PROXY PAPER™ GUIDELINES - glasslewis.com

1 2019. PROXY PAPER . GUIDELINES . AN OVE RVIEW OF T H E glass L E WI S A PPR OAC H TO PR OXY ADVIC E. UNITED STATES. Table of Contents GUIDELINES Summary of Changes for the 2019 United States Policy 1. Executive 2. Clarifying 3. Housekeeping 4. A BOARD OF DIRECTORS THAT SERVES THE INTERESTS OF Election of 5. Voting Recommendations on the Basis of Board Committee Independent Voting Recommendations on the Basis of Board The Role of a Committee Audit Committees and 11. Standards for Assessing the Audit 11. Compensation Committee 13. Nominating and Governance Committee 16. Board-Level Risk Management 18. Environmental and Social Risk 18.

2 Director Commitments .. 19. Other Controlled 21. Significant 22. Governance Following an IPO or 22. Dual-Listed or Foreign Incorporated 23. OTC-Listed 23. Mutual Fund 24. Declassified Board Composition and Board I. PROXY 27. Majority Vote for the Election of 27. The Plurality Vote 27. Advantages of a Majority Vote 27. Conflicting and Excluded TRANSPARENCY AND INTEGRITY IN FINANCIAL Auditor 30. Voting Recommendations on Auditor 31. Pension Accounting THE LINK BETWEEN COMPENSATION AND 32. Advisory Vote on Executive Compensation ( Say-on-Pay )..32. Say-on-Pay Voting 33. Company Pay for Short-Term 35. Long-Term 36.

3 Grants of Front-Loaded 37. One-Time 37. Contractual Payments and 37. Recoupment Provisions ( Clawbacks ).. 38. Hedging of 39. Pledging of 39. Compensation Consultant CEO Pay Frequency of 40. Vote on Golden Parachute 40. Equity-Based Compensation Plan Option Exchanges and 42. Option Backdating, Spring-Loading and Director Compensation 44. Employee Stock Purchase 44. Executive Compensation Tax Deductibility Amendment to IRS 162(m).. 44. GOVERNANCE STRUCTURE AND THE SHAREHOLDER Anti-Takeover 46. Poison Pills (Shareholder Rights Plans)..46. II. NOL Poison Fair Price 47. Quorum 48. Director and Officer 48. 48.

4 Exclusive Forum and Fee-Shifting Bylaw 49. Authorized 49. Advance Notice 50. Virtual Shareholder 50. Voting Dual-Class Share 51. Cumulative 51. Supermajority Vote 52. Transaction of Other Anti-Greenmail Mutual Funds: Investment Policies and Advisory Real Estate Investment Preferred Stock Issuances at 53. Business Development Authorization to Sell Shares at a Price Below Net Asset Auditor Ratification and Below-NAV SHAREHOLDER 55. Environmental, Social & Governance III. GUIDELINES Introduction SUMMARY OF CHANGES FOR THE 2019 UNITED STATES POLICY GUIDELINES . glass Lewis evaluates these GUIDELINES on an ongoing basis and formally updates them on an annual basis.

5 This year we've made noteworthy revisions in the following areas, which are summarized below but discussed in greater detail in the relevant section of this document: BOARD GENDER DIVERSITY. Our policy regarding board gender diversity, announced in November 2017, will take effect for meetings held after January 1, 2019. Under the updated policy, glass Lewis will generally recommend voting against the nominating committee chair of a board that has no female members. Depending on other factors, includ- ing the size of the company, the industry in which the company operates and the governance profile of the company, we may extend this recommendation to vote against other nominating committee members.

6 Also, when making these voting recommendations, we will carefully review a company's disclosure of its diversity considerations and may refrain from recommending shareholders vote against directors of companies outside the Russell 3000 index, or when boards have provided a sufficient rationale for not having any female board members. Such rationale may include, but is not limited to, a disclosed timetable for addressing the lack of diversity on the board, and any notable restrictions in place regarding the board's composition, such as direc- tor nomination agreements with significant investors. CONFLICTING AND EXCLUDED PROPOSALS.

7 We have codified our policy regarding conflicting special meeting shareholder resolutions: In instances where companies place on the ballot both a management and shareholder proposal re- questing different thresholds for the right to call a special meeting, glass Lewis will generally recom- mend voting for the lower threshold (in most instances, the shareholder proposal) and recommend voting against the higher threshold. In instances where there are conflicting management and shareholder special meeting proposals and the company does not currently maintain a special meeting right, glass Lewis may consider recom- mending that shareholders vote in favor of the shareholder proposal and recommending that sharehold- ers abstain from voting on management's proposal.

8 In instances where companies have excluded a special meeting shareholder proposal in favor of a man- agement proposal ratifying an existing special meeting right, glass Lewis will typically recommend against the ratification proposal as well as members of the nominating and governance committee. glass Lewis will also be making note of instances where the SEC has allowed companies to exclude sharehold- er proposals, which may result in recommendations against members of the governance committee. In recent years, we have seen the dynamic nature of the considerations given by the SEC when determining whether companies may exclude certain shareholder proposals.

9 We understand that not all shareholder proposals serve the long-term interests of shareholders and value and respect the limitations placed on shareholder proponents when submitting proposals to a vote of shareholders, as certain shareholder proposals can unduly burden companies. However, in the event that we believe that the exclusion of a shareholder proposal was detrimental to shareholders, we may, in very limited circumstances, recommend against the members of the governance committee. 1. ENVIRONMENTAL AND SOCIAL RISK OVERSIGHT. We have codified our approach to reviewing how boards are overseeing environmental and social issues.

10 For large cap companies and in instances where we identify material oversight issues, glass Lewis will review a company's overall governance practices and identify which directors or board-level committees have been charged with oversight of environmental and/or social issues. glass Lewis will also note instances where such oversight has not been clearly defined by companies in their governance documents. Further, we have clarified that, in instances where it is clear that companies have not properly managed or mitigated environmental or social risks to the detriment of shareholder value, or when such mismanagement has threatened shareholder value, glass Lewis may consider recommending that shareholders vote against members of the board who are responsible for oversight of environmental and social risks.