Each also serves as an Officer of The Central and Eastern Europe Fund, Inc. and The New Germany Fund, Inc., two other closed-end registered investment companies for which DWS Investment Management Americas, Inc. acts as Administrator.
The European
Equity Fund, Inc.
form
n-csr disclosure re: AUDIT FEES
The following table shows the amount of
fees that Ernst & Young LLP (“EY”), the Fund’s Independent Registered Public Accounting Firm, billed to the
Fund during the Fund’s last two fiscal years. The Audit Committee approved in advance all audit services and non-audit services
that EY provided to the Fund.
Services that the Fund’s Independent
Registered Public Accounting Firm Billed to the Fund
Fiscal Year
Ended
December 31,
|
Audit Fees Billed to Fund
|
Audit-Related
Fees Billed to Fund
|
Tax Fees Billed to Fund
|
All
Other Fees Billed to Fund
|
2020
|
$42,722
|
$0
|
$7,880
|
$0
|
2019
|
$58,722
|
$0
|
$8,565
|
$1,000
|
The “All Other Fees Billed to the
Fund” were billed for services associated with foreign tax filings.
Services that the Fund’s Independent
Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers
The following table shows the amount of fees billed by EY to the
Fund’s advisor, DWS International GmbH, or the administrator, DWS Investment Management Americas, Inc. (“DIMA”),
and any entity controlling, controlled by or under common control with DWS International GmbH or DWS Investment Management Americas,
Inc. (“Control Affiliate”) that provides ongoing services to the Fund (collectively, the “Advisor Entities”),
for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s last two fiscal
years.
Fiscal Year
Ended
December 31,
|
Audit-Related
Fees Billed to Adviser and Affiliated Fund Service Providers
|
Tax Fees Billed to Adviser and Affiliated Fund Service Providers
|
All
Other Fees Billed to Adviser and Affiliated Fund Service Providers
|
2020
|
$0
|
$650,763
|
$0
|
2019
|
$0
|
$740,482
|
$0
|
The above “Tax Fees” were
billed in connection with tax compliance services and agreed upon procedures
Non-Audit Services
The following table shows the amount of
fees that EY billed during the Fund’s last two fiscal years for non-audit services. The Audit Committee pre-approved all
non-audit services that EY provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Fund’s
operations and financial reporting. The Audit Committee requested and received information from EY about any non-audit services
that EY rendered during the Fund’s last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee
considered this information in evaluating EY’s independence..
Fiscal Year
Ended
December 31,
|
Total
Non-Audit Fees Billed to Fund
(A)
|
Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund)
(B)
|
Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements)
(C)
|
Total of (A), (B)
and (C)
|
2020
|
$7,880
|
$650,763
|
$0
|
$658,643
|
2019
|
$9,565
|
$740,482
|
$0
|
$750,047
|
All other engagement fees were billed for services in connection
with agreed upon procedures and tax compliance for DIMA and other related entities.
Audit Committee Pre-Approval Policies and Procedures. Generally,
each Fund’s Audit Committee must pre approve (i) all services to be performed for a Fund by a Fund’s Independent Registered
Public Accounting Firm and (ii) all non-audit services to be performed by a Fund’s Independent Registered Public Accounting
Firm for the Advisor Entities with respect to operations and financial reporting of the Fund. The Audit Committee may, in its discretion,
delegate all or a portion of its duties and responsibilities to a subcommittee of the Audit Committee. The Board and the Audit
Committee have authorized any member of the Audit Committee to pre-approve any audit or non-audit services to be
performed by the independent auditors, provided that any such approvals are presented to the Audit Committee at its next scheduled
meeting.
There were no amounts that were approved by the Audit Committee
pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
According to each principal Independent Registered Public
Accounting Firm, substantially all of the principal Independent Registered Public Accounting Firm's hours spent on auditing the
registrant's financial statements were attributed to work performed by full-time permanent employees of the principal Independent
Registered Public Accounting Firm.
***
In connection with the audit of the 2019 and 2020 financial
statements, the Fund entered into an engagement letter with EY. The terms of the engagement letter required by EY, and agreed to
by the Audit Committee, include a provision mandating the use of mediation and arbitration to resolve any controversy or claim
between the parties arising out of or relating to the engagement letter or services provided thereunder.
***
Pursuant to PCAOB Rule 3526, EY is required to describe in
writing to the Fund’s Audit Committee, on at least an annual basis, all relationships between EY, or any of its affiliates,
and the DWS Funds, including the Fund, or persons in financial reporting oversight roles at the DWS Funds that, as of the date
of the communication, may reasonably be thought to bear on EY’s independence. Pursuant to PCAOB Rule 3526, EY has reported
the matters set forth below that may reasonably be thought to bear on EY’s independence. With respect to each reported matter,
individually and in the aggregate, EY advised the Audit Committee that, after careful consideration of the facts and circumstances
and the applicable independence rules, it concluded that the matters do not and will not impair EY’s ability to exercise
objective and impartial judgement in connection with the audits of the financial statements for the Fund and a reasonable investor
with knowledge of all relevant facts and circumstances would conclude that EY has been and is capable of exercising objective and
impartial judgment on all issues encompassed within EY’s audit engagements. EY also confirmed to the Audit Committee that
it can continue act as the Independent Registered Public Accounting Firm for the Fund.
|
·
|
EY advised the Fund’s Audit Committee that various covered persons within EY’s affiliates
held investments in, or had other financial relationships with, entities within the DWS Funds “investment company complex”
(as defined in Regulation S-X) (the “DWS Funds Complex”). EY informed the Audit Committee that these investments and
financial relationships were inconsistent with Rule 2-01(c)(1) of Regulation S-X. EY reported that all breaches have been resolved
and that none of the breaches involved any investments in the Fund or any professionals who were part of the audit engagement team
for the Fund. In addition, EY noted that the independence breaches did not (i) create a mutual or conflicting interest with the
Fund, (ii) place EY in the position of auditing its own work, (iii) result in EY acting as management or an employee of the Fund,
or (iv) place EY in a position of being an advocate of the Fund.
|
|
|
ITEM 5.
|
AUDIT COMMITTEE OF LISTED REGISTRANTS
|
|
|
|
The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The registrant's audit committee consists of Walter C. Dostmann (Chairman), Richard R. Burt, Dr. Christopher Pleister, and Dr. Kenneth C. Froewiss.
|
|
|
ITEM 6.
|
SCHEDULE OF INVESTMENTS
|
|
|
|
Not applicable
|
|
|
ITEM 7.
|
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
|
|
|
1. Scope
DWS has adopted and implemented the following Policies
and Guidelines, which it believes are reasonably designed to ensure that proxies are voted in the best economic interest of clients
and in accordance with its fiduciary duties and local regulation. This Proxy Voting Policy and Guidelines – DWS (“Policy
and Guidelines”) shall apply to all accounts managed by US domiciled advisers and to all US client accounts managed by non-US
regional offices. Non-US regional offices are required to maintain procedures and to vote proxies as may be required by law on
behalf of their non-US clients. In addition, DWS’s proxy policies reflect the fiduciary standards and responsibilities for
ERISA accounts.
The attached guidelines represent a set of global recommendations
that were determined by the Global Proxy Voting Sub-Committee (the “GPVSC”). These guidelines were developed to provide
DWS with a comprehensive list of recommendations that represent how DWS will generally vote proxies for its clients. The recommendations
derived from the application of these guidelines are not intended to influence the various DWS legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational structures and documents of the various DWS legal
entities allows, where necessary or appropriate, the execution by individual DWS subsidiaries of the proxy voting rights independently
of any parent or affiliated company. This applies in particular to non US fund management companies. The individuals that make
proxy voting decisions are also free to act independently, subject to the normal and customary supervision by the Management/Boards
of these DWS legal entities.
2. DWS’S
Proxy Voting Responsibilities
Proxy votes are the property of DWS’s advisory clients.1
As such, DWS’s authority and responsibility to vote such proxies depend upon its contractual relationships with its
clients or other delegated authority. DWS has delegated responsibility for effecting its advisory clients’ proxy votes to
Institutional Shareholder Services (“ISS”), an independent third-party proxy voting specialist. ISS votes DWS’s
advisory clients’ proxies in accordance with DWS’s proxy guidelines or DWS’s specific instructions. Where a client
has given specific instructions as to how a proxy should be voted, DWS will notify ISS to carry out those instructions. Where no
specific instruction exists, DWS will follow the procedures in voting the proxies set forth in this document. Certain Taft-Hartley
clients may direct DWS to have ISS vote their proxies in accordance with Taft-Hartley Voting Guidelines.
Clients may in certain instances contract with their custodial
agent and notify DWS that they wish to engage in securities lending transactions. In such cases, it is the responsibility of the
custodian to deduct the number of shares that are on loan so that they do not get voted twice. To the extent a security is out
on loan and DWS determines that a proxy vote (or other shareholder action) is materially important to the client’s account,
DWS may request, on a best efforts basis, that the agent recall the security prior to the record date to allow DWS to vote the
securities.
3. POLICIES
3.1. Proxy
Voting Activities are Conducted in the Best Economic Interest of Clients
DWS has adopted the following Policies and Guidelines
to ensure that proxies are voted in accordance with the best economic interest of its clients, as determined by DWS in good faith
after appropriate review.
3.2. The
Global Proxy Voting Sub-Committee
The Global Proxy Voting Sub-Committee is an internal working
group established by the applicable DWS’s Investment Risk Oversight Committee pursuant to a written charter. The GPVSC is
responsible for overseeing DWS’s proxy voting activities, including:
|
1.
|
Adopting, monitoring and updating guidelines, attached as Attachment A (the “Guidelines”), that provide how DWS
will generally vote proxies pertaining to a comprehensive list of common proxy voting matters;
|
|
2.
|
Voting proxies where: (i) the issues are not covered by specific client instruction or the Guidelines; (ii) the Guidelines
specify that the issues are to be determined on a case-by-case basis; or (iii) where an exception to the Guidelines may be in the
best economic interest of DWS’s clients; and
|
|
3.
|
Monitoring Proxy Vendor Oversight’s proxy voting activities (see below).
|
DWS’s Proxy Vendor Oversight, a function of DWS’s
Operations Group, is responsible for coordinating with ISS to administer DWS’s proxy voting process and for voting proxies
in accordance with any specific client instructions or, if there are none, the Guidelines, and overseeing ISS’ proxy responsibilities
in this regard.
1 For
purposes of this document, “clients” refers to persons or entities: (i) for which DWS serves as investment adviser
or sub-adviser; (ii) for which DWS votes proxies; and (iii) that have an economic or beneficial ownership interest in the portfolio
securities of issuers soliciting such proxies.
3.3 Availability
of Proxy Voting Policies and Proxy Voting Record
Copies of this Policy, as it may be updated from time
to time, is made available to clients as required by law and otherwise at DWS’s discretion. Clients may also obtain information
on how their proxies were voted by DWS as required by law and otherwise at DWS’s discretion. Note, however, that DWS must
not selectively disclose its investment company clients’ proxy voting records. Proxy Vendor Oversight will make proxy voting
reports available to advisory clients upon request. The investment companies’ proxy voting records will be disclosed to shareholders
by means of publicly-available annual filings of each company’s proxy voting record for the 12-month periods ending June
30 (see Section 6 below), if so required by relevant law.
4. Procedures
The key aspects of DWS’s proxy voting process are
delineated below.
4.1. The
GPVSC’s Proxy Voting Guidelines
The Guidelines set forth the GPVSC’s standard voting
positions on a comprehensive list of common proxy voting matters. The GPVSC has developed and continues to update the Guidelines
based on consideration of current corporate governance principles, industry standards, client feedback, and the impact of the matter
on issuers and the value of the investments.
The GPVSC will review the Guidelines as necessary to support
the best economic interests of DWS’s clients and, in any event, at least annually. The GPVSC will make changes to the Guidelines,
whether as a result of the annual review or otherwise, taking solely into account the best economic interests of clients. Before
changing the Guidelines, the GPVSC will thoroughly review and evaluate the proposed change and the reasons therefore, and the GPVSC
Chair will ask GPVSC members whether anyone outside of the DWS organization (but within Deutsche Bank and its affiliates) or any
entity that identifies itself as an DWS advisory client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If any such matter is reported to the GPVSC Chair, the
Chair will promptly notify the Conflicts of Interest Management Sub-Committee (see Section 5.4) and will defer the approval, if
possible. Lastly, the GPVSC will fully document its rationale for approving any change to the Guidelines.
The Guidelines may reflect a voting position that differs
from the actual practices of the public company(ies) within the Deutsche Bank organization or of the investment companies for which
DWS or an affiliate serves as investment adviser or sponsor. Investment companies, particularly closed-end investment companies,
are different from traditional operating companies. These differences may call for differences in voting positions on the same
matter. Further, the manner in which DWS votes investment company proxies may differ from proposals for which a DWS-advised or
sponsored investment company solicits proxies from its shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the pre-determined guidelines of ISS.
4.2. Specific
Proxy Voting Decisions Made by the GPVSC
Proxy Vendor Oversight will refer to the GPVSC all proxy
proposals: (i) that are not covered by specific client instructions or the Guidelines; or (ii) that, according to the Guidelines,
should be evaluated and voted on a case-by-case basis.
Additionally, if Proxy Vendor Oversight,2 the
GPVSC Chair or any member of the GPVSC, a Portfolio Manager, a Research Analyst or a sub-adviser believes that voting a particular
proxy in accordance with the Guidelines may not be in the best economic interests of clients, that individual may bring the matter
to the attention of the GPVSC Chair and/or Proxy Vendor Oversight.
If Proxy Vendor Oversight refers a proxy proposal to the
GPVSC or the GPVSC determines that voting a particular proxy in accordance with the Guidelines is not in the best economic interests
of clients, the GPVSC will evaluate and vote the proxy, subject to the procedures below regarding conflicts.
The GPVSC endeavours to hold meetings to decide how to
vote particular proxies sufficiently before the voting deadline so that the procedures below regarding conflicts can be completed
before the GPVSC’s voting determination.
2 Proxy
Vendor Oversight generally monitors upcoming proxy solicitations for heightened attention from the press or the industry and for
novel or unusual proposals or circumstances, which may prompt Proxy Vendor Oversight to bring the solicitation to the attention
of the GPVSC Chair. DWS Portfolio Managers, DWS Research Analysts and sub-advisers also may bring a particular proxy vote to the
attention of the GPVSC Chair, as a result of their ongoing monitoring of portfolio securities held by advisory clients and/or their
review of the periodic proxy voting record reports that the GPVSC Chair distributes to DWS portfolio managers and DWS research
analysts.
4.3. The
GPVSC’s Proxy Voting Guidelines
In some cases, the GPVSC may determine that it is in the
best economic interests of its clients not to vote certain proxies, or that it may not be feasible to vote certain proxies. If
the conditions below are met with regard to a proxy proposal, DWS will abstain from voting:
|
1.
|
Neither the Guidelines nor specific client instructions cover an issue;
|
|
2.
|
ISS does not make a recommendation on the issue; and
|
|
3.
|
The GPVSC cannot convene on the proxy proposal at issue to make a determination as to what would be in the client’s best
interest. (This could happen, for example, if the Conflicts of Interest Management Sub-Committee found that there was a material
conflict or if despite all best efforts being made, the GPVSC quorum requirement could not be met).
|
In addition, it is DWS’s policy not to vote proxies
of issuers subject to laws of those jurisdictions that impose restrictions upon selling shares after proxies are voted, in order
to preserve liquidity. In other cases, it may not be possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so that proxies may be voted on a timely basis. Voting
rights on securities that have been loaned to third-parties transfer to those third-parties, with loan termination often being
the only way to attempt to vote proxies on the loaned securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the economic benefits expected from voting the proxy or
group of proxies.
Proxy Vendor Oversight will coordinate with the GPVSC
Chair regarding any specific proxies and any categories of proxies that will not or cannot be voted. The reasons for not voting
any proxy shall be documented.
4.4. Conflict
of Interest Procedures
4.4.1. Procedures
to Address Conflicts of Interest and Improper Influence
Overriding Principle. In the limited circumstances
where the GPVSC votes proxies,3 the GPVSC will vote those proxies in accordance with what it, in good faith, determines
to be the best economic interests of DWS’s clients.4
Independence of the GPVSC. As a matter of Compliance
policy, the GPVSC and Proxy Vendor Oversight are structured to be independent from other parts of Deutsche Bank. Members of the
GPVSC and the employee responsible for Proxy Vendor Oversight are employees of DWS. As such, they may not be subject to the supervision
or control of any employees of Deutsche Bank Corporate and Investment Banking division (“CIB”). Their compensation
cannot be based upon their contribution to any business activity outside of DWS without prior approval of Legal and Compliance.
They can have no contact with employees of Deutsche Bank outside of DWS regarding specific clients, business matters, or initiatives
without the prior approval of Legal and Compliance. They furthermore may not discuss proxy votes with any person outside of DWS
(and within DWS only on a need to know basis).
Conflict Review Procedures. The “Conflicts
of Interest Management Sub-Committee” within DWS monitors for potential material conflicts of interest in connection with
proxy proposals that are to be evaluated by the GPVSC. The Conflicts of Interest Management Sub-Committee members include DWS Compliance,
the chief compliance officers of the advisors and the DWS Funds. Promptly upon a determination that a proxy vote shall be presented
to the GPVSC, the GPVSC Chair shall notify the Conflicts of Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed reasonably appropriate to evaluate, in its reasonable judgment,
if DWS or any person participating in the proxy voting process has, or has the appearance of, a material conflict of interest.
For the purposes of this policy, a conflict of interest shall be considered “material” to the extent that a reasonable
person could expect the conflict to influence, or appear to influence, the GPVSC’s decision on the particular vote at issue.
GPVSC should provide the Conflicts of Interest Management Sub-Committee a reasonable amount of time (no less than 24 hours) to
perform all necessary and appropriate reviews. To the extent that a conflicts review cannot be sufficiently completed by the Conflicts
of Interest Management Sub-Committee the proxies will be voted in accordance with the standard Guidelines.
The information considered by the Conflicts of Interest
Management Sub-Committee may include without limitation information regarding: (i) DWS client relationships; (ii) any relevant
personal conflict known by the Conflicts of Interest Management Sub-Committee or brought to the attention of that sub-committee;
and (iii) any communications with members of the GPVSC (or anyone participating or providing information to the GPVSC) and any
person outside of the DWS organization (but within Deutsche Bank and its affiliates) or any entity that identifies itself as an
DWS advisory client regarding the vote at issue. In the context of any determination, the Conflicts of Interest Management Sub-Committee
may consult with and shall be entitled to rely upon all applicable outside experts, including legal counsel.
Upon completion of the investigation, the Conflicts of
Interest Management Sub-Committee will document its findings and conclusions. If the Conflicts of Interest Management Sub-Committee
determines that: (i) DWS has a material conflict of interest that would prevent it from deciding how to vote the proxies concerned
without further client consent; or (ii) certain individuals should be recused from participating in the proxy vote at issue, the
Conflicts of Interest Management Sub-Committee will so inform the GPVSC Chair.
If notified that DWS has a material conflict of interest
as described above, the GPVSC chair will obtain instructions as to how the proxies should be voted either from: (i) if time permits,
the affected clients; or (ii) in accordance with the standard Guidelines. If notified that certain individuals should be recused
from the proxy vote at issue, the GPVSC Chair shall do so in accordance with the procedures set forth below.
Note: Any DWS employee who becomes aware of a potential,
material conflict of interest in respect of any proxy vote to be made on behalf of clients shall notify Compliance or the Conflicts
of Interest Management Sub-Committee. Compliance shall call a meeting of the Conflicts of Interest Management Sub-Committee to
evaluate such conflict and determine a recommended course of action.
3 As
mentioned above, the GPVSC votes proxies where: (i) neither a specific client instruction nor a Guideline directs how the proxy
should be voted; (ii) where the Guidelines specify that an issue is to be determined on a case-by-case basis; or (iii) where voting
in accordance with the Guidelines may not be in the best economic interests of clients.
4 Proxy
Vendor Oversight, who serves as the non-voting secretary of the GPVSC, may receive routine calls from proxy solicitors and other
parties interested in a particular proxy vote. Any contact that attempts to exert improper pressure or influence shall be reported
to the Conflicts of Interest Management Sub-Committee.
Procedures to be followed by the GPVSC. At the
beginning of any discussion regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will inquire as to whether
any GPVSC member (whether voting or ex officio) or any person participating in the proxy voting process has a personal conflict
of interest or has actual knowledge of an actual or apparent conflict that has not been reported to the Conflicts of Interest Management
Sub-Committee.
The GPVSC Chair also will inquire of these same parties
whether they have actual knowledge regarding whether any Director, officer, or employee outside of the DWS organization (but within
Deutsche Bank and its affiliates) or any entity that identifies itself as an DWS advisory client, has: (i) requested that DWS,
Proxy Vendor Oversight (or any member thereof), or a GPVSC member vote a particular proxy in a certain manner; (ii) attempted to
influence DWS, Proxy Vendor Oversight (or any member thereof), a GPVSC member or any other person in connection with proxy voting
activities; or (iii) otherwise communicated with a GPVSC member, or any other person participating or providing information to
the GPVSC regarding the particular proxy vote at issue and which incident has not yet been reported to the Conflicts of Interest
Management Sub-Committee.
If any such incidents are reported to the GPVSC Chair,
the Chair will promptly notify the Conflicts of Interest Management Sub-Committee and, if possible, will delay the vote until the
Conflicts of Interest Management Sub-Committee can complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC (i) whether anyone should be recused from the proxy voting process or
(ii) whether DWS should vote the proxy in accordance with the standard guidelines, seek instructions as to how to vote the proxy
at issue from ISS or, if time permits, the affected clients. These inquiries and discussions will be properly reflected in the
GPVSC’s minutes.
Duty to Report. Any DWS employee, including any
GPVSC member (whether voting or ex officio), that is aware of any actual or apparent conflict of interest relevant to, or any attempt
by any person outside of the DWS organization (but within Deutsche Bank and its affiliates) or any entity that identifies itself
as an DWS advisory client to influence how DWS votes its proxies has a duty to disclose the existence of the situation to the GPVSC
Chair (or his or her designee) and the details of the matter to the Conflicts of Interest Management Sub-Committee. In the case
of any person participating in the deliberations on a specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.
Recusal of Members. The GPVSC will recuse from
participating in a specific proxy vote any GPVSC members (whether voting or ex officio) and/or any other person who: (i) are personally
involved in a material conflict of interest; or (ii) who, as determined by the Conflicts of Interest Management Sub-Committee,
have actual knowledge of a circumstance or fact that could affect their independent judgment, in respect of such vote. The GPVSC
will also exclude from consideration the views of any person (whether requested or volunteered) if the GPVSC or any member thereof
knows, or if the Conflicts of Interest Management Sub-Committee has determined, that such other person has a material conflict
of interest with respect to the particular proxy or has attempted to influence the vote in any manner prohibited by these policies.
If, after excluding all relevant GPVSC voting members
pursuant to the paragraph above, there are three or more GPVSC voting members remaining, those remaining GPVSC members will determine
how to vote the proxy in accordance with these Policies and Guidelines. If there are fewer than three GPVSC voting members remaining,
the GPVSC Chair will vote the proxy in accordance with the standard Guidelines or will obtain instructions as to how to have the
proxy voted from, if time permits, the affected clients and otherwise from ISS.
4.4.2. Investment
Companies and Affiliated Public Companies
Investment Companies. As reflected in the Guidelines,
all proxies solicited by open-end and closed-end investment companies are voted in accordance with the pre-determined guidelines
of ISS, unless the investment company client directs DWS to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which DWS or an affiliate serves as investment adviser or principal underwriter, such
proxies are voted in the same proportion as the vote of all other shareholders (i.e., “mirror” or “echo”
voting). Master Fund proxies solicited from feeder Funds are voted in accordance with applicable provisions of Section 12 of the
Investment Company Act of 1940 (“Investment Company Act”).
Subject to participation agreements with certain Exchange
Traded Funds (“ETF”) issuers that have received exemptive orders from the US Securities and Exchange Commission (“SEC”)
allowing investing DWS Funds to exceed the limits set forth in Section 12(d)(1)(A) and (B) of the Investment Company Act, DWS will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of outstanding voting shares globally when required to do
so by participation agreements and SEC orders.
Affiliated Public Companies. For proxies solicited
by non-investment company issuers of or within the DWS or Deutsche Bank organization (e.g., shares of DWS or Deutsche Bank), these
proxies will be voted in the same proportion as the vote of other shareholders (i.e., “mirror” or “echo”
voting). In markets where mirror voting is not permitted, DWS will “Abstain” from voting such shares.
Note: With respect to the DWS Central Cash Management
Government Fund (registered under the Investment Company Act), the Fund is not required to engage in echo voting and the investment
adviser will use these Guidelines and may determine, with respect to the DWS Central Cash Management Government Fund, to vote contrary
to the positions in the Guidelines, consistent with the Fund’s best interest.
4.4.3. Other
Procedures that Limit Conflicts of Interest
DWS and other entities in the Deutsche Bank organization
have adopted a number of policies, procedures, and internal controls that are designed to avoid various conflicts of interest,
including those that may arise in connection with proxy voting, including but not limited to:
|
1.
|
Code of Conduct – DB Group;
|
|
2.
|
Conflicts of Interest Policy – DWS Group;
|
|
3.
|
Code of Ethics – DWS US;
|
|
4.
|
Code of Ethics – DWS ex US
|
|
5.
|
Code of Professional Conduct – US.
|
The GPVSC expects that these policies, procedures, and
internal controls will greatly reduce the chance that the GPVSC (or its members) would be involved in, aware of, or influenced
by an actual or apparent conflict of interest.
All impacted business units are required to adopt, implement,
and maintain procedures to ensure compliance with this Section. At a minimum, such procedures must: (i) assign roles and responsibilities
for carrying out the procedures, including responsibility for periodically updating the procedures; (ii) identify clear escalation
paths for identified breaches of the procedures; and (iii) contain a legend or table mapping the procedures to this Section (e.g.,
cross-referencing Section or page numbers).
5. RECORDKEEPING
At a minimum, the following records must be properly maintained
and readily accessible in order to evidence compliance with this Policy.
|
■
|
DWS will maintain a record of each proxy vote cast by DWS that includes among other things, company name, meeting date, proposals
presented, vote cast, and shares voted.
|
|
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Proxy Vendor Oversight maintains records for each of the proxy ballots it votes. Specifically, the records include, but are
not limited to:
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The proxy statement (and
any additional solicitation materials) and relevant portions of annual statements;
Any additional information
considered in the voting process that may be obtained from an issuing company, its agents, or proxy research firms;
Analyst worksheets created
for stock option plan and share increase analyses; and
Proxy Edge print-screen of
actual vote election.
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DWS will: (i) retain this Policy and the Guidelines; (ii) will maintain records of client requests for proxy voting information;
and (iii) will retain any documents Proxy Vendor Oversight or the GPVSC prepared that were material to making a voting decision
or that memorialized the basis for a proxy voting decision.
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The GPVSC also will create and maintain appropriate records documenting its compliance with this Policy, including records
of its deliberations and decisions regarding conflicts of interest and their resolution.
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With respect to DWS’s investment company clients, ISS will create and maintain records of each company’s proxy
voting record for the 12-month periods ending June 30. DWS will compile the following information for each matter relating to a
portfolio security considered at any shareholder meeting held during the period covered by the report (and with respect to which
the company was entitled to vote):
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The name of the issuer of
the portfolio security;
The exchange ticker symbol
of the portfolio security (if symbol is available through reasonably practicable means);
The Council on Uniform Securities
Identification Procedures (“CUSIP”) number for the portfolio security (if the number is available through reasonably
practicable means);
The shareholder meeting date;
A brief identification of
the matter voted on;
Whether the matter was proposed
by the issuer or by a security holder;
Whether the company cast
its vote on the matter;
How the company cast its
vote (e.g., for or against proposal, or abstain; for or withhold regarding election of Directors); and
Whether the company cast
its vote for or against Management.
Note: This list is intended to provide guidance only in
terms of the records that must be maintained in accordance with this policy. In addition, please note that records must be maintained
in accordance with the Records Management Policy – Deutsche Bank Group and applicable policies and procedures thereunder.
With respect to electronically stored records, “properly
maintained” is defined as complete, authentic (unalterable), usable and backed-up. At a minimum, records should be retained
for a period of not less than six years (or longer, if necessary to comply with applicable regulatory requirements), the first
three years in an appropriate DWS office.
6. OVERSIGHT
RESPONSIBILITIES
Proxy Vendor Oversight will review a reasonable sampling
of votes on a regular basis to ensure that ISS has cast the votes in a manner consistent with the Guidelines. Proxy Vendor Oversight
will provide the GPVSC with a quarterly report of its review and identify any issues encountered during the period. Proxy Vendor
Oversight will also perform a post season review once a year on certain proposals to assess whether ISS voted consistent with the
Guidelines.
In addition, the GPVSC will, in cooperation with Proxy
Vendor Oversight and DWS Compliance, consider, on at least an annual basis, whether ISS has the capacity and competence to adequately
analyze the matters for which it is responsible. This includes whether ISS has effective polices, and methodologies and a review
of ISS’s policies and procedures with respect to conflicts.
The GPVSC also monitors the proxy voting process by reviewing
summary proxy information presented by ISS to determine, among other things, whether any changes should be made to the Guidelines.
This review will take place at least quarterly and is documented in the GPVSC’s minutes.
7. ANNUAL
REVIEW
The GPVSC, in cooperation with Proxy Vendor Oversight,
will review and document, no less frequently than annually, the adequacy of the Guidelines, including whether the Guidelines continue
to be reasonably designed to ensure that DWS votes in the best interest of its clients.
8. GLOSSARY
Term
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Definition
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CUSIP
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Council on Uniform Securities Identification Procedures
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ETF
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Exchange Traded Funds
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GPVSC
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Global Proxy Voting Sub-Committee
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Investment Company Act
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Investment Company Act of 1940
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ISS
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Institutional Shareholder Services
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SEC
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Securities and Exchange Commission
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9. LIST
OF ANNEXES AND ATTACHMENTS
Attachment A – DWS Proxy Voting Guidelines
Attachment A – DWS PROXY VOTING GUIDELINES
DWS
Proxy Voting Guidelines
Effective March 1, 2020
[DWS LOGO GRAPHIC OMITTED]
Table of Contents
I.
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Board of Directors and Executives
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A.
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Election of Directors
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B.
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Board Diversity
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C.
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Classified Boards of Directors
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D.
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Board and Committee Independence
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E.
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Liability and Indemnification of Directors
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F.
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Qualification of Directors
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G.
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Removal of Directors and Filling of Vacancies
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H.
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Proposals to Fix the Size of the Board
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I.
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Proposals to Restrict Chief Executive Officer’s Service on Multiple Boards
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J.
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Proposals to Establish Audit Committees
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II.
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Capital Structure
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A.
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Authorization of Additional Shares
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B.
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Authorization of “Blank Check” Preferred Stock
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C.
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Stock Splits/Reverse Stock Splits
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D.
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Dual Class/Supervoting Stock
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E.
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Large Block Issuance
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F.
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Recapitalization into a Single Class of Stock
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G.
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Share Repurchases
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H.
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Reductions in Par Value
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III.
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Corporate Governance Issues
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A.
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Confidential Voting
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B.
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Cumulative Voting
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C.
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Supermajority Voting Requirements
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D.
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Shareholder Right to Vote
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E.
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Amendments of the Articles
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F.
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Related Party Transactions
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IV.
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Compensation
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A.
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Executive and Director Stock Option Plans
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B.
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Employee Stock Option / Purchase Plans
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C.
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Golden Parachutes
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D.
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Proposals to Limit Benefits or Executive Compensation
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E.
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Shareholder Proposals Concerning “Pay for Superior Performance”
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F.
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Executive Compensation Advisory
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G.
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Advisory Votes on Executive Compensation
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H.
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Frequency of Advisory Vote on Executive Compensation
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V.
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Anti-Takeover Related Issues
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A.
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Shareholder Rights Plans (“Poison Pills”)
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B.
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Reincorporation
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C.
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Fair-Price Proposals
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D.
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Exemption From State Takeover Laws
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E.
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Non-Financial Effects of Takeover Bids
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VI.
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Mergers & Acquisitions
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VII.
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Environmental, Social and Governance Issues
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A.
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Principles for Responsible Investment
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B.
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ESG Issues
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VIII.
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Miscellaneous Items
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A.
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Ratification of Auditors
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B.
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Limitation of Non-Audit Services Provided by Independent Auditor
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C.
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Audit Firm Rotation
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D.
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Transaction of Other Business
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E.
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Motions to Adjourn the Meeting
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F.
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Bundled Proposals
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G.
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Change of Company Name
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H.
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Proposals Related to the Annual Meeting
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I.
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Reimbursement of Expenses Incurred from Candidate Nomination
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J.
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Investment Company Proxies
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IX.
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International Proxy Voting Guidelines With Application For Holdings Incorporated Outside the United States and Canada
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A.
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Election of Directors
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B.
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Renumeration (Variable Pay)
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C.
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Long-Term Incentive Plans
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D.
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Proposals to Restrict Supervisory Board Members Service on Multiple Boards
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E.
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Establishment of a Remuneration Committee
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F.
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Management Board Election and Motion
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G.
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Large Block Issuance
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H.
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Share Repurchases
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I.
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Use of Net Profits
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J.
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Amendments of the Articles
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K.
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Related Party Transactions
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L.
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Auditor
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X.
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Proxy Voting Guidelines With Application For Holdings Incorporated in Japan
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These Guidelines may reflect a voting position that differs
from the actual practices of the public company(ies) within the Deutsche Bank organization or of the investment companies for which
DWS or an affiliate serves as investment adviser or sponsor.
NOTE: Because of the unique structure and
regulatory scheme applicable to closed-end and open-end investment companies (except Real Estate Investment Trusts), the voting
guidelines (particularly those related to governance issues) generally not applicable to holdings of closed-end and open-end investment
companies, especially for directors of fund-complexes.
I. Board
of Directors and Executives
A. Election
of Directors
Routine: DWS’s Policy is to vote “For”
the uncontested election of Directors. Votes for a Director in an uncontested election will be withheld in cases where a Director
has shown an inability to perform his/her duties in the best interests of the shareholders, taking into account the following additional
factors:
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Accountability to shareholders and transparency of governance practices
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Responsiveness to investor input and shareholder vote
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Composition of the board with Directors adding value through skills, expertise and time commitment
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Independence from management
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Where it deems necessary, DWS will also take into account
the following additional factors:
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A combined CEO/Chairman role without a lead Independent Director in place would trigger a vote “Against” the CEO/Chairman.
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It is essential that the board have a lead independent
director, who should have approval over information flow to the board, meeting agendas and meeting schedules to ensure a structure
that provides an appropriate balance between the powers of the CEO and those of the independent directors.
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Attendance at Board meetings not disclosed on an individual basis in the annual report or on the company’s website and
neither is the reported overall attendance above 90%. An individual candidate has attended fewer than 75% of the board and audit
/ risk committee meetings in a given year without a satisfactory explanation for his / her absence disclosed in a clear and comprehensible
form in the relevant proxy filings. Satisfactory explanation will be understood as any health issues or family incidents. These
would trigger a vote “Against” the election of the corresponding directors
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A former executive director who is nominated for a membership on the non-executive board when two or more former executive
directors already serve on the same board would result in a vote “Against” the former executive, as the board cannot
be regarded as independent anymore.
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Relevant committees in place and they are majority independent. If the main committees are not majority independent, this could
trigger a vote of “Abstain” for the Chairman of the Board and if the Chairman is not up for election, “Abstain”
on the non-independent committee members.
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The management of Environmental Social and Governance (ESG) controversies will be analysed on a case-by-case basis based on
relevant internationally recognized E, S or G principles (e.g. the UN Global Compact Principles and OECD Guidelines for Multinationals).
Under extraordinary circumstances, DWS will vote against the election of directors or the entire board if there were material failures
of governance, stewardship, risk oversight, or fiduciary responsibilities identified as a result of the controversies around the
company.
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When the director election lengthens the term of office, DWS will consider voting “Against” this election.
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In the absence of an annual election, we are
generally supportive of staggered boards as the perpetual renewal of an appropriate proportion of the board members secures an
active succession planning. In cases where the annual (re)-election is established, DWS would oppose proposals that would lengthen
the term of office (i.e. from annual election to terms of two/three years or more).
Regarding independence: Vote against or withhold from
non-independent Directors when:
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The board consists of 50% or less independent Directors;
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The non-independent Director is part of the audit, compensation or nominating committee;
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The company has not appointed an audit, compensation or nominating committee.
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DWS will classify Directors as non-independent when:
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For executive Directors:
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Current employee of the company
or one of its affiliates.
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For non-executive Directors:
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Significant ownership (beneficial
owner of more than 50% of the company’s voting power)
Former CEO of the company
or of an acquired company within the past five years.
Former officer of the company,
an affiliate or an acquired firm within the past five years.
Immediate family member of
a current or former officer of the company or its affiliates within the last five years
Currently provides (or an
immediate family member provides) professional services to the company, to an affiliate of the company or an individual officer
of the company or one of its affiliates in excess of $10,000 per year.
Proxy contest: In a proxy contest involving election
of Directors, a case-by-case voting decision will be made based upon analysis of the issues involved and the merits of the incumbent
and dissident slates of Directors. Where applicable, DWS will consider the recommendations of ISS along with various factors, including
the following:
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Long-term financial performance of the company relative to its industry;
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Management’s track record;
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Background to the contested election;
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Nominee qualifications and any compensatory arrangements;
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Strategic plan of dissident slate and quality of the critique against management;
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Likelihood that the proposed goals and objectives can be achieved (both slates); and
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Stock ownership positions.
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In the case of candidates nominated pursuant to proxy
access, DWS’s policy is to vote case-by-case considering any applicable factors listed above, including additional factors
and any recommendations of a third party proxy research vendor, currently ISS, which may be relevant, including those that are
specific to the company, to the nominee(s) and/or to the nature of the election (such as whether or not there are more candidates
than board seats).
Rationale: The large majority of corporate Directors
fulfil their fiduciary obligation and in most cases support for Management’s nominees is warranted. As the issues relevant
to a contested election differ in each instance, those cases must be addressed as they arise.
B. Board
Diversity
For companies in the Russell 3000 or S&P 1500 indices,
DWS will consider voting "Against" or "Withhold" from the chairperson of the nominating committee at companies
when there is not at least one woman on the company's board. DWS will consider voting “Against” or “Withhold”
from other directors, on a case-by-case basis, if the nominating committee chairperson is not up for election.
Mitigating factors include:
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a firm commitment, as stated in the proxy statement, to appoint at least one woman to the board within a year,
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The presence of a woman on the board at the preceding annual meeting and a firm commitment to appoint at least one woman to
the board within a year; or
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Other relevant factors as applicable.
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C. Classified
Boards of Directors
DWS’s policy is to vote against proposals to classify
the Board and for proposals to repeal classified Boards and elect Directors annually.
Rationale: Directors should be held accountable
on an annual basis. By entrenching the incumbent Board, a classified Board may be used as an anti-takeover device to the detriment
of the shareholders in a hostile take-over situation.
D. Board
and Committee Independence
DWS’s policy is to vote:
1. “For” proposals that require that a certain
percentage (majority up to 66 2/3%) of members of a Board of Directors be comprised of independent or unaffiliated Directors.
2. “For” proposals that require all members
of a company's compensation, audit, nominating, or other similar committees be comprised of independent or unaffiliated Directors.
3. “Against” shareholder proposals to require
the addition of special interest, or constituency, representatives to Boards of Directors.
4. “For” separation of the Chairman and CEO
positions.
5. Generally “For” proposals that require
a company to appoint a Chairman who is an independent Director, taking into account the following factors:
Whether the proposal is binding
and whether it requires an immediate change.
Whether the current board
has an existing executive or non-independent chair or there was a recent combination of the CEO and chair roles.
Whether the governance structure
ensures a sufficient board and committee independence, a balance of board and CEO tenure.
Whether the company has poor
governance practices (such as compensation, poor risk oversight, or any actions which harmed or have the potential to harm the
interests of the shareholders).
Whether the company is demonstrating
poor performance (as per the assessment and recommendation of ISS).
Rationale: Board independence is a cornerstone
of effective governance and accountability. A Board that is sufficiently independent from Management assures that shareholders'
interests are adequately represented.
No Director qualifies as “independent” unless
the Board of Directors affirmatively determines that the Director has no material relationship with the listed company (either
directly or as a partner, shareholder, or officer of an organization that has a relationship with the company).
Whether a Director is in fact not "independent"
will depend on the laws and regulations of the primary market for the security and the exchanges, if any, on which the security
trades.
E. Liability
and Indemnification of Directors
DWS’s policy is to vote on a case-by-case basis
on Management proposals to limit Directors' liability and to broaden the indemnification of Directors, unless broader indemnification
or limitations on Directors' liability would affect shareholders' interests in pending litigation, in which case, DWS would vote
“Against”.
Rationale: While shareholders want Directors and
officers to be responsible for their actions, it may not be in the best interests of the shareholders for them to be too risk averse.
If the risk of personal liability is too great, companies may not be able to find capable Directors willing to serve. We support
expanding coverage only for actions taken in good faith and not for serious violations of fiduciary obligation or negligence.
F. Qualification
of Directors
DWS’s policy is to follow Management’s recommended
vote on either Management or shareholder proposals that set retirement ages for Directors or require specific levels of stock ownership
by Directors.
Rationale: As a general rule, the Board of Directors,
and not the shareholders, is most qualified to establish qualification policies.
G. Removal
of Directors and Filling of Vacancies
DWS’s policy is to vote “Against” proposals
that include provisions that Directors may be removed only for cause or proposals that include provisions that only continuing
Directors may fill Board vacancies.
Rationale: Differing state statutes permit removal
of Directors with or without cause. Removal of Directors for cause usually requires proof of self-dealing, fraud, or misappropriation
of corporate assets, limiting shareholders' ability to remove Directors except under extreme circumstances. Removal without cause
requires no such showing.
Allowing only incumbent Directors to fill vacancies can
serve as an anti-takeover device, precluding shareholders from filling the Board until the next regular election.
H. Proposals
to Fix the Size of the Board
DWS’s policy is to vote:
1. “For”
proposals to fix the size of the Board unless: (a) no specific reason for the proposed change is given; or (b) the proposal is
part of a package of takeover defences.
2. “Against”
proposals allowing Management to fix the size of the Board without shareholder approval.
Rationale: Absent danger of anti-takeover use,
companies should be granted a reasonable amount of flexibility in fixing the size of its Board.
I. Proposals
to Restrict Chief Executive Officer’s Service on Multiple Boards
DWS’s policy is to vote “For” proposals
to restrict a Chief Executive Officer from serving on more than two outside Boards of Directors.
Rationale: Chief Executive Officer must have sufficient
time to ensure that shareholders’ interests are represented adequately.
Note: A Director’s service on multiple closed-end
fund Boards within a fund complex are treated as service on a single Board for the purpose of the proxy voting guidelines.
J. Proposals
to Establish Audit Committees
DWS’s policy is to vote “For” proposals
that require the establishment of Audit Committees.
Rationale: The Audit Committee should deal with
accounting and risk management related questions, verifies the independence of the auditor with due regard to possible conflicts
of interest. It also should determine the procedure of the audit process.
II. Capital
Structure
A. Authorization
of Additional Shares
DWS’s policy is to vote “For” proposals
to increase the authorization of existing classes of stock that do not exceed a 3:1 ratio of shares authorized to shares outstanding
for a large cap company and do not exceed a 4:1 ratio of shares authorized to shares outstanding for a small-midcap company (companies
having a market capitalization under one billion US dollars).
Rationale: While companies need an adequate number
of shares in order to carry on business, increases requested for general financial flexibility must be limited to protect shareholders
from their potential use as an anti-takeover device. Requested increases for specifically designated, reasonable business purposes
(stock split, merger, etc.) will be considered in light of those purposes and the number of shares required.
B. Authorization
of “Blank Check” Preferred Stock
DWS’s policy is to vote:
1. “Against”
proposals to create blank check preferred stock or to increase the number of authorized shares of blank check preferred stock unless
the company expressly states that the stock will not be used for anti-takeover purposes and will not be issued without shareholder
approval.
2. “For”
proposals mandating shareholder approval of blank check stock placement.
Rationale: Shareholders should be permitted to
monitor the issuance of classes of preferred stock in which the Board of Directors is given unfettered discretion to set voting,
dividend, conversion, and other rights for the shares issued.
C. Stock
Splits/Reverse Stock Splits
DWS’s policy is to vote “For” stock
splits if a legitimate business purpose is set forth and the split is in the shareholders' best interests. A vote is cast “For”
a reverse stock split only if the number of shares authorized is reduced in the same proportion as the reverse split or if the
effective increase in authorized shares (relative to outstanding shares) complies with the proxy guidelines for common stock increases.
Rationale: Generally, stock splits do not detrimentally
affect shareholders. Reverse stock splits, however, may have the same result as an increase in authorized shares and should be
analyzed accordingly.
D. Dual
Class/Supervoting Stock
DWS’s policy is to vote “Against” proposals
to create or authorize additional shares of super-voting stock or stock with unequal voting rights.
Rationale: The “one share, one vote”
principal ensures that no shareholder maintains a voting interest exceeding their equity interest in the company.
E. Large
Block Issuance
DWS’s policy is to address large block issuances
of stock on a case-by-case basis based on the nature of the issuance, considering various factors including recommendation of ISS
subject to review by the GPVSC as set forth in the guidelines.
For general Issuances, in general DWS’s policy is
to:
1. Vote for issuance authorities with pre-emptive rights
to a maximum of 100 percent over currently issued capital and as long as the share issuance authorities’ periods are clearly
disclosed (or implied by the application of a legal maximum duration) and in line with market-specific practices and/or recommended
guidelines (e.g. issuance periods limited to 18 months for the Netherlands); and
2. Vote for issuance authorities without pre-emptive rights
to a maximum of 20 percent (or a lower limit if local market best practice recommendations provide) of currently issued capital
as long as the share issuance authorities’ periods are clearly disclosed (or implied by the application of a legal maximum
duration) and in line with market-specific practices and/or recommended guidelines (e.g. issuance periods limited to 18 months
for the Netherlands).
For French companies, DWS’s policy is to:
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Vote for general issuance requests with pre-emptive rights, or without pre-emptive rights but with a binding “priority
right,” for a maximum of 50 percent over currently issued capital.
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Generally vote for general authorities to issue shares without pre-emptive rights up to a maximum of 10 percent of share capital.
When companies are listed on a regulated market, the maximum discount on share issuance price proposed in the resolution must,
in addition, comply with the legal discount (i.e., a maximum of 5 percent discount to the share listing price) for a vote for to
be warranted.
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Where it deems necessary, DWS will also consider voting
“Against”, taking into account the following additional factors:
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The combined equity issuance of all equity instruments with pre-emptive rights exceeds 50 percent of the outstanding share
capital or the prevailing maximum threshold as stipulated by best practice rules for corporate governance in the respective country.
Exceeding either of the two thresholds will be judged on a CASE-BY- CASE basis, provided that the subscription rights are actively
tradable in the market.
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The cumulative equity issuances without subscription rights (historical and across instruments) exceed the maximum level specified
in a respective country’s best practices for corporate governance or 30 percent of the company’s nominal capital.
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For specific issuances, in general DWS’s policy
is to:
Vote on a case-by-case basis on all requests, with or
without pre-emptive rights, incorporating where applicable the recommendation of ISS.
Additionally, DWS supports proposals requiring shareholder
approval of large block issuances.
Rationale: Stock issuances must be reviewed in
light of the business circumstances leading to the request and the potential impact on shareholder value.
F. Recapitalization
into a Single Class of Stock
DWS’s policy is to vote “For” recapitalization
plans to provide for a single class of common stock, provided the terms are fair, with no class of stock being unduly disadvantaged.
Rationale: Consolidation of multiple classes of
stock is a business decision that may be left to the Board and/or Management if there is no adverse effect on shareholders.
G. Share
Repurchases
DWS’s policy is to vote “For” share
repurchase plans provided all shareholders are able to participate on equal terms. Where it deems necessary, DWS will also analyse
on a CASE-BY-CASE basis, if the maximum offer/price premium exceeds 10 percent and if the share repurchase program exceeds a maximum
of 10 percent of issued share capital.
Rationale: Buybacks are generally considered beneficial
to shareholders because they tend to increase returns to the remaining shareholders. However, if the maximum offer premium exceeds
10 percent and the program itself exceeds 10 percent of issued capital, this could indicate potential risks for the shareholders
in the longer term.
H. Reductions
in Par Value
DWS’s policy is to vote “For” proposals
to reduce par value, provided a legitimate business purpose is stated (e.g., the reduction of corporate tax responsibility.)
Rationale: Usually, adjustments to par value are
a routine financial decision with no substantial impact on shareholders.
III. Corporate
Governance Issues
A. Confidential
Voting
DWS’s policy is to vote “For” proposals
to provide for confidential voting and independent tabulation of voting results and to vote “Against” proposals to
repeal such provisions.
Rationale: Confidential voting protects the privacy
rights of all shareholders. This is particularly important for employee-shareholders or shareholders with business or other affiliations
with the company, who may be vulnerable to coercion or retaliation when opposing Management. Confidential voting does not interfere
with the ability of corporations to communicate with all shareholders, nor does it prohibit shareholders from making their views
known directly to Management.
B. Cumulative
Voting
DWS’s policy is to vote “Against” shareholder
proposals requesting cumulative voting and “For” Management proposals to eliminate it. The protections afforded shareholders
by cumulative voting are not necessary when a company has a history of good performance and does not have a concentrated ownership
interest. Accordingly, a vote is cast “Against” cumulative voting and “For” proposals to eliminate it if:
a) The
company has a five year return on investment greater than the relevant industry index;
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b)
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All Directors and executive officers as a group beneficially own less than 10% of the outstanding stock; and
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c) No shareholder
(or voting block) beneficially owns 15% or more of the company.
Thus, failure of any one of the three criteria results
in a vote for cumulative voting in accordance with the general policy.
Rationale: Cumulative voting is a tool that should
be used to ensure that holders of a significant number of shares may have Board representation; however, the presence of other
safeguards may make their use unnecessary.
C. Supermajority
Voting Requirements
DWS’s policy is to vote “Against” Management
proposals to require a supermajority vote to amend the charter or bylaws and to vote “For” shareholder proposals to
modify or rescind existing supermajority requirements.
* Exception made
when company holds a controlling position and seeks to lower threshold to maintain control and/or make changes to corporate by-laws.
Rationale: Supermajority voting provisions violate
the democratic principle that a simple majority should carry the vote. Setting supermajority requirements may make it difficult
or impossible for shareholders to remove egregious by-law or charter provisions. Occasionally, a company with a significant insider
held position might attempt to lower a supermajority threshold to make it easier for Management to approve provisions that may
be detrimental to shareholders. In that case, it may not be in the shareholders’ interests to lower the supermajority provision.
D. Shareholder
Right to Vote
DWS’s policy is to vote “Against” proposals
that restrict the right of shareholders to call special meetings, amend the bylaws, or act by written consent. DWS’s policy
is to vote “For” proposals that remove such restrictions.
Rationale: Any reasonable means whereby shareholders
can make their views known to Management or affect the governance process should be supported.
E. Amendments
of the Articles
Where it deems necessary, DWS will consider to generally
vote “Against” if the vote is an article amendment that would lengthen the term of office for directors over 3 years.
F. Related
Party Transactions
DWS will analyse related party transactions on a CASE-BY-CASE
basis and will additionally consider ISS recommendations.
IV. Compensation
Annual Incentive Plans or Bonus Plans are often submitted
to shareholders for approval. These plans typically award cash to executives based on company performance. Deutsche Bank believes
that the responsibility for executive compensation decisions rest with the Board of Directors and/or the compensation committee,
and its policy is not to second-guess the Board’s award of cash compensation amounts to executives unless a particular award
or series of awards is deemed excessive. If stock options are awarded as part of these bonus or incentive plans, the provisions
must meet Deutsche Bank’s criteria regarding stock option plans or similar stock-based incentive compensation schemes, as
set forth below.
A. Executive
and Director Stock Option Plans
DWS’s policy is to vote “For” stock
option plans that meet the following criteria:
1. The resulting dilution of existing shares is less than:
(a) 15% of outstanding shares for large capital corporations; or (b) 20% of outstanding shares for small-mid capital companies
(companies having a market capitalization under one billion US dollars).
2. The transfer of equity resulting from granting options
at less than fair market value (“FMV”) is no greater than 3% of the over-all market capitalization of large capital
corporations or 5% of market cap for small-mid capital companies.
3. The plan does not contain express repricing provisions
and, in the absence of an express statement that options will not be repriced, the company does not have a history of repricing
options.
4. The plan does not grant options on super-voting stock.
DWS will support performance-based option proposals as
long as: (a) they do not mandate that all options granted by the company must be performance based; and (b) only certain high-level
executives are subject to receive the performance based options.
DWS will support proposals to eliminate the payment of
outside Director Pensions.
Rationale: Determining the cost to the company
and to shareholders of stock-based incentive plans raises significant issues not encountered with cash-based compensation plans.
These include the potential dilution of existing shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to reprice or replace underwater options. Our stock
option plan analysis model seeks to allow reasonable levels of flexibility for a company yet still protect shareholders from the
negative impact of excessive stock compensation. Acknowledging that small mid-capital corporations often rely more heavily on stock
option plans as their main source of executive compensation and may not be able to compete with their large capital competitors
with cash compensation, we provide slightly more flexibility for those companies.
B. Employee
Stock Option / Purchase Plans
DWS’s policy is to vote “For” employee
stock purchase plans (“ESPPs”) when the plan complies with Internal Revenue Code Section 423, allowing non-Management
employees to purchase stock at 85% of FMV.
DWS’s policy is to vote “For” employee
stock option plans (“ESOPs”) provided they meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from executive and Director Option plans.
Rationale: ESOPs and ESPPs encourage rank-and-file
employees to acquire an ownership stake in the companies they work for and have been shown to promote employee loyalty and improve
productivity.
C. Golden
Parachutes
DWS’s policy is to vote “For” proposals
to require shareholder approval of golden parachutes and for proposals that would limit golden parachutes to no more than three
times base compensation. DWS’s policy is to vote on a case-by-case basis regarding more restrictive shareholder proposals
to limit golden parachutes.
Rationale: In setting a reasonable limitation,
DWS considers that an effective parachute should be less attractive than continued employment and that the IRS has opined that
amounts greater than three times annual salary, are excessive.
D. Proposals
to Limit Benefits or Executive Compensation
DWS’s policy is to vote “Against”:
1. Proposals to limit benefits, pensions or compensation;
and
2. Proposals that request or require disclosure of executive
compensation greater than the disclosure required by Securities and Exchange Commission (“SEC”) regulations.
Rationale: Levels of compensation and benefits
are generally considered to be day-to-day operations of the company, and are best left unrestricted by arbitrary limitations proposed
by shareholders.
E. Shareholder
Proposals Concerning “Pay for Superior Performance”
DWS’s policy is to address pay for superior performance
proposals on a case-by-case basis, subject to review by the GPVSC as set forth in DWS’s Proxy Voting Policy and Guidelines,
based on recommendation by ISS and in consideration of the following factors:
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What aspects of the company’s annual and long-term equity incentive programs are performance driven?
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If the annual and long-term equity incentive programs are performance driven, are the performance criteria and hurdle rates
disclosed to shareholders or are they benchmarked against a disclosed peer group?
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Can shareholders assess the correlation between pay and performance based on the current disclosure?
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What type of industry and stage of business cycle does the company belong to?
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These proposals generally include the following principles:
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Set compensation targets for the plan’s annual and long-term incentive pay components at or below the peer group median;
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Deliver a majority of the plan’s target long-term compensation through performance-vested, not simply time-vested, equity
awards;
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Provide the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria
used in the annual and performance-vested long-term incentive components of the plan;
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Establish performance targets for each plan financial metric relative to the performance of the company’s peer companies;
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Limit payment under the annual and performance-vested long-term incentive components of the plan to when the company’s
performance on its selected financial performance metrics exceeds peer group median performance.
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Rationale: While DWS agrees that compensation issues
are better left to the discretion of Management, there remains the need to monitor for excessive and problematic compensation practices
on a case-by-case basis. If, after a review of the ISS metrics, DWS is comfortable with ISS’s applying this calculation DWS
will vote according to ISS recommendation.
F. Executive
Compensation Advisory
DWS’s policy is to support management or shareholder
proposals to propose an advisory resolution seeking to ratify the compensation of the company’s named executive officers
(“NEOs”) on an annual basis (“say on pay”).
Rationale: DWS believes that controls exist within
senior Management and corporate compensation committees, ensuring fair compensation to executives. However, an annual advisory
vote represents a good opportunity for shareholders to have a transparent and clear exchange of views with the company of the executive
compensation structures.
G. Advisory
Votes on Executive Compensation
DWS’s policy is to vote on a case-by-case basis
on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation, including
recommendations by ISS where applicable, subject to review by the GPVSC as set forth in DWS’s Proxy Voting Policy and Guidelines.
DWS’s policy is to vote against Advisory Votes on
Executive Compensation (Management Say-on-Pay-MSOP) if:
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There is a significant misalignment between CEO pay and company performance (pay for performance);
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The company maintains significant problematic pay practices;
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The board exhibits a significant level of poor communication and responsiveness to shareholders.
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Primary Evaluation Factors for Executive Pay
Pay-for-Performance Evaluation
DWS will consider the pay-for-performance analysis conducted
annually by an independent third party, currently ISS, to identify strong or satisfactory alignment between pay and performance
over a sustained period. With respect to companies in the Russell 3000 or Russell 3000E Indices, DWS considers the following based
on ISS’ analysis:
1. Peer Group Alignment:
The degree of alignment between
the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year
period.
The multiple of the CEO's
total pay relative to the peer group median.
2. Absolute Alignment – the absolute alignment between
the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual
pay changes and the trend in annualized TSR during the period.
If the above analysis demonstrates significant unsatisfactory
long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, misaligned pay and performance
are otherwise suggested, DWS may consider any of the following qualitative factors as relevant to evaluating how various pay elements
may work to encourage or to undermine long-term value creation and alignment with shareholder interests:
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The ratio of performance- to time-based equity awards;
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The overall ratio of performance-based compensation;
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The completeness of disclosure and rigor of performance goals;
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The company's peer group benchmarking practices;
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Actual results of financial/operational metrics, such as growth in revenue, profit, cash flow, etc., both absolute and relative
to peers;
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Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual
awards);
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Realizable pay compared to grant pay; and
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Any other factors deemed relevant.
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Where it deems necessary, DWS will also take into account
the following additional factors:
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Systems that entitle the company to recover any sums already paid where necessary (e.g. claw- back system). Deviations are
possible wherever the company provides a reasonable explanation why a claw-back was not implemented.
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Problematic Pay Practices
DWS’s policy is to defer to ISS’ recommendation
regarding executive compensation practices that contravene the global pay principles considered by ISS in evaluating executive
pay and practices, including:
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Problematic practices related to non-performance-based compensation elements;
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Incentives that may motivate excessive risk-taking; and
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Problematic Pay Practices related to Non-Performance-Based
Compensation Elements
DWS’s policy is, in general, to evaluate pay elements
that are not directly based on performance on a case-by-case considering the context of a company's overall pay program and demonstrated
pay-for-performance philosophy. DWS will defer to ISS’ analysis of specific pay practices that have been identified as potentially
problematic and may lead to negative recommendations if they are deemed to be inappropriate or unjustified relative to executive
pay best practices. The list below highlights the problematic practices that carry significant weight in DWS’s overall consideration
and may result in adverse vote recommendations:
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Repricing or replacing of underwater stock options/SARS without prior shareholder approval (including cash buyouts and voluntary
surrender of underwater options);
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Excessive perquisites or tax gross-ups, including any gross-up related to a secular trust or restricted stock vesting;
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New or extended agreements that provide for:
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CIC payments exceeding 3
times base salary and average/target/most recent bonus;
CIC severance payments without
involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers);
CIC payments with excise
tax gross-ups (including "modified" gross-ups);
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Insufficient executive compensation disclosure by externally- managed issuers (EMIs) such that a reasonable assessment of pay
programs and practices applicable to the EMI's executives is not possible.
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Incentives that may Motivate Excessive Risk-Taking
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Multi-year guaranteed bonuses;
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A single or common performance metric used for short- and long-term plans;
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Lucrative severance packages;
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High pay opportunities relative to industry peers;
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Disproportionate supplemental pensions; or
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Mega annual equity grants that provide unlimited upside with no downside risk.
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Factors that potentially mitigate the impact of risky
incentives include rigorous claw-back provisions and robust stock ownership/holding guidelines.
Options Backdating
DWS’s policy is to examine the following factors
case-by-case to allow for distinctions to be made between “sloppy” plan administration versus deliberate action or
fraud:
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Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;
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Duration of options backdating;
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Size of restatement due to options backdating;
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Corrective actions taken by the board or compensation committee, such as cancelling or re-pricing backdated options, the recouping
of option gains on backdated grants; and
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Adoption of a grant policy that prohibits backdating, and creates a fixed grant schedule or window period for equity grants
in the future.
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DWS may rely on ISS’s analysis of the foregoing
and may defer to ISS’s recommendation subject to review by the GPVSC.
Rationale: While DWS agrees that compensation issues
are better left to the discretion of Management, there remains a need to take action on this nonbinding proposal if excessive or
problematic compensation practices exist.
H. Frequency
of Advisory Vote on Executive Compensation
DWS’s policy is to vote “For” annual
advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about
companies’ executive pay programs.
Rationale: DWS believes that annual advisory vote
gives shareholders the opportunity to express any compensation concerns to the Executive Compensation proposal which is an advisory
voting.
V. Anti-Takeover
Related Issues
A. Shareholder
Rights Plans (“Poison Pills”)
DWS’s policy is to vote “For” proposals
to require shareholder ratification of poison pills or that request Boards to redeem poison pills, and to vote “Against”
the adoption of poison pills if they are submitted for shareholder ratification.
Rationale: Poison pills are the most prevalent
form of corporate takeover defenses and can be (and usually are) adopted without shareholder review or consent. The potential cost
of poison pills to shareholders during an attempted takeover outweighs the benefits.
B. Reincorporation
DWS’s policy is to examine reincorporation proposals
on a case-by-case basis. The voting decision is based on:
1. Differences in state law between the existing state
of incorporation and the proposed state of incorporation; and
2. Differences between the existing and the proposed charter
/ bylaws / articles of incorporation and their effect on shareholder rights.
If changes resulting from the proposed reincorporation
violate the corporate governance principles set forth in these guidelines, the reincorporation will be deemed contrary to shareholder’s
interests and a vote cast “against.”
Rationale: Reincorporations can be properly analyzed
only by looking at the advantages and disadvantages to their shareholders. Care must be taken that anti-takeover protection is
not the sole or primary result of a proposed change.
C. Fair-Price
Proposals
DWS’s policy is to vote “For” Management
fair-price proposals, provided that:
1. The proposal applies only to two-tier offers;
2. The proposal sets an objective fair-price test based
on the highest price that the acquirer has paid for a company's shares;
3. The supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; and
4. The proposal contains no other anti-takeover provisions
or provisions that restrict shareholders rights.
A vote is cast “For” shareholder proposals
that would modify or repeal existing fair-price requirements that do not meet these standards.
Rationale: While fair price provisions may be used
as anti-takeover devices, if adequate provisions are included, they provide some protection to shareholders who have some say in
their application and the ability to reject those protections if desired.
D. Exemption
from State Takeover Laws
DWS’s policy is to vote “For” shareholder
proposals to opt out of state takeover laws and to vote “Against” Management proposals requesting to opt out of state
takeover laws.
Rationale: Control share statutes, enacted at the
state level, may harm long-term share value by entrenching Management. They also unfairly deny certain shares their inherent voting
rights.
E. Non-Financial
Effects of Takeover Bids
Policy is to vote “Against” shareholder proposals
to require consideration of non-financial effects of merger or acquisition proposals.
Rationale: Non-financial effects may often be subjective
and are secondary to DWS’s stated purpose of acting in its client’s best economic interest.
VI. Mergers
& Acquisitions
Evaluation of mergers, acquisitions and other special
corporate transactions (i.e., takeovers, spin-offs, sale of assets, reorganizations, restructurings, and recapitalizations) are
performed on a case-by-case basis, including consideration of ISS’s analysis and recommendations where applicable, subject
to review by the GPVSC. DWS’s policy is to review and evaluate the merits and drawbacks of the proposed transaction,
balancing various and sometimes countervailing factors including:
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Valuation - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness
opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium,
market reaction and strategic rationale.
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Market reaction - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny
of a deal.
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Strategic rationale - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should
not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful
integration of historical acquisitions.
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Negotiations and process - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable?
A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal
makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect
shareholder value.
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Conflicts of interest - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to
non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to
vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these
directors and officers to support or recommend the merger. The CIC figure presented in the "ISS Transaction Summary"
section of this report is an aggregate figure that can in certain cases be a misleading indicator of the true value transfer from
shareholders to insiders. Where such figure appears to be excessive, analyze the underlying assumptions to determine whether a
potential conflict exists.
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Governance - Will the combined company have a better or worse governance profile than the current governance profiles of the
respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove
that other issues (such as valuation) outweigh any deterioration in governance.
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Additional resources including portfolio management and
research analysts may be considered as set forth in DWS’s policies and procedures.
VII. Environmental,
Social, and Governance Issues
Environmental, social, and governance issues (“ESG”)
are becoming increasingly important to corporate success. We incorporate ESG considerations into both our investment decisions
and our proxy voting decisions – particularly if the financial performance of the company could be impacted. Companies or
states that seriously contravene internationally accepted ethical principles will be subject to heightened scrutiny.
A. Principles
for Responsible Investment
DWS policy is to actively engage with companies on ESG
issues and participate in ESG initiatives. In this context, DWS: (a) votes “For” increased disclosure on ESG issues;
(b) is willing to participate in the development of policy, regulation, and standard setting (such as promoting and protecting
shareholder rights); (c) could support shareholder initiatives and also file shareholder resolutions with long term ESG considerations
and improved ESG disclosure, when applicable; (d) could support standardized ESG reporting and issues to be integrated within annual
financial reports; and (e) on a case-by-case basis, on other votes related to ESG issues.
Rationale: ESG issues can affect the performance
of investment portfolios (to varying degrees across companies, sectors, regions, asset classes, and through time).
B. ESG Issues
DWS’s policy will also consider the Coalition for
Environmentally Responsible Economies (“CERES”) recommendation on Environmental matters contained in the CERES Roadmap
for Sustainability and the recommendations on social and sustainability issues not specifically addressed elsewhere in these Guidelines.
DWS may consider ISS to identify shareholder proposals addressing CERES Roadmap for Sustainability and may have proxies voted in
accordance with ISS’ predetermined voting guidelines on CERES Roadmap for Sustainability. DWS’s policy is to generally
vote for social and environmental shareholder proposals that promote good corporate citizens while enhancing long-term shareholder
and stakeholder value. DWS’s policy is to vote for disclosure reports that seek additional information particularly when
it appears companies have not adequately addressed shareholders' social, workforce, and environmental concerns. In determining
vote recommendations on shareholder social, workforce, and environmental proposals, DWS will consider the recommendation of ISS
along with various other factors including:
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Whether the proposal itself is well framed and reasonable;
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Whether adoption of the proposal would have either a positive or negative impact on the company's short-term or long-term share
value;
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Whether the company's analysis and voting recommendation to shareholders is persuasive;
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The degree to which the company's stated position on the issues could affect its reputation or sales, or leave it vulnerable
to boycott or selective purchasing;
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Whether the subject of the proposal is best left to the discretion of the board;
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Whether the issues presented in the proposal are best dealt with through legislation, government regulation, or company-specific
action;
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The company's approach compared with its peers or any industry standard practices for addressing the issue(s) raised by the
proposal;
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Whether the company has already responded in an appropriate or sufficient manner to the issue(s) raised in the proposal;
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If the proposal requests increased disclosure or greater transparency, whether or not sufficient information is publically
available to shareholders and whether it would be unduly burdensome for the company to compile and avail the requested information
to shareholders in a more comprehensive or amalgamated fashion;
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Whether implementation of the proposal would achieve the objectives sought in the proposal.
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In general, DWS’s policy supports proposals that
request the company to furnish information helpful to shareholders in evaluating the company’s operations, based on ISS’
analysis and recommendation. In order to be able to intelligently monitor their investments shareholders often need information
best provided by the company in which they have invested. Requests to report such information will merit support. Requests to establish
special committees of the board to address broad corporate policy and provide forums for ongoing dialogue on issues including,
but not limited to shareholder relations, the environment, human rights, occupational health and safety, and executive compensation,
will generally be supported, particularly when they appear to offer a potentially effective method for enhancing shareholder value.
DWS’s policy is to closely evaluate proposals that ask the company to cease certain actions that the proponent believes are
harmful to society or some segment of society with special attention to the company’s legal and ethical obligations, its
ability to remain profitable, and potential negative publicity if the company fails to honor the request. DWS’s policy supports
shareholder proposals that improve the company’s public image, and reduce exposure to liabilities.
Rationale: DWS supports CERES and as such generally
considers the CERES recommendation, but will vote on a case-by-case basis.
VIII. Miscellaneous
Items
A. Ratification
of Auditors
DWS’s policy is to vote “For”: (a) the
Management recommended selection of auditors; and (b) proposals to require shareholder approval of auditors.
Rationale: Absent evidence that auditors have not
performed their duties adequately, support for Management’s nomination is warranted.
B. Limitation
of Non-Audit Services Provided by Independent Auditor
DWS’s policy is to support proposals limiting non-audit
fees to 50% of the aggregate annual fees earned by the firm retained as a company's independent auditor.
Rationale: In the wake of financial reporting problems
and alleged audit failures at a number of companies, DWS supports the general principle that companies should retain separate firms
for audit and consulting services to avoid potential conflicts of interest. However, given the protections afforded by the Sarbanes-Oxley
Act of 2002 (which requires Audit Committee pre-approval for non-audit services and prohibits auditors from providing specific
types of services), and the fact that some non-audit services are legitimate audit-related services, complete separation of audit
and consulting fees may not be warranted. A reasonable limitation is appropriate to help ensure auditor independence and it is
reasonable to expect that audit fees exceed non-audit fees.
C. Audit
Firm Rotation
DWS’s policy is to vote against proposals seeking
audit firm rotation, unless there are relevant audit-related issues.
Rationale: Because the Sarbanes-Oxley Act mandates
that the lead audit partner be switched every five years, DWS believes that rotation of the actual audit firm would be costly and
disruptive, unless DWS believes there are significant audit-related issues.
Where it deems necessary, on audit-related agenda items,
DWS will also consider voting “Against”, taking into account the following additional factors:
1. The name of the audit firm is not disclosed.
2. No breakdown of audit/non-audit fees is provided.
3. Non-audit fees exceed standard audit and audit-related
fees, unless ISS highlights a special justification such as IPOs, M&A or restructuring (this guideline applies only to companies
on the country`s main index).
4. Auditors are changed without explanation.
D. Transaction
of Other Business
DWS’s policy is to vote “Against” transaction
of other business proposals.
Rationale: This is a routine item to allow shareholders
to raise other issues and discuss them at the meeting. As the nature of these issues may not be disclosed prior to the meeting,
we recommend a vote against these proposals. This protects shareholders voting by proxy (and not physically present at a meeting)
from having action taken at the meeting that they did not receive proper notification of or sufficient opportunity to consider.
E. Motions
to Adjourn the Meeting
DWS’s Policy is to vote “Against” proposals
to adjourn the meeting.
Rationale: Management may seek authority to adjourn
the meeting if a favorable outcome is not secured. Shareholders should already have had enough information to make a decision.
Once votes have been cast, there is no justification for Management to continue spending time and money to press shareholders for
support.
F. Bundled
Proposals
DWS’s policy is to vote against bundled proposals
if any bundled issue would require a vote against it if proposed individually.
Rationale: Shareholders should not be forced to
“take the good with the bad” in cases where the proposals could reasonably have been submitted separately.
G. Change
of Company Name
DWS’s policy is to support Management on proposals
to change the company name.
Rationale: This is generally considered a business
decision for a company.
H. Proposals
Related to the Annual Meeting
DWS’s Policy is to vote “For” Management
for proposals related to the conduct of the annual meeting (meeting time, place, etc.)
Rationale: These are considered routine administrative
proposals.
I. Reimbursement
of Expenses Incurred from Candidate Nomination
DWS’s policy is to follow Management’s recommended
vote on shareholder proposals related to the amending of company bylaws to provide for the reimbursement of reasonable expenses
incurred in connection with nominating one or more candidates in a contested election of Directors to the corporation’s Board
of Directors.
Rationale: Corporations should not be liable for
costs associated with shareholder proposals for Directors.
J. Investment
Company Proxies
Proxies solicited by investment companies are voted in
accordance with the recommendations of an independent third party, currently ISS. However, regarding investment companies for which
DWS or an affiliate serves as investment adviser or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder funds will be voted in accordance with applicable
provisions of Section 12 of the Investment Company Act of 1940 (“Investment Company Act”).
Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences may call for differences in voting positions on
the same matter. For example, DWS could vote “For” staggered Boards of closed-end investment companies, although DWS
generally votes “Against” staggered Boards for operating companies. Further, the manner in which DWS votes investment
company proxies may differ from proposals for which a DWS-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end) investment companies are voted in accordance with the
pre-determined guidelines of an independent third-party.
Subject to participation agreements with certain Exchange
Traded Funds (“ETF”) issuers that have received exemptive orders from the US Securities and Exchange Commission allowing
investing DWS Funds to exceed the limits set forth in Section 12(d)(1)(A) and (B) of the Investment Company Act, DWS will echo
vote proxies for ETFs in which Deutsche Bank holds more than 25% of outstanding voting shares globally when required to do so by
participation agreements and SEC orders.
Note: With respect to the DWS Central Cash Management
Government Fund (registered under the Investment Company Act), the Fund is not required to engage in echo voting and the investment
adviser will use these Guidelines, and may determine, with respect to the DWS Central Cash Management Government Fund, to vote
contrary to the positions in the Guidelines, consistent with the Fund’s best interest.
The above guidelines pertain to issuers organized in the
United States and Canada. Proxies solicited by other issuers are voted in accordance with international guidelines or the recommendation
of ISS and in accordance with applicable law and regulation.
IX. International
Proxy Voting Guidelines With Application For Holdings Incorporated Outside the United States and Canada
A. Election of Directors
Where it deems necessary, DWS will also take into account
the following additional factors:
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A combined CEO/Chairman role without a lead Independent Director in place would trigger a vote “Against” the CEO/Chairman.
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It is essential that the board have a lead independent
director, who should have approval over information flow to the board, meeting agendas and meeting schedules to ensure a structure
that provides an appropriate balance between the powers of the CEO and those of the independent directors.
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Attendance at Board meetings not disclosed on an individual basis in the annual report or on the company’s website and
neither is the reported overall attendance above 90 %. An individual candidate has attended fewer than 75 % of the board and audit
/ risk committee meetings in a given year without a satisfactory explanation for his / her absence disclosed in a clear and comprehensible
form in the relevant proxy filings. Satisfactory explanation will be understood as any health issues or family incidents. These
would trigger a vote “Against” the election of the corresponding directors.
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■
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DWS will vote with an “Against” if the election of a candidate results in a direct transition from executive (incl.
the CEO) to non-executive directorship (i.e. without a cooling off of minimum two years). In especially warranted cases, executive
directors with a long and proven track record can become non-executive directors if this change is in line with the national best
practice for corporate governance.
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■
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A former executive director who is nominated for a membership on the non-executive board when two or more former executive
directors already serve on the same board would result in a vote “Against” the former executive, as the board cannot
be regarded as independent anymore.
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■
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Relevant committees in place and they are majority independent. If the main committees are not majority independent, this could
trigger a vote of “Abstain” for the Chairman of the Board and if the Chairman is not up for election, “Abstain”
on the non-independent committee members.
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The management of Environmental Social and Governance (ESG) controversies will be analysed on a case-by-case basis based on
relevant internationally recognized E, S or G principles (e.g. the UN Global Compact Principles and OECD Guidelines for Multinationals).
Under extraordinary circumstances, DWS will vote against the election of directors or the entire board if there were material failures
of governance, stewardship, risk oversight, or fiduciary responsibilities identified as a result of the controversies around the
company.
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■
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When the director election lengthens the term of office, DWS will consider voting “Against” this election.
|
In the absence of an annual election, we are generally
supportive of staggered boards as the perpetual renewal of an appropriate proportion of the board members secures an active succession
planning. In cases where the annual (re)-election is established, DWS would oppose proposals that would lengthen the term of office
(i.e. from annual election to terms of two/three years or more).
B. Remuneration (Variable Pay)
Executive remuneration for Management Board
Where it deems necessary, DWS will also take into account
the following additional factors:
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■
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Systems that entitle the company to recover any sums already paid (e.g. claw-back-system). Deviations are possible wherever
the company provides a reasonable explanation why a claw- back was not implemented.
|
DWS’s policy is to vote “For” Management
Board remuneration that is transparent and linked to results.
Rationale: Executive compensation should motivate
Management and align the interests of Management with the shareholders. The focus should be on criteria that prevent excessive
remuneration; but enable the company to hire and retain first-class professionals.
Shareholder interests are normally best served when Management
is remunerated to optimise long-term returns. Criteria should include suitable measurements like return on capital employed or
economic value added.
Interests should generally also be correctly aligned when
Management own shares in the company – even more so if these shares represent a substantial portion of their own wealth.
Its disclosure shall differentiate between fixed pay,
variable (performance related) pay, and long-term incentives, including stock option plans with valuation ranges as well as pension
and any other significant arrangements.
Executive remuneration for Supervisory Board
DWS’s policy is to vote “For” remuneration
for Supervisory Board that is at least 50% in fixed form.
Rationale: It would normally be preferable if performance
linked compensation were not based on dividend payments, but linked to suitable result based parameters. Consulting and procurement
services should also be published in the company report.
C. Long-Term Incentive Plans
DWS’s policy is to vote “For” long-term
incentive plans for members of a Management Board that reward for above average company performance.
Rationale: Incentive plans will normally be supported
if they:
1. Directly align the interests of members of Management
Boards with those of shareholders;
2. Establish challenging performance criteria to reward
only above average performance;
3. Measure performance by total shareholder return in
relation to the market or a range of comparable companies;
4. Are long-term in nature and encourage long-term ownership
of the shares once exercised through minimum holding periods; and
5. Do not allow a repricing of the exercise price in stock
option plans.
D. Proposals to Restrict Supervisory Board Members
Service on Multiple Boards
DWS’s policy is to vote “For” proposals
to restrict a Supervisory Board Member from serving on more than five Supervisory Boards.
Rationale: We consider a strong, independent, and
knowledgeable Supervisory Board as important counter-balance to executive Management to ensure that the interests of shareholders
are fully reflected by the company.
Full information should be disclosed in the annual reports
and accounts to allow all shareholders to judge the success of the Supervisory Board controlling their company.
Supervisory Board Members must have sufficient time to
ensure that shareholders’ interests are represented adequately.
Note: A Director’s service on multiple closed-end
fund Boards within a fund complex are treated as service on a single Board for the purpose of the proxy voting guidelines.
E. Establishment of a Remuneration Committee
DWS’s policy is to vote “For” proposals
that require the establishment of a Remuneration Committee.
Rationale: Corporations should disclose in each
annual report or proxy statement their policies on remuneration. Essential details regarding executive remuneration including share
options, long-term incentive plans and bonuses, should be disclosed in the annual report, so that investors can judge whether corporate
pay policies and practices meet the standard.
The Remuneration Committee shall not comprise any Board
members and should be sensitive to the wider scene on executive pay. It should ensure that performance-based elements of executive
pay are designed to align the interests of shareholders.
F. Management Board Election and Motion
DWS’s policy is to vote “Against”:
1. The election of Board members with positions on either
Remuneration or Audit Committees;
2. The election of Supervisory Board members with too
many Supervisory Board mandates; and
3. “Automatic” election of former Board members
into the Supervisory Board.
Rationale: Management as an entity, and each of
its members, are responsible for all actions of the company, and are – subject to applicable laws and regulations –
accountable to the shareholders as a whole for their actions.
Sufficient information should be disclosed in the annual
company report and account to allow shareholders to judge the success of the company.
G. Large Block Issuance
For the UK market the following applies:
Generally vote for a resolution to authorise the issuance
of equity, unless:
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The issuance authority exceeds 33 percent of the issued share capital. Assuming it is no more than 33 percent, a further 33
percent of the issued share capital may also be applied to a fully pre-emptive rights issue taking the acceptable aggregate authority
to 66 percent.
|
Where it deems necessary, DWS will also consider voting
“Against”, taking into account the following additional factors:
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The combined equity issuance of all equity instruments with pre-emptive rights exceeds 50 percent of the outstanding share
capital or the prevailing maximum threshold as stipulated by best practice rules for corporate governance in the respective country.
Exceeding either of the two thresholds will be judged on a CASE-BY- CASE basis, provided that the subscription rights are actively
tradable in the market.
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■
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The cumulative equity issuances without subscription rights (historical and across instruments) exceed the maximum level specified
in a respective country’s best practices for corporate governance or 30 percent of the company’s nominal capital.
|
H. Share Repurchases
Where it deems necessary, DWS will also analyse on a CASE-BY-CASE
basis, if the maximum offer/price premium exceeds 10 percent and if the share repurchase program exceeds a maximum of 10 percent
of issued share capital.
Rationale: Buybacks are generally considered beneficial
to shareholders because they tend to increase returns to the remaining shareholders. However, if the maximum offer premium exceeds
10 percent and the program itself exceeds 10 percent of issued capital, this could indicate potential risks for the shareholders
in the longer term.
I. Use of Net Profits
Where it deems necessary, DWS will also consider voting
“Against”, taking into account the following factors:
1. The dividend pay-out ratio has been below 20% for two
consecutive years despite a limited availability of profitable growth opportunities, and management has not given/provided adequate
reasons for this decision.
2. The pay-out ratio exceeds 100 % of the distributable
profits without appropriate reason (the company pays a dividend which affects its book value).
J. Amendments of the Articles
Where it deems necessary, DWS will consider to generally
to vote “Against” if the vote is an article amendment that would lengthen the term of office for directors over 3 years.
K. Related Party Transactions
DWS will analyse related party transactions on a CASE-BY-CASE
basis and will additionally consider ISS recommendations.
L. Auditor
Where it deems necessary, on audit-related agenda items,
DWS will also consider voting “Against”, taking into account the following additional factors:
1. The name of the audit firm is not disclosed.
2. No breakdown of audit/non-audit fees is provided.
3. Non-audit fees exceed standard audit and audit-related-
fees, unless ISS highlights a special justification such as IPOs, M&A or restructuring (this guideline applies only to companies
on the country`s main index).
4. Auditors are changed without explanation.
5. The same lead audit partner has been appointed for
more than five years.
6. Consequently, when the company does not publish the
name of its lead auditor and the duration for which she / he has been previously appointed. (Markets in which the regulatory requirement
for lead partner rotation is maximum five years are exempt from this guideline).
X. Proxy Voting Guidelines With Application For Holdings
Incorporated In Japan
With reference to our policy on board composition in Japan,
we expect companies, which define the role of the board to have a supervisory function instead of an executive function, to have
at least two outside directors and strongly encourage them to ensure that at least 1/3 of the members in their boards are considered
independent.
With reference to our policy of defining independence,
outlined earlier in this document, in Japan as significant shareholders we will consider those who are in the top ten shareholders,
even if their holding represents a share of less than 10%, mainly due to the market practice in Japan for business partners to
own a certain percentage of each other’s shares as cross shareholders. With reference to our policy on the separation of
the CEO and chairman roles and responsibilities, we strongly encourage our Japanese investees to disclose the member, who chairs
the board as well as the member, who is considered to chair the company, the so called “Kaicho”, if these roles are
separated. We also expect and foster our investees in Japan to establish the relevant formal committees- nomination, remuneration
and audit.
Rationale: We acknowledge what has been achieved in the
last couple of years in the corporate governance developments in Japan and support the progress, which has been made in that regard,
in particular with the introduction of the Corporate Governance and Stewardship codes. We aspire to be in a constructive dialogue
with our investees and to act as their steering partner to drive further developments in the corporate governance area. However,
we foster our investees in Japan to strive to have more independent boards generally, as we believe board independence is crucial
for the further development of corporate governance in Japan.
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ITEM 8.
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PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
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|
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Portfolio Manager Disclosure:
As of the date of this report, the following individual handles
the day-to-day management of the Fund.
Juan Barriobero de la Pisa, CFA, Director and Portfolio Manager
of the Fund
-
DWS Head of Spanish Equities from 2007-2019 and Executive Member of the Board at DWS Spain
2006-2018.
-
Joined DWS in 1999 and the Fund in 2020.
-
Degree in European Economic Sciences (ICADE E4), University Pontificia de Comillas.
Compensation of Portfolio Managers
The Advisor and its affiliates are part of DWS. The brand DWS represents
DWS Group GmbH & Co. KGaA (“DWS Group”) and any of its subsidiaries such as DWS Investment Management Americas,
Inc. and RREEF America L.L.C. which offer advisory services. DWS seeks to offer its investment professionals competitive short-term
and long-term compensation based on continuous, above average, fund performance relative to the market. This includes measurement
of short and long-term performance against industry and portfolio benchmarks. As employees of DWS, portfolio managers are paid
on a total compensation basis, which includes Fixed Pay (base salary) and Variable Compensation, as set forth below. The compensation
information below is provided as of the Fund’s most recent annual report dated December 31, 2020.
|
·
|
Fixed Pay (FP) is the key and primary element
of compensation for the majority of DWS employees and reflects the value of the individual’s role and function within the
organization. It rewards factors that an employee brings to the organization such as skills and experience, while reflecting regional
and divisional (i.e. DWS) specifics. FP levels play a significant role in ensuring competitiveness of the Advisor and its affiliates
in the labor market, thus benchmarking provides a valuable input when determining FP levels.
|
|
·
|
Variable Compensation (VC) is a discretionary
compensation element that enables the Advisor and its affiliates to provide additional reward to employees for their performance
and behaviors, while reflecting DWS affordability and the financial situation of Deutsche Bank AG (the “Bank”) and
DWS. VC aims to:
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|
o
|
Recognize that every employee contributes to the
DWS Group’s success through the DWS Group and/or Bank component of VC (Group Component),
|
|
o
|
Reflect individual performance, investment performance,
behaviours and culture through discretionary individual VC (Individual Component), and
|
|
o
|
Reward outstanding contributions at the junior levels
through the discretionary Recognition Award.
|
Employee seniority as well as divisional and regional
specifics determine which VC elements are applicable for a given employee and the conditions under which they apply. Both Group
and Individual Components may be awarded in shares or other share-based instruments and other deferral arrangements.
|
·
|
VC can be delivered via cash, restricted equity awards,
and/or restricted incentive awards or restricted compensation. Restricted compensation may include:
|
|
o
|
notional fund investments
|
|
o
|
restricted equity, notional equity,
|
|
o
|
or such other form as DWS may decide in its sole
discretion
|
|
·
|
VC comprises a greater proportion of total compensation
as an employee’s seniority and total compensation level increase. Proportion of VC delivered via a long-term incentive award,
which is subject to performance conditions and forfeiture provisions, will increase significantly as the amount of the VC increases.
|
|
·
|
Additional forfeiture and claw back provisions, including
complete forfeiture and claw back of VC may apply in certain events if an employee is an InstVV [CRD IV EU Directive4] Material
Risk Taker.
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|
·
|
For key investment professionals, in particular,
a portion of any long-term incentives will be in the form of notional investments aligned, where possible, to the funds they manage.
|
In general, each of the Advisor and its advisory affiliates
seek to offer their investment professionals competitive short-term and long-term compensation based on continuous, above average,
fund performance relative to the market. This includes measurement of short and long-term performance against industry and portfolio
benchmarks. To evaluate their investment professionals in light of and consistent with the compensation principles set forth above,
the Advisor and its affiliates review investment performance for all accounts managed in relation to the appropriate Morningstar
peer group universe with respect to a fund, iMoneyNet peer group with respect to a money market fund or relevant benchmark index(es)
set forth in the governing documents with respect to each other account type. The ultimate goal of this process is to evaluate
the degree to which investment professionals deliver investment performance that meets or exceeds their clients’ risk and
return objectives. When determining total compensation, the Advisor and its affiliates consider a number of quantitative, qualitative
and other factors:
-
Quantitative measures (e.g. one-, three- and five-year
pre-tax returns versus the appropriate Morningstar peer group universe for a fund, or versus the appropriate iMoneyNet peer group
for a money market fund or relevant benchmark index(es) set forth in the governing documents with respect to each other account
type, taking risk targets into account) are utilized to measure performance.
-
Qualitative measures (e.g. adherence to, as well
as contributions to, the enhancement of the investment process) are included in the performance review.
-
Other factors (e.g. non-investment related performance,
teamwork, adherence to compliance rules, risk management and "living the values" of the Advisor and its affiliates) are
included as part of a discretionary component of the review process, giving management the ability to consider additional markers
of performance on a subjective basis.
-
Furthermore, it is important to note that DWS
Group functions within a controlled environment based upon the risk limits established by DWS Group’s Risk division, in conjunction
with DWS Group management. Because risk consideration is inherent in all business activities, performance assessment factors in
an employee’s ability to assess and manage risk.
Fund Ownership of Portfolio Managers
The following table shows the dollar range of Fund shares owned
beneficially and of record by each member of the Fund’s portfolio management team as well as in all US registered Funds advised
by DWS International GmbH as a group (the “Family of Funds”), including investments by their immediate family members
sharing the same household and amounts invested through retirement and deferred compensation plans. This information is provided
as of the Fund’s most recent annual report dated December 31, 2020.
Name of
Portfolio Manager
|
Dollar Range of
Fund Shares Owned
|
Dollar Range of All in the Family of Funds Shares Owned
|
Juan Barriobero de la Pisa
|
-
|
-
|
Conflicts of Interest
In addition to managing the assets of the Fund, the Fund’s
portfolio managers may have responsibility for managing other client accounts of the Advisor or its affiliates. The tables below
show, for each portfolio manager, the number and asset size of (1) SEC registered investment companies (or series thereof) other
than the Fund, (2) pooled investment vehicles that are not registered investment companies and (3) other accounts (e.g., accounts
managed for individuals or organizations) managed by each portfolio manager. Total assets attributed to each portfolio manager
in the tables below include total assets of each account managed by them, although the manager may only manage a portion of such
account’s assets. For Funds subadvised by subadvisors unaffiliated with DWS International GmbH, total assets of Funds managed
may only include assets allocated to the portfolio manager and not the total assets of each Fund managed. The tables also show
the number of performance-based fee accounts, as well as the total assets of the accounts for which the advisory fee is based on
the performance of the account. This information is provided as of the Fund’s most recent annual report dated December 31,
2020.
Other SEC Registered Investment Companies Managed:
Name of Portfolio Manager
|
Number of Registered Investment Companies
|
Total Assets of Registered Investment Companies
|
Number of Investment Company Accounts with Performance Based Fee
|
Total Assets of Performance- Based Fee Accounts
|
Juan Barriobero de la Pisa
|
-
|
-
|
-
|
-
|
Other Pooled Investment Vehicles Managed:
Name of Portfolio Manager
|
Number of Pooled Investment Vehicles
|
Total Assets of Pooled Investment Vehicles
|
Number of Pooled Investment Vehicle Accounts with Performance-Based Fee
|
Total Assets of Performance- Based Fee Accounts
|
Juan Barriobero de la Pisa
|
3
|
$201,001,579
|
-
|
-
|
Other Accounts Managed:
Name of Portfolio Manager
|
Number of Other Accounts
|
Total Assets of Other Accounts
|
Number of Other Accounts with Performance- Based Fee
|
Total Assets of Performance- Based Fee Accounts
|
Juan Barriobero de la Pisa
|
-
|
-
|
-
|
-
|
In addition to the accounts above, an investment professional may
manage accounts in a personal capacity that may include holdings that are similar to, or the same as, those of the Funds. The Advisor
or Subadvisor, as applicable, has in place a Code of Ethics that is designed to address conflicts of interest and that, among other
things, imposes restrictions on the ability of portfolio managers and other “access persons” to invest in securities
that may be recommended or traded in the Funds and other client accounts.
Real, potential or apparent conflicts of interest may arise when
a portfolio manager has day-to-day portfolio management responsibilities with respect to more than one fund or account, including
the following:
|
·
|
Certain investments may be appropriate for the Fund
and also for other clients advised by the Advisor and their affiliates, including other client accounts managed by the Fund’s
portfolio management team. Investment decisions for the Fund and other clients are made with a view to achieving their respective
investment objectives and after consideration of such factors as their current holdings, availability of cash for investment and
the size of their investments generally. A particular security may be bought or sold for only one client or in different amounts
and at different times for more than one but less than all clients. Likewise, because clients of the Advisor and their affiliates
may have differing investment strategies, a particular security may be bought for one or more clients when one or more other clients
are selling the security. The investment results achieved for the Fund may differ from the results achieved for other clients of
the Advisor and their affiliates. In addition, purchases or sales of the same security may be made for two or more clients on the
same day. In such event, such transactions will be allocated among the clients in a manner believed by the Advisor and their affiliates
to be most equitable to each client, generally utilizing a pro rata allocation methodology. In some cases, the allocation procedure
could potentially have an adverse effect or positive effect on the price or amount of the securities purchased or sold by the Fund.
Purchase and sale orders for the Fund may be combined with those of other clients of the Advisor and their affiliates in the interest
of achieving the most favorable net results to the Fund and the other clients.
|
|
·
|
To the extent that a portfolio manager has responsibilities
for managing multiple client accounts, a portfolio manager will need to divide time and attention among relevant accounts. The
Advisor and their affiliates attempt to minimize these conflicts by aligning its portfolio management teams by investment strategy
and by employing similar investment models across multiple client accounts.
|
|
·
|
In some cases, an apparent conflict may arise where the Advisor has an incentive, such as a performance-based
fee, in managing one account and not with respect to other accounts it manages. The Advisor and its affiliates will not determine
allocations based on whether it receives a performance-based fee from the client. Additionally, the Advisor has in place supervisory
oversight processes to periodically monitor performance deviations for accounts with like strategies.
|
|
·
|
The Advisor and its affiliates and the investment team of each Fund may manage other mutual funds
and separate accounts on a long only or a long-short basis. The simultaneous management of long and short portfolios creates potential
conflicts of interest including the risk that short sale activity could adversely affect the market value of the long positions
(and vice versa), the risk arising from sequential orders in long and short positions, and the risks associated with receiving
opposing orders at the same time. The Advisor has adopted procedures that it believes are reasonably designed to mitigate these
and other potential conflicts of interest. Included in these procedures are specific guidelines developed to provide fair and equitable
treatment for all clients whose accounts are managed by each Fund’s portfolio management team. The Advisor and the portfolio
management team have established monitoring procedures, a protocol for supervisory reviews, as well as compliance oversight to
ensure that potential conflicts of interest relating to this type of activity are properly addressed.
|
The Advisor is owned by the DWS Group, a multinational global
financial services firm that is a majority owned subsidiary of Deutsche Bank AG. Therefore, the Advisor is affiliated with a variety
of entities that provide, and/or engage in commercial banking, insurance, brokerage, investment banking, financial advisory, broker-dealer
activities (including sales and trading), hedge funds, real estate and private equity investing, in addition to the provision of
investment management services to institutional and individual investors. Since Deutsche Bank AG, its affiliates, directors, officers
and employees (the “Firm”) are engaged in businesses and have interests in addition to managing asset management accounts,
such wide ranging activities involve real, potential or apparent conflicts of interest. These interests and activities include
potential advisory, transactional and financial activities and other interests in securities and companies that may be directly
or indirectly purchased or sold by the Firm for its clients’ advisory accounts. The Advisor may take investment positions
in securities in which other clients or related persons within the Firm have different investment positions. There may be instances
in which the Advisor and its affiliates are purchasing or selling for their client accounts, or pursuing an outcome in the context
of a workout or restructuring with respect to, securities in which the Firm is undertaking the same or differing strategy in other
businesses or other client accounts. These are considerations of which advisory clients should be aware and which will cause conflicts
that could be to the disadvantage of the Advisor and its affiliate’s advisory clients, including the Fund. The Advisor has
instituted business and compliance policies, procedures and disclosures that are designed to identify, monitor and mitigate conflicts
of interest and, as appropriate, to report them to a Fund’s Board.
|
|
ITEM 9.
|
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
Period
|
Total Number of
Shares Purchased
|
Average Price Paid
per Share
|
Total Number of
Shares Purchased as
Part of Publicly Announced
Plans or Programs
|
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
|
|
|
|
|
|
January 1 through January 31
|
38,400
|
$ 9.58
|
38,400
|
595,800
|
February 1 through February 29
|
18,846
|
$ 9.42
|
18,846
|
576,954
|
March 1 through March 31
|
16,954
|
$ 7.19
|
16,954
|
560,000
|
April 1 through April 30
|
0
|
$ -
|
0
|
560,000
|
May 1 through May 31
|
24,297
|
$ 7.66
|
24,297
|
535,703
|
June 1 through June 30
|
95,962
|
$ 8.39
|
95,962
|
439,741
|
July 1 through July 31
|
62,586
|
$ 8.90
|
62,586
|
377,155
|
August 1 through August 31
|
65,055
|
$ 9.42
|
65,055
|
679,945
|
September 1 through September 30
|
31,900
|
$ 9.57
|
31,900
|
648,045
|
October 1 through October 31
|
22,790
|
$ 9.27
|
22,790
|
625,255
|
November 1 through November 30
|
26,710
|
$ 9.70
|
26,710
|
598,545
|
December 1 through December 31
|
35,500
|
$ 10.43
|
35,500
|
563,045
|
|
|
|
|
|
Total
|
439,000
|
$ 9.05
|
439,000
|
|
|
|
|
|
|
On July 26, 2019, the Fund announced that the Board of Directors approved the extension of the current repurchase authorization permitting the Fund to repurchase up to 767,000 shares during the period from August 1, 2019 through July 31, 2020. Under this plan, the Fund repurchased 389,845 shares in open market transactions from August 1, 2019 to July 31, 2020.
|
|
|
|
|
|
On July 24, 2020, the Fund announced that the Board of Directors approved the extension of the current repurchase authorization permitting the Fund to repurchase up to 745,000 shares during the period from August 1, 2020 through July 31, 2021. Under this plan, the Fund repurchased 181,955 shares in the open market transactions from August 1, 2020 and December 31, 2020.
|
|
|
ITEM 10.
|
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
|
|
|
There were no material changes to the procedures by which stockholders may recommend nominees to the Fund’s Board. The Nominating and Governance Committee will consider nominee candidates properly submitted by stockholders in accordance with applicable law, the Fund's Articles of Incorporation or By-laws, resolutions of the Board and the qualifications and procedures set forth in the Nominating and Governance Committee Charter and this proxy statement. The Nominating and Governance Committee's Charter requires that a stockholder or group of stockholders seeking to submit a nominee candidate (i) must have beneficially owned at least 5% of the Fund's common stock for at least two years, (ii) may submit only one nominee candidate for any particular meeting of stockholders, and (iii) may submit a nominee candidate for only an annual meeting or other meeting of stockholders at which directors will be elected. The stockholder or group of stockholders must provide notice of the proposed nominee pursuant to the requirements found in the Fund's By-laws. Generally, this notice must be received not less than 90 days nor more than 120 days prior to the first anniversary of the date of mailing of the notice for the preceding year's annual meeting. Such notice shall include the specific information required by the Fund's By-laws. The Nominating and Governance Committee will evaluate nominee candidates properly submitted by stockholders on the same basis as it considers and evaluates candidates recommended by other sources.
|
|
|
ITEM 11.
|
CONTROLS AND PROCEDURES
|
|
|
|
(a)
|
The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
|
|
|
|
(b)
|
There have been no changes in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.
|
|
|
ITEM 12.
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Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
|
|
|
Securities Lending
Activities
During The European Equity Fund, Inc. most
recent fiscal year ending December 31, 2020, Brown Brothers Harriman & Co. (“BBH”) served as the fund’s securities
lending agent.
As a securities lending agent, BBH is responsible
for the implementation and administration of a fund’s securities lending program. Pursuant to its respective Securities Lending
Agency Agreement (“Securities Lending Agreement”) with the fund, BBH, as a general matter, performs various services,
including the following:
|
·
|
lend available securities
to institutions that are approved borrowers
|
|
·
|
determine whether a loan
shall be made and negotiate and establish the terms and conditions of the loan with the borrower
|
|
·
|
ensure that all dividends
and other distributions paid with respect to loaned securities are credited to the fund’s relevant account
|
|
·
|
receive and hold, on the
fund’s behalf, or transfer to a fund account, upon instruction by the fund, collateral from borrowers to secure obligations
of borrowers with respect to any loan of available securities
|
|
·
|
mark-to-market the market
value of loaned securities relative to the market value of the collateral each business day
|
|
·
|
obtain additional collateral,
as needed, in order to maintain the value of the collateral relative to the market value of the loaned securities at the levels
required by the Securities Lending Agreement
|
|
·
|
at the termination of a
loan, return the collateral to the borrower upon the return of the loaned securities
|
|
·
|
in accordance with the
terms of the Securities Lending Agreement, invest cash collateral in permitted investments, including investments managed by the
fund’s investment adviser
|
|
·
|
maintain records relating
to the fund’s securities lending activity and provide to the fund a monthly statement describing, among other things, the
loans made during the period, the income derived from the loans (or losses incurred) and the amounts of any fees or payments paid
with respect to each loan
|
BBH is compensated for the above-described
services from its securities lending revenue split. The tables below show the income each fund earned and the fees and compensation
it paid to service providers in connections with its securities lending activities during its most recent fiscal year.
The European Equity Fund, Inc.
Securities Lending Activities - Income and Fees for
Fiscal Year 2020
Gross income from securities lending activities
(including income from cash collateral reinvestment)
|
$11,570
|
Fees and/or compensation for securities lending activities and related services
|
|
Fees paid to securities lending agent from a revenue split
|
$1,013
|
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split
|
$645
|
Administrative fees not included in revenue split
|
--
|
Indemnification fee not included in revenue split
|
--
|
Rebate (paid to borrower)
|
$793
|
Other fees not included in revenue split
|
--
|
Aggregate fees/compensation for securities lending activities and related services
|
$2,451
|
Net income from securities lending activities
|
$9,119
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant:
|
The European Equity Fund, Inc.
|
|
|
|
|
By:
|
/s/Hepsen Uzcan
Hepsen Uzcan
President
|
|
|
Date:
|
3/1/2021
|
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By:
|
/s/Hepsen Uzcan
Hepsen Uzcan
President
|
|
|
Date:
|
3/1/2021
|
|
|
|
|
|
|
By:
|
/s/Diane Kenneally
Diane Kenneally
Chief Financial Officer and Treasurer
|
|
|
Date:
|
3/1/2021
|
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