minutes of the board of trustees of the state universities ... · service provider was conducted...

MINUTES

Meeting of the Corporate Governance Committee

of the Board of Trustees of the

State Universities Retirement System

3:15 p.m., Thursday, June 11, 2015

The Northern Trust

50 South LaSalle Street, Global Conference Center

Chicago, Illinois 60603

The following Trustees were present: Mr. Mitchell Vogel, Chair; Ms. Lindsay Anderson, Ms.

Jacqueline Berger, Mr. Dennis Cullen, Dr. John Engstrom, Mr. Paul R. T. Johnson Jr., Mr. Craig

McCrohon; Ms. Dorinda Miller and Mr. Antonio Vasquez.

Others present: Mr. W. Bryan Lewis, Executive Director; Mr. Andrew Matthews, Chief Operating

Officer; Mr. Daniel Allen, Chief Investment Officer; Mr. Albert Lee, Interim General Counsel; Mr.

Steve Hayward, Director of Internal Audit; Ms. Phyllis Walker, Chief Financial Officer; Ms. Kristen

Houch, Legislative Liaison; Ms. Lori Kern, Executive Assistant; Ms. Mary Pat Burns of Burke, Burns

& Pinelli; Ms. Patti Somerville-Koulouris of the Northern Trust Company; Ms. Renaye Manley and

Mr. Aaron Ammons of Service Employees International Union; Ms. Janet Jones of Janet Jones

Consulting.

Corporate Governance Committee roll call attendance was taken. Trustee Berger, present; Trustee

Johnson, present; Trustee Vogel, present.

APPROVAL OF MINUTES

Trustee Mitchell Vogel presented the Minutes from the Corporate Governance Committee meeting of

March 13, 2015.

Trustee Paul R.T. Johnson, Jr. made the following motion:

That the Minutes from the March 13, 2015 Corporate Governance Committee meeting be

approved, as presented.

The motion carried with all Trustees present voting in favor.

CHAIRPERSON’S REPORT

Trustee Mitchell Vogel reflected on the years since he has been on the Board and mentioned that one

of the changes that he is most proud of is the creation of the Corporate Governance Committee.

UPDATE ON 2015 SHAREHOLDER PROPOSALS

Trustee Vogel reviewed and summarized the memo dated May 29, 2015, prepared by SURS staff

regarding the status update on EEO-1 Shareholder Proposals.

A copy of the staff memorandum “Status Update on EEO-1 Shareholder Proposals” is incorporated as

a part of these Minutes as Exhibit 1.

DISCUSSION OF PROXY VOTING PROVIDER SEARCH

Trustee Vogel then discussed the memo prepared by SURS staff regarding the proxy voting provider

search. Trustee Vogel remarked that due to the ongoing searches for a General Counsel and an

Investment Governance and Compliance Officer, the Marco Consulting Group agreement should be

renewed for one year.

Trustee Berger made the following motion:

That renewal of the proxy voting services agreement for an additional period of one year be

approved.

Trustee Johnson seconded and the motion carried with all Trustees present voting in favor.

A copy of the staff memorandum entitled “Proxy Voting Provider Search” is incorporated as a part of

these Minutes as Exhibit 2.

INFORMATIONAL ITEMS NOT REQUIRING COMMITTEE ACTION

Mr. Lewis remarked that SURS staff had recently been contacted by individuals regarding a particular

vote. SURS reached out to Marco Consulting, as its proxy voting provider, to ensure that Marco was

aware of information received and requested an update from Marco regarding their vote on the issue of

dividend payments by Chevron Corporation.

The following items were provided for reference and are incorporated as a part of these Minutes:

1. Exhibit 3 - Marco Consulting Group Active Ownership Memorandum dated May 19, 2015.

2. Exhibit 4 - PRI Academy – The Gold Standard for ESG Training.

3. Exhibit 5 - Staff memorandum “SURS Proxy Vote Summary Report.”

4. Exhibit 6 - Marco Consulting Group’s Review of Vote Summary Report for First Quarter 2015.

5. Exhibit 7 - Proxy Vote Summary Report for First Quarter 2015.

6. Exhibit 8 - Council of Institutional Investors Recordings.

7. Exhibit 9 - Fiscal Year 2015 Work Plan.

PUBLIC COMMENT

There were no public comments presented to the Corporate Governance Committee.

Since there was no further business before the Committee, Trustee Johnson moved that the meeting be

adjourned. The motion was seconded by Trustee Antonio Vasquez and carried with all Trustees

present voting in favor.

Respectfully submitted,

Mr. W. Bryan Lewis

Secretary, Board of Trustees

WBL:lk

State Universities Retirement System of Illinois

Serving Illinois Community Colleges and Universities 1901 Fox Drive • Champaign, IL 61820-7333

(217) 378-8800 • (217) 378-9802 (FAX)

Investment Department

To: Corporate Governance Committee

From: Daniel L. Allen

Date: May 29, 2015

Re: Status Update on EEO-1 Shareholder Proposals

As approved by the Board at the October 2014 meeting, SURS co-filed shareholder proposals

in November and December along with the New York City pension funds (the NYC Funds)

that requested disclosure of equal employment opportunity (EEO-1) reporting by American

Express Company, The Charles Schwab Corporation and Omnicom Group Inc.

Since all three companies opposed the disclosure of their EEO-1 reporting, the proposal was

included in the companies’ proxy statements to be voted upon by their respective shareholders

at the 2015 annual general meeting. Although the percentage of votes cast in favor of the

proposal did not constitute a majority at any of the meetings, the voting results shown below

indicate there was a considerable amount of support for the measure on the part of

shareholders.

Company Meeting Date Support for the Proposal

American Express Company May 11, 2015 24.68%

The Charles Schwab Corporation May 13, 2015 17.8%

Omnicom Group Inc. May 18, 2015 27.52%

In comparison, the EEO-1 proposals that were filed by the New York City pension funds for

the 2014 proxy season received slightly higher support as 25.1% of the votes cast were in

favor at American Express Company and 20.3% in favor at The Charles Schwab Corporation.

Exhibit 1



(217) 378-8800 • (217) 378-9802 (FAX)




Date: May 29, 2015

Re: Proxy Voting Provider Search

Marco Consulting Group (MCG) was initially hired by the Board of Trustees at the March

2007 meeting to provide institutional proxy voting and reporting services for the domestic

securities in the SURS portfolio effective April 1, 2007. Another search for a proxy voting

service provider was conducted during the summer of 2010, which culminated with the

rehiring of MCG at the September 2010 meeting. The cost of MCG’s domestic proxy voting

and reporting services has been $48,250 per year since October 1, 2010, based on the use of

SURS’ current proxy policy statement and annual updates thereto.

The current agreement with MCG extends until September 30, 2015, and allows SURS the

option of renewing for an additional period of one year. Although it was anticipated that a

new search for a proxy voting service provider would be undertaken in 2015, at this time staff

would recommend that the agreement with MCG be renewed for one year due to the ongoing

searches for the General Counsel position and the Investment Governance and Compliance

Officer position.

Recommendation

SURS Staff recommends

That renewal of the proxy voting services agreement for an additional period of

one year be approved.

Exhibit 2

Chicago ▪ Boston ▪ Denver

Page 1 of 2

Headquarters Office ▪ 550 West Washington Blvd., Suite 900, Chicago, IL 60661 ▪ P: 312-575-9000 ▪ F: 312-575-0085 East Coast Office ▪ 25 Braintree Hill Office Park, Suite 103, Braintree, MA 02184 ▪ P: 617-298-0967 ▪ F: 781-228-5871

Western Office ▪ 1746 Cole Blvd. Suite 225, Golden, CO 80401 ▪ P: 303-645-4677 ▪ F: 312-575-0085

MEMORANDUM

To: State Universities Retirement System of Illinois

From: Marco Consulting Group

Date: May 19, 2015

Re: Active Ownership

BACKGROUND On February 24, 2015, Trustee Mitchell Vogel, Trustee Craig McCrohon, Daniel Allen and Marilyn Branson attended a meeting at Marco Consulting Group (MCG) in Chicago with Maureen O’Brien and Greg Kinczewski to discuss avenues of increasing shareholder advocacy efforts. MCG presented various alternatives for engaging with companies such as writing letters, filing shareholder proposals and attending annual general meetings.

ISSUES MCG is able to serve as a strategic partner for SURS should it wish to be a more engaged shareholder advocate. MCG is able to draft materials, participate and lead negotiations and attend annual meetings. SURS may wish to consider engaging its portfolio companies on any of the five principle areas: board diversity; executive compensation; proxy access; political spending disclosure and environmental concerns.

Board diversity initiatives encourage corporate boards of directors to include diverse nominees. MCG worked with other funds this year to persuade Monster Beverage to amend its bylaws to formally include sexual orientation and gender identity in their considerations when seeking diverse board candidates.

Executive compensation has garnered significant attention in the wake of the Dodd-Frank Financial Reform Act, which gave shareholders an advisory vote on executive pay. Investors are able to assess pay and performance as compared with a company’s peers to determine whether the pay is appropriate. MCG coordinates an effort with 15 institutional investors to file proposals to improve pay practices at firms with failing votes on executive pay.

Exhibit 3

of 2



Proxy access is the ability of shareholders to nominate directors for the corporate board. Absent proxy access, shareholders are left with only the ability to ratify management’s nominees. Proxy access gives substantial, long-term shareowners a meaningful voice in nominating and electing directors. In addition, a 2014 report by the CFA Institute found that proxy access, if adopted market-wide, has the potential to raise U.S. market capitalization by as much as $140 billion. The New York City Pension Funds lead an effort in 2015 to target 75 companies on proxy access. Many companies have decided to adopt proxy access this year including: Abercrombie & Fitch, Bank of America, Big Lots, Citigroup, FirstMerit, General Electric, Hewlett-Packard, McKesson, Nabors, Prudential, Staples, Verizon, Wendy’s, Whiting Petroleum and Yum! Brands.

Political spending disclosure initiatives encourage companies to disclose their political spending done directly to candidates and committees and indirectly through third parties such as trade associations. The Center for Political Accountability, a Washington DC-based non-profit group, serves as coordinator for the campaign. To date, 154 S&P 500 companies have opted to publicly disclose political spending figures on their websites.

Environmental concerns Investors have engaged companies on environmental concerns that span a series of topics, such as renewable energy, mineral sourcing, sustainability reporting, greenhouse gas emission and palm oil sourcing. Most of these proposals call on companies to report on their activities and the environmental impact of them. Other proposals ask for more dramatic action such as reducing greenhouse gas emissions.

Recommendation MCG believes all the preceding issues are valid ones for SURS to engage on, but as an initial step, MCG recommends that SURS start to actively engage companies on board diversity. Studies show board diversity enhances shareholder value and it serves an important social goal to elevate minorities to leadership positions. At the September meeting, Ms. O’Brien will be able to provide a list of companies in need of greater board diversity and SURS may select which companies it would like to engage and the strategies for that engagement.

Exhibit 3

PRI ACADEMY CURRICULUM

Understand how ESG issues are impacting business and investment decision-making using financial modelling, case studies, interactive spreadsheets and implementation guides.

RI FUNDAMENTALSRI ESSENTIALSENHANCED FINANCIAL ANALYSIS

THE GOLD STANDARD FOR ESG TRAINING

Entirely web-basedSelf-paced and flexible learningSpecialist content by global ESG experts

www.priacademy.org

Exhibit 4

“As a leading global provider of sustainability research and analysis to investors and financial institutions around the world, Sustainalytics sought training in RI that would best support our ability to produce the most accurate and effective research. The PRI Academy has proven itself to be just that: a highly effective medium for broadening the discussion beyond analysts’ day to day work, deepening our understanding of our clients, and enhancing the quality of our research.”Rachel Birenbaum Senior Manager, Human Resources and Operations, North America, Sustainalytics

THE GOLD STANDARD FOR ESG TRAINING

TESTIMONIALS

The PRI Academy was developed to provide industry leading training for financial services, corporate and other professionals needing to understand how environmental, social and governance issues are impacting company performance, shareholder value and investment decision making.

The Academy’s global curriculum creates a body of knowledge and common language designed to upskill teams and professionals across investment and capital markets. PRI Academy courses feature content from leading international experts, real life and hypothetical case studies, financial modelling, and have been designed to help maximise the practical application of key ESG concepts in the shortest possible time frame.

COURSES

Currently the PRI Academy offers three courses:

■ RI Fundamentals – a short 2 hour introduction to the basic principles that underly and define responsible investment

■ RI Essentials – a comprehensive examination of responsible investment from theory to practice ■ Enhanced Financial Analysis – the Academy’s advanced course, which takes an indepth look in to the use of

sustainability data in fundamental investment analysis.

The training is completely web-based, which means you can start and finish when and where you please, as long as you have access to the internet. No travel, no pressure, fewer greenhouse gases.

Each PRI Academy course comes with a one year licence. Structured learning programmes, progress monitoring and assessments are all managed in-house by the Academy support team via the Academy’s online learning platform.

Please note that Academy courses do not have prerequiste requirements. However, candidates considering the Enhanced Financial Analysis course are expected to have previous experience and knowledge in financial analysis and RI to gain the most benefit from the training.

Exhibit 4

RI FUNDAMENTALS1Responsible Investment Fundamentals is a short, two hour training course designed for professionals across the business spectrum that want an insight in to responsible investment. The course delivers the business case for RI and introduces new ideas to traditional investment approaches.

The course explores the key principles of responsible investment, uses real life case studies to illustrate the materiality of ESG issues in business, introduces strategies for identifying and managing new approaches to ESG, and identifies sustainability data in financial modelling.

The RI Fundamentals course includes:

■ Defining RI ■ Recognising ESG issues, trends and themes ■ Identifying the relationship between ESG analysis and

investment decision making

AN INTRODUCTION TO RI ■ Identifying traditional analysis versus ESG analysis ■ Understanding the materiality of ESG issues

ESG IN FINANCIAL ANALYSIS

■ Defining environmental issues ■ Understanding investment taxonomy ■ Integrate environmental issues in financial modelling

ENVIRONMENTAL FACTORS IN RI

■ Recognise social factors in financial analysis ■ Understand the risk of ignoring social issues in

investment decisions

SOCIAL FACTORS IN RI

■ Understand the key material impacts of corporate governance

■ Recognise corporate governance factors in financial modelling

GOVERNANCE FACTORS IN RI ■ Defining engagement in practice ■ Recognising the different types of engagement ■ Identifying the outcomes of engagement

RI AND ENGAGEMENT

Exhibit 4

The Responsible Investment Essentials course is recognised as the international “Gold standard for ESG training”. It was developed as the PRI Academy’s foundational course, focusing on the identification and implementation of environmental, social and governance factors in to investment decision making. The course, which takes 12 - 14 hours to complete, explores the key principles of responsible investment, uses real life case studies to illustrate the materiality of ESG issues in business, introduces strategies for identifying and managing new approaches to ESG risk, and identifies methods for integrating sustainability data into financial modelling.

The RI Essentials includes:

■ Define responsible investment ■ Describe E, S and G issues ■ Recognise how ESG issues are related to sustainability

trends and themes ■ Demonstrate how ESG issues create both risks and

opportunities for investors ■ Identify a process for incorporating analysis of ESG

issues into investment decisions

INTRODUCTION TO RI ■ Understand how ESG information complements

traditional financial analysis ■ Identify different types of ESG information relevant to

financial analysis ■ Understand elements of ESG analysis ■ Recognise the role of ‘materiality’ when analysing ESG

factors ■ Apply techniques for qualification and quantification of

ESG factors ■ Integrate ESG data into basic financial models

RI AND FINANCIAL ANALYSIS

■ Define key environmental issues ■ Understand the relationship between business

activities and ecosystem services ■ Identify key environmental ‘megatrends’ ■ Identify approaches to environmental analysis at a

country, sector and company level ■ Understand how to incorporate environmental issues

into financial models and ratio work

RI AND THE ENVIRONMENT RI AND SOCIETY ■ Identify key societal issues ■ Outline the relationship between social issues,

companies and investors ■ Assess the investment implications of societal issues ■ Understand how to apply techniques to incorporate

social issues into financial models and ratio work

RI AND CORPORATE GOVERNANCE

■ Describe corporate governance ■ Understand why corporate governance is important

to investors ■ Understand the role of people, tools and processes

that constitute corporate governance ■ Recognise best practice in corporate governance ■ Understand how to incorporate corporate governance

issues into financial models and ratio work

IMPLEMENTING A RI PROGRAMME

■ Develop a plan for implementing a responsible investment programme that meets the requirements of the PRI within your organisation

■ Identify the key people, processes and tools related to responsible investment

■ Identify the key areas and elements that could be considered when implementing responsible investment

■ Identify the information you need for internal and external reporting on your responsible investment activities

CFA Institute has approved RI Essentials, offered by the PRI Academy for ten CE credit hours. If you are a CFA Institute member, CE credit for your participation in this programme will be automatically recorded in your CE Diary.

RI AND ENGAGEMENT

■ Design an engagement plan ■ Explain how to combine engagement with other RI

strategies ■ Understand how to track and measure engagement

activity ■ Set out the typical steps taken for engaging with a

company ■ Understand the use of benchmarking to evaluate

engagement

RI ESSENTIALS2Exhibit 4

Enhanced Financial Analysis is the first advanced course to be released by the PRI Academy. The course explores and examines the use of sustainability data in fundamental investment analysis and stock valuation. In order to do so, the course taking 6 - 8 hours to complete, works through a series of topics that help to identify the critical environmental, social and governance (ESG) issues relevant to sustainability performance, key value drivers, and overall financial outcomes.

The course aims to provide candidates with a detailed understanding of the place of sustainability in finance, and the role of ESG factors in financial decision making. Targeted at investment professionals, the course aims to build the skills necessary to identify new value drivers in financial analysis, and apply practical tools to modeling and stock valuation.

CFA Institute has approved Enhanced Financial Analysis offered by the PRI Academy for six CE credit hours. If you are a CFA Institute member, CE credit for your participation in this programme will be automatically recorded in your CE Diary.

The Enhanced Financial Analysis course was developed in collaboration with RobecoSAM.www.robecosam.com

ENHANCED FINANCIAL ANALYSIS3 ■ Understand ESG information uses ■ Identify the role of intangible value drivers in

investment decision making

INTRODUCTION ■ Define integrated analysis ■ Identify the relationship between ESG data and

materiality ■ Understand the basic concepts needed to identify

factors most material financial value

THE CASE STUDY

■ Identify ESG factors in traditional sector analysis ■ Outline key environmental, social and business

indicators that can impact financial value ■ Identify global trends and regulations and their impact

on financial analysis ■ Map ESG factors in to hypothetical case studies ■ Measure the extent to which ESG issues will impact key

financial metrics

STEP 1: IDENTIFY ■ Assess the degree to which ESG factors affect industry

and company performance ■ Identify the guiding principles for assessing ESG issues ■ Assess ESG issues using risk mapping methodologies ■ Evaluate revenue, profit margins and operations using

ESG data ■ Assess and rank companies according to key ESG

factors

STEP 2: ASSESS AND ANALYSE

■ Understand the guiding principles of ESG integration ■ Examine a DCF model with an ESG overlay ■ Identify the entry points for ESG analysis in an EP

model ■ Rank and score company performance ■ Recognise varying options of ESG analysis and

integration

STEP 3: MODEL AND INTEGRATE

■ Identify the many uses for sustainability data ■ The role of ESG data in direct financial modelling

USING ESG INFORMATION

■ Identify the range of ESG data available ■ Understand how to use multiple forms of ESG data ■ Recognise the challenges faced in collecting ESG data ■ Identify global initiatives, regulations and tools that

support ESG integration ■ Understand the role of reporting

SOURCING ESG INFORMATION

■ Recognise and apply the key principles of ESG analysis

KEY PRINCIPLES

Exhibit 4

HOW TO ENROL ■ To enrol please visit our website at www.priacademy.org ■ For group enrollments please email us at [email protected]

Email: [email protected]: www.priacademy.org

PRI Association5th Floor, 25 Camperdown Street,London E1 8DZ United KingdomCompany Number: 8763071 Phone: +44(0) 20 3714 3141 Web: www.unpri.org

Exhibit 4

http://www.priacademy.org

mailto:[email protected]

mailto:[email protected]

http://www.priacademy.org

http://www.unpri.org



(217) 378-8800 • (217) 378-9802 (FAX)




Date: May 29, 2015

Re: SURS Proxy Vote Summary Report

For your review, SURS Proxy Vote Summary Report for the first quarter of 2015 is attached to

this memorandum. Marco Consulting Group (MCG) cast 1,971 individual proxy votes for

SURS during the first quarter, approximately 69.6% of which were cast in favor of

management’s recommendations. MCG’s executive summary provides further detail on the

quarter’s activity and the report contains a summary of the votes cast which are organized

according to issue topic.

Exhibit 5



TO: State Universities Retirement System (“SURS”) FROM: Maureen O’Brien, Director of Corporate Governance DATE: May 22, 2015 RE: Review of Vote Summary Report for First Quarter 2015 The Vote Summary Report for the First Quarter, 2015, summarizes Marco Consulting Group’s (“MCG”) votes for the State Universities Retirement System of Illinois (SURS), which are organized in the 13 major categories listed below. The report provides summaries for each major category of management and shareholder-sponsored proposals. The shareholder proposals are identified as such in the title; all other categories are management proposals. The report covers votes at US and Canadian firms as well as global companies where SURS’ investment was pursuant to American Depository Receipts.

1. Anti-Takeover Related

2. Capitalization

3. Directors Related

4. Non-Salary Compensation

5. Reorganization and Mergers

6. Routine/Business

7. Shareholder Proposals: Compensation

8. Shareholder Proposals: Corporate Governance

9. Shareholder Proposals: Directors’ Related

10. Shareholder Proposals: Health/Environment

11. Shareholder Proposals: Other/Miscellaneous

12. Shareholder Proposals: Routine/Business

13. Shareholder Proposals: Social Proposal

Overview MCG voted 1,971 proposals on behalf of SURS for the First Quarter of 2015. Overall, the votes followed management’s recommendations on 1,372 proposals (70%). We supported a majority of management-sponsored proposals in all categories except non-salary compensation. The proposals in this category largely seek shareholder approval for individual compensation plans or are advisory votes on overall compensation policies and procedures. MCG supports plans where pay is aligned with performance, is not excessive and follows best practice in corporate governance. MCG voted with management on 39.5% of non-salary compensation proposals.

Exhibit 6

2

Summaries by Issue Category

Management Proposals 1. Anti-Takeover Related MCG voted with management on 61 of 72 proposals (85%) in this category. Most proposals in this category (56) requested approval to adjourn a meeting. Companies trying to assure passage of important votes sometimes seek approval to adjourn the meeting to solicit more votes if needed. MCG votes in favor of these proposals when the connected proposal is supported and likewise votes against when the associated proposal is opposed. This quarter, MCG voted in favor of adjourning on 47 proposals (84%). We supported one proposal that sought approval for a special type of poison pill that was designed to protect a tax benefit. The net operating loss poison pill ("NOL pill") preserves the Company's ability to use certain tax assets, such as NOLs, to offset future income and thereby reduce potential future federal income tax obligations. MCG also supported one proposal to approve/amend stock ownership limitations and one proposal to give shareholders the right to call a special meeting. We cast a vote against a proposal to give shareholders the right to act by written consent at Majesco Entertainment Company because the move would have allowed a controlling shareholder to act unilaterally by written consent, with no opportunity for minority shareholders to provide input or express their views. We opposed one of 12 proposals on reducing a supermajority vote requirement for the same reason. While we support a simple majority in most cases, at FRP Holdings it would have allowed a small group to outweigh disinterested shareholders. 2. Capitalization MCG voted with management on 23 of 42 proposals (55%) dealing with capitalization this quarter. These proposals seek to increase or decrease authorized common stock, issue warrants, preferred or common shares and consider stock splits. MCG supported three of 11 proposals (27%) to increase authorized stock where the amount sought was not excessive (i.e., not more than 50% of the current authorizations) or was necessary for a specific purpose and for the one proposal this quarter for a reduction in share capital. Stock splits adjust the quantity of shares to encourage larger purchases of stock and reverse stock splits increase the price per share. MCG voted for three of six proposals (50%) to approve a reverse stock split. On issuing shares, MCG voted for four of six proposals (67%) to issue shares with or without pre-emptive rights or for a private placement. We supported both proposals to reduce/cancel a share premium account. We voted for one of three proposals (33%) to authorize a share repurchase program and abstained in two cases where the Company did not provide a rationale.

Exhibit 6

3

We supported several routine items, including four to approve/amend the conversion of securities, two to reissue repurchased shares and one to amend articles. MCG voted for one of two proposals on authorizing a new class of common stock. We opposed one at Colony Financial because the new stock would have uneven voting rights. 3. Directors Related MCG voted with management on 934 of 1,206 proposals (77%) related to directors this quarter. The vast majority of these proposals dealt with the election of the directors to the board. We voted in favor of 924 of 1,190 proposals (78%) to elect directors to the board and as Chairman/Vice Chairman. Nominees are opposed if a company significantly underperformed its peers for five years or directors had poor attendance records, served as insider nominees on boards that lacked independence, or sat on too many other boards, which threatens effectiveness. We also voted against two proposals to eliminate cumulative voting, which allows shareholders to pool their votes in favor of select nominees. We supported all three proposals to approve majority voting because it is the most appropriate standard in an uncontested election. MCG voted in favor of all five proposals to declassify the board of directors to ensure each director stands for election annually; we also opposed two proposals to classify the board. We voted against a proposal related to changing the size of the board and for one to fix the number of directors and/or auditors. Size adjustments warrant approval unless the result is fewer independent directors. MCG cast a vote against a proposal to amend the qualifications for the board at Raymond James Financial because the Company was reacting to a proxy contest where a dissident was challenging management on board seats. The qualification would have restricted nominees that received compensation from third parties—in this case the dissidents--and limited the pool of potential candidates. We voted for one proposal to discharge the management board because it was a procedural matter. 4. Non-Salary Compensation MCG voted with management on 121 of 306 proposals (40%) in this category. MCG voted in favor of 85 of 169 advisory proposals on executive compensation (50%), popularly known as “say-on-pay,” against 10 proposals to approve the remuneration of directors and against two proposals to increase the compensation ceiling for directors. We evaluate compensation by assessing whether pay aligns with performance and examining other practices to identify red flags for potential misuses of shareholders’ funds. The future timing of say-on-pay proposals accounted for another four resolutions and MCG elected for an annual vote in all cases, as opposed to voting on the issue every two or three years. We voted on other items related to compensation, including in favor of 21 of 37 on golden parachutes (57%). We oppose severance arrangements where the recipients receive payments even if they do not lose their job. We also oppose in cases where the

Exhibit 6

4

severance pay-out exceeds 2.99 times salary and bonus or provides for the gross-ups on excise taxes. The other major items in this category seek approval to create or amend individual compensation plans for employees, executives and directors. MCG voted in favor of 12 of 84 proposals (14%). MCG generally opposes equity or cash compensation plans that are exclusive to top-tier management and lack rigorous performance standards. We also oppose stock plans that cause excessive dilution to current shareholder equity. 5. Reorganizations and Mergers MCG voted with management on 55 of 63 proposals (87%) in this category. MCG supported 31 of 36 merger proposals (86%), and 18 of 19 proposals (95%) to issue shares to fund an acquisition. We opposed mergers at C&J Energy Services, Inc., Family Dollar Stores, Inc., GFI Group Inc., Internet Patents Corporation, MarineMax, Inc. and Rocky Mountain Chocolate Factory, Inc. We oppose mergers when shareholders rights will be significantly diminished or if the terms of the transaction are unattractive. We opposed one proposal to form a holding company, one to approve a reorganization plan, one to approve a sale of company assets, two proposals to approve a scheme of arrangement, and one to approve a spin-off agreement. Two proposals this quarter sought approval to change a company’s jurisdiction of incorporation. We supported one at Geospace Technologies Corporation and opposed the other at MarineMax, Inc. because it would have weakened shareholders’ rights. We also opposed a proposal at Rocky Mountain Chocolate Factory, Inc. to adopt a holding company structure and reincorporate from Colorado to Delaware. The bylaws contained a new fee-shifting provision as well as a supermajority vote requirement for bylaw amendments, which would have been a significant reduction in shareholders' rights. 6. Routine/Business MCG voted with management on 175 of 252 proposals (70%) in this category. The ratification of auditors accounts for more than 78% of the routine matters voted on at companies this quarter. MCG supported 135 of 196 (69%) of these proposals. We voted against the only proposal to fix the remuneration of external auditors and against two bundled proposals to approve auditors and their remuneration. Votes are cast in favor unless auditors receive excessive amounts for non-audit services because auditors that receive hefty fees for non-audit work may be conflicted when conducting audit work. We abstained in cases where the company did not disclose the fees. We supported seven proposals to elect members of the audit committee of the board and four proposals to elect members of the remuneration committee. MCG supported 11 of 17 proposals (65%) seeking approval to amend articles. We oppose where amendments are adverse to shareholders’ interests. We supported several routine items: nine to adopt financial statements and related reports; one to appoint an appraiser; four to issue dividends; two to change a company name and one to change the date/location of the annual meeting.

Exhibit 6

5

We voted in favor of a proposal to designate an independent proxy at TE Connectivity, a Swiss company, where an independent proxy was required to exercise the voting rights. Votes were cast against three proposals to amend articles because the changes were not in shareholders’ interest. MCG voted against two proposals to adopt an exclusive forum provision, which makes it more difficult for shareholders to bring lawsuits. We also opposed two proposals to approve other business because companies should provide shareholders detailed information on voting items rather than expecting blanket approval for unspecified items.

Shareholder Proposals 7. Shareholder Proposals: Compensation MCG voted for the one shareholder proposal related to compensation. We supported one proposal at The Walt Disney Company seeking to limit change in control agreements that allow time or performance hurdles on outstanding equity awards to lapse when the company faces an ownership change. 8. Shareholder Proposals: Corporate Governance MCG supported three shareholder proposals on corporate governance. We voted for a proposal to give all shareholders the same voting rights, for a proposal to submit severance agreements to a shareholder vote and for an item to give shareholders a vote on poison pills. 9. Shareholder Proposals: Directors’ Related MCG supported six of seven proposals (86%) in this category. Most of the proposals in this subcategory center on how the board is structured. MCG supported two proposals to give shareholders the right to act by written consent. This quarter MCG supported three proposals on proxy access and one to establish a board committee specializing in social/environmental issues. The one item we voted against asked Costco Wholesale Corporation to establish term limits for directors. Arbitrary terms limits are not in shareholders’ interest if they require the Company to eliminate valuable, experienced directors. 10. Shareholder Proposals: Health/Environment MCG supported all seven proposals in this category. Three proposals asked for reports on environmental impacts and four items requested companies issue sustainability reports. 11. Shareholder Proposals: Other/Miscellaneous MCG supported six of seven proposals (86%) in this category. We supported proposals asking for additional information and/or improvement on anti-bias policies, animal testing and animal welfare. Three proposals in this subcategory asked for disclosure on political and lobbying spending, which we supported. We voted

Exhibit 6

6

against an item under the company-specific category to spin-off operations at Natural Fuel Gas Company because the Company made a compelling argument to maintain the current structure. 12. Shareholder Proposals: Routine/Business MCG supported all four proposals in this category, which requested the companies appoint an independent chairman to the board of directors. 13. Shareholder Proposals: Social Proposal MCG voted against one proposal at Apple that requested the board issue a report on risks to the Company for supporting action on climate change. The Company already provides extensive disclosure (sustainability report, CDP questionnaire, and annual public filings) regarding its climate change policies, risks, and opportunities, including those resulting from changing regulations, and how it is managing those risks.

Exhibit 6

Proxy Vote Summary Report

Votes in Meetings Held Between January 1, 2015 and March 31, 2015

Number Voted

1

2015 Quarterly SURS Statistical Report Proposals For Against Abstain Withhold DNV 1YR 2YRS 3YRS With Mgmt Against Mngt Antitakeover Related "Adopt, Renew or Amend NOL Rights Plan (NOL Pill)" 1 1 0 0 0 0 0 0 0 1 0 Adjourn Meeting 56 47 7 0 0 2 0 0 0 47 7 Approve/Amend Stock Ownership Limitations 1 1 0 0 0 0 0 0 0 1 0 Provide Right to Act by Written Consent 1 0 1 0 0 0 0 0 0 0 1 Provide Right to Call Special Meeting 1 1 0 0 0 0 0 0 0 1 0 Reduce Supermajority Vote Requirement 12 11 1 0 0 0 0 0 0 11 1 Totals for Antitakeover Related : 72 61 9 0 0 2 0 0 0 61 (84.7%) 9 (12.5%) Capitalization Amend Articles/Charter Equity-Related 1 1 0 0 0 0 0 0 0 1 0 Approve Issuance of Equity without Preemptive Rights 1 1 0 0 0 0 0 0 0 1 0 Approve Issuance of Shares for a Private Placement 3 1 2 0 0 0 0 0 0 1 2 Approve Issuance of Warrants/Convertible Debentures 1 1 0 0 0 0 0 0 0 1 0 Approve Reduction in Share Capital 1 1 0 0 0 0 0 0 0 1 0 Approve Reduction/Cancellation of Share Premium Account 2 2 0 0 0 0 0 0 0 2 0 Approve Reverse Stock Split 6 3 3 0 0 0 0 0 0 3 3 Approve/Amend Conversion of Securities 4 4 0 0 0 0 0 0 0 4 0 Authorize Issuance of Equity with Preemptive Rights 1 1 0 0 0 0 0 0 0 1 0 Authorize Reissuance of Repurchased Shares 2 2 0 0 0 0 0 0 0 2 0 Authorize Share Repurchase Program 3 1 0 2 0 0 0 0 0 1 2 Authorize a New Class of Common Stock 2 1 1 0 0 0 0 0 0 1 1 Company Specific - Equity Related 4 1 1 2 0 0 0 0 0 1 3 Increase Authorized Common Stock 9 3 6 0 0 0 0 0 0 3 6 Increase Authorized Preferred Stock 1 0 1 0 0 0 0 0 0 0 1 Increase Authorized Preferred and Common Stock 1 0 1 0 0 0 0 0 0 0 1 Totals for Capitalization : 42 23 15 4 0 0 0 0 0 23 (54.8%) 19 (45.2%) Directors Related Adopt Majority Voting for Uncontested Election of Directors 3 3 0 0 0 0 0 0 0 3 0 Adopt or Amend Board Powers/Procedures/Qualifications 1 0 1 0 0 0 0 0 0 0 1 Approve Discharge of Management Board 1 1 0 0 0 0 0 0 0 1 0 Change Range for Size of the Board 1 0 1 0 0 0 0 0 0 0 1 Classify the Board of Directors 2 0 2 0 0 0 0 0 0 0 2 Declassify the Board of Directors 5 5 0 0 0 0 0 0 0 5 0 Elect Board Chairman/Vice-Chairman 1 0 1 0 0 0 0 0 0 0 1 Elect Director 1187 924 61 0 202 0 0 0 0 924 263 Elect Directors (Bundled) 2 0 2 0 0 0 0 0 0 0 2 Eliminate Cumulative Voting 2 0 2 0 0 0 0 0 0 0 2 Fix Number of Directors and/or Auditors 1 1 0 0 0 0 0 0 0 1 0 Totals for Directors Related : 1206 934 70 0 202 0 0 0 0 934 (77.4%) 272 (22.6%)

Exhibit 7



Number Voted

2

2015 Quarterly SURS Statistical Report Proposals For Against Abstain Withhold DNV 1YR 2YRS 3YRS With Mgmt Against Mngt Non-Salary Comp. Advisory Vote on Golden Parachutes 37 21 14 0 0 2 0 0 0 21 14 Advisory Vote on Say on Pay Frequency 4 0 0 0 0 0 4 0 0 3 1 Amend Executive Share Option Plan 1 0 1 0 0 0 0 0 0 0 1 Amend Non-Employee Director Omnibus Stock Plan 1 0 1 0 0 0 0 0 0 0 1 Amend Non-Employee Director Stock Option Plan 1 0 1 0 0 0 0 0 0 0 1 Amend Omnibus Stock Plan 30 0 30 0 0 0 0 0 0 0 30 Amend Qualified Employee Stock Purchase Plan 5 5 0 0 0 0 0 0 0 5 0 Amend Restricted Stock Plan 1 0 1 0 0 0 0 0 0 0 1 Approve Increase Compensation Ceiling for Directors 2 0 2 0 0 0 0 0 0 0 2 Approve Non-Employee Director Stock Option Plan 1 0 1 0 0 0 0 0 0 0 1 Approve Omnibus Stock Plan 27 0 27 0 0 0 0 0 0 0 27 Approve Qualified Employee Stock Purchase Plan 7 7 0 0 0 0 0 0 0 7 0 Approve Remuneration Report 169 85 84 0 0 0 0 0 0 85 84 Approve Remuneration of Directors 10 0 10 0 0 0 0 0 0 0 10 Approve/Amend Executive Incentive Bonus Plan 10 0 10 0 0 0 0 0 0 0 10 Totals for Non-Salary Comp. : 306 118 182 0 0 2 4 0 0 121 (39.5%) 183 (59.8%) Reorg. and Mergers Approve Formation of Holding Company 1 0 1 0 0 0 0 0 0 0 1 Approve Merger Agreement 36 31 3 0 0 2 0 0 0 31 3 Approve Reorganization/Restructuring Plan 1 1 0 0 0 0 0 0 0 1 0 Approve Sale of Company Assets 1 1 0 0 0 0 0 0 0 1 0 Approve Scheme of Arrangement 2 2 0 0 0 0 0 0 0 2 0 Approve Spin-Off Agreement 1 1 0 0 0 0 0 0 0 1 0 Change Jurisdiction of Incorporation 2 1 1 0 0 0 0 0 0 1 1 Issue Shares in Connection with Acquisition 19 18 1 0 0 0 0 0 0 18 1 Totals for Reorg. and Mergers : 63 55 6 0 0 2 0 0 0 55 (87.3%) 6 (9.5%) Routine/Business Accept Consolidated Financial Statements/Statutory Reports 2 2 0 0 0 0 0 0 0 2 0 Accept Financial Statements and Statutory Reports 2 2 0 0 0 0 0 0 0 2 0 Adopt Jurisdiction of Incorporation as Exclusive Forum 2 0 2 0 0 0 0 0 0 0 2 Adopt New Articles of Association/Charter 3 0 3 0 0 0 0 0 0 0 3 Amend Articles/Bylaws/Charter -- Non-Routine 17 11 6 0 0 0 0 0 0 11 6 Appoint Appraiser/Special Auditor/Liquidator 1 1 0 0 0 0 0 0 0 1 0 Approve Allocation of Income and Dividends 2 2 0 0 0 0 0 0 0 2 0 Approve Auditors and their Remuneration 2 0 2 0 0 0 0 0 0 0 2 Approve Dividends 2 2 0 0 0 0 0 0 0 2 0 Approve Financials/Income Allocation/Director Discharge 5 5 0 0 0 0 0 0 0 5 0 Authorize Board to Fix Remuneration of External Auditor(s) 1 0 1 0 0 0 0 0 0 0 1

Exhibit 7



Number Voted

3

2015 Quarterly SURS Statistical Report Proposals For Against Abstain Withhold DNV 1YR 2YRS 3YRS With Mgmt Against Mngt Change Company Name 2 2 0 0 0 0 0 0 0 2 0 Change Date/Location of Annual Meeting 1 1 0 0 0 0 0 0 0 1 0 Designate X as Independent Proxy 1 1 0 0 0 0 0 0 0 1 0 Elect Members of Audit Committee 7 7 0 0 0 0 0 0 0 7 0 Elect Members of Remuneration Committee 4 4 0 0 0 0 0 0 0 4 0 Other Business 2 0 2 0 0 0 0 0 0 0 2 Ratify Auditors 196 135 61 0 0 0 0 0 0 135 61 Totals for Routine/Business : 252 175 77 0 0 0 0 0 0 175 (69.4%) 77 (30.6%) SH-Compensation Limit/Prohibit Accelerated Vesting of Awards 1 1 0 0 0 0 0 0 0 0 1 Totals for SH-Compensation : 1 1 0 0 0 0 0 0 0 0 (0.0%) 1 (100.0%) SH-Corp Governance Approve Recapitalization Plan for all Stock to Have One-vote 1 1 0 0 0 0 0 0 0 0 1 Submit Severance Agreement to Shareholder Vote 1 1 0 0 0 0 0 0 0 0 1 Submit Shareholder Rights Plan to Shareholder Vote 1 1 0 0 0 0 0 0 0 0 1 Totals for SH-Corp Governance : 3 3 0 0 0 0 0 0 0 0 (0.0%) 3 (100.0%) SH-Dirs' Related Adopt Proxy Access Right 3 3 0 0 0 0 0 0 0 0 3 Establish Environmental/Social Issue Board Committee 1 1 0 0 0 0 0 0 0 0 1 Establish Term Limits for Directors 1 0 1 0 0 0 0 0 0 1 0 Provide Right to Act by Written Consent 2 2 0 0 0 0 0 0 0 0 2 Totals for SH-Dirs' Related : 7 6 1 0 0 0 0 0 0 1 (14.3%) 6 (85.7%) SH-Health/Environ. Community -Environmental Impact 3 3 0 0 0 0 0 0 0 0 3 Sustainability Report 4 4 0 0 0 0 0 0 0 0 4 Totals for SH-Health/Environ. : 7 7 0 0 0 0 0 0 0 0 (0.0%) 7 (100.0%) SH-Other/misc. Adopt Sexual Orientation Anti-Bias Policy 1 1 0 0 0 0 0 0 0 0 1 Animal Testing 1 1 0 0 0 0 0 0 0 0 1 Animal Welfare 1 1 0 0 0 0 0 0 0 0 1 Company-Specific -- Shareholder Miscellaneous 1 0 1 0 0 0 0 0 0 1 0 Political Contributions and Lobbying 1 1 0 0 0 0 0 0 0 0 1 Political Lobbying Disclosure 2 2 0 0 0 0 0 0 0 0 2 Totals for SH-Other/misc. : 7 6 1 0 0 0 0 0 0 1 (14.3%) 6 (85.7%)

Exhibit 7



Number Voted

4

2015 Quarterly SURS Statistical Report Proposals For Against Abstain Withhold DNV 1YR 2YRS 3YRS With Mgmt Against Mngt SH-Routine/Business Require Independent Board Chairman 4 4 0 0 0 0 0 0 0 0 4 Totals for SH-Routine/Business : 4 4 0 0 0 0 0 0 0 0 (0.0%) 4 (100.0%) Social Proposal Anti-Social Proposal 1 0 1 0 0 0 0 0 0 1 0 Totals for Social Proposal : 1 0 1 0 0 0 0 0 0 1 (100.0%) 0 (0.0%) Totals for the report : 1971 1393 362 4 202 6 4 0 0 1372 (69.6%) 593 (30.1%)

Exhibit 7

Council of Institutional Investors Recordings

Sign in to www.cii.org and click Events – Event Calendar – Monthly View or Search View

3/11/15 Teleconference: A Conversation with the Author of “The Black Box Society”

The teleconference featured a discussion with Frank Pasquale, whose book, The Black Box

Society: The Secret Algorithms that Control Money and Information, develops a social theory of

reputation, search, and finance and sheds light on the mechanisms that facilitate high frequency

trading.

Moderator: Matthew Frakes, research analyst, Council of Institutional Investors

4/22/15 Teleconference: Golden Parachutes for Government Service

The teleconference examined the practice of major banks and investment companies of giving

executives golden parachute pay packages for entering government service and the steps the

AFL-CIO has taken to push for transparency on this issue.

Speaker: Heather Slavkin Corzo, director, AFL-CIO Office of Investment

5/06/15 Teleconference: REIT Activism at UNITE HERE & the Independently-Filed

Shareholder Proposal

The teleconference covered UNITE HERE’s involvement in four ongoing proxy contests at

Ashford Hospitality Trust, Pinnacle Entertainment, Chesapeake Lodging Trust and Hospitality

Properties Trust and activism at several other REITs. The call included a discussion of the

union’s strategy to file its own proxy card with multiple shareholder proposals.

Speaker: JJ Fueser, research coordinator, UNITE HERE

5/14/15 Teleconference: Request to SEC Regarding Stock Buyback Rules

The teleconference pertained to Senator Baldwin’s recent letter to SEC Chairman Mary Jo White

on stock buybacks.

Speaker: Brian Conlan, legislative assistant to Senator Tammy Baldwin (D-WI)

5/19/15 Teleconference: Shareholder Views on Stock Buybacks

The teleconference allowed for a discussion of shareholder views on the topic of stock buybacks.

Speakers: Scott M. Stringer, New York City comptroller, and Anne Simpson, senior portfolio

manager and director of global governance, CALPERS

Exhibit 8

Council of Institutional Investors Recordings

Sign in to www.cii.org and click Events – Event Calendar – Monthly View or Search View

5/27/15 Teleconference: Japanese Proxy Season Preview

The teleconference focused on the major issues and key annual meetings of the upcoming proxy

season in Japan and the many changes afoot since the recent finalization of the country’s new

Corporate Governance Code.

Speakers: Mohani Maharaj, co-chair, CII International Governance Committee; corporate

governance analyst, TIAA-CREF and Benjamin Adams, executive manager, IR Japan

Exhibit 8

Fiscal Year 2015 Work Plan Corporate Governance Committee Schedule

State Universities Retirement System Denotes recurring items

- Denotes non-recurring items

FISCAL YEAR 2015 June 2015 - Status Update on EEO-1 Shareholder Proposals

- Discussion of Proxy Voting Provider Search

Exhibit 9

minutes of the board of trustees of the state universities ... · service provider was conducted...

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