Model Board Policy

30 March 2015

Board director engagement with shareholders is an important mechanism of board accountability. This Model Board Policy is a template that boards of U.S. corporations can use in developing their own policy for director/shareholder engagement.

PGGM and RPMI Railpen believe that engagement with shareholders is a fundamental duty of the directors that shareholders elect and is a key board accountability mechanism. We have written a model policy that the Board of US companies could adopt to demonstrate its commitment to engagement with shareholders. We encourage the Board to use our model policy in developing their own policy in this important area of board governance.

The Board’s policy on engagement with shareholders
 
Introduction: 
The Board of Directors (the “Board”) instils a culture of openness to communication with shareholders, and believes that such engagement leads to better-informed decisions that promote the best interests of the Company. In particular, this engagement enables the Board to fulfil its duties in an informed manner, giving due consideration to the concerns of shareholders.

This policy sets out how the Board will seek to undertake direct engagement with shareholders, the Board’s expectations of shareholders and the appropriate areas of engagement between both parties. This policy is the responsibility of the Board and forms part of the Company’s corporate governance guidelines.

How the Board Engages with Shareholders: 
The Board believes that the annual report and proxy statement are effective methods to communicate its decisions on long-term value creation through effective oversight of the corporate strategy including corporate governance and other matters pertaining to the Company. Further, the Board recognizes that engagement is an extension of, and important complement to, the Board’s disclosures. 

The Board considers the annual shareholders’ meeting as an opportunity for communication between shareholders and board directors and encourages all shareholders to attend the meeting. The Board also values continuous and ongoing dialogue with shareholders throughout the year which helps to create alignment and ensure that shareholders are fully informed when making voting decisions. The Board directors commit to making themselves available at various points during the year and invite shareholders to meet with independent board directors to discuss the responsibilities of, and oversight by, the Board.

Shareholders can contact the Board directly through the channels provided in Appendix A at the end of this document.

Board appointed or management representatives will monitor communications from shareholders and will ensure that all legitimate queries are forwarded to the addressee(s). All requests for engagement and dialogue with a director(s) will be acknowledged promptly and all meeting requests will be appropriately addressed within one month.  

The Board considers that it may be appropriate for their representatives to respond initially to enquiries or issues of concern raised by shareholders. The Board also recognizes that there are areas of board oversight and decision making that only independent board directors can explain in a proper accountability structure. The Board deems it appropriate for individual board directors to lead engagement with shareholders on various matters which are the purview of the Board.

The Board recognizes its legal responsibility to observe Regulation Fair Disclosure and considers that it can be observed without hampering discussions between shareholders and directors.

The Board’s Expectation of Shareholders: 
The Board recognizes that many shareholders have views about the Company which may benefit the Board in determining the best interests of the Company. However, when conflicts arise between the goals of different shareholders, the Board will prioritize those goals which are aligned with the long-term perspective.

In conducting engagement, the Board considers that both shareholders and board directors should respect and understand certain protocols, including that:

• Shareholders and Board directors should be clear about the purpose of engagement meetings as well the desired outcomes of meetings

• Informational requests or requests pertaining to matters not under the Board’s purview may be responded to by management

• Shareholders and Board directors understand the restrictions on discussion areas imposed by Regulation Fair Disclosure

• Shareholders and Board directors respect the confidential nature of their communications

• Shareholders and Board directors sufficiently prepare for meetings

• Board directors prefer the opportunity to learn about and address legitimate shareholder concerns in private sessions, rather than through public platforms such as the media.

Appropriate Topics for Engagement: 
The Board believes that insights and explanations from directors can be particularly valuable to shareholders when the process around board decision-making is discussed. Some examples in which the Board will engage on process, as well as decision-making outcomes, include:

• Executive compensation

• Board leadership structure

• Board and committee structure

• Audit oversight matters

• Succession planning for management representatives

• Nominations and succession planning for directors

• Board’s role in overseeing strategy, including risk and the allocation of capital

• Management proposals which have failed to reach majority support from shareholders

• Shareholder proposals which have received majority support from shareholders

The Board recognizes that this list is not exhaustive and that there are other areas that are appropriate for engagement with shareholders.

The Board welcomes feedback on this policy and will review and update the policy on a regular basis and as practices evolve.