RiskMetrics Group Releases 2009 Proxy Voting Policies - 14 Jan 2009

Poor accounting practices. RiskMetrics will
recommend case-by-case voting on specific members of the audit
committee or the full board, if serious poor accounting practices
such as fraud, misapplication of GAAP, or material weaknesses or
deficiencies in Section 404 disclosures exist. Before deciding if a
negative vote is justified, RiskMetrics will pay attention to
several factors like "the severity, breadth, chronological
sequence and duration, as well as the company's efforts at
remediation or corrective actions."

Poor pay practices. In the current economic
crisis, compensation practices have been and will continue to be
the subject of media, investor, and governmental scrutiny.
RiskMetrics will recommend a withhold or against vote for
compensation committee members, the chief executive officer (CEO),
or the entire board of directors, in certain cases, if poor pay
practices are found to exist. Poor pay practices include, among
others, excessive executive perquisites, excise tax gross-ups, or
modified single trigger provisions (in the event of a change in
control) in equity compensation plans. RiskMetrics also may
recommend a vote for shareholder proposals on clawbacks of
incentive pay if the company's policy on the issue does not
meet best practices standards. RiskMetrics will similarly endorse
proposals seeking holding period requirements for executives
receiving equity-based incentives, if there are circumstances,
(like the presence of risk-incentivizing factors) that warrant the
adoption of such proposals. RiskMetrics has indicated that it will
not look upon the stock market's deterioration as sufficient
reason for repricing of stock options or resetting performance
plans by companies. RiskMetrics also has revised its methodology
for constructing peer groups for CEO compensation purposes and will
pay attention to factors such as the company's size and
revenue, among others, and will reduce the minimum peer group from
12 companies to eight.

Directors' attendance. RiskMetrics will
recommend withhold or against votes on the re-election of directors
who, without a valid excuse, attended less than 75 percent of the
board and committee meetings during the most recent fiscal year.
RiskMetrics will evaluate on a case-by-case basis any meaningful
information provided by the company regarding a director's
absence due to unavoidable and extraordinary circumstances such as
conflicts.

Performance/governance evaluation for
directors. RiskMetrics will recommend withhold or against
votes on all director nominees if the company's board lacks
appropriate accountability or oversight, and the board has
"sustained poor performance relative to peers."
"Sustained poor performance" will mean one- and
three-year total shareholder returns in the bottom half of a
company's peer group. Previously, the measure was the bottom
five percent; the new measure — bottom 50 percent
— is a considerably higher standard.

Independent chairman. RiskMetrics will, as in
the past, recommend voting for shareholder proposals that require
an independent director to be the chairman of the board, unless
there are compelling reasons to the contrary such as if the company
in question maintains a "counterbalance governance
structure." Current factors whose presence would sway
RiskMetrics away from recommending that the chairman be an
independent director are:

The presence of a designated lead independent director

Two-thirds of the company's board consist of independent
directors

All key committees of the company's board of directors
consist entirely of independent board members

The company has established governance guidelines

The company has not experienced sustained poor performance as
described in the preceding paragraph (unless there has been a
change in the chair/CEO position during the last three years)

The absence of any problematic governance or management issues
at the company