spirit of enhancing shareholder rights. |
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Considerations include the following: |
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•The ownership thresholds and holding duration proposed in the resolution |
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•The binding nature of the proposal |
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•The number of directors that shareholders may be able to nominate each year |
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•Company governance structure |
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•Shareholder rights |
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•Board performance |
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Age/Term Limits |
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Generally, we will vote against age and term limits unless the company is found to have poor board refreshment and director succession practices, and has a preponderance of non-executive directors with excessively long tenures serving on the board. |
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Approve Remuneration of Directors |
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Generally, we will support directors' compensation, provided the amounts are not excessive relative to other issuers in the market or industry. In making our determination, we review whether the compensation is overly dilutive to existing shareholders. |
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Indemnification |
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Generally, we support proposals to limit directors' liability and/or expand indemnification and liability protection if he or she has not acted in bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office. |
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Classified Boards |
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We generally support annual elections for the board of directors. |
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Confidential Voting |
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We will support confidential voting. |
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Board Size |
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We will support proposals seeking to fix the board size or designate a range for the board size and will vote against proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval. |
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Board Responsiveness |
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We may vote against the re-election of members of the compensation committee if we have serious concerns about remuneration practices and if the company has not been responsive to shareholder pressure to review its approach. In addition, if the level of dissent against a management proposal on executive pay is consistently high, and we have determined that a vote against a pay-related proposal is warranted in the third consecutive year, we may vote against the Chair of the compensation committee. |
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Audit-Related Issues |
Ratifying Auditors and Approving Auditor Compensation |
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We support the approval of auditors and auditor compensation provided that the issuer has properly disclosed audit and non-audit fees relative to market practice and the audit fees are not deemed excessive. We deem audit fees to be excessive if the non-audit fees for the prior year constituted 50 percent or more of the total fees paid to the auditor. We will also support the disclosure of auditor and consulting relationships when the same or related entities are conducting both activities and will support the establishment of a selection committee responsible for the final approval of significant management consultant contract awards where existing firms are already acting in an auditing function. |
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In circumstances where “other” fees include fees related to initial public offerings, bankruptcy emergence, and spin-offs, and the company makes public disclosure of the amount and nature of those fees which are determined to be 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. |
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We will support the discharge of auditors and requirements that auditors attend the annual meeting of shareholders.3 |
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Approval of Financial Statements |
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The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. We expect external auditors to provide assurance of a company's financial condition. Hence, we will vote against the approval of financial statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/ adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not disclosed. |
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Capital-Related Issues |
Capital structure proposals include requests by management for approval of amendments to the certificate of incorporation that will alter the capital structure of the company. |
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The most common request is for an increase in the number of authorized shares of common stock, usually in conjunction with a stock split or dividend. Typically, we support requests that are not unreasonably dilutive or enhance the rights of common shareholders. In considering authorized share proposals, the typical threshold for approval is 100 percent over current authorized shares. However, the threshold may be increased if the company offers a specific need or purpose (merger, stock splits, growth purposes, etc.). All proposals are evaluated on a case-by-case basis taking into account the company's specific financial situation. |
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Increase in Authorized Common Shares |
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In general, we support share increases for general corporate purposes up to 100 percent of current authorized stock. |
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We support increases for specific corporate purposes up to 100 percent of the specific need plus 50 percent of current authorized common stock for US and Canadian firms. |
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When applying the thresholds, we will also consider the nature of the specific need, such as mergers and acquisitions and stock splits. |
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Increase in Authorized Preferred Shares |
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We vote on a case-by-case basis on proposals to increase the number of preferred shares. |
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Generally, we will vote for the authorization of preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock and the terms of the preferred stock appear reasonable. |
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We will support proposals to create “declawed” blank check preferred stock (stock that cannot be used as a takeover defense). However, we will vote against proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose. |
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Unequal Voting Rights |
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We will not support proposals authorizing the creation of new classes of common stock with superior voting rights and will vote against new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights. In addition, we will not support capitalization changes that add “blank check” classes of stock (i.e. classes of stock with undefined voting rights) or classes that dilute the voting interests of existing shareholders. |
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However, we will support capitalization changes that eliminate other classes of stock and/ or unequal voting rights. |
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Mergers and Acquisitions |
Mergers or the reorganization of the structure of a company often involve proposals relating to reincorporation, restructurings, liquidations, and other major changes to the corporation. |
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Proposals that are in the best interests of the shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations, will be supported. |
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In general, provisions that are not viewed as economically sound or are thought to be destructive to shareholders' rights are not supported. |
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We will generally support transactions that maximize shareholder value. Some of the considerations include the following: |
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•Offer premium |
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•Strategic rationale |
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•Board oversight of the process for the recommended transaction, including, director and/or management conflicts of interest |
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•Offers made at a premium and where there are no other higher bidders |
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•Offers in which the secondary market price is substantially lower than the net asset value |
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We may vote against a transaction considering the following: |
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•Offers with potentially damaging consequences for minority shareholders because of illiquid stock, especially in some non-US markets |
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•Offers where we believe there is a reasonable prospect for an enhanced bid or other bidders |
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•The current market price of the security exceeds the bid price at the time of voting |
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Anti–Takeover Issues |
Typically, these are proposals relating to requests by management to amend the certificate of incorporation or bylaws to add or to delete a provision that is deemed to have an anti-takeover effect. The majority of these proposals deal with management's attempt to add some provision that makes a hostile takeover more difficult or will protect incumbent management in the event of a change in control of the company. |
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Proposals that reduce shareholders' rights or have the effect of entrenching incumbent management will not be supported. |
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Proposals that enhance the right of shareholders to make their own choices as to the desirability of a merger or other proposal are supported. |
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Shareholder Rights Plans |
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US We will support mandates requiring shareholder approval of a shareholder rights plans (“poison pill”) and repeals of various anti-takeover related provisions. |
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In general, we will vote against the adoption or renewal of a US issuer's shareholder rights plan (“poison pill”). |
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We will vote for an amendment to a shareholder rights plan (“poison pill”) where the terms of the new plans are more favorable to shareholders' ability to accept unsolicited offers (i.e. if one of the following conditions are met: (i) minimum trigger, flip-in or flip-over of 20 percent, (ii) maximum term of three years, (iii) no “dead hand,” “slow hand,” “no hand” nor similar feature that limits the ability of a future board to redeem the pill, and (iv) inclusion of a shareholder redemption feature (qualifying offer clause), permitting ten percent of the shares to call a special meeting or seek a written consent to vote on rescinding the pill if the board refuses to redeem the pill 90 days after a qualifying offer is announced). |
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Canada We analyze proposals for shareholder approval of a shareholder rights plan (“poison pill”) on a case-by-case basis taking into consideration numerous factors, including but not limited to, whether it conforms to ‘new generation' rights plans and the scope of the plan. |
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Special Meetings |
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We will vote for shareholder proposals related to special meetings at companies that do not provide shareholders the right to call for a special meeting in their bylaws if: |
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•The company also does not allow shareholders to act by written consent |
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•The company allows shareholders to act by written consent but the ownership threshold for acting by written consent is set above 25 percent of outstanding shares |
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We will vote for shareholder proposals related to special meetings at companies that give shareholders (with a minimum 10 percent ownership threshold) the right to call for a special meeting in their bylaws if: |
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•The current ownership threshold to call for a special meeting is above 25 percent of outstanding shares |
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We will vote for management proposals related to special meetings. |
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Written Consent |
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We will vote for shareholder proposals on written consent at companies if: |
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•The company does not have provisions in their bylaws giving shareholders the right to call for a special meeting |
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•The company allows shareholders the right to call for a special meeting, but the current ownership threshold to call for a special meeting is above 25 percent of outstanding shares |
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•The company has a poor governance profile |
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We will vote management proposals on written consent on a case-by-case basis. |
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Super–Majority |
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We will generally vote against amendments to bylaws requiring super-majority shareholder votes to pass or repeal certain provisions. We will vote for the reduction or elimination of super-majority vote requirements, unless management of the issuer was concurrently seeking to or had previously made such a reduction or elimination. |
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Remuneration Issues |
Despite the differences among the types of plans and the awards possible there is a simple underlying philosophy that guides the analysis of all compensation plans; namely, the terms of the plan should be designed to provide an incentive for executives and/or employees to align their interests with those of the shareholders and thus work toward enhancing shareholder value. Plans that benefit participants only when the shareholders also benefit are those most likely to be supported. |
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Advisory Vote on Executive Compensation and Frequency |
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State Street Global Advisors believes executive compensation plays a critical role in aligning executives' interest with shareholders', attracting, retaining and incentivizing key talent, and ensuring positive correlation between the performance achieved by management and the benefits derived by shareholders. We support management proposals on executive compensation where there is a strong relationship between executive pay and performance over a five-year period. We seek adequate disclosure of various compensation elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests as well as with corporate strategy, and performance. Further shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance on an annual basis. |
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In Canada, where advisory votes on executive compensation are not commonplace, we will rely primarily upon engagement to evaluate compensation plans. |
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Employee Equity Award Plans |
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We consider numerous criteria when examining equity award proposals. Generally we do not vote against plans for lack of performance or vesting criteria. Rather the main criteria that will result in a vote against an equity award plan are: |
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Excessive voting power dilution To assess the dilutive effect, we divide the number of shares required to fully fund the proposed plan, the number of authorized but unissued shares and the issued but unexercised shares by the fully diluted share count. We review that number in light of certain factors, such as the industry of the issuer. |
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Historical option grants Excessive historical option grants over the past three years. Plans that provide for historical grant patterns of greater than five to eight percent are generally not supported. |
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Repricing We will vote against any plan where repricing is expressly permitted. If a company has a history of repricing underwater options, the plan will not be supported. |
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Other criteria include the following: |
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•Number of participants or eligible employees |
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•The variety of awards possible |
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•The period of time covered by the plan |
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There are numerous factors that we view as negative. If combined they may result in a vote against a proposal. Factors include: |
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•Grants to individuals or very small groups of participants |
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•“Gun-jumping” grants which anticipate shareholder approval of a plan or amendment |
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•The power of the board to exchange “underwater” options without shareholder approval. This pertains to the ability of a company to reprice options, not the actual act of repricing described above |
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•Below market rate loans to officers to exercise their options |
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•The ability to grant options at less than fair market value; |
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•Acceleration of vesting automatically upon a change in control |
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•Excessive compensation (i.e. compensation plans which we deem to be overly dilutive) |
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Share Repurchases If a company makes a clear connection between a share repurchase program and its intent to offset dilution created from option plans and the company fully discloses the amount of shares being repurchased, the voting dilution calculation may be adjusted to account for the impact of the buy back. |
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Companies will not have any such repurchase plan factored into the dilution calculation if they do not (i) clearly state the intentions of any proposed share buy-back plan, (ii) disclose a definitive number of the shares to be bought back, (iii) specify the range of premium/discount to market price at which a company can repurchase shares, and (iv) disclose the time frame during which the shares will be bought back. |
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162(m) Plan Amendments If a plan would not normally meet our criteria described above, but was primarily amended to add specific performance criteria to be used with awards that were designed to qualify for performance-based exception from the tax deductibility limitations of Section 162(m) of the Internal Revenue Code, then we will support the proposal to amend the plan. |
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Employee Stock Option Plans |
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We generally vote for stock purchase plans with an exercise price of not less than 85 percent of fair market value. However, we take market practice into consideration. |
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Compensation-Related Items |
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We generally support the following proposals: |
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•Expansions to reporting of financial or compensation-related information within reason |
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•Proposals requiring the disclosure of executive retirement benefits if the issuer does not have an independent compensation committee |
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We generally vote against the following proposal: |
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•Retirement bonuses for non-executive directors and auditors |
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Miscellaneous/Routine Items |
We generally support the following miscellaneous/routine governance items: |
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•Reimbursement of all appropriate proxy solicitation expenses associated with the election when voting in conjunction with support of a dissident slate |
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•Opting-out of business combination provision |
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•Proposals that remove restrictions on the right of shareholders to act independently of management |
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•Liquidation of the company if the company will file for bankruptcy if the proposal is not approved |
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•Shareholder proposals to put option repricings to a shareholder vote |
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•General updating of, or corrective amendments to, charter and bylaws not otherwise specifically addressed herein, unless such amendments would reasonably be expected to diminish shareholder rights (e.g. extension of directors' term limits, amending shareholder vote requirement to amend the charter documents, insufficient information provided as to the reason behind the amendment) |
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•Change in corporation name |
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•Mandates that amendments to bylaws or charters have shareholder approval |
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•Management proposals to change the date, time, and/or location of the annual meeting unless the proposed change is unreasonable |
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•Repeals, prohibitions or adoption of anti-greenmail provisions |
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•Management proposals to implement a reverse stock split when the number of authorized shares will be proportionately reduced and proposals to implement a reverse stock split to avoid delisting |
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•Exclusive forum provisions |
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State Street Global Advisors generally does not support the following miscellaneous/ routine governance items: |
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•Proposals requesting companies to adopt full tenure holding periods for their executives |
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•Reincorporation to a location that we believe has more negative attributes than its current location of incorporation |
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•Shareholder proposals to change the date, time, and/or location of the annual meeting unless the current scheduling or location is unreasonable |
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•Proposals to approve other business when it appears as a voting item |
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•Proposals giving the board exclusive authority to amend the bylaws |
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•Proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding unless there are compelling reasons to support the proposal |
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Environmental and Social Issues |
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (sustainability) issues. We use our voice and our vote through engagement, proxy voting, and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics that align with our stewardship priorities and build long-term relationships with issuers. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustainability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and our Frameworks for Voting Environmental and Social Shareholder Proposals, both available at ssga.com/about-us/asset-stewardship.html. |
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More Information |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
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March 2022 |
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United Kingdom and Ireland |
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Proxy Voting and Engagement Guidelines |
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State Street Global Advisors' United Kingdom and Ireland Proxy Voting and Engagement Guidelinesi outline our expectations of companies listed on stock exchanges in the United Kingdom and Ireland. These Guidelines complement and should be read in conjunction with State Street Global Advisors' Global Proxy Voting and Engagement Principles, which provide a detailed explanation of our approach to voting and engaging with companies, and State Street Global Advisors' Conflict Mitigation Guidelines. |
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State Street Global Advisors' United Kingdom (“UK”) and Ireland Proxy Voting and Engagement Guidelines address areas including board structure, audit-related issues, capital structure, remuneration, environmental, social and other governance-related issues. |
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When voting and engaging with companies in global markets, we consider market specific nuances in the manner that we believe will most likely protect and promote the long-term economic value of client investments. We expect companies to observe the relevant laws and regulations of their respective markets, as well as country-specific best practice guidelines and corporate governance codes. When we identify that a country's regulatory requirements do not address some of the key philosophical principles that we believe are fundamental to our global voting guidelines, we may hold companies in such markets to our global standards. |
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In our analysis and research into corporate governance issues in the UK and Ireland, we expect all companies that obtain a primary listing on the London Stock Exchange or the Irish Stock Exchange, regardless of domicile, to comply with the UK Corporate Governance Code, and proactively monitor companies' adherence to the Code. Consistent with the ‘comply or explain' expectations established by the Code, we encourage companies to proactively disclose their level of compliance with the Code. In instances of non-compliance in which companies cannot explain the nuances of their governance structure effectively, either publicly or through engagement, we may vote against the independent board leader. |
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State Street Global Advisors' Proxy Voting and Engagement Philosophy |
In our view, corporate governance and sustainability issues are an integral part of the investment process. The Asset Stewardship Team consists of investment professionals with expertise in corporate governance and company law, remuneration, accounting, and environmental and social issues. We have established robust corporate governance principles and practices that are backed with extensive analytical expertise to understand the complexities of the corporate governance landscape. We engage with companies to provide insight on the principles and practices that drive our voting decisions. We also conduct proactive engagement to address significant shareholder concerns and environmental, social and governance (“ESG”) issues in a manner consistent with maximizing shareholder value. |
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The team works alongside members of State Street Global Advisors' Active Fundamental and Europe, Middle East and Africa (“EMEA”) Investment teams. We collaborate on issuer engagements and provide input on company specific fundamentals. We are also a member of various investor associations that seek to address broader corporate governance related policy issues in the UK and European markets. |
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State Street Global Advisors is a signatory to the United Nations Principles for Responsible Investment (“UNPRI”) and is compliant with the UK Stewardship Code. We are committed to sustainable investing, and are working to further integrate ESG principles into investment and corporate governance practice where applicable and consistent with our fiduciary duty. |
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Directors and Boards |
Principally, we believe the primary responsibility of a board of directors is to preserve and enhance shareholder value and to protect shareholder interests. In order to carry out their primary responsibilities, directors have to undertake activities that range from setting strategy, overseeing executive management, and monitoring the risks that arise from a company's business, including risks related to sustainability issues. Further, good corporate governance necessitates the existence of effective internal controls and risk management systems, which should be governed by the board. |
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We believe that a well constituted board of directors, with a balance of skills, expertise and independence, provides the foundations for a well governed company. We view board quality as a measure of director independence, director succession planning, board diversity, evaluations and refreshment, and company governance practices. We vote for the (re-)election of directors on a case-by-case basis after considering various factors, including board quality, general market practice, and availability of information on director skills and expertise. In principle, we believe independent directors are crucial to robust corporate governance and help management establish sound corporate governance policies and practices. A sufficiently independent board will most effectively monitor management and perform oversight functions necessary to protect shareholder interests. |
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Our broad criteria for director independence for UK companies include factors such as: |
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•Participation in related-party transactions and other business relations with the company |
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•Employment history with company |
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•Excessive tenure and a preponderance of long-tenured directors |
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•Relations with controlling shareholders |
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•Family ties with any of the company's advisers, directors or senior employees |
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•Company classification of a director as non-independent |
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When voting on the election or re-election of a director, we also consider the number of outside board directorships a non-executive and an executive may undertake. Thus, we may withhold votes from board chairs and lead independent directors who sit on more than three public company boards, and from non-executive directors who hold more than four public company board mandates. We may also take voting action against Named Executive Officers who undertake more than two public board memberships. Service on a mutual fund board or a UK investment trust is not considered when evaluating directors for excessive commitments. |
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We also consider attendance at board meetings and may withhold votes from directors who attend less than 75 percent of board meetings in a given year without appropriate explanation or providing reason for their failure to meet the attendance threshold. In addition, we monitor other factors that may influence the independence of a non-executive director, such as performance-related pay, cross-directorships and significant shareholdings. |
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We support the annual election of directors. |
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While we are generally supportive of having the roles of chair and CEO separated in the UK market, we assess the division of responsibilities between chair and CEO on a case-by-case basis, giving consideration to factors such as the company's specific circumstances, overall level of independence on the board and general corporate governance standards in the company. Similarly, we monitor for circumstances in which a combined chair/CEO is appointed or a former CEO becomes chair. |
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We may also consider factors such as board performance and directors who appear to be remiss in the performance of their oversight responsibilities when considering their suitability for reappointment (e.g. fraud, criminal wrongdoing and breach of fiduciary responsibilities). |
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We believe companies should have committees for audit, remuneration and nomination oversight. The audit committee is responsible for monitoring the integrity of the financial statements of the company, the appointment of external auditors, auditor qualifications and independence, and effectiveness and resource levels. Similarly, executive pay is an important aspect of corporate governance, and it should be determined by the board of directors. We expect companies to have remuneration committees to provide independent oversight over executive pay. We will vote against nominees who are executive members of audit or remuneration committees. |
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We consider whether board members have adequate skills to provide effective oversight of corporate strategy, operations and risks, including environmental and social issues. Boards should also have a regular evaluation process in place to assess the effectiveness of the board and the skills of board members to address issues such as emerging risks, changes to corporate strategy, and diversification of operations and geographic footprint. The nomination committee is responsible for evaluating and reviewing the balance of skills, knowledge, and experience of the board. It also ensures that adequate succession plans are in place for directors and the CEO. We may vote against the re-election of members of the nomination committee if, over time, the board has failed to address concerns over board structure or succession. |
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Poorly structured executive compensation plans pose increasing reputational risk to companies. Ongoing high level of dissent against a company's compensation proposals may indicate that the company is not receptive to investor concerns. If the level of dissent against a company's remuneration report and/or remuneration policy is consistently high, and we have determined that a vote against a pay-related proposal is warranted in the third consecutive year, we will vote against the Chair of the remuneration committee. |
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Board Gender Diversity |
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We expect boards of all listed companies to have at least one female board member. If a company fails to meet this expectation, State Street Global Advisors may vote against the chair of the board's nominating committee or the board leader in the absence of a nominating committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee. |
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Board Racial/Ethnic Diversity |
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We believe that companies have a responsibility to effectively manage and disclose risks and opportunities related to racial and ethnic diversity. If a company in the FTSE 100 does not disclose, at minimum, the gender, racial and ethnic composition of its board, we will vote against the Chair of the nominating committee. We may withhold support from the Chair of the nominating committee also when a company in the FTSE 100 does not have at least one director from an underrepresented community on its board. |
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Director Time Commitments |
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When voting on the election or re-election of a director, we also consider the number of outside board directorships a non-executive and an executive may undertake. Thus, State Street Global Advisors may take voting action against a director who exceeds the number of board mandates listed below: |
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•Named Executive Officers (NEOs) of a public company who sit on more than two public company boards |
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•Non-executive board chairs or lead independent directors who sit on more than three public company boards |
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•Director nominees who sit on more than four public company boards |
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For non-executive board chairs/lead independent directors and director nominees who hold excessive commitments, as defined above, we may consider waiving our policy and vote in support of a director if a company discloses its director commitment policy in a publicly available manner (e.g., corporate governance guidelines, proxy statement, company website). This policy or associated disclosure must include: |
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•A numerical limit on public company board seats a director can serve on |
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•This limit cannot exceed our policy by more than one seat |
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•Consideration of public company board leadership positions (e.g., Committee Chair) |
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•Affirmation that all directors are currently compliant with the company policy |
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•Description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments |
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If a director is imminently leaving a board and this departure is disclosed in a written, time-bound and publicly-available manner, we may consider waiving our withhold vote when evaluating the director for excessive time commitments. |
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Service on a mutual fund board, the board of a UK investment trust or a Special Purpose Acquisition Company (SPAC) board is not considered when evaluating directors for excessive commitments. However, we do expect these roles to be considered by nominating committees when evaluating director time commitments. |
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Incorporating R-FactorTM into Director Votes |
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R-FactorTM is a scoring system created by State Street Global Advisors that measures the performance of a company's business operations and governance as it relates to financially material ESG factors facing the company's industry. R-FactorTM encourages companies to manage and disclose material, industry-specific ESG risks and opportunities, thereby reducing investment risk across our own portfolio and the broader market. State Street Global Advisors may take voting action against the independent board leader at companies listed on the FTSE 350 that are R-FactorTM laggards1 and momentum underperformers2 and cannot articulate how they plan to improve their score. |
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Climate-related Disclosure |
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We believe climate change poses a systemic risk to all companies in our portfolio. |
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State Street Global Advisors has publicly supported the global regulatory efforts to establish a mandatory baseline of climate risk disclosures for all companies. Until these consistent disclosure standards are established, we find that the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) provide the most effective framework by which companies can develop strategies to plan for climate-related risks and make their businesses more resilient to the impacts of climate change. |
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As such, we may vote against the independent board leader at companies in the FTSE 350 that fail to provide sufficient disclosure in accordance with the TCFD framework, including: |
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•Board oversight of climate-related risks and opportunities |
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•Total Scope 1 and Scope 2 greenhouse gas emissions |
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•Targets for reducing greenhouse gas emissions |
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Indemnification and Limitations on Liability |
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Generally, we support proposals to limit directors' liability and/or expand indemnification and liability protection up to the limit provided by law. This holds if a director has not acted in bad faith, gross negligence, nor reckless disregard of the duties involved in the conduct of his or her office. |
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Audit-Related Issues |
Companies should have robust internal audit and internal control systems designed for effective management of any potential and emerging risks to company operations and strategy. The responsibility of setting out an internal audit function lies with the audit committee, which should have as members independent non-executive directors. |
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Appointment of External Auditors |
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State Street Global Advisors believes that a company's auditor is an essential feature of an effective and transparent system of external supervision. Shareholders should be given the opportunity to vote on their appointment or re-appoint at the annual meeting. When appointing external auditors and approving audit fees, we take into consideration the level of detail in company disclosures and will generally not support such resolutions if an adequate breakdown is not provided and if non-audit fees are more than 50% of audit fees. In addition, we may vote against members of the audit committee if we have concerns with audit-related issues or if the level of non-audit fees to audit fees is significant. In certain circumstances, we may consider auditor tenure when evaluating the audit process. |
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Limit Legal Liability of External Auditors |
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We generally oppose limiting the legal liability of audit firms because we believe this could create a negative impact on the quality of the audit function. |
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Approval of Financial Statements |
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The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. We expect external auditors to provide assurance of a company's financial condition. Hence, we will vote against the approval of financial statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/ adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not disclosed. |
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Shareholder Rights and Capital-Related Issues |
Share Issuances |
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The ability to raise capital is critical for companies to carry out strategy, to grow, and to achieve returns above their cost of capital. The approval of capital raising activities is essential to shareholders' ability to monitor returns and to ensure capital is deployed efficiently. We support capital increases that have sound business reasons and are not excessive relative to a company's existing capital base. |
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Pre-emption rights are a fundamental right for shareholders to protect their investment in a company. Where companies seek to issue new shares without pre-emption rights, we may vote against if such authorities are greater than 20% of the issued share capital. We may also vote against resolutions that seek authority to issue capital with pre-emption rights if the aggregate amount allowed seems excessive and is not justified by the board. Generally, we are against capital issuance proposals greater than 100% of the issued share capital when the proceeds are not intended for a specific purpose. |
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Share Repurchase Programs |
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We generally support a proposal to repurchase shares. However, this is not the case if the issuer does not clearly state the business purpose for the program, a definitive number of shares to be repurchased, the range of premium/discount to market price at which a company can repurchase shares, and the timeframe for the repurchase. We may vote against share repurchase requests that allow share repurchases during a takeover period. |
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Dividends |
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We generally support dividend payouts that constitute 30% or more of net income. We may vote against the dividend payouts if the dividend payout ratio has been consistently below 30% without adequate explanation or the payout is excessive given the company's financial position. Particular attention will be paid where the payment may damage the company's long term financial health. |
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Mergers and Acquisitions |
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Mergers or reorganizing the structure of a company often involve proposals relating to reincorporation, restructurings, mergers, liquidations, and other major changes to the corporation. Proposals that are in the best interests of the shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations, will be supported. In general, provisions that are not viewed as financially sound or are thought to be destructive to shareholders' rights and are not supported. |
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We will generally support transactions that maximize shareholder value. Some of the considerations include the following: |
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•Offer premium |
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•Strategic rationale |
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•Board oversight of the process for the recommended transaction, including, director and/ or management conflicts of interest |
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•Offers made at a premium and where there are no other higher bidders |
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•Offers in which the secondary market price is substantially lower than the net asset value |
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We may vote against a transaction considering the following: |
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•Offers with potentially damaging consequences for minority shareholders because of illiquid stock |
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•Offers in which we believe there is a reasonable prospect for an enhanced bid or other bidders |
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•The current market price of the security exceeds the bid price at the time of voting |
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Anti-Takeover Measures |
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We oppose anti-takeover defenses such as authorities for the board when subject to a hostile takeover to issue warrants convertible into shares to existing shareholders. |
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Notice Period to Convene a General Meeting |
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We expect companies to give as much notice as is practicable when calling a general meeting. Generally, we are not supportive of authorizations seeking to reduce the notice period to 14 days. |
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Remuneration |
Executive Pay |
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Despite the differences among the types of plans and awards possible, there is a simple underlying philosophy that guides our analysis of executive pay: there should be a direct relationship between remuneration and company performance over the long term. |
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Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration policies and reports, we consider adequate disclosure of various remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short- term incentives, alignment of pay structures with shareholder interests as well as with corporate strategy and performance. We may oppose remuneration reports where pay seems misaligned with shareholders' interests. We may also vote against the re-election of members of the remuneration committee if we have serious concerns about remuneration practices or if the company has not been responsive to shareholder concerns. |
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Equity Incentive Plans |
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We may not support proposals on equity-based incentive plans where insufficient information is provided on matters such as grant limits, performance metrics, performance, vesting periods, and overall dilution. Generally we do not support options under such plans being issued at a discount to market price or plans that allow for re-testing of performance metrics. |
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Non-Executive Director Pay |
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Authorities that seek shareholder approval for non-executive directors' fees are generally not controversial. We typically support resolutions regarding directors' fees unless disclosure is poor and we are unable to determine whether they are excessive relative to fees paid by comparable companies. We will evaluate any non-cash or performance related pay to non-executive directors on a company- by-company basis. |
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Risk Management |
State Street Global Advisors believes that risk management is a key function of the board, which is responsible for setting the overall risk appetite of a company and for providing oversight of the risk management process established by senior executives at a company. We allow boards to have discretion over how they provide oversight in this area. We expect companies to disclose how the board provides oversight on its risk management system and risk identification. Boards should also review existing and emerging risks as they can evolve with a changing political and economic landscape or as companies diversify their operations into new areas. |
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Environmental and Social Issues |
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (sustainability) issues. We use our voice and our vote through engagement, proxy voting, and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics that align with our stewardship priorities and build long-term relationships with issuers. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustainability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and Frameworks for Voting Environmental and Social Shareholder Proposals, both available at ssga.com/about-us/asset-stewardship.html. |
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More Information |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
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March 2022 |
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Rest of the World |
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Proxy Voting and Engagement Guidelines |
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State Street Global Advisors' Rest of the World Proxy Voting and Engagement Guidelinesi cover different corporate governance frameworks and practices in international markets not covered under specific country/ regional guidelines. These Guidelines complement and should be read in conjunction with State Street Global Advisors' overarching Global Proxy Voting and Engagement Principles, which provide a detailed explanation of our approach to voting and engaging with companies, and State Street Global Advisors' Conflict Mitigation Guidelines. |
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At State Street Global Advisors, we recognize that markets not covered under specific country/regional guidelines, specifically emerging markets, are disparate in their corporate governance frameworks and practices. While they tend to pose broad common governance issues across all markets, such as concentrated ownership, poor disclosure of financial and related-party transactions, and weak enforcement of rules and regulation, our proxy voting Guidelines are designed to identify and to address specific governance concerns in each market. We also evaluate the various factors that contribute to the corporate governance framework of a country. These factors include, but are not limited to: (i) the macroeconomic conditions and broader political system in a country; (ii) quality of regulatory oversight, enforcement of property and shareholder rights; and (iii) the independence of judiciary. |
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State Street Global Advisors' Proxy Voting and Engagement Philosophy in Emerging Markets |
State Street Global Advisors' approach to proxy voting and issuer engagement in emerging markets is designed to increase the value of our investments through the mitigation of governance risks. The overall quality of the corporate governance framework in an emerging market country drives the level of governance risks investors assign to a country. Thus, improving the macro governance framework in a country may help to reduce governance risks and to increase the overall value of our holdings over time. In order to improve the overall governance framework and practices in a country, members of our Asset Stewardship Team endeavor to engage with representatives from regulatory agencies and stock markets to highlight potential concerns with the macro governance framework of a country. We are also a member of various investor associations that seek to address broader corporate governance-related policy issues in emerging markets. To help mitigate company-specific risk, the State Street Global Advisors Asset Stewardship Team works alongside members of the Active Fundamental and emerging market specialists to engage with emerging market companies on governance issues and address any specific concerns, or to get more information regarding shareholder items that are to be voted on at upcoming shareholder meetings. This integrated approach to engagement drives our proxy voting and engagement philosophy in emerging markets. |
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Our proxy voting Guidelines in emerging markets address six broad areas: |
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•Directors and Boards |
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•Accounting and Audit-Related Issues |
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•Shareholder Rights and Capital-Related Issues |
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•Remuneration |
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•Environmental and Social Issues |
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•General/Routine Issues |
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Directors and Boards |
We believe that a well constituted board of directors, with a balance of skills, expertise and independence, provides the foundation for a well governed company. However, several factors, such as low overall independence level requirements by market regulators, poor biographical disclosure of director profiles, prevalence of related-party transactions, and the general resistance from controlling shareholders to increase board independence, render the election of directors as one of the most important fiduciary duties we perform in emerging market companies. |
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We vote for the election/re-election of directors on a case-by-case basis after considering various factors, including general market practice and availability of information on director skills and expertise. We expect companies to meet minimum overall board independence standards, as defined in a local corporate governance code or market practice. Therefore, in several countries, we will vote against certain non-independent directors if overall board independence levels do not meet market standards. |
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Our broad criteria for director independence in emerging market companies include factors such as: |
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•Participation in related-party transactions |
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•Employment history with company |
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•Relations with controlling shareholders and employees |
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•Company classification of a director as non-independent |
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In some countries, market practice calls for the establishment of a board level audit committee. We believe an audit committee should be responsible for monitoring the integrity of the financial statements of a company and appointing external auditors. It should also monitor their qualifications, independence, effectiveness and resource levels. Based upon our desire to enhance the quality of financial and accounting oversight provided by independent directors, we expect that listed companies have an audit committee constituted of a majority of independent directors. |
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Further, we expect boards of listed companies in all markets and indices to have at least one female board member. If a company fails to meet this expectation, State Street Global Advisors may vote against the Chair of the board's nominating committee or the board leader in the absence of a nominating committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee or those persons deemed responsible for the nomination process. We may waive the policy if a company engages with State Street Global Advisors and provides a specific, timebound plan for adding at least one woman to its board. |
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Poorly structured executive compensation plans pose increasing reputational risk to companies. Ongoing high level of dissent against a company's compensation proposals may indicate that the company is not receptive to investor concerns. If the level of dissent against a company's remuneration report and/or remuneration policy is consistently high, and we have determined that a vote against a pay-related proposal is warranted in the third consecutive year, we will vote against the Chair of the remuneration committee. |
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Audit-Related Issues |
The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. As a result, board oversight of internal controls and the independence of the audit process are essential if investors are to rely upon financial statements. We believe that audit committees provide the necessary oversight for the selection and appointment of auditors, the company's internal controls and the accounting policies, and the overall audit process. |
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Appointment of External Auditors |
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We believe that a company's auditor is an essential feature of an effective and transparent system of external supervision. Shareholders should be given the opportunity to vote on their appointment or re-appointment at the annual meeting. We believe that it is imperative for audit committees to select outside auditors who are independent from management. |
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Approval of Financial Statements |
The disclosure and availability of reliable financial statements in a timely manner is imperative for the investment process. We expect external auditors to provide assurance of a company's financial condition. Hence, we will vote against the approval of financial statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/ adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not disclosed. |
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Shareholder Rights and Capital-Related Issues |
State Street Global Advisors believes that changes to a company's capital structure, such as changes in authorized share capital, share repurchase and debt issuances, are critical decisions made by the board. We believe the company should have a business rationale that is consistent with corporate strategy and should not overly dilute its shareholders. |
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Related-Party Transactions |
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Most companies in emerging markets have a controlled ownership structure that often includes complex cross-shareholdings between subsidiaries and parent companies (“related companies”). As a result, there is a high prevalence of related-party transactions between the company and its various stakeholders, such as directors and management. In addition, inter-group loan and loan guarantees provided to related companies are some of the other related-party transactions that increase the risk profile of companies. In markets where shareholders are required to approve such transactions, we expect companies to provide details about the transaction, such as its nature, value and purpose. This also encourages independent directors to ratify such transactions. Further, we encourage companies to describe the level of independent board oversight and the approval process, including details of any independent valuations provided by financial advisors on related-party transactions. |
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Share Repurchase Programs |
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With regard to share repurchase programs, we expect companies to clearly state the business purpose for the program and a definitive number of shares to be repurchased. |
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Mergers and Acquisitions |
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Mergers or reorganization of the structure of a company often involve proposals relating to reincorporation, restructurings, liquidations and other major changes to the corporation. Proposals that are in the best interest of the shareholders, demonstrated by enhancing share value or improving the effectiveness of the company's operations, will be supported. In general, provisions that are not viewed as financially sound or are thought to be destructive to shareholders' rights are not supported. |
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We evaluate mergers and structural reorganizations on a case-by-case basis. We generally support transactions that maximize shareholder value. Some of the considerations include, but are not limited to, the following: |
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•Offer premium |
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•Strategic rationale |
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•Board oversight of the process for the recommended transaction, including director and/ or management conflicts of interest |
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•Offers made at a premium and where there are no other higher bidders |
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•Offers in which the secondary market price is substantially lower than the net asset value |
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We may vote against a transaction considering the following: |
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•Offers with potentially damaging consequences for minority shareholders because of illiquid stock |
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•Offers where we believe there is a reasonable prospect for an enhanced bid or other bidders |
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•The current market price of the security exceeds the bid price at the time of voting |
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We will actively seek direct dialogue with the board and management of companies that we have identified through our screening processes. Such engagements may lead to further monitoring to ensure the company improves its governance or sustainability practices. In these cases, the engagement process represents the most meaningful opportunity for State Street Global Advisors to protect long-term shareholder value from excessive risk due to poor governance and sustainability practices. |
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Remuneration |
We consider it to be the board's responsibility to set appropriate levels of executive remuneration. Despite the differences among the types of plans and the potential awards, there is a simple underlying philosophy that guides our analysis of executive remuneration: there should be a direct relationship between executive compensation and company performance over the long term. In emerging markets, we encourage companies to disclose information on senior executive remuneration. |
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Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration reports, we consider factors such as adequate disclosure of remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests, corporate strategy and performance. We may oppose remuneration reports where pay seems misaligned with shareholders' interests. We may also vote against the re-election of members of the remuneration committee if we have serious concerns about remuneration practices and if the company has not been responsive to shareholder pressure to review its approach. With regard to director remuneration, we support director pay provided the amounts are not excessive relative to other issuers in the market or industry, and are not overly dilutive to existing shareholders. |
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Environmental and Social Issues |
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging with our portfolio companies about material environmental and social (sustainability) issues. We use our voice and our vote through engagement, proxy voting and thought leadership in order to communicate with issuers and educate market participants about our perspective on important sustainability topics. Our Asset Stewardship program prioritization process allows us to proactively identify companies for engagement and voting in order to mitigate sustainability risks in our portfolio. Through engagement, we address a broad range of topics that align with our stewardship priorities and build long-term relationships with issuers. When voting, we fundamentally consider whether the adoption of a shareholder proposal addressing a material sustainability issue would promote long-term shareholder value in the context of the company's existing practices and disclosures as well as existing market practice. |
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For more information on our approach to environmental and social issues, please see our Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and our Frameworks for Voting Environmental and Social Shareholder Proposals, both available at ssga.com/about-us/asset-stewardship.html. |
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General/Routine Issues |
Some of the other issues that are routinely voted on in emerging markets include approving the allocation of income and accepting financial statements and statutory reports. For these voting items, our guidelines consider several factors, such as historical dividend payouts, pending litigation, governmental investigations, charges of fraud, or other indication of significant concerns. |
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More Information |
Any client who wishes to receive information on how its proxies were voted should contact its State Street Global Advisors relationship manager. |
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About State Street Global Advisors |
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.14 trillion† under our care. |
(a)(i) |
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(f) |
Not applicable. |
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(g)(iv) |
(h)(i)(1) |
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(h)(vi) |
(h)(vii) |
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(i)(i) |
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(j) |
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(k) |
Not applicable. |
(l) |
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(m)(i)(1) |
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(m)(ii) |
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(m)(iv) |
(m)(v) |
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(m)(vi) |
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(n) |
Not applicable. |
(o) |
Reserved. |
(p)(i) |
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(p)(ii) |
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(p)(iii) |
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(p)(iv) |
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(q) |
EX-101.INS |
XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document. |
EX-101.SCH |
XBRL Taxonomy Extension Schema Document |
EX-101.CAL |
XBRL Taxonomy Extension Calculation Linkbase |
EX-101.DEF |
XBRL Taxonomy Extension Definition Linkbase |
EX-101.LAB |
XBRL Taxonomy Extension Labels Linkbase |
EX-101.PRE |
XBRL Taxonomy Extension Presentation Linkbase |
Name |
Position with and Name of Other Company |
Ellen Needham |
Chairman, Director and President of SSGA FM; Senior Vice President/Senior Managing Director of SSGA |
Sean Driscoll |
Director of SSGA FM; Managing Director of SSGA |
Barry F.X. Smith |
Director of SSGA FM; Executive Vice President of SSGA |
Lori Heinel |
Director of SSGA FM; Executive Vice President of SSGA |
Apea Amoa |
Director of SSGA FM; Managing Director and Chief Financial Officer of SSGA |
Jaclyn Collier |
Chief Compliance Officer of SSGA GM; Senior Vice President/Senior Managing Director and Chief Compliance Officer of SSGA |
Bo Trevino |
Treasurer of SSGA FM; Vice President of SSGA |
Sean O’Malley, Esq. |
Chief Legal Officer of SSGA FM; Senior Vice President/Senior Managing Director and General Counsel of SSGA |
Ann Carpenter |
Chief Operating Officer of SSGA FM; Managing Director of SSGA |
Timothy Corbett |
Chief Risk Officer of SSGA FM; Senior Vice President/Senior Managing Director of SSGA |
Jamie Bernardi |
Derivates Risk Manager of SSGA FM; Managing Director of SSGA |
Christyann Weltens |
Derivates Risk Manager of SSGA FM; Vice President of SSGA |
David Urman, Esq. |
Clerk of SSGA FM; Vice President and Senior Counsel of SSGA |
Daniel Furman, Esq. |
Assistant Clerk of SSGA FM; Managing Director and Managing Counsel of SSGA |
Leanne Dunn, Esq. |
Assistant Clerk of SSGA FM; Managing Director and Senior Counsel of SSGA |
Michael Pastore, Esq. |
Assistant Clerk of SSGA FM; Managing Director and Senior Counsel of SSGA |
Name* |
Positions and Offices with Underwriter |
Positions and Offices with Fund |
Stephen Kyllo |
President, Chief Operating Officer, Director, Chief Compliance Officer |
None |
Patrick J. Pedonti** |
Vice President, Treasurer and Assistant Secretary |
None |
Eric T. Parsons |
Vice President, Controller and Assistant Treasurer |
None |
Jason White*** |
Secretary |
None |
Richard C. Noyes |
Senior Vice President, General Counsel, Assistant Secretary |
None |
Liza Orr |
Vice President, Senior Counsel |
None |
Jed Stahl |
Vice President, Senior Counsel |
None |
Terence Digan |
Vice President |
None |
James Stegall |
Vice President |
None |
Gary Ross |
Senior Vice President |
None |
Hilary Quinn |
Vice President |
None |
THE SELECT SECTOR SPDR® TRUST | |
| |
By: |
/s/ Ellen M. Needham |
|
Ellen M. Needham |
|
President |
Signature |
Title |
Date |
/s/ Ashley T. Rabun* |
Trustee |
January 26, 2023 |
Ashley T. Rabun |
| |
/s/ Allison Grant Williams* |
Trustee |
January 26, 2023 |
Allison Grant Williams |
|
|
/s/ Sheila Hartnett-Devlin* |
Trustee |
January 26, 2023 |
Sheila Hartnett-Devlin |
|
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/s/ James Jessee* |
Trustee |
January 26, 2023 |
James Jessee |
|
|
/s/ Teresa Polley* |
Trustee |
January 26, 2023 |
Teresa Polley |
|
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/s/ R. Charles Tschampion* |
Trustee |
January 26, 2023 |
R. Charles Tschampion |
|
|
/s/ James E. Ross* |
Trustee |
January 26, 2023 |
James E. Ross |
|
|
/s/ Rory Tobin* |
Trustee |
January 26, 2023 |
Rory Tobin |
|
|
/s/ Chad C. Hallett |
Treasurer and Principal Financial Officer (fulfills the role of Principal Accounting Officer) |
January 26, 2023 |
Chad C. Hallett |
| |
/s/ Ellen M. Needham |
President and Principal Executive Officer |
January 26, 2023 |
Ellen M. Needham |
|
*By: |
/s/ David Urman |
|
David Urman As Attorney-in-Fact Pursuant to Power of Attorney |