Amended
Proxy Voting Policies and Procedures
Midas Dollar Reserves,
Inc., Midas Fund, Inc., and Midas Special
Equities Fund, Inc.
(the “Funds”) delegate the responsibility for
voting
proxies of portfolio companies held in each Fund’s portfolio
to Institutional Shareholder Services, Inc. (“ISS”). The Proxy
Voting Guidelines of ISS are incorporated by reference
herein as
each Fund’s proxy voting policies and procedures,
as supplemented
by the terms hereof. Each Fund retains
the right to override
the delegation to ISS on a case-by-case
basis, in which case the
ADDENDUM-NON-DELEGATED PROXY VOTING
POLICIES AND
PROCEDURES supercede the Proxy Voting Guidelines
of ISS in
their entirety. In all cases, a Fund’s proxies
will be voted in the
best interests of the Fund.
With respect to
a vote upon which a Fund overrides the
delegation to ISS, to
the extent that such vote presents a material
conflict of interest
between the Fund and its investment adviser,
distributor, or
any affiliated person of the Fund’s investment
adviser
or distributor, the Fund will disclose such conflict to, and
obtain consent from, its Independent Directors, or a committee
thereof, prior to voting the proxy.
January 1, 2004
-- ADDENDUM --
NON-DELEGATED PROXY VOTING POLICIES AND PROCEDURES
These
proxy voting policies and procedures are intended to provide
general guidelines regarding the issues they address. As
such, they cannot be “violated.” In
each case the vote will be based on maximizing shareholder
value over the long term, as consistent with overall investment
objectives and policies.
BOARD AND GOVERNANCE ISSUES
Board of Director Composition
Typically, we will not object to slates with
at least a majority of independent directors.
We generally will not object
to shareholder proposals that request that the board audit,
compensation and/or nominating committees include independent
directors exclusively.
Approval of Independent Auditors
We will evaluate on a case-by-case
basis instances in which the audit firm has a significant audit
relationship with the company to determine whether we believe
independence has been compromised.
We will review and evaluate
the resolutions seeking ratification of the auditor when fees
for financial systems design and implementation substantially
exceed audit and all other fees, as this can compromise the
independence of the auditor.
We will carefully review and
evaluate the election of the audit committee chair if the audit
committee recommends an auditor whose fees for financial systems
design and implementation substantially exceed audit and all
other fees, as this can compromise the independence of the
auditor.
Increase Authorized Common Stock
We will generally support the
authorization of additional common stock necessary to facilitate
a stock split. We will generally support the authorization
of additional common stock.
Blank Check Preferred Stock
Blank check preferred is stock
with a fixed dividend and a preferential claim on company assets
relative to common shares. The
terms of the stock (voting, dividend and conversion rights)
are determined at the discretion of the Board when the stock
is issued. Although
such an issue can in theory be used for financing purposes,
often it has been used in connection with a takeover defense.
Accordingly, we will generally evaluate the creation of blank
check preferred stock.
Classified or “Staggered” Board
On a classified (or staggered)
board, directors are divided into separate classes (usually
three) with directors in each class elected to overlapping
three-year terms. Companies
argue that such Boards offer continuity in direction which
promotes long-term planning. However,
in some instances they may serve to deter unwanted takeovers
since a potential buyer would have to wait at least two years
to gain a majority of Board seats.
We will vote on a case-by-case
basis on issues involving classified boards.
Supermajority Vote Requirements
Supermajority vote requirements
in a company’s charter or bylaws require a level of voting
approval in excess of simple majority. Generally,
supermajority provisions require at least 2/3 affirmative vote
for passage of issues.
We will vote on a case-by-case
basis regarding issues involving supermajority voting.
Restrictions on Shareholders
to Act by Written Consent
Written consent allows shareholders
to initiate and carry out a shareholder action without waiting
until the annual meeting or by calling a special meeting. It
permits action to be taken by the written consent of the same
percentage or outstanding shares that would be required to
effect the proposed action at a shareholder meeting.
We will generally not object
to proposals seeking to preserve the right of shareholders
to act by written consent.
Restrictions on Shareholders
to Call Meetings
We will generally not object
to proposals seeking to preserve the right of the shareholders
to call meetings.
Limitations, Director Liability
and Indemnification
Because of increased litigation
brought against directors of corporations and the increase
costs of director’s liability insurance, many states
have passed laws limiting director liability for those acting
in good faith. Shareholders,
however, often must opt into such statutes. In
addition, many companies are seeking to add indemnification
of directors to corporate bylaws.
We will generally support director
liability and indemnification resolutions because it is important
for companies to be able to attract the most qualified individuals
to their Boards.
Reincorporation
Corporations are in general bound
by the laws of the state in which they are incorporated. Companies
reincorporate for a variety of reasons including shifting incorporation
to a state where the company has its most active operations
or corporate headquarters, or shifting incorporation to take
advantage of state corporate takeovers laws.
We typically will not object
to reincorporation proposals.
Cumulative
Voting
Cumulative voting allows shareholders
to cumulate their votes behind one or a few directors running
for the board – that is, cast more than one vote for
a director thereby helping a minority of shareholders to win
board representation. Cumulative
voting generally gives minority shareholders an opportunity
to effect change in corporate affairs.
We typically will not object
to proposals to adopt cumulative voting in the election of
directors.
Dual Classes of Stock
In order to maintain corporate
control in the hands of a certain group of shareholders, companies
may seek to create multiple classes of stock with differing
rights pertaining to voting and dividends.
We
will vote on a case-by-case basis dual classes of stock. However,
we will typically not object to dual classes of stock.
Limit Directors’ Tenure
In general, corporate directors
may stand for re-election indefinitely. Opponents
of this practice suggest that limited tenure would inject new
perspectives into the boardroom as well as possibly creating
room for directors from diverse backgrounds; however, continuity
is important to corporate leadership and in some instances
alternative means may be explored for injecting new ideas or
members from diverse backgrounds into corporate boardrooms.
Accordingly, we will vote on
a case-by-case basis regarding attempts to limit director tenure.
Minimum Director Stock Ownership
The director share ownership
proposal requires that all corporate directors own a minimum
number of shares in the corporation. The
purpose of this resolution is to encourage directors to have
the same interest as other shareholders.
We normally will not object to
resolutions that require corporate directors to own shares
in the company.
EXECUTIVE COMPENSATION
Disclosure of CEO, Executive,
Board and Management Compensation
On a case-by-case basis, we will
support shareholder resolutions requesting companies to disclose
the salaries of top management and the Board of Directors.
Compensation for CEO, Executive,
Board and Management
We typically will not object
to proposals regarding executive compensation if we believe
the compensation clearly does not reflect the current and future
circumstances of the company.
Formation and Independence of
Compensation Review Committee
We normally will not object to
shareholder resolutions requesting the formation of a committee
of independent directors to review and examine executive compensation.
Stock Options for Board and Executives
We will generally review the
overall impact of stock option plans that in total offer greater
than 25% of shares outstanding because of voting and earnings
dilution.
We will vote on a case-by-case
basis option programs that allow the repricing of underwater
options.
In most cases, we will oppose
stock option plans that have option exercise prices below the
marketplace on the day of the grant.
Generally, we will support options
programs for outside directors subject to the same constraints
previously described.
Employee Stock Ownership Plan
(ESOPs)
We will generally not object
to ESOPs created to promote active employee ownership. However,
we will generally oppose any ESOP whose purpose is to prevent
a corporate takeover.
Changes to Charter or By-Laws
We will conduct a case-by-case
review of the proposed changes with the voting decision resting
on whether the proposed changes are in shareholder’s
best interests.
Confidential Voting
Typically, proxy voting differs
from voting in political elections in that the company is made
aware of shareholder votes as they are cast. This
enables management to contact dissenting shareholders in an
attempt to get them to change their votes.
We generally will not object
to confidential voting.
Equal Access to Proxy
Equal access proposals ask companies
to give shareholders access to proxy materials to state their
views on contested issues, including director nominations. In
some cases they would actually allow shareholders to nominate
directors. Companies
suggest that such proposals would make an increasingly complex
process even more burdensome.
In general, we will not oppose
resolutions for equal access proposals.
Golden Parachutes
Golden parachutes are severance
payments to top executives who are terminated or demoted pursuant
to a takeover. Companies
argue that such provisions are necessary to keep executives
from “jumping ship” during potential takeover attempts.
We will not object to the right
of shareholders to vote on golden parachutes because they go
above and beyond ordinary compensation practices. In
evaluating a particular golden parachute, we will examine if
considered material total management compensation, the employees
covered by the plan, and the quality of management and all
other factors deemed pertinent.
MERGERS AND ACQUISITIONS
Mergers, Restructuring and Spin-offs
A merger, restructuring, or spin-off
in some way affects a change in control of the company’s
assets. In evaluating
the merit of each issue, we will consider the terms of each
proposal. This
will include an analysis of the potential long-term value of
the investment.
On a case by case basis, we will
review management proposals for merger or restructuring to
determine the extent to which the transaction appears to offer
fair value and other proxy voting policies stated are not violated.
Poison Pills
Poison pills (or shareholder
rights plans) are triggered by an unwanted takeover attempt
and cause a variety of events to occur which may make the company
financially less attractive to the suitor. Typically,
directors have enacted these plans without shareholder approval. Most
poison pill resolutions deal with putting poison pills up for
a vote or repealing them altogether.
We typically will not object
to most proposals to put rights plans up for a shareholder
vote. In general,
poison pills will be reviewed for the additional value provided
to shareholders, if any.
Anti-Greenmail Proposals
Greenmail is the payment a corporate
raider receives in exchange for his/her shares. This
payment is usually at a premium to the market price, so while
greenmail can ensure the continued independence of the company,
it discriminates against other shareholders.
We generally will support anti-greenmail
provisions.
Opt-Out of State Anti-takeover
Law
A strategy for dealing with anti-takeover
issues has been a shareholder resolution asking a company to
opt-out of a particular state’s anti-takeover laws.
We generally will not object
to bylaws changes requiring a company to opt out of state anti-takeover
laws. Resolutions requiring companies to opt into state anti-takeover
statutes generally will be subject to further review for appropriateness.
Other Situations
In the event an issue is not
addressed in the above guidelines, we will determine on a case-by-case
basis any proposals that may arise from management or shareholders. To
the extent that a proposal from management does not infringe
on shareholder rights, we will generally support management’s
position. We may also elect to abstain or not vote on
any given matter.
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