This guide details Illuminate's approach to shareholder voting. We go through various topics to provide transparency into how we exercise voting rights on behalf of our clients.
Employees
Policies and practices affecting employee working conditions, compensation, and representation
Pay Gap Would you support proposals to report on gender and race-related pay disparities?
Illuminate votes: Yes
Family Leave Would you support proposals to report on paid family leave?
Illuminate votes: Yes
Board Representation Would you support proposals designed to include consideration of non-management employees to serve on the board of directors?
Illuminate votes: Yes
Onshoring Would you support proposals to consider relocating their workforce to the United States?
Illuminate votes: Yes
Climate Transition Would you support proposals to report on the effects of climate change and/or the energy transition on employees, communities, and other stakeholders?
Illuminate votes: Yes
Paid Sick Leave Would you support proposals seeking to expand paid sick leave to include part-time employees?
Illuminate votes: Yes
Worker Safety Would you support proposals seeking additional reporting on worker safety and well-being?
Illuminate votes: Yes
Workplace Composition
Policies and practices that influence the recruitment and retention of a diverse workforce
Workplace Data Would you support proposals to disclose equal employment opportunity (EEO-1) data regarding workforce composition?
Illuminate votes: Yes
Discrimination Which of the following best matches your preferences regarding proposals requesting information, reporting, or policy changes to address potential discrimination in hiring and other employment-related activities? Examples covered by this question include but are not limited to discrimination related to gender, race, former incarceration status, and ethnicity.
Illuminate votes: Vote For
Recruitment and retention Which of the following best matches your preferences regarding proposals requesting reporting on the effectiveness of diversity, equity and inclusion programs on recruitment and retention?
Illuminate votes: Vote for, but vote against if the proposal is alleging that DEI programs increase risk to the company
Employee diversity reporting If a company fails to disclose standardized employee demographic data on the EEO-1 form, I would...
Illuminate votes: Vote against directors on the nominating committee
Executive Compensation
Compensation packages to attract and retain executives, hold them accountable, and align their incentives with those of the company.
Pay ratio CEO compensation should not exceed...
Illuminate votes: Up to 100 times median employee
Maximum amounts paid If an executive pay package doesn't disclose enough information to calculate the total amount of compensation that could be paid...
Illuminate votes: Vote Against
Discretionary bonuses Discretionary bonuses are not based on performance. If a compensation package includes discretionary bonuses (including RSUs without a performance component)...
Illuminate votes: Vote against
Automatic Renewal Some compensation plans (including employment agreements) renew automatically. If a plan includes an auto-renew feature...
Illuminate votes: Vote Against
Dilution If a compensation plan will result in over 10% dilution of current outstanding stock...
Illuminate votes: Vote Against
Recoupment Would you support proposals to recoup compensation based on misstated financials or deceptive business practices?
Illuminate votes: Yes
Compensation and performance Would you vote against the executive compensation proposal (and compensation committee members) if there is a weak correlation between executive pay and the company's performance during the previous 3 year period?
Illuminate votes: Yes
Golden Parachute/Handshake Executives are often offered compensation if their employment is terminated, either as part of a change of control or unconnected to one. I would vote against compensation packages that include termination pay of...
Illuminate votes: 3 times the executive's total pay for the current year
Say on pay frequency How often would you like to be given an opportunity to vote on executive compensation?
Illuminate votes: Every year
Payments upon change of control Companies may enter into agreements with senior employees that guarantee payments if certain conditions are met upon a change of control, such as the sale of the company. Which of the following most closely matches your preferences in this area?
Illuminate votes: Compensation agreements should require both change of control and involuntary termination ("double trigger") before payments are earned
Perks and benefits Would you support proposals requesting disclosure beyond what is legally required of executive perquisites and benefit programs?
Illuminate votes: Yes
Pay Ratio: Shareholder Proposals Would you support shareholder proposals that seek disclosure of data related to the differences between executive and employee compensation (including CEO to employee pay ratios)?
Illuminate votes: Yes
Golden Parachute/Handshake: Shareholder Approval Would you support proposals that seek shareholder approval of senior managers' compensation upon termination or change of control (golden parachute payments)?
Illuminate votes: Yes
Climate Change
How companies are reporting on, preparing for, and reducing their contributions to climate change...
Climate Change - shareholder input Should shareholders have a say on climate change issues?
Illuminate votes: Yes
Approach to Climate Change Issues Which of these most closely matches your thoughts on climate change?
Illuminate votes: I want companies to make all possible efforts to limit their negative impacts on climate change
Conservation
Environmental impacts not directly related to GHG emissions, such as plastics waste and water quality.
Should shareholders have a say on environmental issues? This includes environmental impacts aside from those related to greenhouse gas emissions.
Illuminate votes: Yes
Say on the environment Which of these most closely matches your thoughts on the environment?
Illuminate votes: I want companies to make all possible efforts to limit their negative impacts on the environment.
Human Rights
How companies, their technologies/products/services, and their customers impact human rights.
Say on Human Rights Should shareholders have a say on human rights issues that go beyond the minimum required by law?
Illuminate votes: Yes
Which of these most closely matches your thoughts on human rights?
Illuminate votes: I want companies to make all possible efforts to limit their negative impacts on human rights.
Health
Relating to a company's impacts on human health.
Reproductive health Would you support proposals to report on risks related to a company's reproductive health policies, including the effects that more restrictive policies may have on employee hiring, retention, productivity, and brand risks?
Illuminate votes: Yes
Access to Reproductive Health Services Would you support proposals advocating for expanded access to reproductive health services such as abortion, for example by reimbursing travel costs to jurisdictions that offer such services?
Illuminate votes: Yes
Drug Pricing Would you support proposals to report on high-priced drug pricing policy including development costs, pricing regional differences, and patient access?
Illuminate votes: Yes
Tobacco Would you support proposals to report on plans to reduce tobacco use in low-income neighborhoods, reduce nicotine in tobacco products, eliminate tobacco imagery for youth media, and adopt smokefree policies?
Illuminate votes: Yes
Tobacco risk Would you support proposals requesting disclosure of health risks of smoking and vaping beyond what is legally required?
Illuminate votes: Yes
Pesticides Would you support proposals to report on and adopt plans to phase out use of pesticides like neonicotinoids and glyphosate?
Illuminate votes: Yes
Nanomaterials Would you support proposals to label, disclose, report on use of nanomaterials in food products or packaging?
Illuminate votes: Yes
Heavy metals and toxic chemicals Would you support proposals to label, disclose, report on, phase out, or adopt plans to minimize heavy metals and toxic chemicals from company products?
Illuminate votes: Yes
Pornography If a proposal seeks reporting regarding risk related to exposure or involvement in the pornography industry, I would...
Illuminate votes: Vote for
Food additives If a proposal seeks reporting regarding risk related to food additives such as sugars, non-sugar sweeteners, preservatives, or dyes, I would...
Illuminate votes: Vote for
Privacy, Security, and Risk
How companies disclose their data collection and handling practices.
Algorithmic Accountability Would you support proposals to report on policies to ensure that algorithms used by the company do not result in discrimination or bias, and do not promote the dissemination of disinformation?
Illuminate votes: Yes
Data Sharing Would you support proposals to report on policies to ensure that personal data is not shared without explicit prior consent?
Illuminate votes: Yes
Take Downs Would you support proposals to report on procedures for removing misinformation from publicly available sites and/or the availability of takedown data for academic analysis.
Illuminate votes: Yes
Animal Welfare
A company's impacts on the quality of life of the animals it interacts with.
Say on Animal Welfare Should shareholders have a say on animal welfare issues?
Illuminate votes: Yes
Say on Animal Welfare II Which of these most closely matches your thoughts on animal welfare?
Illuminate votes: I want companies to make all possible efforts to limit their negative impacts on animal welfare
Political Activity & Taxes
How companies pursue their interests through political processes, such as lobbying or supporting campaigns.
Lobbying Would you support proposals to report on direct and indirect lobbying, political advocacy, and charitable giving activities?
Illuminate votes: Yes
Reputational Risk Would you support proposals to report on reputational risk due to mismatch between company values and political or charitable activities?
Illuminate votes: Yes
Tax Transparency Would you support proposals seeking to assess the risks of tax reforms by requesting reporting on the company's tax practices or seeking to conform tax reporting to the Global Reporting Initiative's Tax Standard?
Illuminate votes: Yes
Viewpoint discrimination Would you support proposals requesting reporting on alleged discrimination against people or entities who espouse conservative views, as expressed through political beliefs, speech, or religious practices?
Illuminate votes: Yes
Independence
Conflicts of interest on the board of directors or an external auditor.
Board Independence Companies are required to disclose whether board members are independent in order to help investors determine the board's ability to impartially monitor the company. Which of the following most closely matches how you would vote?
Illuminate votes: Vote against the nominating committee and non-independent board nominees if less than 66% of the board nominees are not independent
Nominating Committee: performance If the nominating committee proposes a chairperson who is not independent, I would....
Illuminate votes: Vote in line with the board's recommendation
Compensation Committee The job of the compensation committee is to propose executive compensation packages. If compensation committee members are also executives, there could be a conflict of interest. Which of the following most closely matches how you would vote on compensation committee members?
Illuminate votes: Vote against compensation committee members who are not independent
Independent director tenure Some investors share the view that long-serving directors may become complacent or lack of independence. Concerns about lack of diversity and lack of new perspectives are also at issue. Which of the following most closely matches your preference on director tenure?
Illuminate votes: Vote against independent board members who have served for 9 years or longer
Audit Committee The job of the audit committee is to provide oversight of the financial reporting process, including recommendations for auditors. If the audit committee members are also executives whose compensation and employment is influenced by the results of an audit, there may be a conflict of interest. Which of the following most closely matches how you would vote on audit committee members?
Illuminate votes: Vote against audit committee members who are not independent
Nominating Committee: Independence The job of the nominating committee is to propose directors for membership on the board. Because the board is responsible for monitoring the executives of the company, it is important that directors should not be selected based on their loyalty to the company's executives. Which of the following most closely matches how you would vote on nominating committee directors?
Illuminate votes: Vote against nominating comittee directors who are not independent
Auditor independence I would vote against approving an external auditor if...
Illuminate votes: The auditor's non-audit fees exceed 25% of total fees paid to the auditor
Unregistered/undisclosed auditor If an external auditor is not registered with the Public Company Accounting Oversight Board (PCAOB) or not disclosed, I would...
Illuminate votes: Vote against ratification of the auditor
Auditor arbitration agreements If an auditor requires the company to sign an arbitration agreement, I would...
Illuminate votes: Vote against ratification of the auditor
Board Composition
Relating to criteria for selecting nominees for service on the board of directors.
Non gender-diverse nominees For this question, "gender diversity" is defined as the percentage of non-male directors divided by the total number of directors. What is the minimum gender diversity you expect on a board, such that you would vote against nominating committee members if that threshold is not met?
Illuminate votes: 25% gender diversity
Ethnic and Underrepresented Community Diversity I would vote against nominating committee members who…
Illuminate votes: Nominate a slate of directors who are not at least 10% ethnically diverse
Board composition information If the company has failed to rep the gender and/or ethnic composition of its board, would you vote against members of the Nominating Committee?
Illuminate votes: Yes
Compensation committee composition Would you vote against directors nominated to serve on the compensation committee if they also serve as CEO of a publicly traded company?
Illuminate votes: Yes
Shareholder Protections
Actions affecting the financial, ownership, and voting rights of shareholders.
Unequal voting rights One share of Common Stock usually comes with one vote. Companies sometimes propose to issue different classes of shares with higher or lower share-to-vote ratios. If a proposal seeks to issue stock with with more or less than one vote per share, I would...
Illuminate votes: Vote against
One share one vote If a proposal asks a company to adopt a "one share one vote policy," or seeks additional disclosure regarding voting rights associated with its current multi-class share structure, I would...
Illuminate votes: Vote for
Classified Board A company may try to discourage takeover attempts by grouping directors into classes with different term lengths. With classified boards, only a subset of directors are voted on at the annual election, making it difficult to quickly change board composition. This shields the company from hostile takeovers but also makes it difficult for shareholders with the company's best interests in mind to hold the board accountable. Which of the following most closely matches your preference?
Illuminate votes: Vote to declassify boards, so that all directors are voted on at the same time.
Shareholder nominees for the board Many companies' bylaws allow shareholders representing a certain percentage of shares outstanding to nominate directors. Which of the following most closely matches your preferences on this issue?
Illuminate votes: Vote for proposals to allow shareholders to nominate up to two directors or 25% of the directors serving, whichever is greater
Special Meetings Shareholders at many companies have the right to convene meetings outside of the Annual Meeting to vote on various issues. Companies typically require shareholders to meet an ownership threshold to call a meeting. Which of the following mostly closely matches your preference?
Illuminate votes: Vote for proposals to lower the threshold to as low as 10%
Written Consent Many companies allow shareholders to act by "written consent," enabling a vote on issues without having to meet the formal requirements of a meeting. Which of the following mostly closely matches your preference?
Illuminate votes: Vote for proposals to allow for shareholders to act by written consent.
Simple Majority Voting Some companies require a supermajority to pass proposals. If a proposal requests implementation of a simple majority (>50%) standard, I would...
Illuminate votes: Vote for with a plurality standard or contested elections.
In companies with a controlling shareholder, moving from a supermajority voting standard to a simple majority standard may reinforce the influence of the controlling shareholder, potentially to the detriment of ordinary shareholders. If a proposal at such a company seeks to implement a simple majority voting standard, I would…
Illuminate votes: Vote for
Amending the bylaws If a proposal seeks to allow shareholders to amend bylaws by a simple majority vote, I would...
Illuminate votes: Vote for
Board Size Which of the following most closely matches your preference regarding the number of directors who serve on the board?
Illuminate votes: Support proposals to set the size of the board at a specific number
Portfolio performance Systems-first voting recognizes that overall market return is the most important factor in the financial performance of a diversified portfolio, and that market returns depend upon the systems that support the economy. When considering a vote that is linked to the performance of a social or environmental system, investors should ask, "How will my vote affect my overall return from the market?" Would you support proposals that aim, in whole or in part, to address diversified investors' common financial interests in a just and sustainable economy, in addition to supporting proposals that only aim to support individual company interests in sustainability matters?
Illuminate votes: Yes
Soliciting client voting preferences Would you support proposals requesting that financial intermediaries (including but not limited to asset managers, brokers, banks, and custodians) solicit the voting preferences of their clients?
Illuminate votes: Yes
Reimbursement for solicitation expenses Would you support proposals to reimburse shareholder solicitation expenses when a proposal receives over 50% support?
Illuminate votes: Yes
Cumulative Voting Cumulative voting allows shareholders to cast all of their available votes for a single board nominee, strengthening the ability of minority shareholders to elect a director, particularly if their efforts are coordinated. If a proposal seeks to implement cumulative voting, I would...
Illuminate votes: Vote for
Say on Poison Pills If a proposal seeks to redeem a poison pill or allow shareholders to vote on it, I would...
Illuminate votes: Vote for
Say on advance notice requirements Companies may implement rules restricting the ability to shareholders to nominate directors or present shareholder proposals. If a proposal seeks to require a vote on changes to advance notice requirements, I would...
Illuminate votes: Vote for
Reincorporation If management includes a proposal to reincorporate in a new jurisdiction, I would...
Illuminate votes: Vote against if the main purpose is avoidance of environmental or other regulations perceived to constrain the company's ability to pursue profit.
Virtual shareholder meetings Which of the following most closely matches your preferences?
Illuminate votes: Limit shareholder meetings to virtual only
Director Responsiveness and Accountability
The capacity of directors to meet the demands of the job, and mechanisms for holding them accountable.
Busy Directors Serving on a board often requires a large time commitment, so directors should not serve on too many different boards at the same time. Most shareholder voting guidelines include a max number of board commitments between 3 and 5. What's your preference for the maximum number of boards a director should serve on?
Illuminate votes: 3
Busy Directors Part II Directors who also serve as senior executives of a company may have significant demands on their time, making it difficult for them to effectively fulfill their board duties. What is your preference for the maximum number of boards a senior executive should sit on?
Illuminate votes: 2
Failure to Implement If a shareholder proposal is passed but the company fails to implement it...
Illuminate votes: I would vote against the entire board
Failure to act Directors are sometimes given information about situations that present a risk to human capital or the reputation of the firm, such as but not limited to reports of sexual harassment, law-breaking, toxic work environment, etc. If a director in possession of such information fails to investigate it or inform the person responsible, I would...
Illuminate votes: Vote against the director, or for a proposal advocating for a further investigation of the issue.
Meeting Attendance Companies are required to disclose directors who do not attend at least 75% of meetings. I would...
Illuminate votes: Vote against directors who don't attend at least 75% of meetings.
D&O Liability State and national laws govern the extent to which companies may indemnify their directors, officers, and other employees. If a proposal seeks to change or approve the company's indemnification policy, I would...
Illuminate votes: Vote for if the stated purpose is limited to conformance with applicable law.