Corporate Governance

As an independent asset management firm, we are committed to encouraging good corporate governance practices at the companies in which we invest. We seek to impact governance in several ways, including through proxy voting and listening to companies held in the portfolios we manage. We also seek to improve internal processes through research on governance matters and participation in industry surveys and events.

For questions about our corporate governance activities or policies, visit the links below or contact us at corporategovernance@dimensional.com.

Policies

  • Proxy Voting Guidelines

     

    Effective February 1, 2019

     

    General Approach to Corporate Governance and Proxy Voting


    When voting proxies, Dimensional seeks to act in the interests of the funds and accounts we manage. We seek to maximize shareholder value subject to the standards of the relevant legal and regulatory regimes, listing requirements, regional stewardship codes, and any social and sustainability guidelines of specific funds or accounts. Dimensional will evaluate management and shareholder proposals on a case-by-case basis.

    We expect the members of a portfolio company’s board to act in the interests of their shareholders. Each portfolio company’s board should implement policies and adopt practices that align the interests of the board and management with those of its shareholders. Since a board’s main responsibility is to oversee management and to manage and mitigate risk, it is important that board members have the experience and skills to carry out that responsibility.

     

    This document outlines Dimensional's global approach to key proxy voting issues and highlights particular considerations in specific markets.

     

     

    Global Evaluation Framework


    Uncontested Director Elections

    Dimensional may vote against individual directors, committee members, or the full board of a portfolio company in the following situations:

    1. There are problematic audit-related practices;

    2. There are problematic compensation practices or persistent pay for performance misalignment;

    3. There are problematic anti-takeover provisions;

    4. There have been material failures of governance, risk oversight, or fiduciary responsibilities;

    5. The board has failed to adequately respond to shareholder concerns;

    6. The board has demonstrated a lack of accountability to shareholders.

    Dimensional also considers the following when voting on directors:

    1. Board independence

    2. Director attendance

    3. Director capacity to serve

    4. Board composition

    Contested Director Elections

    In the case of contested board elections at portfolio companies, Dimensional takes a case-by-case approach. With the goal of maximizing shareholder value, we consider the qualifications of the nominees, the likelihood that each side can accomplish their stated plans, the company's corporate governance practices, and the incumbent board's history of responsiveness to shareholders.

    Auditors

    Dimensional will typically support the ratification of auditors unless there are concerns with the auditor's independence, the accuracy of the auditor's report, the level of non-audit fees, or if lack of disclosure makes it difficult for us to assess these factors.

    Anti-Takeover Provisions

    We believe that the market for corporate control, which often results in acquisitions which generally increase shareholder value, should be able to function without undue restrictions. Takeover defenses such as poison pills can lead to entrenchment of management and reduced accountability at the board level.

    Related-Party Transactions

    Related-party transactions have played a significant role in several high-profile corporate scandals and failures. We believe related party transactions should be minimized. When such transactions are determined to be fair to the company and its shareholders in accordance with the portfolio company’s policies and governing law, they should be thoroughly disclosed in public filings.

    Equity Compensation

    Dimensional supports the adoption of equity plans that align the interests of the portfolio company board, management, and company employees with those of shareholders.

    Dimensional will evaluate equity compensation plans on a case-by-case basis, taking into account the potential dilution to shareholders, the portfolio company's historical use of equity, and the particular plan features.

    Executive Compensation

    Dimensional supports compensation for executives that is clearly linked to the portfolio company’s performance. Compensation should be designed to attract, retain and appropriately motivate and serve as a means to align the interests of executives with those of shareholders. To the extent that compensation is clearly excessive and not aligned with the portfolio company’s performance or other factors, Dimensional would not support such compensation.

    Therefore, Dimensional reviews proposals seeking approval of a portfolio company’s executive compensation plan closely, taking into account the quantum of pay, company performance, and the structure of the plan.

    Director Compensation

    Dimensional will support director compensation that is reasonable in both size and composition relative to industry and market norms.

    Mergers & Acquisitions (M&A)

    Dimensional's primary consideration in evaluating mergers and acquisitions is maximizing shareholder value. Given that we believe market prices reflect future expected cash flows, an important consideration is the price reaction to the announcement, and the extent to which the deal represents a premium to the pre-announcement price. Dimensional will also consider the strategic rationale, potential conflicts of interest, and the possibility of competing offers.

    Dimensional may vote against deals where there are concerns with the acquisition process or where there appear to be significant conflicts of interest.

    Capitalization

    Dimensional will vote case-by-case on proposals related to share issuances, taking into account the purpose for which the shares will be used, the risk to shareholders of not approving the request, and the dilution to existing shareholders.

    Dimensional opposes the creation of dual-class share structures with unequal voting rights and will vote against proposals to create or continue dual-class capital structures.

    Shareholder Proposals

    When evaluating shareholder proposals, Dimensional considers the most important factor to be whether adoption of the proposal is likely to enhance or protect shareholder value.

    Dimensional will also consider the potential cost to the portfolio company, the portfolio company’s current handling of the issue (both on an absolute basis and relative to peers), and whether the issue would be better addressed through legislation or government regulation.

    Dimensional’s Approach to Environmental and Social Issues


    Dimensional believes that portfolio company boards are best positioned to address environmental & social (E&S) issues within their duties. We may communicate with portfolio companies to better understand the alignment of the interests of boards and management with those of shareholders on these topics. If a portfolio company is unresponsive to material E&S risks which may have economic ramifications for shareholders, Dimensional may support shareholder proposals and may also vote against or withhold voting from directors individually, committee members, or the entire board.

    For sustainability-focused funds, Dimensional may support shareholder proposals aimed at enhancing the disclosure around certain environmental issues. In limited circumstances, Dimensional may support proposals requesting companies take specific steps to address material risks from environmental issues. For socially-focused funds, Dimensional may support shareholder proposals aimed at enhancing the disclosure around certain social issues. In limited circumstances, Dimensional may support proposals requesting companies take specific steps to address material risks from social issues.

    Proxy Voting Principles for Australia


    Uncontested Director Elections

    Shareholders elect the board of a portfolio company to represent their interests and oversee management and expect portfolio company boards to adopt policies and practices that align the interests of the board and management with those of shareholders and limit the potential for conflicts of interest.

    One of the most important measures aimed at ensuring that portfolio company shareholders’ interests are represented is an independent board of directors, made up of individuals with the diversity of backgrounds, experiences, and skill-sets needed to effectively oversee management and manage risk. We expect portfolio company boards to be majority independent.

    Dimensional believes that key audit and remuneration committees should be composed of independent directors. Dimensional will vote against executive directors, other than the CEO, who serve on the audit committee or who serve on the remuneration committee if the remuneration committee is not majority independent.

    CEO/Chair

    If a portfolio company’s board chair is not independent, the board should have a lead independent director with specific responsibilities, including the setting of meeting agendas. Dimensional may vote against executive board chairs if such measures are absent.

    Auditors

    Australian law does not require the annual ratification of auditors; therefore, concerns with a portfolio company's audit practices will be reflected in votes against members of the audit committee.

    Dimensional may vote against audit committee members if there are concerns with the auditor's independence, the accuracy of the auditor's report, the level of non-audit fees, or if lack of disclosure makes it difficult to assess these factors.

    Dimensional may also vote against audit committee members in instances of fraud or material failures in oversight of audit functions.

    Share Issuances

    Dimensional will evaluate requests for share issuances on a case-by-case basis, taking into account factors such as the impact on current shareholders and the rationale for the request.

    When voting on approval of prior share distributions, Dimensional will generally support prior issuances that conform to the dilution guidelines set out in ASX Listing Rule 7.1.

    Share Repurchase

    Dimensional will evaluate requests for share repurchases on a case-by-case basis, taking into account factors such as the impact on current shareholders, the rationale for the request, and the company's history of repurchases. Dimensional expects repurchases to be made in arms-length transactions using independent third-parties.

    Dimensional may vote against plans that do not include limitations on the company's ability to use the plan to repurchase shares from third parties at a premium and limitations on the use of share purchases as an anti-takeover device.

    Constitution Amendments

    Dimensional will evaluate requests for amendments to a portfolio company's constitution on a case-by-case basis. The primary consideration will be the impact on the rights of shareholders.

    Non-Executive Director Compensation

    Dimensional will support non-executive director remuneration that is reasonable in both size and composition relative to industry and market norms. Dimensional will vote against components of non-executive director remuneration that are likely to impair a director's independence, such as options or performance-based remuneration.

    Equity Plans

    Dimensional supports the adoption of equity plans that align the interests of the portfolio company board, management, and company employees with those of shareholders.

    Companies should clearly disclose components of the plan, including vesting periods and performance hurdles.

    Dimensional may vote against plans that are exceedingly dilutive to existing shareholders. Plans that permit retesting or repricing will generally be viewed unfavorably.

    Proxy Voting Principles for the United States


    Uncontested Director Elections

    Shareholders elect the board of a portfolio company to represent their interests and oversee management and expect portfolio company boards to adopt policies and practices that align the interests of the board and management with those of shareholders and limit the potential for conflicts of interest.

    One of the most important measures aimed at ensuring that portfolio company shareholders’ interests are represented is an independent board of directors, made up of individuals with the diversity of backgrounds, experiences, and skill-sets needed to effectively oversee management and manage risk. We expect portfolio company boards to be majority independent and key committees to be fully independent.

    Dimensional may vote against individual directors, committee members, or the full board of a portfolio company in the following situations:

    1. Problematic audit-related practices;

    2. Problematic compensation practices or persistent pay for performance misalignment;

    3. Problematic anti-takeover provisions;

    4. Material failures of governance, risk oversight, or fiduciary responsibilities;

    5. Failure to adequately respond to shareholder concerns;

    6. Lack of accountability to shareholders.


    Dimensional also considers the following when voting on directors at portfolio companies:

    1. Director attendance - Board members should attend at least 75% of meetings.

    2. Director commitments - Board members should ensure that they have the capacity to fulfill the requirements of each board membership.


    Contested Director Elections

    In the case of contested board elections at portfolio companies, Dimensional takes a case-by-case approach. With the goal of maximizing shareholder value, we consider the qualifications of the nominees, the likelihood that each side can accomplish their stated plans, the portfolio company's corporate governance practices, and the incumbent board's history of responsiveness to shareholders.

    Classified Boards

    We believe that shareholders should be given the right to vote on the entire slate of directors on an annual basis. Therefore, we encourage portfolio company boards to conduct annual elections for all sitting directors.

    Dimensional will generally support proposals to declassify existing boards at portfolio companies, and will oppose efforts by portfolio companies to adopt classified board structures, in which only part of the board is elected each year.

    CEO/Chair

    Dimensional believes that the portfolio company boards are best placed to determine whether the separation of roles is appropriate and will generally vote with management on shareholder proposals requiring that the chairman’s position be filled by an independent director.

    However, at portfolio companies with a combined CEO/Chair, Dimensional expects the board to appoint a lead independent director with specific responsibilities, including the setting of meeting agendas, to seek to ensure the board is able to act independently.

    Board Size

    Dimensional generally believes that portfolio company boards are best positioned to determine an appropriate size, and therefore will generally defer to the board in setting its size. However, Dimensional will oppose proposals to alter board structure or size in the context of a fight for control of the company or the board.

    Age/Term Limits

    Dimensional believes it is the responsibility of a portfolio company’s Nominating Committee to ensure that the company’s board of directors is composed of individuals with the skills needed to effectively oversee management and will generally oppose proposals seeking to impose age or term limits for directors.

    That said, portfolio companies should clearly disclose their director evaluation and board refreshment policies in their proxy.

    Poison Pills

    Dimensional generally opposes poison pills. As a result, we may vote against the adoption of a pill and all directors that put a pill in place without first obtaining shareholder approval. Votes against directors may extend beyond the company that adopted the pill, to all boards the directors serve on. In considering a poison pill for approval, we may take into account the existence of ‘qualified offer’ and other shareholder-friendly provisions.

    For pills designed to protect net operating losses, we may take into consideration a variety of factors, including but not limited to the size of the available operating losses and the likelihood that they will be utilized to offset gains.

    Cumulative Voting

    Under cumulative voting, each shareholder is entitled to the number of his or her shares multiplied by the number of directors to be elected. Shareholders have the flexibility to allocate their votes among directors in the proportion they see fit, including casting all their votes for one director. This is particularly impactful in the election of dissident candidates to the board in the event of a proxy contest.

    Dimensional will typically support proposals that provide for cumulative voting and against proposals to eliminate cumulative voting unless the portfolio company has demonstrated that there are adequate safeguards in place, such as proxy access and majority voting.

    Majority Voting

    For the election of directors, companies may adopt either a majority or plurality vote standard. In a plurality vote standard, the directors with the most votes are elected. If the number of directors up for election is equal to the number of board seats, each director only needs to receive one vote in order to be elected. In a majority vote standard, in order to be elected, a director must receive the support of a majority of shares voted or present at the meeting.

    Dimensional supports a majority (rather than plurality) voting standard for uncontested director elections. The majority vote standard should be accompanied by a director resignation policy to address failed elections.

    To account for contested director elections, portfolio companies with a majority vote standard should include a carve-out for plurality voting in situations where there are more nominees than seats.

    Supermajority Vote Requirements

    Dimensional believes that the affirmative vote of a majority of shareholders should be sufficient to approve items such as bylaw amendments and mergers. Dimensional will vote against proposals seeking to implement a supermajority vote requirement and for proposals seeking the adoption of a majority vote standard.

    Dimensional will vote against incumbent directors at portfolio companies that place substantial restrictions on shareholders' ability to amend bylaws.

    Right to Call Meetings and Act by Written Consent

    Dimensional will generally support the right of shareholders to call special meetings of a portfolio company board (if they own 25% of shares outstanding) and take action by written consent.

    Proxy Access

    Dimensional will typically support management and shareholder proposals for proxy access that allow a shareholder (or group of shareholders) holding three percent of voting power for three years to nominate up to 25 percent of a portfolio company board. Dimensional will typically vote against proposals that are more restrictive than these guidelines.

    Amend Bylaws/Charters

    Dimensional believes that shareholders should have the right to amend a company’s bylaws. Dimensional will vote against incumbent directors at portfolio companies that place substantial restrictions on shareholders' ability to amend bylaws. 

    Exclusive Forum

    Dimensional is generally supportive of management proposals to adopt an exclusive forum for shareholder litigation.

    Auditors

    Dimensional will typically support the ratification of auditors unless there are concerns with the auditor's independence, the accuracy of the auditor's report, the level of non-audit fees, or if lack of disclosure makes it difficult to assess these factors.

    In addition to voting against the ratification of the auditors, Dimensional may also vote against Audit Committee members in instances of fraud, material weakness, or significant financial restatements.

    Stock-Based Compensation Plans

    Dimensional supports the adoption of equity plans that align the interests of portfolio company board, management, and company employees with those of shareholders.

    Dimensional will evaluate equity compensation plans on a case-by-case basis, taking into account the potential dilution to shareholders, the company's historical use of equity, and the particular plan features.

    Dimensional will typically vote against plans that have features that have a negative impact on shareholders. Such features include single-trigger or discretionary vesting, an overly broad definition of change in control, a lack of minimum vesting periods for grants, and the ability to reprice shares without shareholder approval.

    Dimensional may also vote against equity plans if problematic equity grant practices have contributed to a pay for performance misalignment.

    Employee Stock Purchase Plans

    Dimensional will generally support qualified employee stock purchase plans (as defined by Section 423 of the Internal Revenue Code), provided that the purchase price is no less than 85 percent of market value, the number of shares reserved for the plan is no more than ten percent of outstanding shares, and the offering period is no more than 27 months.

    Supplemental Executive Retirement Plans

    Dimensional will generally support shareholder proposals that ask the company to put to shareholder vote extraordinary benefits such as credit for years of service not actually worked, preferential benefit formulas, or accelerated vesting of pension benefits contained in supplemental executive retirement plan (SERP).

    Advisory Votes on Executive Compensation (Say on Pay)

    Dimensional supports reasonable compensation for executives that is clearly linked to the company’s performance. Compensation should serve as a means to align the interests of executives with those of shareholders. To the extent that compensation is excessive, it represents a transfer to management of shareholder wealth. Therefore, Dimensional reviews proposals seeking approval of a company’s executive compensation plan closely, taking into account the quantum of pay, company performance, and the structure of the plan.

    Certain practices, such as:
    • multi-year guaranteed bonuses
    • excessive severance agreements (particularly those that vest without involuntary job loss or diminution of duties or those with excise-tax gross-ups)
    • single, or the same, metrics used for both short-term and long-term executive compensation plans may encourage excessive risk-taking by executives and are generally opposed by Dimensional.


    At portfolio companies that have a history of problematic pay practices or excessive compensation, Dimensional will consider the company’s responsiveness to shareholders’ concerns and may vote against members of the compensation committee if these concerns have not been addressed.

    Frequency of Say on Pay

    Executive compensation in the United States in typically composed of three parts: 1) base salary; 2) cash bonuses based on annual performance (short-term incentive awards); 3) and equity awards based on performance over a multi-year period (long-term incentive awards).

    Dimensional supports triennial say on pay because it allows for a longer-term assessment of whether compensation was adequately linked to company performance. This is particularly important in situations where a company makes significant changes to their long-term incentive awards, as the effectiveness of such changes in aligning pay and performance cannot be determined in a single year.

    If there are serious concerns about a company's compensation plan in a year where the plan is not on the ballot, Dimensional may vote against members of the Compensation Committee.

    Clawback Provisions

    Dimensional typically supports clawback provisions in executive compensation plans as a way to mitigate risk of excessive risk taking by executives.

    Executive Severance Agreements (Golden Parachutes)

    Dimensional analyzes golden parachute proposals on a case-by-case basis.

    Dimensional expects payments to be reasonable on both an absolute basis and relative to the value of the transaction. Dimensional will typically vote against agreements with cash severance of more than 3x salary and bonus.

    Dimensional expects vesting of equity to be contingent on both a change in control and a subsequent involuntary termination of the employee (“double-trigger change in control”).

    Remuneration of Directors

    Dimensional will support director compensation that is reasonable in both size and composition relative to industry and market norms.

    Mergers and Acquisitions (M&A)

    Dimensional's primary consideration in evaluating mergers and acquisitions is maximizing shareholder value. Given that we believe market prices reflect future expected cash flows, an important consideration is the price reaction to the announcement, and the extent to which the deal represents a premium to the pre-announcement price. Dimensional will also consider the strategic rationale, potential conflicts of interest, and the possibility of competing offers.

    Dimensional may vote against deals where there are concerns with the acquisition process or where there appear to be significant conflicts of interest.

    Reincorporation

    Dimensional will evaluate reincorporation proposals on a case-by-case basis.

    Dimensional may vote against reincorporations if the move would result in a substantial diminution of shareholder rights.

    Increase Authorized Shares

    Dimensional will vote case-by-case on proposals seeking to increase common or preferred stock, taking into account the purpose for which the shares will be used and the risk to shareholders of not approving the request.

    Dimensional will typically vote against requests for common or preferred stock issuances that are excessively dilutive relative to common market practice.

    Dimensional will typically vote against proposals at portfolio companies with multiple share classes to increase the number of shares of the class with superior voting rights.

    Blank Check Preferred Stock

    Blank check preferred stock is stock that can be issued at the discretion of the board, with the voting, conversion, distribution, and other rights determined by the board at the time of issue. Therefore, blank check preferred stock can potentially serve as means to entrench management and prevent takeovers.

    To mitigate concerns regarding what we believe is the inappropriate use of blank check preferred stock, Dimensional expects portfolio companies seeking approval for blank preferred stock to clearly state that the shares will not be used for anti-takeover purposes.

    Dual Classes of Stock

    Dual class share structures are generally seen as detrimental to shareholder rights, as they are accompanied by unequal voting rights. Dimensional believes in the principle of one share, one vote.

    Dimensional opposes the creation of dual-class share structures with unequal voting rights and will vote against proposals to create or continue dual-class capital structures.

    Dimensional will vote against directors at portfolio companies that adopt a dual-class structure without shareholder approval after the company’s IPO. Implementation of a dual-class structure prior to or in connection with an IPO may not per se warrant a vote against directors but will be considered on a case-by-case basis.

    Shareholder Proposals

    When evaluating shareholder proposals, including proposals on environmental and social issues, Dimensional considers the most important factor to be whether adoption of the proposal is likely to enhance or protect shareholder value.

    Dimensional will also consider the potential cost to the portfolio company, the portfolio company’s current handling of the issue (both on an absolute basis and relative to peers), and whether the issue would be better addressed through legislation or government regulation.

    Director Election Guidelines for Europe, the Middle East, and Africa (EMEA)


    Dimensional will leverage its global framework when evaluating EMEA portfolio companies, but will apply the following market-specific considerations when voting on directors.

    United Kingdom

    Dimensional expects portfolio companies to follow the requirements of the UK Corporate Governance Code with regards to board and committee composition.

    France

    All portfolio company boards should be at least one-third independent; for non-controlled companies, at least half of board members (excluding those appointed pursuant to French law) should be independent.

    Executives should not serve on audit and remuneration committees. Dimensional will vote against executives who serve on these committees. Dimensional prefers the role of chairman and CEO to be separated; however, Dimensional may support a combined role if the board has a lead independent director with specific responsibilities, including the setting of meeting agendas.

    Dimensional will typically vote against the election of censors, but may consider providing support if the censor is to serve on an interim basis.

    Germany

    All portfolio company boards should be at least one-third independent; for non-controlled companies, at least half of board members (excluding employee-elected representatives) should be independent.

    Absent exceptional circumstances, Dimensional expects the role of chairman and CEO to be separated and will vote against the election of a director to serve in a combined role. Dimensional will generally also vote against the appointment of a former CEO as Chairman.

    Switzerland

    For all companies, boards should be at least one-third independent; for non-controlled companies, at least half of board members should be independent.

    Executives should not serve on audit and remuneration committees. Dimensional will vote against executives who serve on these committees. Additionally, Dimensional expects these committees to be majority independent and will vote against non-independent nominees if their election would result in the committee being less than majority independent.

    Dimensional expects the role of chairman and CEO to be separated and will generally vote against the election of a director to serve in a combined role.

    South Africa

    Dimensional expects portfolio companies to follow the recommendations of the King Report On Corporate Governance (King Code IV) with regards to board and committee composition.

    Proxy Voting Principles for Japan


    Uncontested Director Elections

    Shareholders elect the board of a portfolio company to represent their interests and oversee management and expect portfolio company boards to adopt policies and practices that align the interests of the board and management with those of shareholders and limit the potential for conflicts of interest.

    One of the most important measures aimed at ensuring that portfolio company shareholders’ interests are represented is an independent board of directors, made up of individuals with the diversity of backgrounds, experiences, and skill-sets needed to effectively oversee management and manage risk.

    At portfolio companies with a three-committee structure, Dimensional expects at least one-third of the board to be outsiders. Ideally, the board should be majority independent.

    At portfolio companies with an audit committee structure, Dimensional expects at least one third of the board to be outsiders. Ideally, the audit committee should be entirely independent; at minimum, any outside directors who serve on the committee should be independent.

    At portfolio companies with a statutory auditor structure, Dimensional expects the board to include at least two outside directors. At portfolio companies with a statutory auditor structure that have a controlling shareholder, at least two directors should be independent outsiders.

    Statutory Auditors

    Statutory auditors are responsible for effectively overseeing management and ensuring that decisions made are in the best interest of shareholders. Dimensional may vote against statutory auditors who are remiss in their responsibilities.

    When voting on outside statutory auditors, Dimensional expects nominees to be independent and to have the capacity to fulfill the requirements of their role as evidenced by attendance at meetings of the board of directors or board of statutory auditors.

    Director and Statutory Auditor Compensation

    Dimensional will support compensation for portfolio company directors and statutory auditors that is reasonable in both size and composition relative to industry and market norms.

    When requesting an increase to the level of director fees, Dimensional expects portfolio companies to provide a specific reason for the increase. Dimensional will support an increase of director fees if it is in conjunction with the introduction of performance-based compensation, or where the ceiling for performance-based compensation is being increased. Dimensional will not support an increase in director fees if there is evidence that the directors have been remiss in effectively overseeing management or ensuring that decisions made are in the best interest of shareholders.

    Dimensional will typically support an increase to the statutory auditor compensation ceiling unless there is evidence that the statutory auditors have been remiss in effectively overseeing management or ensuring that decisions made are in the best interest of shareholders.

    Dimensional will support the granting of annual bonuses to portfolio company directors and statutory auditors unless there is evidence the board or the statutory auditors have been remiss in effectively overseeing management or ensuring that decisions made are in the best interest of shareholders.

    Dimensional generally supports the granting of retirement benefits to portfolio company insiders, so long as the individual payments, and aggregate amount of such payments, is disclosed.

    Dimensional will vote against the granting of retirement bonuses if there is evidence the portfolio company board or statutory auditors have been remiss in effectively overseeing management or ensuring that decisions made are in the best interest of shareholders.

    Equity Based Compensation

    Dimensional supports the adoption of equity plans that align the interests of the portfolio company board, management, and company employees with those of shareholders.

    Dimensional will typically support stock option plans to portfolio company executives and employees if total dilution from the proposed plans and previous plans does not exceed 5 percent for mature companies or 10 percent for growth companies.

    Dimensional will vote against stock plans if upper limit of options that can be issued per year is not disclosed.

    For deep-discounted stock option plans, Dimensional typically expects portfolio companies to disclose specific performance hurdles.

    Capital Allocation

    Dimensional will typically support well-justified dividend payouts that do not negatively impact the company's overall financial health.

    Share Repurchase

    Dimensional is typically supportive of portfolio company boards having discretion over share repurchases absent concerns with the company's balance sheet management, capital efficiency, buyback and dividend payout history, board composition, or shareholding structure.

    Dimensional will typically support proposed repurchases that do not have a negative impact on shareholder value.

    For repurchases of more than 10 percent of issue share capital, Dimensional expects the company to provide a robust explanation for the request.

    Shareholder Rights Plans

    We believe the market for corporate control, which can result in acquisitions that are accretive to shareholders, should be able to function without undue restrictions. Takeover defenses such as poison pills can lead to entrenchment and reduced accountability at the board level.

    Indemnification and Limitations on Liability

    Dimensional generally supports limitations on liability for directors and statutory auditors in ordinary circumstances.

    Limit Legal Liability of External Auditors

    Dimensional generally opposes limitations on the liability of external auditors.

    Increase in Authorized Capital

    Dimensional will typically support requests for increases of less than 100 percent of currently authorized capital, so long as the increase does not leave the company with less than 30 percent of the proposed authorized capital outstanding.

    For increases that exceed these guidelines, Dimensional expects portfolio companies to provide a robust explanation for the increase.

    Dimensional will not support requests for increases that will be used as an anti-takeover device.

    Expansion of Business Activities

    For well performing portfolio companies seeking to expand their business into enterprises related to their core business, Dimensional will typically support management requests to amend the company's articles to expand the company's business activities.

  • Responsible Investment Policy

    Responsible Investment Statement

    Effective as of June 2019

    General Statement

    Dimensional’s1  investment philosophy is based on the belief that in liquid capital markets, prices reflect all publicly available information. This includes information about a portfolio company’s strategy, financial and non-financial performance, risk, capital structure, social and environmental impact, and corporate governance. As such, Dimensional’s view is that securities traded in those markets reflect the aggregate risk and return expectations of all market participants and competition among market participants drives prices toward fair value. 

    This belief in markets means that Dimensional expects any value or long-term profitability attributable to a company’s current environmental, social, and governance practices to be reflected in a company’s price. A company can improve its corporate governance practices by aligning company management with shareholder interests, such as by promoting strong board representation, as well as by reducing unnecessary environmental and social risks. Dimensional also believes efforts to improve corporate governance may be reflected in increased valuations through a combination of lower discount rates and higher cash flows. For this reason, Dimensional primarily focuses its responsible investment efforts on improving governance practices in companies within the investment portfolios it manages on behalf of its clients.

    As a long-term investor on behalf of its clients, Dimensional is well positioned to positively influence a company’s governance practices. As an investment manager, Dimensional has a fiduciary duty to its clients. We believe that shareholders have a right to be heard by company management and that it is our responsibility as an investment manager to judiciously exercise shareholder voting rights on behalf of the portfolios we manage, taking into account both the costs and potential benefits. Dimensional broadly incorporates governance considerations into the investment management process through its proxy voting, which incorporates practices to reflect shareholder interests, as well as communicating with portfolio companies to share Dimensional policies and areas of focus with regard to governance practices. Dimensional improves its internal processes through selected projects, research and consistent review of those processes.

    United Nations Principles for Responsible Investment (“UNPRI”)

    As part of its commitment to encouraging strong governance, Dimensional became a signatory to the UNPRI in August 2012. The UNPRI provides a framework for incorporating environmental, social, and corporate governance (“ESG”) considerations into investment management practices. Dimensional commits to adopt and implement the six principles of the UNPRI (the “Principles”) where consistent with its fiduciary duty to clients, including:

    Principle 1: Dimensional will incorporate ESG issues into investment analysis and decision-making processes.

    Principle 2: Dimensional will incorporate ESG issues into relevant policies and practices.

    Principle 3: Dimensional will seek appropriate disclosure on ESG issues from relevant portfolio companies.

    Principle 4: Dimensional will promote acceptance and implementation of the Principles within the investment industry.

    Principle 5: Dimensional will work to enhance its effectiveness in implementing the Principles.

    Principle 6: Dimensional will report on its activities and progress toward implementing the Principles.

    Responsible Investment Initiatives

    Corporate Governance Committee and CG Group

    Dimensional has established a Corporate Governance Committee that reports to the Investment Committee. The Corporate Governance Committee is composed of senior executives, officers, directors, and members of the portfolio management team and is responsible for administering Dimensional’s proxy voting policy, considering complex proxy voting cases, and overseeing the Corporate Governance Group.

    The Corporate Governance Group is a day-to-day working unit, which implements policies and oversees operations. This group includes dedicated analysts and resides within Portfolio Management. The group also utilizes investment management personnel in the Portfolio Management group.

    Investment Management

    Dimensional’s primary responsible investment focus is on improving governance practices at portfolio companies.  As an example, Dimensional generally excludes closely held companies from its universe of eligible securities for its clients on governance grounds, since companies with large strategic shareholders may not represent the interests of a broad set of shareholders. Dimensional may also choose not to purchase companies for its clients where, based on public information, in its judgment, there is a heightened concern of fraudulent or other behavior or situations that may make market information unreliable.

    Dimensional designs portfolios to increase the reliability of investment outcomes. We believe the probability of realizing positive equity, size, value, and profitability premiums increases with the investment horizon. So, we emphasize the benefits of a long-term investment horizon with our clients and we integrate ESG goals in a manner we think is consistent with helping investors achieve their long-term goals.  

    Dimensional also takes environmental and social principles into consideration for certain portfolios it manages. If clients have particular social and/or environmental preferences, Dimensional can implement negative screens or overlays to its underlying investment strategies to provide those clients with tailored investment solutions. Many of these preferences are incorporated into Dimensional’s social funds and sustainability funds.

    In social funds, Dimensional seeks to incorporate social considerations into investment strategies by identifying and screening companies to reflect the values of its clients. Dimensional may utilize research from independent third-party vendors, depending on the requirements of each portfolio, to systematically exclude restricted securities. For the guidelines of the social screens followed by these funds, please see the prospectuses of the relevant funds.

    In sustainability funds, Dimensional seeks to address the sustainability issues important to investors while maintaining sound investment principles. Sustainability considerations are integrated within a robust investment solution that pursues higher expected returns through increased weighting to smaller market cap, lower relative price, and higher profitability securities. Using data collected by Dimensional and research from independent third-party vendors on company business practices, companies are systematically evaluated with regard to sustainability. Investment in those companies is emphasized, reduced, or excluded based on how they fare on key sustainability metrics, including the primary sustainability impact considerations of high greenhouse gas emissions or reserves that may produce those emissions. Dimensional’s approach to sustainability can offer investors the ability to pursue their sustainability and investment goals simultaneously.

    With regard to social and/or environmental considerations, it is Dimensional’s belief that investors decide whether those preferences should be aligned with their investment decisions, but that choice should not have to come at the expense of sound investment principles. These views are reflected in Dimensional’s social and sustainability funds.

    General Approach to Active Ownership

    At Dimensional, our efforts to add value do not end once the portfolios we manage invest in a company. Dimensional acts as a fiduciary to its clients. Our active ownership2 activity is an additional way that we seek to make a positive impact on the overall investment process in line with our commitments as signatories to the UNPRI and relevant regional stewardship codes and as part of our services to our clients. Regional stewardship codes are discussed in more detail on the relevant Dimensional regional public websites.

    • Engagement

    In light of Dimensional’s investment philosophy described in the General Statement above, Dimensional considers prices, and therefore the information contained in prices, throughout its investment process. In addition to the belief that the data is already incorporated into the price of the portfolio company, Dimensional also monitors the various factors (strategy, financial and non-financial performance, risk, capital structure, social and environmental impact, and corporate governance) and uses this information in different parts of our investment process.  

    For example, combining prices with certain fundamental variables (including financial performance and capital structure) can inform us about differences in expected returns, and this information is used in our portfolio construction and management processes. Members of the research and portfolio management teams use information from multiple data sources and news feeds to monitor information about portfolio companies’ financial performance and capital structure.  This monitoring allows Dimensional to quickly incorporate portfolio company events (such as those driven by a change in a company’s capital structure) by making relevant adjustments to the information Dimensional pulls from a portfolio company’s financial statement data. Dimensional also monitors non-financial and ESG information regarding our portfolio companies as part of our engagement and proxy voting processes, using information from multiple third-party providers. For example, Dimensional monitors our portfolio companies for the presence of certain non-shareholder friendly governance features such as poison pills, staggered boards and excessive compensation arrangements, and through the close evaluation of announced merger activity, or corporate governance related news. Dimensional also believes there should be clear alignment between the company’s strategy and the incentives used in the company’s executive compensation plans, and Dimensional has developed a process to identify portfolio companies where there appears to be a misalignment between the interests of management and those of shareholders as indicated by pay plans that fail to align executive compensation to company performance. Dimensional may engage with these companies or may take action through proxy voting.

    • Communication with portfolio companies and their stakeholders

    Dimensional’s Corporate Governance Group will communicate directly with the board and management of portfolio companies to understand their approach to corporate governance, including management of material environmental and social factors. In all such communications with portfolio companies, Dimensional’s aim is to seek additional information in the interests of protecting and enhancing the value of the investments of Dimensional’s clients. During such conversations, Dimensional makes clear that material non-public information should not be disclosed to Dimensional in the course of such discussions. If the board or management is unresponsive to concerns raised during discussions, Dimensional may vote against appropriate members of the company’s board in accordance with our proxy voting guidelines.

    When prioritizing engagements, Dimensional takes a holistic approach by considering a variety of factors, including a portfolio company’s overall governance profile, recent public ESG controversies, the collective holdings of Dimensional’s clients in the company, recent or upcoming proxy votes, and follow-ups from prior engagements.

    For instance, many conversations with portfolio companies are prompted when the companies have not provided sufficient information in their disclosures for Dimensional to assess particular elements concerning the company’s proxy, including but not limited to, executive compensation, anti-takeover provisions, board composition and effectiveness, material sustainability factors, and shareholder proposals. In these conversations, Dimensional prioritizes its questions to hear from companies how the board aligns management and shareholder interests, and protects shareholder value.

    Portfolio companies have multiple stakeholders, including other investors, employees, vendors, customers, and the communities in which they operate. Decisions made by the board of a portfolio company can impact a variety of stakeholders and the effect on stakeholders can impact the value of the company. As a fiduciary to our clients, we believe that our role is to be an active owner of our portfolio companies, which includes engagement with portfolio company boards and management.  As a long-term investor on behalf of its clients, Dimensional is well positioned to engage with portfolio company boards and management to understand how the effects on these stakeholders are being considered and the policies and procedures the portfolio company has adopted to mitigate potential materials risks.

    • Cooperation with other shareholders

    Dimensional is open to dialogue with management and dissident groups. While regulatory concerns may prevent us from acting collectively with other investors, we will consider communicating with other investors (and may consider communicating with other stakeholders) in relation to specific portfolio companies when we believe that doing so is in the best interest of our clients, is likely to maximize the value of their investment, is consistent with our policies and guidelines and is permissible under applicable laws and regulations. If we believe that other investors have valid concerns, we may communicate with them to understand their concerns; this may help inform our view of company management.

    Dimensional also maintains open lines of communication to listen to dissidents and management, maintaining a monitored email address (corporategovernance@dimensional.com) for dissidents or portfolio companies to contact Dimensional with corporate governance related material or meeting requests. Dimensional also maintains a staff dedicated to corporate governance matters that is available to communicate with dissidents and portfolio company management and also is available to reach out to portfolio companies as necessary to gather information necessary to make informed proxy voting decisions. Dimensional spoke with nearly 600 portfolio companies in 2018 to better understand their governance practices and to explain our proxy voting policies. 

    • Dimensional may join or participate in events with relevant industry groups.

    Dimensional is a member of the Council of Institutional Investors, a voice for corporate governance practices for US companies and strong shareholder rights and protections, and the Harvard's Institutional Investor Forum, which co‑sponsors the Harvard Law School Forum on Corporate Governance and Financial Regulation.

    • Exercise of voting rights and other rights attaching to shares

    Consistent with our overall investment philosophy, Dimensional monitors our portfolio companies' corporate governance through the proxy voting process, through monitoring for the presence of certain non-shareholder friendly governance features such as poison pills, staggered boards and excessive compensation arrangements, and through the close evaluation of announced merger activity, or corporate governance related news.

    Proxy voting is the act of exercising shareholder voting rights on behalf of clients, and Dimensional views proxy voting as an integral part of its investment management process. As Dimensional believes that stronger corporate governance practices will be reflected in higher security prices, Dimensional seeks to make proxy voting decisions consistent with the goal that boards and management of portfolio companies are focused on protecting and enhancing shareholder value.

    When voting (or refraining from voting) proxies, Dimensional seeks to act in the best interests of the funds and accounts we manage. We seek to maximize shareholder value considering the standards of the relevant legal and regulatory regimes, listing requirements, regional stewardship codes, and any social and sustainability guidelines of specific funds or accounts. Dimensional will evaluate management and shareholder proposals on a case-by-case basis.

    We expect the members of a portfolio company’s board to act in the interests of their shareholders. Each portfolio company’s board should implement policies and adopt practices that align the interests of the board and management with those of its shareholders. Since a board’s main responsibility is to oversee management and to manage and mitigate risk, it is important that board members have the experience and skills to carry out that responsibility.

    Dimensional believes that portfolio company boards are best positioned to address environmental & social (E&S) issues within their duties. If a portfolio company is unresponsive to material E&S risks which may have economic ramifications for shareholders, Dimensional may support shareholder proposals related to E&S issues and may also vote against or withhold voting from directors individually, committee members, or the entire board on such issues. Dimensional may also engage with portfolio companies to better understand the alignment of the interests of boards and management with those of shareholders on E&S topics.

    For sustainability-focused funds, Dimensional may support shareholder proposals aimed at enhancing the disclosure around certain environmental issues. For socially-focused funds, Dimensional may also support shareholder proposals aimed at enhancing the disclosure around certain social issues. In limited circumstances, for all funds, Dimensional may support proposals requesting companies take specific steps to address material risks from environmental or social issues.

    To supplement its internal research and analysis, Dimensional has engaged proxy advisory firms to provide information on shareholder meeting dates, research on proxy proposals, voting recommendations based on our proxy voting policies and procedures, and vote execution; however, Dimensional retains final discretion on how to vote. Dimensional’s Corporate Governance Committee reviews the capacity and competency of these firms annually.

    Dimensional takes into consideration the costs associated with voting and generally will vote in instances where the expected economic benefit of doing so outweighs the costs for a given portfolio. Dimensional may use securities lending as a way to increase performance. For securities on loan, Dimensional will balance the revenue-producing value of loans against the value of casting votes. Dimensional does intend to recall securities on loan if, based upon information in Dimensional’s possession, it determines that voting the securities is likely to materially affect the value of a client’s investment and that is in the client’s best interests to do so.

    Dimensional prepares Proxy Voting Policies and Procedures (“Proxy Voting Policies”) which include Proxy Voting Guidelines containing principles on how proxies will generally be voted (“Guidelines”) and generally will instruct voting of proxies in accordance with the Guidelines. Dimensional has determined that, generally, voting proxies in accordance with the Guidelines should be in the best interests of clients. The Guidelines provide a framework for analysis and decision making but do not address all potential issues. The Guidelines are published on our website and are updated at least annually and additionally as needed, and Dimensional’s Proxy Voting Policies are available to our clients on request.

    The Guidelines have been formulated to encourage our portfolio companies to adopt and maintain corporate governance policies that are consistent with our clients' best interests and the preservation of the value of their investments. Proxy advisory firms provide analysis and vote recommendations in accordance with our Guidelines for portfolios for which we have proxy voting authority. The Corporate Governance Group is available to contact these proxy advisory firms in the event we question the analysis provided and regularly communicates with personnel from these firms. Although Dimensional may consider the proxy voting recommendations, we remain ultimately responsible for all proxy voting decisions. Dimensional also reserves the right to instruct votes counter to the proxy voting Guidelines if we believe that the best interests of our clients would be served by such a vote.

    Dimensional regularly monitors for, and strongly opposes, the enactment or renewal of poison pills and/or staggered boards. We have a publicly stated view in opposition to the implementation of poison pills and staggered boards and generally any management or governance practices that may limit shareholder ownership rights. Dimensional has a practice to notify portfolio companies that enact these types of provisions that it will vote against all of the members of that company’s board of directors, and those same individuals that are directors at other portfolio companies, since the act of adopting any of these provisions is an act that we believe no director representing the interests of its shareholders should endorse.

    In cases of mergers, our governance analysts that are part of our Corporate Governance Group will work with portfolio managers to assess whether a proposed merger is in the best interest of shareholders and take appropriate action. Such action may include the selling of shares, voting for or against a merger and/or sending correspondence reminding the board of directors of the portfolio company to consider the best interests of shareholders.

    Dimensional also monitors for related party transactions and executive compensation arrangements that are misaligned with company performance, combining internal screens with analysis from leading proxy research firms and, where appropriate, obtaining explanatory information by communicating with portfolio companies. Dimensional has an established track record of voting against compensation arrangements that fail to align pay with performance, and will vote against the re-election of compensation committee members deemed to be not properly fulfilling the role of pay oversight.

    We are generally not willing to become insiders and do not seek to control the companies our clients invest in. In our corporate governance discussions, we instruct that we should not receive any material non-public information.

    Our clients are long term shareholders that hold companies for many years and Dimensional monitors the outcomes of engagements using internal tracking tools and third-party services. By having long holding periods, it strengthens our ability to monitor and follow up with companies.

    Key engagements and proxy votes are reviewed quarterly by the Corporate Governance Committee.

    Dimensional discloses information concerning its proxy voting records on its website and in other governance-related materials as appropriate and updates such information as new information becomes available from time to time. We disclose summary voting results for our US mutual funds (“Dimensional Investment Companies”), Irish UCITS, UK OEICs, and Australian trusts on our regional websites. Summary voting results include number of votes cast by region and topic, as well as percent of management and shareholder proposals supported. A complete history of our voting for the Dimensional Investment Companies, Irish UCITS, UK OEICs, as well as for the Canadian funds and Australian trusts, is disclosed on our regional websites. For separate account clients we provide reports concerning our proxy voting activity as specified in the client's agreement with us and in accordance with applicable regulation.

    Information on Dimensional’s portfolio company communications by topic and geographic region is available on Dimensional’s public website.  Dimensional will annually report on its progress towards implementing the UNPRI as required.

    Escalation of Stewardship Activities

    Dimensional uses several escalation mechanisms in the event it has a concern about a portfolio company's corporate governance practices. If Dimensional has concerns that the corporate governance practices of a portfolio company are not consistent with our clients' best interests and the preservation of the value of their investments, we will vote accordingly and have often dissented from the recommendations of management on proxy matters. As Dimensional's clients together can constitute a large shareholding, we believe that our votes have a voice that portfolio company boards and management are sensitive to.

    If negative corporate governance practices persist following the exercise of proxy voting in accordance with Dimensional's Proxy Voting Policies and Guidelines, our Corporate Governance Group may follow up directly with management or the company board to ensure that the company understands the importance we place on good corporate governance. 

    Another method of escalation is that if we think that the actions of the directors of a portfolio company are not in the best interests of shareholders, we may decide to vote against those directors that lost our trust not only in any proxy for the portfolio company but also in any election for directors at any other company they are, or may attempt to be, directors. We then communicate this decision to the portfolio company and its board.

    Separately, we also escalate directly through letter campaigns directed to portfolio companies on specific corporate stewardship concerns. In general, our priority is to escalate in situations where we believe a conflict of interest exists between management and shareholders.

    On a broader scale, we escalate general governance matters through our participation at industry conferences sponsored by the Council of Institutional Investors, the Harvard Corporate Governance Roundtable, and Society for Corporate Governance, among others. We believe this platform allows our voice to be heard in a broader manner and may have more impact at an industry level.

    Management of Conflict of Interests

    Conflicts of interest may exist in the course of communicating with a portfolio company or voting on a proxy. For example, there can be a potential conflict of interest if Dimensional is actively soliciting investment advisory business from a client or potential client which is also the company soliciting a proxy or if Dimensional retains the services of a third-party service provider which is also the company soliciting a proxy.

    To address the limited instances in which a potential conflict may arise, with respect to a proxy vote, Dimensional maintains an explicit policy on managing such potential conflicts which is focused on the principle of preserving shareholder value. The procedures Dimensional follows in the event a potential conflict of interest arises with respect to a vote are set out in a specific section of Dimensional’s Proxy Voting Policies and are summarized below.

    Engagements are generally handled by the Corporate Governance Group, and in certain cases portfolio managers are involved. When engaging, Dimensional seeks to handle any communications with portfolio companies in accordance with a standard protocol and consistent with Dimensional’s Proxy Voting Policies regarding conflicts.

    As proxies that Dimensional receives on behalf of its clients generally will be voted in accordance with the predetermined Proxy Voting Guidelines, we expect that the vast majority of proxies voted should not be affected by any conflicts of interest. Furthermore, as Dimensional is privately-held, we do not have conflicts of interests that may arise from being a subsidiary of a publicly-traded entity.

    In the limited instances where (i) the Corporate Governance Group is considering voting a proxy not prescribed or perceived to be contrary to the Guidelines, or (ii) the Corporate Governance Group believes a potential conflict of interest exists, the Corporate Governance Group will disclose the potential conflict to a member of the Corporate Governance Committee. As a matter of practice, the Chief Compliance Officer is also notified. Such disclosure will describe the proposal to be voted upon and disclose any potential conflict of interest including but not limited to any potential personal conflict of interest (e.g., familial relationship with company management) relating to the proxy vote, in which case the conflicted individual will remove himself or herself from the proxy voting process.

    If a Committee member has actual knowledge of a conflict of interest and recommends a vote not prescribed or perceived to be contrary to the Proxy Voting Guidelines, the Committee member will bring the vote to the Committee which will determine how the vote should be cast, keeping in mind the principle of preserving shareholder value, or to abstain, unless abstaining would be materially adverse to the client’s interests. An annual report on any such determination is provided to the board of trustees/directors of the Dimensional Investment Companies.

    Internal Projects and Research

    Dimensional may conduct research on the implications of certain governance practices and what it means for a company to have good governance policies and practices.

    Monitoring of Service Providers

    To assist with our internal evaluation of proxies and operational processing of proxy voting, we utilise services from leading third-party proxy advisory firms. We monitor services provided by these proxy advisory firms to consider whether they have the capacity and competency to adequately analyse proxy issues and can make their recommendations in an impartial manner and in the best interests of Dimensional’s clients. Purchasing research from multiple proxy advisory firms in certain circumstances assists us in monitoring the quality of the research provided by the service providers and also serves as a source against which to check our own assessments. Monitoring of proxy advisory firms may include some or all of the following: 

    • periodic sampling of votes cast by the proxy advisory firm to seek to confirm that the Guidelines adopted by Dimensional are being followed,
    • onsite visits to the proxy advisory firm office and/or discussions with the proxy advisory firm to determine whether the proxy advisory firm continues to have capacity and competency to carry out its proxy obligations,
    • a review of the proxy advisory firm’s policies and procedures, with a particular focus on those relating to identifying and addressing conflicts of interest and ensuring that current and accurate information is used in creating recommendations,
    • inquiring as to the proxy advisory firm’s compliance with relevant regulatory regimes, including the European Union Shareholder Rights Directive II,
    • requesting the proxy advisory firm to notify Dimensional if there is a change in the firm’s material policies and procedures, particularly with respect to conflicts, or material business practices (e.g. entering or exiting new lines of business), and reviewing any such change, and
    • participating in the proxy advisors’ annual policy formulation processes.

    Corporate Responsibility

    Dimensional is committed to improving its sustainability practices globally by seeking to understand the impact of its business operations on the environment and develop offices, plans, and processes that minimize those impacts. Dimensional’s corporate headquarters was awarded a three-star rating by Austin Energy Green Building.

    1. “Dimensional” and “we” refers to the Dimensional separate but affiliated entities generally, rather than one particular entity.  These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd. and Dimensional Japan Ltd.

    2. Dimensional can discuss governance matters with portfolio companies to represent client interests, though Dimensional does not, on behalf of its clients, acquire securities with the purpose or intended effect of changing or influencing the control of a portfolio company and is an investment-only investor. 

     

  • Frequently Asked Questions

    Who is responsible for Corporate Governance at Dimensional?

    Dimensional’s global corporate governance activities are managed by the Corporate Governance (CG) group, which sits within Dimensional’s Portfolio Management department. The group implements policies, monitors day-to-day operations, and researches governance issues and industry trends. Our Corporate Governance Committee, comprised of senior management, is responsible for overseeing the CG group, formulating and recommending changes to policy, and making decisions on governance-related matters.

    What is Dimensional’s policy on proxy voting?

    Dimensional votes or refrains from voting proxies on behalf of Australian trusts as well as those separate account mandates for which clients have given us the authority to vote according to its then current proxy voting policies and procedures. Our voting activities are intended to maximize shareholder value. This involves consideration of the feasibility, costs, and expected benefits of voting for each portfolio.

    Does Dimensional vote proxies at every company meeting?

    Dimensional seeks to vote, or refrain from voting, proxies in a manner that we believe is in the best interest of each portfolio. In instances where the costs—including opportunity costs—of voting exceed the expected economic benefits, we may refrain from voting. Additionally, international market restrictions—such as share blocking, re-registration, and onerous power of attorney requirements—may preclude us from voting in certain markets or at certain company meetings.

    Does Dimensional utilize any third-party services in the proxy voting process?

    Yes. Dimensional has engaged Institutional Shareholder Services (ISS) to provide information on shareholder meeting dates, research on proxy proposals, and voting recommendations based on our proxy voting policies and procedures. ISS also provides vote execution through its proprietary voting platform. In addition to ISS, we may also review voting recommendations from Glass Lewis and other research providers for selected meetings. Third-party research is only one of several inputs into our voting decision on a given proposal. We retain final discretion on how to vote.

    Does Dimensional disclose its voting intentions or share ownership prior to voting?

    Dimensional generally does not disclose our voting intentions or the portfolios’ share ownership prior to voting, except as required by applicable laws and regulation.

    Does Dimensional make its proxy voting record publicly available?

    Yes. We disclose voting information for our Australian trusts on our public website.

    Is Dimensional a signatory to the United Nations Principles for Responsible Investment (UN-PRI)?

    Yes. Dimensional became a signatory to the UN-PRI in August 2012.

    How may I contact Dimensional’s Corporate Governance group?

    The group may be contacted via email: corporategovernance@dimensional.com.

Voting - Australian Trusts

  • Engagement Summary

    2018 CALENDAR YEAR

    The goal of Dimensional’s engagement and proxy voting efforts is to improve governance practices in a way that we believe may increase expected cash flows to investors or reduce the discount rate investors apply to future cash flows. To the extent these efforts do result in improved governance practices, we would expect shareholders to benefit from increases in company prices.

    The decision to speak to a company is made on a case-by-case basis, taking into account a number of factors, including the company's overall ESG profile and past proxy vote results. We see engagement as an opportunity to encourage our portfolio companies to adopt and maintain a strong corporate governance framework, with independent boards representing shareholders’ interests, including the avoidance and mitigation of environmental and social risks. A deeper understanding of the company also allows us to make more thoughtful, informed proxy voting decisions.

    Engagement Summary

    ANNUAL ENGAGEMENT BY REGION

    ANNUAL ENGAGEMENT BY REGION
    Based on country of incorporation

    ANNUAL ENGAGEMENT BY TOPIC

    ANNUAL ENGAGEMENT BY TOPIC

    • Board Structure and Composition includes, among other items, board classification, combined CEO/Chair, board diversity, board size, term limits
    • Executive Compensation includes Say-on-Pay, golden parachutes, and equity compensation plans
    • Shareholder Rights includes, among other items, special meeting, written consent, proxy access, voting standards, ability to amend bylaws, voting rights
    • Corporate Social Responsibility refers to the company’s approach to environmental and social (E&S) issues, including the management of material E&S risks
    • All Other Topics includes, among other items, poison pills, RPTs, succession planning, audit and accounting issues and capitalization and financial authorizations
    1. As noted, Dimensional discusses governance matters with portfolio companies to represent client interests. Dimensional does not, on behalf of its clients, acquire securities with the purpose or intended effect of changing or influencing the control of a portfolio company and is an investment-only investor.
  • Annual Summary

    2018 CALENDAR YEAR

    The goal of Dimensional’s engagement and proxy voting efforts is to improve governance practices in a way that we believe may increase expected cash flows to investors or reduce the discount rate investors apply to future cash flows. To the extent these efforts do result in improved governance practices, we would expect shareholders to benefit from increases in company prices.

    Dimensional votes proxies at shareholder meetings globally to hold boards and management of portfolio companies accountable to best corporate governance standards. Dimensional believes that better governance practices will be reflected in higher security prices as a result of a combination of lower discount rates, higher cash flows and better risk management. As such, Dimensional believes proxy voting is an important means by which we advocate for the economic interest of our clients.

    Voting Summary

    Dimensional's Australian Wholesale Trusts voted 9,464 distinct proposals at 1,041 meetings, representing 98 percent of eligible meetings.1

    Dimensional votes proxies at shareholder meetings globally to hold boards and management of portfolio companies accountable to best corporate governance standards. Dimensional believes that better governance practices will be reflected in higher security prices as a result of a combination of lower discount rates, higher cash flows and better risk management. As such, Dimensional believes proxy voting is an important means by which we advocate for the economic interest of our clients.

    PROPOSALS VOTED ON, BY ISSUE2

    Proposals Voted on By Issue



    The "Director Elections" category includes the election of statutory auditors in Japan.
    "Board and Governance Related" includes proposals related to director compensation, board size and structure, voting standards, and shareholder access.
    "Routine Business Matters" includes a range of procedural matters, as well as proposals calling for the adjournment of meetings, votes on the frequency of say on pay, and the election of auditors.


    MEETINGS VOTED, BY REGION

    Meetings voted by region



    SUPPORT FOR MANAGEMENT AND SHAREHOLDER PROPOSALS

    Management Proposals

    Proposal Type Number of Proposals Voted Percentage Voted For Percentage Voted Against
    Antitakeover Related 67 86.6% 13.4%
    Capitalisation 597 89.9% 10.1%
    Compensation 1,780 83.1% 16.9%
    Board and Governance Related 159 88.1% 11.9%
    Director Elections 5,212 91.7% 8.3%
    Routine Business Matters 1,232 93.8% 6.2%
    Reorganization and Mergers 173 97.1% 2.9%
    Total 9,220 90.2% 9.8%

    Shareholder Proposals

    Proposal Type Number of Proposals Voted Percentage Voted For Percentage Voted Against
    Board and Governance Related 93 15.1% 84.9%
    Director Elections 39 28.2% 71.8%
    Routine Business Matters 22 9.1% 90.9%
    Other 90 17.8% 82.2%
    Total 244 17.6% 82.4%
    1. Dimensional votes proxies wherever it is feasible and economical to do so. We may not vote in markets that have share-blocking, re-registration or other practices that impair our ability to sell voted shares. In addition, we consider the costs associated with voting (per vote charges, meeting representation fees, etc.) and vote in instances where the expected economic benefit of voting outweighs the costs for a given portfolio.
    2. Issues representing less than 1% of voted proposals are not represented.
  • Proxy Voting Records