RBC Asset Management Inc. is the primary investment adviser of the
RBC Funds (the "Funds"). In this role, RBC Asset Management
Inc. has an obligation to act in the best interests of the Funds.
This responsibility includes exercising the voting rights attached
to securities held by the Funds. It is the policy of RBC Asset Management
Inc. to exercise the voting rights of the Funds in accordance with
the best interests of the Funds.
The exercise of voting rights requires the ongoing review of the
corporate governance and performance of management of an issuer
and the consideration of the potential impact of a vote on the value
of the securities of the issuer held by the Funds. In order to discharge
its obligations under this policy, RBC Asset Management Inc. accesses
and utilizes research on management performance and corporate governance
issues, drawn from portfolio manager and analyst due diligence,
information provided by leading independent research firms and involvement
in organizations such as the Canadian Coalition for Good Governance.
As part of the governance regime for the Funds, RBC Asset Management
Inc. also seeks the advice of its Board of Governors, all of
the members of which are independent of Royal Bank of Canada and
its associates and affiliates, including RBC Asset Management Inc.
The executive team of RBC Asset Management Inc. is responsible
for the oversight and implementation of this policy.
Use of Proxy Voting Guidelines
A decision to invest in an issuer is based in part on a portfolio
manager's analysis of the performance of management and the corporate
governance of the issuer. Since a decision to invest is generally
an endorsement of management of the issuer, RBC Asset Management
Inc. will generally vote with management on routine matters. However,
since a portfolio manager must be focussed on shareholder value
on an ongoing basis, it is the responsibility of the portfolio manager
to be aware of the potential investment implications of any issue
on which securityholders are asked to vote.
RBC Asset Management Inc. has retained Institutional
Shareholder Services Canada Corp., the
Canadian subsidiary of Institutional Shareholder Services, Inc.
("ISS"), a leading, independent firm with expertise in
global proxy voting and corporate governance issues, to augment
its internal processes. In conjunction with ISS, RBC Asset Management
Inc. has established the Funds' Proxy Voting Guidelines. The Guidelines
indicate the principles of corporate governance which the Funds
will generally support through the exercise of proxy votes.
While RBC Asset Management Inc. will generally vote the Funds'
proxies strictly in accordance with the Funds' Proxy Voting Guidelines,
there may be circumstances where it believes it is in the best interests
of a Fund to vote differently than the manner contemplated by the
Guidelines. The ultimate decision as to the manner in which the
Funds' proxies will be voted rests with RBC Asset Management Inc.
Special Conflict of Interest Provisions
RBC Asset Management Inc. is a subsidiary of Royal Bank of Canada.
Some of the Funds hold common shares of the Royal Bank. There is
the potential for a conflict of interest between the interests of
the Funds and the interests of RBC Asset Management Inc. or its
employees in connection with the exercise of voting rights of the
Funds attached to the Royal Bank shares. There is also the potential
for a conflict of interest in connection with the exercise of the
Funds' voting rights attached to the shares of another issuer, where
the outcome of the vote may directly impact the price of Royal Bank
shares.
In order to balance the interests of the Funds in exercising proxies
with the desire to avoid the perception of a conflict of interest,
RBC Asset Management Inc. has instituted procedures to help ensure
that a Fund's proxy is voted:
- in accordance with the business judgment of the portfolio manager,
uninfluenced by considerations other than the best interests of
the Fund
- free from any influence by the Royal Bank of Canada and without
taking into account any consideration relevant to Royal Bank or
any of its associates or affiliates.
The procedures for voting Royal Bank proxies, and for other issuers'
proxies where there may be a conflict of interest, include escalation
of the issue to the Board of Governors for its review and recommendation,
although the responsibility for deciding how to vote
the Funds' proxies and for exercising the vote remains with RBC
Asset Management Inc.
Proxy Voting Administration
Due to the volume and diversity of securities held by the Funds,
RBC Asset Management Inc. has retained ISS to provide administrative
services to the Funds as a proxy voting agent. RBC Asset Management
Inc. has adopted proxy voting procedures to ensure that the Funds'
proxies are in fact voted by ISS in accordance with this Proxy Voting
Policy.
The Chief Investment Officer of RBC Asset Management Inc. is responsible
for overseeing the implementation of the proxy voting procedures.
Proxy Voting Guidelines
Issuers' proxies most frequently contain proposals to elect corporate
directors, to appoint external auditors and set their compensation,
to adopt or amend management compensation plans, and to amend the
capitalization of the company. These guidelines summarize the corporate
governance principles which the Funds will generally support through
the exercise of votes on these issues.
- Boards of Directors - RBC Asset Management Inc. supports
resolutions that promote the effectiveness of boards in acting
in the best interests of shareholders. It generally votes in favour
of the election of directors for boards having a majority of independent
directors and an independent chair, where the chairs of all board
committees and at least a majority of committee members are independent.
- Auditors and Auditor Compensation - Where all members
of an issuer's audit committee are independent, RBC Asset Management
Inc. will generally support the election of directors, the appointment
of auditors and the approval of the recommended auditor compensation.
- Management Compensation - The goal of RBC Asset Management
Inc. is to support compensation arrangements that are tied to
long-term corporate performance and shareholder value. These arrangements
should induce management to purchase and hold equity in the company
to better align management's interests with those of shareholders.
Stock option plans that are overly generous or excessively dilutive
to other shareholders will not be supported.
- Changes in Capitalization - RBC Asset Management Inc.
recognizes the need for management of an issuer to have flexibility
in the issue or buyback of shares to meet changing financial conditions.
Changes in capitalization will generally be supported where a
reasonable need for the change is demonstrated, however changes
resulting in excessive dilution of existing shareholder value
will not be supported.
Other issues, including those business issues specific to the issuer
or those raised by shareholders of the issuer, are addressed on
a case-by-case basis with a focus on the potential impact of the
vote on shareholder value.
