Proxy Voting

  • Proxy Voting Policy

    MASSACHUSETTS FINANCIAL SERVICES COMPANY PROXY VOTING POLICIES AND PROCEDURES

    January 1, 2024

     

    At MFS Investment Management, our core purpose is to create value responsibly. In serving the long-term economic interests of our clients, we rely on deep fundamental research, risk awareness, engagement, and effective stewardship to generate long-term risk-adjusted returns for our clients. A core component of this approach is our proxy voting activity. We believe that robust ownership practices can help protect and enhance long-term shareholder value. Such ownership practices include diligently exercising our voting rights as well as engaging with our issuers on a variety of proxy voting topics. We recognize that environmental, social and governance (“ESG”) issues may impact the long-term value of an investment, and, therefore, we consider ESG issues in light of our fiduciary obligation to vote proxies in what we believe to be in the best long- term economic interest of our clients.

    MFS Investment Management and its subsidiaries that perform discretionary investment activities (collectively, “MFS”) have adopted these proxy voting policies and procedures (“MFS Proxy Voting Policies and Procedures”) with respect to securities owned by the clients for which MFS serves as investment adviser and has been delegated the power to vote proxies on behalf of such clients. These clients include pooled investment vehicles sponsored by MFS (an “MFS Fund” or collectively, the “MFS Funds”).

    Our approach to proxy voting is guided by the overall principle that proxy voting decisions are made in what MFS believes to be the best long-term economic interests of our clients for which we have been delegated with the authority to vote on their behalf, and not in the interests of any other party, including company management or in MFS' corporate interests, including interests such as the distribution of MFS Fund shares and institutional client relationships. These Proxy Voting Policies and Procedures include voting guidelines that govern how MFS generally will vote on specific matters as well as how we monitor potential material conflicts of interest on the part of MFS that could arise in connection with the voting of proxies on behalf of MFS’ clients.

    Our approach to proxy voting is guided by the following additional principles:

    1. Consistency in application of the policy across multiple client portfolios: While MFS generally votes consistently on the same matter when securities of an issuer are held by multiple client portfolios, MFS may vote differently on the matter for different client portfolios under certain circumstances. For example, we may vote differently for a client portfolio if we have received explicit voting instructions to vote differently from such client for its own account. Likewise, MFS may vote differently if the portfolio management team responsible for a particular client account believes that a different voting instruction is in the best long-term economic interest of such account.

    2. Consistency in application of policy across shareholder meetings in most instances: As a general matter, MFS seeks to vote consistently on similar proxy proposals across all shareholder meetings. However, as many proxy proposals (e.g., mergers, acquisitions, and shareholder proposals) are analyzed on a case-by-case basis in light of the relevant facts and circumstances of the issuer and proposal MFS may vote similar proposals differently at different shareholder meetings. In addition, MFS also reserves the right to override the guidelines with respect to a particular proxy proposal when such an override is, in MFS’ best judgment, consistent with the overall principle of voting proxies in the best long-term economic interests of MFS’ clients.

    3. Consideration of company specific context and informed by engagement: As noted above MFS will seek to consider a company’s specific context in determining its voting decision. Where there are significant, complex or unusual voting items we may seek to engage with a company before making the vote to further inform our decision. Where sufficient progress has not been made on a particular issue of engagement, MFS may determine a vote against management may be warranted to reflect our concerns and influence for change in the best long-term economic interests of our clients for which MFS has been delegated with the authority to vote on their behalf.

    4. Clear decisions to best support issuer processes and decision making: To best support improved issuer decision making we strive to generally provide clear decisions by voting either For or Against each item. We may however vote to Abstain in certain situations if we believe a vote either For or Against may produce a result not in the best long-term economic interests of our clients.

    5. Transparency in approach and implementation: In addition to the publication of the MFS Proxy Voting Policies and Procedures on our website, we are open to communicating our vote intention with companies, including ahead of the annual meeting. We may do this proactively where we wish to make our view or corresponding rationale clearly known to the company. Our voting data is reported to clients upon request and publicly on a quarterly and annual basis on our website (under Proxy Voting Records & Reports). For more information about reporting on our proxy voting activities, please refer to Section F below.

    A. VOTING GUIDELINES

    The following guidelines govern how MFS will generally vote on specific matters presented for shareholder vote. These guidelines are not exhaustive, and MFS may vote on matters not identified below. In such circumstances, MFS will be governed by its general policy to vote in what MFS believes to be in the best long-term economic interest of its clients. These guidelines are written to apply to the markets and companies where MFS has significant assets invested. There will be markets and companies, such as controlled companies and smaller markets, where local governance practices are taken into consideration and exceptions may need to be applied that are not explicitly stated below. There are also markets and companies where transparency and related data limit the ability to apply these guidelines.

    Board structure and performance

    MFS generally supports the election and/or discharge of directors proposed by the board in uncontested or non-contentious elections, unless concerns have been identified, such as in relation to:

    Director independence

    MFS believes that good governance is enabled by a board with at least a simple majority of directors who are “independent” (as determined by MFS in its sole discretion)1 of management, the company and each other. MFS may not support the non-independent nominees, or other relevant director (e.g., chair of the board or the chair of the nominating committee), where insufficient independence is identified and determined to be a risk to the board’s and/or company’s effectiveness.

    As a general matter we will not support a nominee to a board if, as a result of such nominee being elected to the board, the board will consist of less than a simple majority of members who are “independent.” However, there are also governance structures and markets where we may accept lower levels of independence, such as companies required to have nonshareholder representatives on the board, controlled companies, and companies in certain markets. In these circumstances we generally expect the board to be at least one-third independent or at least half of shareholder representatives to be independent, and as a general matter we will not support the nominee to the board if as a result of such nominee’s elections these expectations are not met. In certain circumstances, we may not support another relevant director’s election. For example, in Japan, we will generally not support the most senior director where the board is not comprised of at least one-third independent directors.

    MFS also believes good governance is enabled by a board whose key committees, in particular audit, nominating and compensation/remuneration, consist entirely of “independent” directors. For Canada and US companies, MFS generally votes against any non-independent nominee that would cause any of the audit, compensation, nominating committee to not be fully independent. For Australia, Benelux, Ireland, New Zealand, Switzerland, and UK companies MFS generally votes against any non-independent nominee that would cause the audit or compensation/remuneration committee to not be fully independent. For Korea companies MFS generally votes against any non-independent nominee that would cause the audit committee to not be fully independent. In other markets MFS generally votes against non-independent nominees or other relevant director if a majority of committee members or the chair of the audit committee are not independent. However, there are also governance structures (e.g., controlled companies or boards with non-shareholder representatives) and markets where we may accept lower levels of independence for these key committees.

    In general, MFS believes that good governance is enabled by a board with at least a simple majority of directors who are independent and whose key committees consist entirely of independent directors. While there are currently markets where we accept lower levels of independence, we expect to expand these independence guidelines to all markets over time.

    Tenure in leadership roles

    For a board with a lead independent director whose overall tenure on the board equals or exceeds twenty (20) years, we will generally engage with the company to encourage refreshment of that role, and we may vote against the long tenured lead director if progress on refreshment is not made or being considered by the company’s board or we identify other concerns that suggest more immediate refreshment is necessary.

    Overboarding

    All directors on a board should have sufficient time and attention to fulfil their duties and play their part in achieving effective oversight, both in normal and exceptional circumstances.

    MFS may also vote against any director if we deem such nominee to have board roles or outside time commitments that we believe would impair their ability to dedicate sufficient time and attention to their director role.

    As a general guideline, MFS will generally vote against a director’s election if they:

    • Are not a CEO or executive chair of a public company, but serve on more than four (4) public company boards in total at US companies and more than five (5) public boards for companies in other non-US markets.
    • Are a CEO or executive chair of a public company, and serve on more than two (2) public company boards in total at US companies and two (2) outside public company boards for companies in non-US markets. In these cases, MFS would only apply a vote against at the meetings of the companies where the director is non-executive.

    MFS may consider exceptions to this guideline if: (i) the company has disclosed the director's plans to step down from the number of public company boards exceeding the above limits, as applicable, within a reasonable time; or (ii) the director exceeds the permitted number of public company board seats solely due to either his/her board service on an affiliated company (e.g., a subsidiary), or service on more than one investment company within the same investment company complex (as defined by applicable law), or iii) after engagement we believe the director’s ability to dedicate sufficient time and attention is not impaired by the external roles.

    Diversity

    MFS believes that a well-balanced board with diverse perspectives is a foundation for sound corporate governance, and this is best spread across the board rather than concentrated in one or a few individuals. We take a holistic view on the dimensions of diversity that can lead to diversity of perspectives and stronger oversight and governance. Gender diversity is one such dimension and where good disclosure and data enables a specific expectation and voting guideline.

    On gender representation specifically MFS wishes to see companies in all markets achieve a consistent minimum representation of women of at least a third of the board, and we are likely to increase our voting guideline towards this over time.

    Currently, where data is available, MFS will generally vote against the chair of the nominating and governance committee or other most relevant position at any company whose board is comprised of an insufficient representation of directors who are women for example:

    • At US, Canadian, European, Australian, New Zealand companies: less than 24%.
    • At Brazilian companies: less than 20%. 
    • At Chinese, Hong Kong, Indian, Japanese, Korean, Chilean and Mexican companies: less than 10%.

    As a general matter, MFS will vote against the chair of the nominating committee of US S&P 500 companies and UK FTSE 100 companies that have failed to appoint at least one director who identifies as either an underrepresented ethnic/racial minority or a member of the LGBTQ+ community.

    MFS may consider exceptions to these guidelines if we believe that the company is transitioning towards these goals or has provided clear and compelling reasons for why they have been unable to comply with these goals.

    For other markets, we will engage on board diversity and may vote against the election of directors where we fail to see progress.

    Board size

    MFS believes that the size of the board can have an effect on the board's ability to function efficiently and effectively. While MFS may evaluate board size on a case-by-case basis, we will typically vote against the chair of the nominating and governance committee in instances where the size of the board is greater than sixteen (16) members. An exception to this is companies with requirements to have equal representation of employees on the board where we expect a maximum of twenty (20) members.

    Other concerns related to director election:

    MFS may also not support some or all nominees standing for election to a board if we determine:

    • There are concerns with a director or board regarding performance, governance or oversight, which may include:
      • Clear failures in oversight or execution of duties, including the identification, management and reporting of material risks and information, at the company or any other at which the nominee has served. This may include climate-related risks;
      • A failure by the director or board of the issuer to take action to eliminate shareholder unfriendly provisions in the issuer's charter documents; or 
      • Allowing the hedging and/or significant pledging of company shares by executives.
    • A director attended less than 75% of the board and/or relevant committee meetings in the previous year without a valid reason stated in the proxy materials or other annual governance reporting;
    • The board or relevant committee has not adequately responded to an issue that received a significant vote against management from shareholders; 
    • The board has implemented a poison pill without shareholder approval since the last annual meeting and such poison pill is not on the subsequent shareholder meeting's agenda (including those related to net-operating loss carry-forwards); or 
    • In Japan, the company allocates a significant portion of its net assets to crossshareholdings. 

    Unless the concern is commonly accepted market practice, MFS may also not support some or all nominees standing for election to a nominating committee if we determine (in our sole discretion) that the chair of the board is not independent and there is no strong lead independent director role in place, or an executive director is a member of a key board committee.

    Where individual directors are not presented for election in the year MFS may apply the same vote position to votes on the discharge of the director. Where the election of directors is bundled MFS may vote against the whole group if there is concern with an individual director and no other vote related to that director.

    Proxy contests

    From time to time, a shareholder may express alternative points of view in terms of a company's strategy, capital allocation, or other issues. Such a shareholder may also propose a slate of director nominees different than the slate of director nominees proposed by the company (a "Proxy Contest"). MFS will analyze Proxy Contests on a case-by-case basis, taking into consideration the track record and current recommended initiatives of both company management and the dissident shareholder(s). MFS will support the director nominee(s) that we believe is in the best, long-term economic interest of our clients.

    Other items related to board accountability:

    Majority voting for the election of directors: MFS generally supports reasonably crafted proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of the plurality standard for electing directors (including binding resolutions requesting that the board amend the company’s bylaws), provided the proposal includes a carve-out for a plurality voting standard when there are more director nominees than board seats (e.g., contested elections).

    Declassified boards: MFS generally supports proposals to declassify a board (i.e., a board in which only a sub-set of board members is elected each year) for all issuers other than for certain closed-end investment companies. MFS generally opposes proposals to classify a board for issuers other than for certain closed-end investment companies.

    The right to call a special meeting or act by written consent:

    MFS believes a threshold of 15-25% is an appropriate balance of shareholder and company interests, with thresholds of 15% for large and widely held companies.

    MFS will generally support management proposals to establish these rights. MFS will generally support shareholder proposals to adjust existing rights to within the thresholds described above. MFS may also support shareholder proposals to establish the right at a threshold of 10% or above if no existing right exists and no right is presented for vote by management within the threshold range described above.

    MFS will support shareholder proposals to establish the right to act by majority written consent if shareholders do not have the right to call a special meeting at the thresholds described above or lower.

    Independent chairs: MFS believes boards should include some form of independent leadership responsible for amplifying the views of independent directors and setting meeting agendas, and this is often best positioned as an independent chair of the board or a lead independent director. We review the merits of a change in leadership structure on a case-by-case basis.

    Proxy access: MFS believes that the ability of qualifying shareholders to nominate a certain number of directors on the company's proxy statement ("Proxy Access") may have corporate governance benefits. However, such potential benefits must be balanced by its potential misuse by shareholders. Therefore, MFS generally supports Proxy Access proposals at U.S. issuers that establish ownership criteria of 3% of the company held continuously for a period of 3 years. In our view, such qualifying shareholders should have the ability to nominate at least 2 directors. We also believe companies should be mindful of imposing any undue impediments within their bylaws that may render Proxy Access impractical, including re-submission thresholds for director nominees via Proxy Access.

    Items related to shareholder rights:

    Anti-takeover measures: In general, MFS votes against any measure that inhibits capital appreciation in a stock, including proposals that protect management from action by shareholders. These types of proposals take many forms, ranging from “poison pills” and “shark repellents” to super-majority requirements. While MFS may consider the adoption of a prospective “poison pill” or the continuation of an existing “poison pill" on a case-bycase basis, MFS generally votes against such anti-takeover devices.

    MFS will consider any poison pills designed to protect a company’s net-operating loss carryforwards on a case-by-case basis, weighing the accounting and tax benefits of such a pill against the risk of deterring future acquisition candidates. MFS will also consider, on a case-by-case basis, proposals designed to prevent tenders which are disadvantageous to shareholders such as tenders at below market prices and tenders for substantially less than all shares of an issuer.

    MFS generally supports proposals that seek to remove governance structures that insulate management from shareholders. MFS generally votes for proposals to rescind existing “poison pills” and proposals that would require shareholder approval to adopt prospective “poison pills.”

    Cumulative voting: MFS generally opposes proposals that seek to introduce cumulative voting and supports proposals that seek to eliminate cumulative voting. In either case, MFS will consider whether cumulative voting is likely to enhance the interests of MFS’ clients as minority shareholders.

    One-share one-vote: As a general matter, MFS supports proportional alignment of voting rights with economic interest, and may not support a proposal that deviates from this approach. Where multiple share classes or other forms of disproportionate control are in place, we expect these to have sunset provisions of generally no longer than seven years after which the structure becomes single class one-share one-vote.

    Reincorporation and reorganization proposals: When presented with a proposal to reincorporate a company under the laws of a different state, or to effect some other type of corporate reorganization, MFS considers the underlying purpose and ultimate effect of such a proposal in determining whether or not to support such a measure. MFS generally votes with management in regards to these types of proposals, however, if MFS believes the proposal is not in the best long-term economic interests of its clients, then MFS may vote against management (e.g., the intent or effect would be to create additional inappropriate impediments to possible acquisitions or takeovers).

    Other business: MFS generally votes against "other business" proposals as the content of any such matter is not known at the time of our vote.

    Items related to capitalization proposals, capital allocation and corporate

    actions:

    Issuance of stock: There are many legitimate reasons for the issuance of stock.

    Nevertheless, as noted above under “Stock Plans,” when a stock option plan (either

    individually or when aggregated with other plans of the same company) would

    substantially dilute the existing equity (e.g., by more than approximately 10-15%), MFS

    generally votes against the plan.

    MFS typically votes against proposals where management is asking for authorization to

    issue common or preferred stock with no reason stated (a “blank check”) because the

    unexplained authorization could work as a potential anti-takeover device. MFS may also

    vote against the authorization or issuance of common or preferred stock if MFS determines

    that the requested authorization is excessive or not warranted. MFS will consider the

    ‐ 9 ‐

    1051727

    duration of the authority and the company’s history in using such authorities in making its

    decision.

    Repurchase programs: MFS generally supports proposals to institute share repurchase

    plans in which all shareholders have the opportunity to participate on an equal basis. Such

    plans may include a company acquiring its own shares on the open market, or a company

    making a tender offer to its own shareholders.

    Mergers, acquisitions & other special transactions: MFS considers proposals with

    respect to mergers, acquisitions, sale of company assets, share and debt issuances and other

    transactions that have the potential to affect ownership interests on a case-by-case basis.

    When analyzing such proposals, we use a variety of materials and information, including

    our own internal research as well as the research of third-party service providers.

    Independent Auditors

    MFS generally supports the election of auditors but may determine to vote against the

    election of a statutory auditor and/or members of the audit committee in certain markets if

    MFS reasonably believes that the statutory auditor is not truly independent, sufficiently

    competent or there are concerns related to the auditor’s work or opinion. To inform this

    view, MFS may evaluate the use of non-audit services in voting decisions when the

    percentage of non-audit fees to total auditor fees exceeds 40%, in particular if recurring.

    Executive Compensation

    MFS believes that competitive compensation packages are necessary to attract, motivate

    and retain executives. We seek compensation plans that are geared towards durable longterm

    value creation and aligned with shareholder interests and experience, such as where

    we believe:

     The plan is aligned with the company’s current strategic priorities with a focused set of

    clear, suitably ambitious and measurable performance conditions;

    o Practices of concern may include an incentive plan without financial performance

    conditions, without a substantial majority weighting to quantitative metrics or that vests

    substantially below median performance.

     Meaningful portions of awards are paid in shares and based on long performance

    periods (e.g., at least three years);

     Awards and potential future awards, reflect the nature of the business, value created

    and the executive’s performance;

    o Practices of concern may include large windfall gains or award increases without

    justification.

     Awards are fair, not detrimental to firm culture and reflect the policies approved by

    shareholders at previous meetings with appropriate use of discretion (positive and

    negative); and

    ‐ 10 ‐

    1051727

    o Practices of concern may include one-off awards without justification or robust

    performance conditions, equity awards repriced without shareholder approval,

    substantial executive or director share pledging, egregious perks or substantial internal

    pay imbalances.

     The calculation and justification for awards is sufficiently transparent for investors to

    appraise alignment with performance and future incentives.

    MFS will analyze votes on executive compensation on a case-by-case basis. When

    analyzing compensation practices, MFS generally uses a two-step process. MFS first seeks

    to identify any compensation practices that are potentially of concern by using both internal

    research and the research of third-party service providers. Where such practices are

    identified, MFS will then analyze the compensation practices in light of relevant facts and

    circumstances. MFS will vote against an issuer's executive compensation practices if MFS

    determines that such practices are not geared towards durable long-term value creation

    and are misaligned with the best, long-term economic interest of our clients. When

    analyzing whether an issuer’s compensation practices are aligned with the best, long-term

    economic interest of our clients, MFS uses a variety of materials and information, including

    our own internal research and engagement with issuers as well as the research of thirdparty

    service providers.

    MFS generally supports proposals to include an advisory shareholder vote on an issuer’s

    executive compensation practices on an annual basis.

    MFS does not have formal voting guideline in regards to the inclusion of ESG incentives

    in a company’s compensation plan; however, where such incentives are included, we

    believe:

     The incentives should be tied to issues that are financially material for the issuer in

    question.

     They should predominantly include quantitative or other externally verifiable

    outcomes rather than qualitative measures.

     The weighting of incentives should be appropriately balanced with other strategic

    priorities.

    We believe non-executive directors may be compensated in cash or stock but these should

    not be performance-based.

    Stock Plans

    MFS may oppose stock option programs and restricted stock plans if they:

     Provide unduly generous compensation for officers, directors or employees, or

    could result in excessive dilution to other shareholders. As a general guideline,

    MFS votes against restricted stock, stock option, non-employee director, omnibus

    stock plans and any other stock plan if all such plans for a particular company

    involve potential excessive dilution (which we typically consider to be, in the

    aggregate, of more than 15%). MFS will generally vote against stock plans that

    ‐ 11 ‐

    1051727

    involve potential dilution, in aggregate, of more than 10% at U.S. issuers that are

    listed in the Standard and Poor’s 100 index as of December 31 of the previous year.

     Allow the board or the compensation committee to re-price underwater options or

    to automatically replenish shares without shareholder approval.

     Do not require an investment by the optionee, give “free rides” on the stock price,

    or permit grants of stock options with an exercise price below fair market value on

    the date the options are granted.

    In the cases where a stock plan amendment is seeking qualitative changes and not

    additional shares, MFS will vote on a case-by-case basis.

    MFS will consider proposals to exchange existing options for newly issued options,

    restricted stock or cash on a case-by-case basis, taking into account certain factors,

    including, but not limited to, whether there is a reasonable value-for-value

    exchange and whether senior executives are excluded from participating in the

    exchange.

    From time to time, MFS may evaluate a separate, advisory vote on severance

    packages or “golden parachutes” to certain executives at the same time as a vote on

    a proposed merger or acquisition. MFS will vote on a severance package on a caseby-

    case basis, and MFS may vote against the severance package regardless of

    whether MFS supports the proposed merger or acquisition.

    MFS supports the use of a broad-based employee stock purchase plans to increase

    company stock ownership by employees, provided that shares purchased under the

    plan are acquired for no less than 85% of their market value and do not result in

    excessive dilution.

    MFS may also not support some or all nominees standing for election to a

    compensation/remuneration committee if:

     MFS votes against consecutive pay votes;

     MFS determines that a particularly egregious executive compensation practice has

    occurred. This may include use of discretion to award excessive payouts. MFS believes

    compensation committees should have flexibility to apply discretion to ensure final

    payments reflect long-term performance as long as this is used responsibly;

     MFS believes the committee is inadequately incentivizing or rewarding executives, or

    is overseeing pay practices that we believe are detrimental the long-term success of the

    company; or

     An advisory pay vote is not presented to shareholders, or the company has not

    implemented the advisory vote frequency supported by a plurality/majority of

    shareholders.

    ‐ 12 ‐

    1051727

    Shareholder Proposals on Executive Compensation

    MFS generally opposes shareholder proposals that seek to set rigid restrictions on

    executive compensation as MFS believes that compensation committees should retain

    flexibility to determine the appropriate pay package for executives.

    MFS may support reasonably crafted shareholder proposals that:

     Require shareholder approval of any severance package for an executive officer that

    exceeds a certain multiple of such officer’s annual compensation that is not determined

    in MFS’ judgment to be excessive;

     Require the issuer to adopt a policy to recover the portion of performance-based

    bonuses and awards paid to senior executives that were not earned based upon a

    significant negative restatement of earnings, or other significant misconduct or

    corporate failure, unless the company already has adopted a satisfactory policy on the

    matter;

     Expressly prohibit the backdating of stock options; or,

     Prohibit the acceleration of vesting of equity awards upon a broad definition of a

    "change-in-control" (e.g., single or modified single-trigger).

    Environmental and Social Proposals

    Where management presents climate action/transition plans to shareholder vote, we will

    evaluate the level of ambition over time, scope, credibility and transparency of the plan in

    determining our support. Where companies present climate action progress reports to

    shareholder vote we will evaluate evidence of implementation of and progress against the

    plan and level of transparency in determining our support.

    Most vote items related to environmental and social topics are presented by shareholders.

    As these proposals, even on the same topic, can vary significantly in scope and action

    requested, these proposals are typically assessed on a case-by-case basis.

    For example, MFS may support reasonably crafted proposals:

     On climate change: that seek disclosure consistent with the recommendations of a

    generally accepted global framework (e.g., Task Force on Climate-related

    Financial Disclosures) that is appropriately audited and that is presented in a way

    that enables shareholders to assess and analyze the company's data; or request

    appropriately robust and ambitious plans or targets.

     Other environmental: that request the setting of targets for reduction of

    environmental impact or disclosure of key performance indicators or risks related

    to the impact, where materially relevant to the business. An example of such a

    proposal could be reporting on the impact of plastic use or waste stemming from

    company products or packaging.

     On diversity: that seek to amend a company’s equal employment opportunity policy

    to prohibit discrimination; that request good practice employee-related DEI

    ‐ 13 ‐

    1051727

    disclosure; or that seek external input and reviews on specific related areas of

    performance.

     On lobbying: that request good practice disclosure regarding a company’s political

    contributions and lobbying payments and policy (including trade organizations and

    lobbying activity).

     On tax: that request reporting in line with the GRI 207 Standard on Tax.

     On corporate culture and/or human/worker rights: that request additional disclosure

    on corporate culture factors like employee turnover and/or management of human

    and labor rights.

    MFS is unlikely to support a proposal if we believe that the proposal is unduly costly,

    restrictive, unclear, burdensome, has potential unintended consequences, is unlikely to lead

    to tangible outcomes or we don’t believe the issue is material or the action a priority for

    the business. MFS is also unlikely to support a proposal where the company already

    provides publicly available information that we believe is sufficient to enable shareholders

    to evaluate the potential opportunities and risks on the subject of the proposal, if the request

    of the proposal has already been substantially implemented, or if through engagement we

    gain assurances that it will be substantially implemented.

    The laws of various states or countries may regulate how the interests of certain clients

    subject to those laws (e.g., state pension plans) are voted with respect to environmental,

    social and governance issues. Thus, it may be necessary to cast ballots differently for

    certain clients than MFS might normally do for other clients.

    B. GOVERNANCE OF PROXY VOTING ACTIVITIES

    From time to time, MFS may receive comments on the MFS Proxy Voting Policies and

    Procedures from its clients. These comments are carefully considered by MFS when it

    reviews these MFS Proxy Voting Policies and Procedures and revises them as appropriate,

    in MFS' sole judgment.

    1. MFS Proxy Voting Committee

    The administration of these MFS Proxy Voting Policies and Procedures is overseen by the

    MFS Proxy Voting Committee, which includes senior personnel from the MFS Legal and

    Global Investment and Client Support Departments as well as members of the investment

    team. The Proxy Voting Committee does not include individuals whose primary duties

    relate to client relationship management, marketing, or sales. The MFS Proxy Voting

    Committee:

    a. Reviews these MFS Proxy Voting Policies and Procedures at least annually and

    recommends any amendments considered to be necessary or advisable;

    b. Determines whether any potential material conflict of interest exists with respect to

    instances in which MFS (i) seeks to override these MFS Proxy Voting Policies and

    ‐ 14 ‐

    1051727

    Procedures; (ii) votes on ballot items not governed by these MFS Proxy Voting Policies

    and Procedures; (iii) evaluates an excessive executive compensation issue in relation

    to the election of directors; or (iv) requests a vote recommendation from an MFS

    portfolio manager or investment analyst (e.g., mergers and acquisitions);

    c. Considers special proxy issues as they may arise from time to time; and

    d. Determines engagement priorities and strategies with respect to MFS' proxy voting

    activities

    The day-to-day application of the MFS Proxy Voting Policies and Procedures are

    conducted by the MFS stewardship team led by MFS’ Director of Global Stewardship. The

    stewardship team are members of MFS’ investment team.

    2. Potential Conflicts of Interest

    These policies and procedures are intended to address any potential material conflicts of

    interest on the part of MFS or its subsidiaries that are likely to arise in connection with the

    voting of proxies on behalf of MFS’ clients. If such potential material conflicts of interest

    do arise, MFS will analyze, document and report on such potential material conflicts of

    interest (see below) and shall ultimately vote the relevant ballot items in what MFS believes

    to be the best long-term economic interests of its clients. The MFS Proxy Voting

    Committee is responsible for monitoring and reporting with respect to such potential

    material conflicts of interest.

    The MFS Proxy Voting Committee is responsible for monitoring potential material

    conflicts of interest on the part of MFS or its subsidiaries that could arise in connection

    with the voting of proxies on behalf of MFS’ clients. Due to the client focus of our

    investment management business, we believe that the potential for actual material conflict

    of interest issues is small. Nonetheless, we have developed precautions to assure that all

    votes are cast in the best long-term economic interest of its clients.2 Other MFS internal

    policies require all MFS employees to avoid actual and potential conflicts of interests

    between personal activities and MFS’ client activities. If an employee (including

    investment professionals) identifies an actual or potential conflict of interest with respect

    to any voting decision (including the ownership of securities in their individual portfolio),

    then that employee must recuse himself/herself from participating in the voting process.

    Any significant attempt by an employee of MFS or its subsidiaries to unduly influence

    MFS’ voting on a particular proxy matter should also be reported to the MFS Proxy Voting

    Committee.

    In cases where ballots are voted in accordance with these MFS Proxy Voting Policies and

    Procedures, no material conflict of interest will be deemed to exist. In cases where (i) MFS

    2 For clarification purposes, note that MFS votes in what we believe to be the best, long-term economic interest of

    our clients entitled to vote at the shareholder meeting, regardless of whether other MFS clients hold “short”

    positions in the same issuer or whether other MFS clients hold an interest in the company that is not entitled to vote

    at the shareholder meeting (e.g., bond holder).

    ‐ 15 ‐

    1051727

    is considering overriding these MFS Proxy Voting Policies and Procedures, (ii) matters

    presented for vote are not governed by these MFS Proxy Voting Policies and Procedures,

    (iii) MFS identifies and evaluates a potentially concerning executive compensation issue

    in relation to an advisory pay or severance package vote, or (iv) a vote recommendation is

    requested from an MFS portfolio manager or investment analyst for proposals relating to a

    merger, an acquisition, a sale of company assets or other similar transactions (collectively,

    “Non-Standard Votes”); the MFS Proxy Voting Committee will follow these procedures:

    a. Compare the name of the issuer of such ballot or the name of the shareholder (if

    identified in the proxy materials) making such proposal against a list of significant

    current (i) distributors of MFS Fund shares, and (ii) MFS institutional clients (the “MFS

    Significant Distributor and Client List”);

    b. If the name of the issuer does not appear on the MFS Significant Distributor and Client

    List, then no material conflict of interest will be deemed to exist, and the proxy will be

    voted as otherwise determined by the MFS Proxy Voting Committee;

    c. If the name of the issuer appears on the MFS Significant Distributor and Client List,

    then the MFS Proxy Voting Committee will be apprised of that fact and each member

    of the MFS Proxy Voting Committee (with the participation of MFS' Conflicts Officer)

    will carefully evaluate the proposed vote in order to ensure that the proxy ultimately is

    voted in what MFS believes to be the best long-term economic interests of MFS’

    clients, and not in MFS' corporate interests; and

    d. For all potential material conflicts of interest identified under clause (c) above, the MFS

    Proxy Voting Committee will document: the name of the issuer, the issuer’s

    relationship to MFS, the analysis of the matters submitted for proxy vote, the votes as

    to be cast and the reasons why the MFS Proxy Voting Committee determined that the

    votes were cast in the best long-term economic interests of MFS’ clients, and not in

    MFS' corporate interests. A copy of the foregoing documentation will be provided to

    MFS’ Conflicts Officer.

    The members of the MFS Proxy Voting Committee are responsible for creating and

    maintaining the MFS Significant Distributor and Client List, in consultation with MFS’

    distribution and institutional business units. The MFS Significant Distributor and Client

    List will be reviewed and updated periodically, as appropriate.

    For instances where MFS is evaluating a director nominee who also serves as a

    director/trustee of the MFS Funds, then the MFS Proxy Voting Committee will adhere to

    the procedures described in section (c) above regardless of whether the portfolio company

    appears on our Significant Distributor and Client List. In doing so, the MFS Proxy Voting

    Committee will adhere to such procedures for all Non-Standard Votes at the company’s

    shareholder meeting at which the director nominee is standing for election.

    If an MFS client has the right to vote on a matter submitted to shareholders by Sun Life

    Financial, Inc. or any of its affiliates (collectively "Sun Life"), MFS will cast a vote on

    ‐ 16 ‐

    1051727

    behalf of such MFS client as such client instructs or in the event that a client instruction is

    unavailable pursuant to the recommendations of Institutional Shareholder Services, Inc.'s

    ("ISS") benchmark policy, or as required by law. Likewise, if an MFS client has the right

    to vote on a matter submitted to shareholders by a public company for which an MFS Fund

    director/trustee serves as an executive officer, MFS will cast a vote on behalf of such MFS

    client as such client instructs or in the event that client instruction is unavailable pursuant

    to the recommendations of ISS or as required by law.

    Except as described in the MFS Fund's Prospectus, from time to time, certain MFS Funds

    (the “top tier fund”) may own shares of other MFS Funds (the “underlying fund”). If an

    underlying fund submits a matter to a shareholder vote, the top tier fund will generally vote

    its shares in the same proportion as the other shareholders of the underlying fund. If there

    are no other shareholders in the underlying fund, the top tier fund will vote in what MFS

    believes to be in the top tier fund’s best long-term economic interest. If an MFS client has

    the right to vote on a matter submitted to shareholders by a pooled investment vehicle

    advised by MFS (excluding those vehicles for which MFS' role is primarily portfolio

    management and is overseen by another investment adviser), MFS will cast a vote on

    behalf of such MFS client in the same proportion as the other shareholders of the pooled

    investment vehicle.

    3. Review of Policy

    The MFS Proxy Voting Policies and Procedures are available on www.mfs.com and may

    be accessed by both MFS’ clients and the companies in which MFS’ clients invest. The

    MFS Proxy Voting Policies and Procedures are reviewed by the Proxy Voting Committee

    annually. From time to time, MFS may receive comments on the MFS Proxy Voting

    Policies and Procedures from its clients. These comments are carefully considered by MFS

    when it reviews these MFS Proxy Voting Policies and Procedures and revises them as

    appropriate, in MFS' sole judgment.

    C. OTHER ADMINISTRATIVE MATTERS & USE OF PROXY

    ADVISORY FIRMS

    1. Use of Proxy Advisory Firms

    MFS, on behalf of itself and certain of its clients (including the MFS Funds) has entered

    into an agreement with an independent proxy administration firm pursuant to which the

    proxy administration firm performs various proxy vote related administrative services such

    as vote processing and recordkeeping functions. Except as noted below, the proxy

    administration firm for MFS and its clients, including the MFS Funds, is ISS. The proxy

    administration firm for MFS Development Funds, LLC is Glass, Lewis & Co., Inc. (“Glass

    Lewis”; Glass Lewis and ISS are each hereinafter referred to as the “Proxy

    Administrator”).

    The Proxy Administrator receives proxy statements and proxy ballots directly or indirectly

    from various custodians, logs these materials into its database and matches upcoming

    ‐ 17 ‐

    1051727

    meetings with MFS Fund and client portfolio holdings, which are inputted into the Proxy

    Administrator’s system by an MFS holdings data-feed. The Proxy Administrator then

    reconciles a list of all MFS accounts that hold shares of a company’s stock and the number

    of shares held on the record date by these accounts with the Proxy Administrator’s list of

    any upcoming shareholder’s meeting of that company. If a proxy ballot has not been

    received, the Proxy Administrator and/or MFS may contact the client’s custodian

    requesting the reason as to why a ballot has not been received. Through the use of the Proxy

    Administrator system, ballots and proxy material summaries for all upcoming

    shareholders’ meetings are available on-line to certain MFS employees and members of

    the MFS Proxy Voting Committee.

    MFS also receives research reports and vote recommendations from proxy advisory firms.

    These reports are only one input among many in our voting analysis, which includes other

    sources of information such as proxy materials, company engagement discussions, other

    third-party research and data. MFS has due diligence procedures in place to help ensure

    that the research we receive from our proxy advisory firms is materially accurate and that

    we address any material conflicts of interest involving these proxy advisory firms. This

    due diligence includes an analysis of the adequacy and quality of the advisory firm

    staff, its conflict of interest policies and procedures and independent audit reports. We also

    review the proxy policies, methodologies and peer-group-composition methodology of our

    proxy advisory firms at least annually. Additionally, we also receive reports from our proxy

    advisory firms regarding any violations or changes to conflict of interest procedures.

    2. Analyzing and Voting Proxies

    Proxies are voted in accordance with these MFS Proxy Voting Policies and Procedures.

    The Proxy Administrator, at the prior direction of MFS, automatically votes all proxy

    matters that do not require the particular exercise of discretion or judgment with respect to

    these MFS Proxy Voting Policies and Procedures as determined by MFS. In these

    circumstances, if the Proxy Administrator, based on MFS' prior direction, expects to vote

    against management with respect to a proxy matter and MFS becomes aware that the issuer

    has filed or will file additional soliciting materials sufficiently in advance of the deadline

    for casting a vote at the meeting, MFS will consider such information when casting its vote.

    With respect to proxy matters that require the particular exercise of discretion or judgment,

    the MFS Proxy Voting Committee or its representatives considers and votes on those proxy

    matters. In analyzing all proxy matters, MFS uses a variety of materials and information,

    including, but not limited to, the issuer's proxy statement and other proxy solicitation

    materials (including supplemental materials), our own internal research and research and

    recommendations provided by other third parties (including research of the Proxy

    Administrator). As described herein, MFS may also determine that it is beneficial in

    analyzing a proxy voting matter for members of the Proxy Voting Committee or its

    representatives to engage with the company on such matter. MFS also uses its own internal

    research, the research of Proxy Administrators and/or other third party research tools and

    vendors to identify (i) circumstances in which a board may have approved an executive

    compensation plan that is excessive or poorly aligned with the portfolio company's

    business or its shareholders, (ii) environmental, social and governance proposals that

    ‐ 18 ‐

    1051727

    warrant further consideration, or (iii) circumstances in which a company is not in

    compliance with local governance or compensation best practices. Representatives of the

    MFS Proxy Voting Committee review, as appropriate, votes cast to ensure conformity with

    these MFS Proxy Voting Policies and Procedures.

    For certain types of votes (e.g., mergers and acquisitions, proxy contests and capitalization

    matters), MFS’ stewardship team will seek a recommendation from the MFS investment

    analyst that is responsible for analyzing the company and/or portfolio managers that holds

    the security in their portfolio.3 For certain other votes that require a case-by-case analysis

    per these policies (e.g., potentially excessive executive compensation issues, or certain

    shareholder proposals), the stewardship team will likewise consult with MFS investment

    analysts and/or portfolio managers.3 However, the MFS Proxy Voting Committee will

    ultimately be responsible for the manner in which all ballots are voted.

    As noted above, MFS reserves the right to override the guidelines when such an override

    is, in MFS’ best judgment, consistent with the overall principle of voting proxies in the

    best long-term economic interests of MFS’ clients. Any such override of the guidelines

    shall be analyzed, documented and reported in accordance with the procedures set forth in

    these policies.

    In accordance with its contract with MFS, the Proxy Administrator also generates a variety

    of reports for the MFS Proxy Voting Committee and makes available on-line various other

    types of information so that the MFS Proxy Voting Committee or its representatives may

    review and monitor the votes cast by the Proxy Administrator on behalf of MFS’ clients.

    For those markets that utilize a "record date" to determine which shareholders are eligible

    to vote, MFS generally will vote all eligible shares pursuant to these guidelines regardless

    of whether all (or a portion of) the shares held by our clients have been sold prior to the

    meeting date.

    3. Securities Lending

    From time to time, certain MFS Funds may participate in a securities lending program. In

    the event MFS or its agent receives timely notice of a shareholder meeting for a U.S.

    security, MFS and its agent will attempt to recall any securities on loan before the

    meeting’s record date so that MFS will be entitled to vote these shares. However, there

    may be instances in which MFS is unable to timely recall securities on loan for a

    U.S. security, in which cases MFS will not be able to vote these shares. MFS will report to

    the appropriate board of the MFS Funds those instances in which MFS is not able to timely

    recall the loaned securities. MFS generally does not recall non-U.S. securities on loan

    because there may be insufficient advance notice of proxy materials, record dates, or vote

    3 From time to time, due to travel schedules and other commitments, an appropriate portfolio manager or

    research analyst may not be available to provide a vote recommendation. If such a recommendation cannot

    be obtained within a reasonable time prior to the cut-off date of the shareholder meeting, the MFS Proxy

    Voting Committee may determine to abstain from voting.

    ‐ 19 ‐

    1051727

    cut-off dates to allow MFS to timely recall the shares in certain markets on an automated

    basis. As a result, non-U.S. securities that are on loan will not generally be voted. If MFS

    receives timely notice of what MFS determines to be an unusual, significant vote for a non-

    U.S. security whereas MFS shares are on loan and determines that voting is in the best

    long-term economic interest of shareholders, then MFS will attempt to timely recall the

    loaned shares.

    4. Potential impediments to voting

    In accordance with local law or business practices, some companies or custodians prevent

    the sale of shares that have been voted for a certain period beginning prior to the

    shareholder meeting and ending on the day following the meeting (“share blocking”).

    Depending on the country in which a company is domiciled, the blocking period may begin

    a stated number of days prior or subsequent to the meeting (e.g., one, three or five days) or

    on a date established by the company. While practices vary, in many countries the block

    period can be continued for a longer period if the shareholder meeting is adjourned and

    postponed to a later date. Similarly, practices vary widely as to the ability of a shareholder

    to have the “block” restriction lifted early (e.g., in some countries shares generally can be

    “unblocked” up to two days prior to the meeting whereas in other countries the removal of

    the block appears to be discretionary with the issuer’s transfer agent). Due to these

    restrictions, MFS must balance the benefits to its clients of voting proxies against the

    potentially serious portfolio management consequences of a reduced flexibility to sell the

    underlying shares at the most advantageous time. For companies in countries with share

    blocking periods or in markets where some custodians may block shares, the disadvantage

    of being unable to sell the stock regardless of changing conditions generally outweighs the

    advantages of voting at the shareholder meeting for routine items. Accordingly, MFS will

    not vote those proxies in the absence of an unusual, significant vote that outweighs the

    disadvantage of being unable to sell the stock.

    From time to time, governments may impose economic sanctions which may prohibit us

    from transacting business with certain companies or individuals. These sanctions may also

    prohibit the voting of proxies at certain companies or on certain individuals. In such

    instances, MFS will not vote at certain companies or on certain individuals if it determines

    that doing so is in violation of the sanctions.

    In limited circumstances, other market specific impediments to voting shares may limit our

    ability to cast votes, including, but not limited to, late delivery of proxy materials, untimely

    vote cut-off dates, power of attorney and share re-registration requirements, or any other

    unusual voting requirements. In these limited instances, MFS votes securities on a bestefforts

    basis in the context of the guidelines described above.

    D. ENGAGEMENT

    As part of its approach to stewardship MFS engages with companies in which it invests on

    a range of priority issues. Where sufficient progress has not been made on a particular issue

    of engagement, MFS may determine a vote against management may be warranted to

    ‐ 20 ‐

    1051727

    reflect our concerns and influence for change in the best long-term economic interests of

    our clients.

    MFS may determine that it is appropriate and beneficial to engage in a dialogue or written

    communication with a company or other shareholders specifically regarding certain

    matters on the company’s proxy statement that are of concern to shareholders, including

    environmental, social and governance matters. This may be to discuss and build our

    understanding of a certain proposal, or to provide further context to the company on our

    vote decision.

    A company or shareholder may also seek to engage with members of the MFS Proxy

    Voting Committee or Stewardship Team in advance of the company’s formal proxy

    solicitation to review issues more generally or gauge support for certain contemplated

    proposals. For further information on requesting engagement with MFS on proxy voting

    issues or information about MFS' engagement priorities, please contact

    dlstewardshipteam@mfs.com.

    E. RECORDS RETENTION

    MFS will retain copies of these MFS Proxy Voting Policies and Procedures in effect from

    time to time and will retain all proxy voting reports submitted to the Board of Trustees of

    the MFS Funds for the period required by applicable law. Proxy solicitation materials,

    including electronic versions of the proxy ballots completed by representatives of the MFS

    Proxy Voting Committee, together with their respective notes and comments, are

    maintained in an electronic format by the Proxy Administrator and are accessible on-line

    by the MFS Proxy Voting Committee and other MFS employees. All proxy voting

    materials and supporting documentation, including records generated by the Proxy

    Administrator’s system as to proxies processed, including the dates when proxy ballots

    were received and submitted, and the votes on each company’s proxy issues, are retained

    as required by applicable law.

    F. REPORTS

    U.S. Registered MFS Funds

    MFS publicly discloses the proxy voting records of the U.S. registered MFS Funds on a

    quarterly basis. MFS will also report the results of its voting to the Board of Trustees of

    the U.S. registered MFS Funds. These reports will include: (i) a summary of how votes

    were cast (including advisory votes on pay and “golden parachutes”); (ii) a summary of

    votes against management’s recommendation; (iii) a review of situations where MFS did

    not vote in accordance with the guidelines and the rationale therefore; (iv) a review of the

    procedures used by MFS to identify material conflicts of interest and any matters identified

    as a material conflict of interest; (v) a review of these policies and the guidelines; (vi) a

    review of our proxy engagement activity; (vii) a report and impact assessment of instances

    in which the recall of loaned securities of a U.S. issuer was unsuccessful; and (viii) as

    necessary or appropriate, any proposed modifications thereto to reflect new developments

    ‐ 21 ‐

    1051727

    in corporate governance and other issues. Based on these reviews, the Trustees of the U.S.

    registered MFS Funds will consider possible modifications to these policies to the extent

    necessary or advisable.

    Other MFS Clients

    MFS may publicly disclose the proxy voting records of certain other clients (including

    certain MFS Funds) or the votes it casts with respect to certain matters as required by law.

    A report can also be printed by MFS for each client who has requested that MFS furnish a

    record of votes cast. The report specifies the proxy issues which have been voted for the

    client during the year and the position taken with respect to each issue and, upon request,

    may identify situations where MFS did not vote in accordance with the MFS Proxy Voting

    Policies and Procedures.

    Firm-wide Voting Records

    MFS also publicly discloses its firm-wide proxy voting records on a quarterly basis.

    Except as described above, MFS generally will not divulge actual voting practices to any

    party other than the client or its representatives because we consider that information to be

    confidential and proprietary to the client. However, as noted above, MFS may determine

    that it is appropriate and beneficial to engage in a dialogue with a company regarding

    certain matters. During such dialogue with the company, MFS may disclose the vote it

    intends to cast in order to potentially effect positive change at a company in regards to

    environmental, social or governance issues.

     

    _____________________________________________________________________________________

    1 MFS’ determination of “independence” may be different than that of the company, the exchange on which the company is listed, or of third party (e.g., proxy advisory firm). 

    2 For clarification purposes, note that MFS votes in what we believe to be the best, long-term economic interest of our clients entitled to vote at the shareholder meeting, regardless of whether other MFS clients hold “short” positions in the same issuer or whether other MFS clients hold an interest in the company that is not entitled to vote at the shareholder meeting (e.g., bond holder). 

    3 From time to time, due to travel schedules and other commitments, an appropriate portfolio manager or research analyst may not be available to provide a vote recommendation.  If such a recommendation cannot be obtained within a reasonable time prior to the cut-off date of the shareholder meeting, the MFS Proxy Voting Committee may determine to abstain from voting.

     

     

  • Frequently Asked Questions

    Content under review.

  • Proxy Voting Records & Reports

    Proxy Voting Records
    MFS Firm-Wide Proxy Voting Records

    Proxy Voting Reports

     

MASSACHUSETTS FINANCIAL SERVICES COMPANY PROXY VOTING POLICIES AND PROCEDURES

January 1, 2024

 

At MFS Investment Management, our core purpose is to create value responsibly. In serving the long-term economic interests of our clients, we rely on deep fundamental research, risk awareness, engagement, and effective stewardship to generate long-term risk-adjusted returns for our clients. A core component of this approach is our proxy voting activity. We believe that robust ownership practices can help protect and enhance long-term shareholder value. Such ownership practices include diligently exercising our voting rights as well as engaging with our issuers on a variety of proxy voting topics. We recognize that environmental, social and governance (“ESG”) issues may impact the long-term value of an investment, and, therefore, we consider ESG issues in light of our fiduciary obligation to vote proxies in what we believe to be in the best long- term economic interest of our clients.

MFS Investment Management and its subsidiaries that perform discretionary investment activities (collectively, “MFS”) have adopted these proxy voting policies and procedures (“MFS Proxy Voting Policies and Procedures”) with respect to securities owned by the clients for which MFS serves as investment adviser and has been delegated the power to vote proxies on behalf of such clients. These clients include pooled investment vehicles sponsored by MFS (an “MFS Fund” or collectively, the “MFS Funds”).

Our approach to proxy voting is guided by the overall principle that proxy voting decisions are made in what MFS believes to be the best long-term economic interests of our clients for which we have been delegated with the authority to vote on their behalf, and not in the interests of any other party, including company management or in MFS' corporate interests, including interests such as the distribution of MFS Fund shares and institutional client relationships. These Proxy Voting Policies and Procedures include voting guidelines that govern how MFS generally will vote on specific matters as well as how we monitor potential material conflicts of interest on the part of MFS that could arise in connection with the voting of proxies on behalf of MFS’ clients.

Our approach to proxy voting is guided by the following additional principles:

1. Consistency in application of the policy across multiple client portfolios: While MFS generally votes consistently on the same matter when securities of an issuer are held by multiple client portfolios, MFS may vote differently on the matter for different client portfolios under certain circumstances. For example, we may vote differently for a client portfolio if we have received explicit voting instructions to vote differently from such client for its own account. Likewise, MFS may vote differently if the portfolio management team responsible for a particular client account believes that a different voting instruction is in the best long-term economic interest of such account.

2. Consistency in application of policy across shareholder meetings in most instances: As a general matter, MFS seeks to vote consistently on similar proxy proposals across all shareholder meetings. However, as many proxy proposals (e.g., mergers, acquisitions, and shareholder proposals) are analyzed on a case-by-case basis in light of the relevant facts and circumstances of the issuer and proposal MFS may vote similar proposals differently at different shareholder meetings. In addition, MFS also reserves the right to override the guidelines with respect to a particular proxy proposal when such an override is, in MFS’ best judgment, consistent with the overall principle of voting proxies in the best long-term economic interests of MFS’ clients.

3. Consideration of company specific context and informed by engagement: As noted above MFS will seek to consider a company’s specific context in determining its voting decision. Where there are significant, complex or unusual voting items we may seek to engage with a company before making the vote to further inform our decision. Where sufficient progress has not been made on a particular issue of engagement, MFS may determine a vote against management may be warranted to reflect our concerns and influence for change in the best long-term economic interests of our clients for which MFS has been delegated with the authority to vote on their behalf.

4. Clear decisions to best support issuer processes and decision making: To best support improved issuer decision making we strive to generally provide clear decisions by voting either For or Against each item. We may however vote to Abstain in certain situations if we believe a vote either For or Against may produce a result not in the best long-term economic interests of our clients.

5. Transparency in approach and implementation: In addition to the publication of the MFS Proxy Voting Policies and Procedures on our website, we are open to communicating our vote intention with companies, including ahead of the annual meeting. We may do this proactively where we wish to make our view or corresponding rationale clearly known to the company. Our voting data is reported to clients upon request and publicly on a quarterly and annual basis on our website (under Proxy Voting Records & Reports). For more information about reporting on our proxy voting activities, please refer to Section F below.

A. VOTING GUIDELINES

The following guidelines govern how MFS will generally vote on specific matters presented for shareholder vote. These guidelines are not exhaustive, and MFS may vote on matters not identified below. In such circumstances, MFS will be governed by its general policy to vote in what MFS believes to be in the best long-term economic interest of its clients. These guidelines are written to apply to the markets and companies where MFS has significant assets invested. There will be markets and companies, such as controlled companies and smaller markets, where local governance practices are taken into consideration and exceptions may need to be applied that are not explicitly stated below. There are also markets and companies where transparency and related data limit the ability to apply these guidelines.

Board structure and performance

MFS generally supports the election and/or discharge of directors proposed by the board in uncontested or non-contentious elections, unless concerns have been identified, such as in relation to:

Director independence

MFS believes that good governance is enabled by a board with at least a simple majority of directors who are “independent” (as determined by MFS in its sole discretion)1 of management, the company and each other. MFS may not support the non-independent nominees, or other relevant director (e.g., chair of the board or the chair of the nominating committee), where insufficient independence is identified and determined to be a risk to the board’s and/or company’s effectiveness.

As a general matter we will not support a nominee to a board if, as a result of such nominee being elected to the board, the board will consist of less than a simple majority of members who are “independent.” However, there are also governance structures and markets where we may accept lower levels of independence, such as companies required to have nonshareholder representatives on the board, controlled companies, and companies in certain markets. In these circumstances we generally expect the board to be at least one-third independent or at least half of shareholder representatives to be independent, and as a general matter we will not support the nominee to the board if as a result of such nominee’s elections these expectations are not met. In certain circumstances, we may not support another relevant director’s election. For example, in Japan, we will generally not support the most senior director where the board is not comprised of at least one-third independent directors.

MFS also believes good governance is enabled by a board whose key committees, in particular audit, nominating and compensation/remuneration, consist entirely of “independent” directors. For Canada and US companies, MFS generally votes against any non-independent nominee that would cause any of the audit, compensation, nominating committee to not be fully independent. For Australia, Benelux, Ireland, New Zealand, Switzerland, and UK companies MFS generally votes against any non-independent nominee that would cause the audit or compensation/remuneration committee to not be fully independent. For Korea companies MFS generally votes against any non-independent nominee that would cause the audit committee to not be fully independent. In other markets MFS generally votes against non-independent nominees or other relevant director if a majority of committee members or the chair of the audit committee are not independent. However, there are also governance structures (e.g., controlled companies or boards with non-shareholder representatives) and markets where we may accept lower levels of independence for these key committees.

In general, MFS believes that good governance is enabled by a board with at least a simple majority of directors who are independent and whose key committees consist entirely of independent directors. While there are currently markets where we accept lower levels of independence, we expect to expand these independence guidelines to all markets over time.

Tenure in leadership roles

For a board with a lead independent director whose overall tenure on the board equals or exceeds twenty (20) years, we will generally engage with the company to encourage refreshment of that role, and we may vote against the long tenured lead director if progress on refreshment is not made or being considered by the company’s board or we identify other concerns that suggest more immediate refreshment is necessary.

Overboarding

All directors on a board should have sufficient time and attention to fulfil their duties and play their part in achieving effective oversight, both in normal and exceptional circumstances.

MFS may also vote against any director if we deem such nominee to have board roles or outside time commitments that we believe would impair their ability to dedicate sufficient time and attention to their director role.

As a general guideline, MFS will generally vote against a director’s election if they:

  • Are not a CEO or executive chair of a public company, but serve on more than four (4) public company boards in total at US companies and more than five (5) public boards for companies in other non-US markets.
  • Are a CEO or executive chair of a public company, and serve on more than two (2) public company boards in total at US companies and two (2) outside public company boards for companies in non-US markets. In these cases, MFS would only apply a vote against at the meetings of the companies where the director is non-executive.

MFS may consider exceptions to this guideline if: (i) the company has disclosed the director's plans to step down from the number of public company boards exceeding the above limits, as applicable, within a reasonable time; or (ii) the director exceeds the permitted number of public company board seats solely due to either his/her board service on an affiliated company (e.g., a subsidiary), or service on more than one investment company within the same investment company complex (as defined by applicable law), or iii) after engagement we believe the director’s ability to dedicate sufficient time and attention is not impaired by the external roles.

Diversity

MFS believes that a well-balanced board with diverse perspectives is a foundation for sound corporate governance, and this is best spread across the board rather than concentrated in one or a few individuals. We take a holistic view on the dimensions of diversity that can lead to diversity of perspectives and stronger oversight and governance. Gender diversity is one such dimension and where good disclosure and data enables a specific expectation and voting guideline.

On gender representation specifically MFS wishes to see companies in all markets achieve a consistent minimum representation of women of at least a third of the board, and we are likely to increase our voting guideline towards this over time.

Currently, where data is available, MFS will generally vote against the chair of the nominating and governance committee or other most relevant position at any company whose board is comprised of an insufficient representation of directors who are women for example:

  • At US, Canadian, European, Australian, New Zealand companies: less than 24%.
  • At Brazilian companies: less than 20%. 
  • At Chinese, Hong Kong, Indian, Japanese, Korean, Chilean and Mexican companies: less than 10%.

As a general matter, MFS will vote against the chair of the nominating committee of US S&P 500 companies and UK FTSE 100 companies that have failed to appoint at least one director who identifies as either an underrepresented ethnic/racial minority or a member of the LGBTQ+ community.

MFS may consider exceptions to these guidelines if we believe that the company is transitioning towards these goals or has provided clear and compelling reasons for why they have been unable to comply with these goals.

For other markets, we will engage on board diversity and may vote against the election of directors where we fail to see progress.

Board size

MFS believes that the size of the board can have an effect on the board's ability to function efficiently and effectively. While MFS may evaluate board size on a case-by-case basis, we will typically vote against the chair of the nominating and governance committee in instances where the size of the board is greater than sixteen (16) members. An exception to this is companies with requirements to have equal representation of employees on the board where we expect a maximum of twenty (20) members.

Other concerns related to director election:

MFS may also not support some or all nominees standing for election to a board if we determine:

  • There are concerns with a director or board regarding performance, governance or oversight, which may include:
    • Clear failures in oversight or execution of duties, including the identification, management and reporting of material risks and information, at the company or any other at which the nominee has served. This may include climate-related risks;
    • A failure by the director or board of the issuer to take action to eliminate shareholder unfriendly provisions in the issuer's charter documents; or 
    • Allowing the hedging and/or significant pledging of company shares by executives.
  • A director attended less than 75% of the board and/or relevant committee meetings in the previous year without a valid reason stated in the proxy materials or other annual governance reporting;
  • The board or relevant committee has not adequately responded to an issue that received a significant vote against management from shareholders; 
  • The board has implemented a poison pill without shareholder approval since the last annual meeting and such poison pill is not on the subsequent shareholder meeting's agenda (including those related to net-operating loss carry-forwards); or 
  • In Japan, the company allocates a significant portion of its net assets to crossshareholdings. 

Unless the concern is commonly accepted market practice, MFS may also not support some or all nominees standing for election to a nominating committee if we determine (in our sole discretion) that the chair of the board is not independent and there is no strong lead independent director role in place, or an executive director is a member of a key board committee.

Where individual directors are not presented for election in the year MFS may apply the same vote position to votes on the discharge of the director. Where the election of directors is bundled MFS may vote against the whole group if there is concern with an individual director and no other vote related to that director.

Proxy contests

From time to time, a shareholder may express alternative points of view in terms of a company's strategy, capital allocation, or other issues. Such a shareholder may also propose a slate of director nominees different than the slate of director nominees proposed by the company (a "Proxy Contest"). MFS will analyze Proxy Contests on a case-by-case basis, taking into consideration the track record and current recommended initiatives of both company management and the dissident shareholder(s). MFS will support the director nominee(s) that we believe is in the best, long-term economic interest of our clients.

Other items related to board accountability:

Majority voting for the election of directors: MFS generally supports reasonably crafted proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of the plurality standard for electing directors (including binding resolutions requesting that the board amend the company’s bylaws), provided the proposal includes a carve-out for a plurality voting standard when there are more director nominees than board seats (e.g., contested elections).

Declassified boards: MFS generally supports proposals to declassify a board (i.e., a board in which only a sub-set of board members is elected each year) for all issuers other than for certain closed-end investment companies. MFS generally opposes proposals to classify a board for issuers other than for certain closed-end investment companies.

The right to call a special meeting or act by written consent:

MFS believes a threshold of 15-25% is an appropriate balance of shareholder and company interests, with thresholds of 15% for large and widely held companies.

MFS will generally support management proposals to establish these rights. MFS will generally support shareholder proposals to adjust existing rights to within the thresholds described above. MFS may also support shareholder proposals to establish the right at a threshold of 10% or above if no existing right exists and no right is presented for vote by management within the threshold range described above.

MFS will support shareholder proposals to establish the right to act by majority written consent if shareholders do not have the right to call a special meeting at the thresholds described above or lower.

Independent chairs: MFS believes boards should include some form of independent leadership responsible for amplifying the views of independent directors and setting meeting agendas, and this is often best positioned as an independent chair of the board or a lead independent director. We review the merits of a change in leadership structure on a case-by-case basis.

Proxy access: MFS believes that the ability of qualifying shareholders to nominate a certain number of directors on the company's proxy statement ("Proxy Access") may have corporate governance benefits. However, such potential benefits must be balanced by its potential misuse by shareholders. Therefore, MFS generally supports Proxy Access proposals at U.S. issuers that establish ownership criteria of 3% of the company held continuously for a period of 3 years. In our view, such qualifying shareholders should have the ability to nominate at least 2 directors. We also believe companies should be mindful of imposing any undue impediments within their bylaws that may render Proxy Access impractical, including re-submission thresholds for director nominees via Proxy Access.

Items related to shareholder rights:

Anti-takeover measures: In general, MFS votes against any measure that inhibits capital appreciation in a stock, including proposals that protect management from action by shareholders. These types of proposals take many forms, ranging from “poison pills” and “shark repellents” to super-majority requirements. While MFS may consider the adoption of a prospective “poison pill” or the continuation of an existing “poison pill" on a case-bycase basis, MFS generally votes against such anti-takeover devices.

MFS will consider any poison pills designed to protect a company’s net-operating loss carryforwards on a case-by-case basis, weighing the accounting and tax benefits of such a pill against the risk of deterring future acquisition candidates. MFS will also consider, on a case-by-case basis, proposals designed to prevent tenders which are disadvantageous to shareholders such as tenders at below market prices and tenders for substantially less than all shares of an issuer.

MFS generally supports proposals that seek to remove governance structures that insulate management from shareholders. MFS generally votes for proposals to rescind existing “poison pills” and proposals that would require shareholder approval to adopt prospective “poison pills.”

Cumulative voting: MFS generally opposes proposals that seek to introduce cumulative voting and supports proposals that seek to eliminate cumulative voting. In either case, MFS will consider whether cumulative voting is likely to enhance the interests of MFS’ clients as minority shareholders.

One-share one-vote: As a general matter, MFS supports proportional alignment of voting rights with economic interest, and may not support a proposal that deviates from this approach. Where multiple share classes or other forms of disproportionate control are in place, we expect these to have sunset provisions of generally no longer than seven years after which the structure becomes single class one-share one-vote.

Reincorporation and reorganization proposals: When presented with a proposal to reincorporate a company under the laws of a different state, or to effect some other type of corporate reorganization, MFS considers the underlying purpose and ultimate effect of such a proposal in determining whether or not to support such a measure. MFS generally votes with management in regards to these types of proposals, however, if MFS believes the proposal is not in the best long-term economic interests of its clients, then MFS may vote against management (e.g., the intent or effect would be to create additional inappropriate impediments to possible acquisitions or takeovers).

Other business: MFS generally votes against "other business" proposals as the content of any such matter is not known at the time of our vote.

Items related to capitalization proposals, capital allocation and corporate

actions:

Issuance of stock: There are many legitimate reasons for the issuance of stock.

Nevertheless, as noted above under “Stock Plans,” when a stock option plan (either

individually or when aggregated with other plans of the same company) would

substantially dilute the existing equity (e.g., by more than approximately 10-15%), MFS

generally votes against the plan.

MFS typically votes against proposals where management is asking for authorization to

issue common or preferred stock with no reason stated (a “blank check”) because the

unexplained authorization could work as a potential anti-takeover device. MFS may also

vote against the authorization or issuance of common or preferred stock if MFS determines

that the requested authorization is excessive or not warranted. MFS will consider the

‐ 9 ‐

1051727

duration of the authority and the company’s history in using such authorities in making its

decision.

Repurchase programs: MFS generally supports proposals to institute share repurchase

plans in which all shareholders have the opportunity to participate on an equal basis. Such

plans may include a company acquiring its own shares on the open market, or a company

making a tender offer to its own shareholders.

Mergers, acquisitions & other special transactions: MFS considers proposals with

respect to mergers, acquisitions, sale of company assets, share and debt issuances and other

transactions that have the potential to affect ownership interests on a case-by-case basis.

When analyzing such proposals, we use a variety of materials and information, including

our own internal research as well as the research of third-party service providers.

Independent Auditors

MFS generally supports the election of auditors but may determine to vote against the

election of a statutory auditor and/or members of the audit committee in certain markets if

MFS reasonably believes that the statutory auditor is not truly independent, sufficiently

competent or there are concerns related to the auditor’s work or opinion. To inform this

view, MFS may evaluate the use of non-audit services in voting decisions when the

percentage of non-audit fees to total auditor fees exceeds 40%, in particular if recurring.

Executive Compensation

MFS believes that competitive compensation packages are necessary to attract, motivate

and retain executives. We seek compensation plans that are geared towards durable longterm

value creation and aligned with shareholder interests and experience, such as where

we believe:

 The plan is aligned with the company’s current strategic priorities with a focused set of

clear, suitably ambitious and measurable performance conditions;

o Practices of concern may include an incentive plan without financial performance

conditions, without a substantial majority weighting to quantitative metrics or that vests

substantially below median performance.

 Meaningful portions of awards are paid in shares and based on long performance

periods (e.g., at least three years);

 Awards and potential future awards, reflect the nature of the business, value created

and the executive’s performance;

o Practices of concern may include large windfall gains or award increases without

justification.

 Awards are fair, not detrimental to firm culture and reflect the policies approved by

shareholders at previous meetings with appropriate use of discretion (positive and

negative); and

‐ 10 ‐

1051727

o Practices of concern may include one-off awards without justification or robust

performance conditions, equity awards repriced without shareholder approval,

substantial executive or director share pledging, egregious perks or substantial internal

pay imbalances.

 The calculation and justification for awards is sufficiently transparent for investors to

appraise alignment with performance and future incentives.

MFS will analyze votes on executive compensation on a case-by-case basis. When

analyzing compensation practices, MFS generally uses a two-step process. MFS first seeks

to identify any compensation practices that are potentially of concern by using both internal

research and the research of third-party service providers. Where such practices are

identified, MFS will then analyze the compensation practices in light of relevant facts and

circumstances. MFS will vote against an issuer's executive compensation practices if MFS

determines that such practices are not geared towards durable long-term value creation

and are misaligned with the best, long-term economic interest of our clients. When

analyzing whether an issuer’s compensation practices are aligned with the best, long-term

economic interest of our clients, MFS uses a variety of materials and information, including

our own internal research and engagement with issuers as well as the research of thirdparty

service providers.

MFS generally supports proposals to include an advisory shareholder vote on an issuer’s

executive compensation practices on an annual basis.

MFS does not have formal voting guideline in regards to the inclusion of ESG incentives

in a company’s compensation plan; however, where such incentives are included, we

believe:

 The incentives should be tied to issues that are financially material for the issuer in

question.

 They should predominantly include quantitative or other externally verifiable

outcomes rather than qualitative measures.

 The weighting of incentives should be appropriately balanced with other strategic

priorities.

We believe non-executive directors may be compensated in cash or stock but these should

not be performance-based.

Stock Plans

MFS may oppose stock option programs and restricted stock plans if they:

 Provide unduly generous compensation for officers, directors or employees, or

could result in excessive dilution to other shareholders. As a general guideline,

MFS votes against restricted stock, stock option, non-employee director, omnibus

stock plans and any other stock plan if all such plans for a particular company

involve potential excessive dilution (which we typically consider to be, in the

aggregate, of more than 15%). MFS will generally vote against stock plans that

‐ 11 ‐

1051727

involve potential dilution, in aggregate, of more than 10% at U.S. issuers that are

listed in the Standard and Poor’s 100 index as of December 31 of the previous year.

 Allow the board or the compensation committee to re-price underwater options or

to automatically replenish shares without shareholder approval.

 Do not require an investment by the optionee, give “free rides” on the stock price,

or permit grants of stock options with an exercise price below fair market value on

the date the options are granted.

In the cases where a stock plan amendment is seeking qualitative changes and not

additional shares, MFS will vote on a case-by-case basis.

MFS will consider proposals to exchange existing options for newly issued options,

restricted stock or cash on a case-by-case basis, taking into account certain factors,

including, but not limited to, whether there is a reasonable value-for-value

exchange and whether senior executives are excluded from participating in the

exchange.

From time to time, MFS may evaluate a separate, advisory vote on severance

packages or “golden parachutes” to certain executives at the same time as a vote on

a proposed merger or acquisition. MFS will vote on a severance package on a caseby-

case basis, and MFS may vote against the severance package regardless of

whether MFS supports the proposed merger or acquisition.

MFS supports the use of a broad-based employee stock purchase plans to increase

company stock ownership by employees, provided that shares purchased under the

plan are acquired for no less than 85% of their market value and do not result in

excessive dilution.

MFS may also not support some or all nominees standing for election to a

compensation/remuneration committee if:

 MFS votes against consecutive pay votes;

 MFS determines that a particularly egregious executive compensation practice has

occurred. This may include use of discretion to award excessive payouts. MFS believes

compensation committees should have flexibility to apply discretion to ensure final

payments reflect long-term performance as long as this is used responsibly;

 MFS believes the committee is inadequately incentivizing or rewarding executives, or

is overseeing pay practices that we believe are detrimental the long-term success of the

company; or

 An advisory pay vote is not presented to shareholders, or the company has not

implemented the advisory vote frequency supported by a plurality/majority of

shareholders.

‐ 12 ‐

1051727

Shareholder Proposals on Executive Compensation

MFS generally opposes shareholder proposals that seek to set rigid restrictions on

executive compensation as MFS believes that compensation committees should retain

flexibility to determine the appropriate pay package for executives.

MFS may support reasonably crafted shareholder proposals that:

 Require shareholder approval of any severance package for an executive officer that

exceeds a certain multiple of such officer’s annual compensation that is not determined

in MFS’ judgment to be excessive;

 Require the issuer to adopt a policy to recover the portion of performance-based

bonuses and awards paid to senior executives that were not earned based upon a

significant negative restatement of earnings, or other significant misconduct or

corporate failure, unless the company already has adopted a satisfactory policy on the

matter;

 Expressly prohibit the backdating of stock options; or,

 Prohibit the acceleration of vesting of equity awards upon a broad definition of a

"change-in-control" (e.g., single or modified single-trigger).

Environmental and Social Proposals

Where management presents climate action/transition plans to shareholder vote, we will

evaluate the level of ambition over time, scope, credibility and transparency of the plan in

determining our support. Where companies present climate action progress reports to

shareholder vote we will evaluate evidence of implementation of and progress against the

plan and level of transparency in determining our support.

Most vote items related to environmental and social topics are presented by shareholders.

As these proposals, even on the same topic, can vary significantly in scope and action

requested, these proposals are typically assessed on a case-by-case basis.

For example, MFS may support reasonably crafted proposals:

 On climate change: that seek disclosure consistent with the recommendations of a

generally accepted global framework (e.g., Task Force on Climate-related

Financial Disclosures) that is appropriately audited and that is presented in a way

that enables shareholders to assess and analyze the company's data; or request

appropriately robust and ambitious plans or targets.

 Other environmental: that request the setting of targets for reduction of

environmental impact or disclosure of key performance indicators or risks related

to the impact, where materially relevant to the business. An example of such a

proposal could be reporting on the impact of plastic use or waste stemming from

company products or packaging.

 On diversity: that seek to amend a company’s equal employment opportunity policy

to prohibit discrimination; that request good practice employee-related DEI

‐ 13 ‐

1051727

disclosure; or that seek external input and reviews on specific related areas of

performance.

 On lobbying: that request good practice disclosure regarding a company’s political

contributions and lobbying payments and policy (including trade organizations and

lobbying activity).

 On tax: that request reporting in line with the GRI 207 Standard on Tax.

 On corporate culture and/or human/worker rights: that request additional disclosure

on corporate culture factors like employee turnover and/or management of human

and labor rights.

MFS is unlikely to support a proposal if we believe that the proposal is unduly costly,

restrictive, unclear, burdensome, has potential unintended consequences, is unlikely to lead

to tangible outcomes or we don’t believe the issue is material or the action a priority for

the business. MFS is also unlikely to support a proposal where the company already

provides publicly available information that we believe is sufficient to enable shareholders

to evaluate the potential opportunities and risks on the subject of the proposal, if the request

of the proposal has already been substantially implemented, or if through engagement we

gain assurances that it will be substantially implemented.

The laws of various states or countries may regulate how the interests of certain clients

subject to those laws (e.g., state pension plans) are voted with respect to environmental,

social and governance issues. Thus, it may be necessary to cast ballots differently for

certain clients than MFS might normally do for other clients.

B. GOVERNANCE OF PROXY VOTING ACTIVITIES

From time to time, MFS may receive comments on the MFS Proxy Voting Policies and

Procedures from its clients. These comments are carefully considered by MFS when it

reviews these MFS Proxy Voting Policies and Procedures and revises them as appropriate,

in MFS' sole judgment.

1. MFS Proxy Voting Committee

The administration of these MFS Proxy Voting Policies and Procedures is overseen by the

MFS Proxy Voting Committee, which includes senior personnel from the MFS Legal and

Global Investment and Client Support Departments as well as members of the investment

team. The Proxy Voting Committee does not include individuals whose primary duties

relate to client relationship management, marketing, or sales. The MFS Proxy Voting

Committee:

a. Reviews these MFS Proxy Voting Policies and Procedures at least annually and

recommends any amendments considered to be necessary or advisable;

b. Determines whether any potential material conflict of interest exists with respect to

instances in which MFS (i) seeks to override these MFS Proxy Voting Policies and

‐ 14 ‐

1051727

Procedures; (ii) votes on ballot items not governed by these MFS Proxy Voting Policies

and Procedures; (iii) evaluates an excessive executive compensation issue in relation

to the election of directors; or (iv) requests a vote recommendation from an MFS

portfolio manager or investment analyst (e.g., mergers and acquisitions);

c. Considers special proxy issues as they may arise from time to time; and

d. Determines engagement priorities and strategies with respect to MFS' proxy voting

activities

The day-to-day application of the MFS Proxy Voting Policies and Procedures are

conducted by the MFS stewardship team led by MFS’ Director of Global Stewardship. The

stewardship team are members of MFS’ investment team.

2. Potential Conflicts of Interest

These policies and procedures are intended to address any potential material conflicts of

interest on the part of MFS or its subsidiaries that are likely to arise in connection with the

voting of proxies on behalf of MFS’ clients. If such potential material conflicts of interest

do arise, MFS will analyze, document and report on such potential material conflicts of

interest (see below) and shall ultimately vote the relevant ballot items in what MFS believes

to be the best long-term economic interests of its clients. The MFS Proxy Voting

Committee is responsible for monitoring and reporting with respect to such potential

material conflicts of interest.

The MFS Proxy Voting Committee is responsible for monitoring potential material

conflicts of interest on the part of MFS or its subsidiaries that could arise in connection

with the voting of proxies on behalf of MFS’ clients. Due to the client focus of our

investment management business, we believe that the potential for actual material conflict

of interest issues is small. Nonetheless, we have developed precautions to assure that all

votes are cast in the best long-term economic interest of its clients.2 Other MFS internal

policies require all MFS employees to avoid actual and potential conflicts of interests

between personal activities and MFS’ client activities. If an employee (including

investment professionals) identifies an actual or potential conflict of interest with respect

to any voting decision (including the ownership of securities in their individual portfolio),

then that employee must recuse himself/herself from participating in the voting process.

Any significant attempt by an employee of MFS or its subsidiaries to unduly influence

MFS’ voting on a particular proxy matter should also be reported to the MFS Proxy Voting

Committee.

In cases where ballots are voted in accordance with these MFS Proxy Voting Policies and

Procedures, no material conflict of interest will be deemed to exist. In cases where (i) MFS

2 For clarification purposes, note that MFS votes in what we believe to be the best, long-term economic interest of

our clients entitled to vote at the shareholder meeting, regardless of whether other MFS clients hold “short”

positions in the same issuer or whether other MFS clients hold an interest in the company that is not entitled to vote

at the shareholder meeting (e.g., bond holder).

‐ 15 ‐

1051727

is considering overriding these MFS Proxy Voting Policies and Procedures, (ii) matters

presented for vote are not governed by these MFS Proxy Voting Policies and Procedures,

(iii) MFS identifies and evaluates a potentially concerning executive compensation issue

in relation to an advisory pay or severance package vote, or (iv) a vote recommendation is

requested from an MFS portfolio manager or investment analyst for proposals relating to a

merger, an acquisition, a sale of company assets or other similar transactions (collectively,

“Non-Standard Votes”); the MFS Proxy Voting Committee will follow these procedures:

a. Compare the name of the issuer of such ballot or the name of the shareholder (if

identified in the proxy materials) making such proposal against a list of significant

current (i) distributors of MFS Fund shares, and (ii) MFS institutional clients (the “MFS

Significant Distributor and Client List”);

b. If the name of the issuer does not appear on the MFS Significant Distributor and Client

List, then no material conflict of interest will be deemed to exist, and the proxy will be

voted as otherwise determined by the MFS Proxy Voting Committee;

c. If the name of the issuer appears on the MFS Significant Distributor and Client List,

then the MFS Proxy Voting Committee will be apprised of that fact and each member

of the MFS Proxy Voting Committee (with the participation of MFS' Conflicts Officer)

will carefully evaluate the proposed vote in order to ensure that the proxy ultimately is

voted in what MFS believes to be the best long-term economic interests of MFS’

clients, and not in MFS' corporate interests; and

d. For all potential material conflicts of interest identified under clause (c) above, the MFS

Proxy Voting Committee will document: the name of the issuer, the issuer’s

relationship to MFS, the analysis of the matters submitted for proxy vote, the votes as

to be cast and the reasons why the MFS Proxy Voting Committee determined that the

votes were cast in the best long-term economic interests of MFS’ clients, and not in

MFS' corporate interests. A copy of the foregoing documentation will be provided to

MFS’ Conflicts Officer.

The members of the MFS Proxy Voting Committee are responsible for creating and

maintaining the MFS Significant Distributor and Client List, in consultation with MFS’

distribution and institutional business units. The MFS Significant Distributor and Client

List will be reviewed and updated periodically, as appropriate.

For instances where MFS is evaluating a director nominee who also serves as a

director/trustee of the MFS Funds, then the MFS Proxy Voting Committee will adhere to

the procedures described in section (c) above regardless of whether the portfolio company

appears on our Significant Distributor and Client List. In doing so, the MFS Proxy Voting

Committee will adhere to such procedures for all Non-Standard Votes at the company’s

shareholder meeting at which the director nominee is standing for election.

If an MFS client has the right to vote on a matter submitted to shareholders by Sun Life

Financial, Inc. or any of its affiliates (collectively "Sun Life"), MFS will cast a vote on

‐ 16 ‐

1051727

behalf of such MFS client as such client instructs or in the event that a client instruction is

unavailable pursuant to the recommendations of Institutional Shareholder Services, Inc.'s

("ISS") benchmark policy, or as required by law. Likewise, if an MFS client has the right

to vote on a matter submitted to shareholders by a public company for which an MFS Fund

director/trustee serves as an executive officer, MFS will cast a vote on behalf of such MFS

client as such client instructs or in the event that client instruction is unavailable pursuant

to the recommendations of ISS or as required by law.

Except as described in the MFS Fund's Prospectus, from time to time, certain MFS Funds

(the “top tier fund”) may own shares of other MFS Funds (the “underlying fund”). If an

underlying fund submits a matter to a shareholder vote, the top tier fund will generally vote

its shares in the same proportion as the other shareholders of the underlying fund. If there

are no other shareholders in the underlying fund, the top tier fund will vote in what MFS

believes to be in the top tier fund’s best long-term economic interest. If an MFS client has

the right to vote on a matter submitted to shareholders by a pooled investment vehicle

advised by MFS (excluding those vehicles for which MFS' role is primarily portfolio

management and is overseen by another investment adviser), MFS will cast a vote on

behalf of such MFS client in the same proportion as the other shareholders of the pooled

investment vehicle.

3. Review of Policy

The MFS Proxy Voting Policies and Procedures are available on www.mfs.com and may

be accessed by both MFS’ clients and the companies in which MFS’ clients invest. The

MFS Proxy Voting Policies and Procedures are reviewed by the Proxy Voting Committee

annually. From time to time, MFS may receive comments on the MFS Proxy Voting

Policies and Procedures from its clients. These comments are carefully considered by MFS

when it reviews these MFS Proxy Voting Policies and Procedures and revises them as

appropriate, in MFS' sole judgment.

C. OTHER ADMINISTRATIVE MATTERS & USE OF PROXY

ADVISORY FIRMS

1. Use of Proxy Advisory Firms

MFS, on behalf of itself and certain of its clients (including the MFS Funds) has entered

into an agreement with an independent proxy administration firm pursuant to which the

proxy administration firm performs various proxy vote related administrative services such

as vote processing and recordkeeping functions. Except as noted below, the proxy

administration firm for MFS and its clients, including the MFS Funds, is ISS. The proxy

administration firm for MFS Development Funds, LLC is Glass, Lewis & Co., Inc. (“Glass

Lewis”; Glass Lewis and ISS are each hereinafter referred to as the “Proxy

Administrator”).

The Proxy Administrator receives proxy statements and proxy ballots directly or indirectly

from various custodians, logs these materials into its database and matches upcoming

‐ 17 ‐

1051727

meetings with MFS Fund and client portfolio holdings, which are inputted into the Proxy

Administrator’s system by an MFS holdings data-feed. The Proxy Administrator then

reconciles a list of all MFS accounts that hold shares of a company’s stock and the number

of shares held on the record date by these accounts with the Proxy Administrator’s list of

any upcoming shareholder’s meeting of that company. If a proxy ballot has not been

received, the Proxy Administrator and/or MFS may contact the client’s custodian

requesting the reason as to why a ballot has not been received. Through the use of the Proxy

Administrator system, ballots and proxy material summaries for all upcoming

shareholders’ meetings are available on-line to certain MFS employees and members of

the MFS Proxy Voting Committee.

MFS also receives research reports and vote recommendations from proxy advisory firms.

These reports are only one input among many in our voting analysis, which includes other

sources of information such as proxy materials, company engagement discussions, other

third-party research and data. MFS has due diligence procedures in place to help ensure

that the research we receive from our proxy advisory firms is materially accurate and that

we address any material conflicts of interest involving these proxy advisory firms. This

due diligence includes an analysis of the adequacy and quality of the advisory firm

staff, its conflict of interest policies and procedures and independent audit reports. We also

review the proxy policies, methodologies and peer-group-composition methodology of our

proxy advisory firms at least annually. Additionally, we also receive reports from our proxy

advisory firms regarding any violations or changes to conflict of interest procedures.

2. Analyzing and Voting Proxies

Proxies are voted in accordance with these MFS Proxy Voting Policies and Procedures.

The Proxy Administrator, at the prior direction of MFS, automatically votes all proxy

matters that do not require the particular exercise of discretion or judgment with respect to

these MFS Proxy Voting Policies and Procedures as determined by MFS. In these

circumstances, if the Proxy Administrator, based on MFS' prior direction, expects to vote

against management with respect to a proxy matter and MFS becomes aware that the issuer

has filed or will file additional soliciting materials sufficiently in advance of the deadline

for casting a vote at the meeting, MFS will consider such information when casting its vote.

With respect to proxy matters that require the particular exercise of discretion or judgment,

the MFS Proxy Voting Committee or its representatives considers and votes on those proxy

matters. In analyzing all proxy matters, MFS uses a variety of materials and information,

including, but not limited to, the issuer's proxy statement and other proxy solicitation

materials (including supplemental materials), our own internal research and research and

recommendations provided by other third parties (including research of the Proxy

Administrator). As described herein, MFS may also determine that it is beneficial in

analyzing a proxy voting matter for members of the Proxy Voting Committee or its

representatives to engage with the company on such matter. MFS also uses its own internal

research, the research of Proxy Administrators and/or other third party research tools and

vendors to identify (i) circumstances in which a board may have approved an executive

compensation plan that is excessive or poorly aligned with the portfolio company's

business or its shareholders, (ii) environmental, social and governance proposals that

‐ 18 ‐

1051727

warrant further consideration, or (iii) circumstances in which a company is not in

compliance with local governance or compensation best practices. Representatives of the

MFS Proxy Voting Committee review, as appropriate, votes cast to ensure conformity with

these MFS Proxy Voting Policies and Procedures.

For certain types of votes (e.g., mergers and acquisitions, proxy contests and capitalization

matters), MFS’ stewardship team will seek a recommendation from the MFS investment

analyst that is responsible for analyzing the company and/or portfolio managers that holds

the security in their portfolio.3 For certain other votes that require a case-by-case analysis

per these policies (e.g., potentially excessive executive compensation issues, or certain

shareholder proposals), the stewardship team will likewise consult with MFS investment

analysts and/or portfolio managers.3 However, the MFS Proxy Voting Committee will

ultimately be responsible for the manner in which all ballots are voted.

As noted above, MFS reserves the right to override the guidelines when such an override

is, in MFS’ best judgment, consistent with the overall principle of voting proxies in the

best long-term economic interests of MFS’ clients. Any such override of the guidelines

shall be analyzed, documented and reported in accordance with the procedures set forth in

these policies.

In accordance with its contract with MFS, the Proxy Administrator also generates a variety

of reports for the MFS Proxy Voting Committee and makes available on-line various other

types of information so that the MFS Proxy Voting Committee or its representatives may

review and monitor the votes cast by the Proxy Administrator on behalf of MFS’ clients.

For those markets that utilize a "record date" to determine which shareholders are eligible

to vote, MFS generally will vote all eligible shares pursuant to these guidelines regardless

of whether all (or a portion of) the shares held by our clients have been sold prior to the

meeting date.

3. Securities Lending

From time to time, certain MFS Funds may participate in a securities lending program. In

the event MFS or its agent receives timely notice of a shareholder meeting for a U.S.

security, MFS and its agent will attempt to recall any securities on loan before the

meeting’s record date so that MFS will be entitled to vote these shares. However, there

may be instances in which MFS is unable to timely recall securities on loan for a

U.S. security, in which cases MFS will not be able to vote these shares. MFS will report to

the appropriate board of the MFS Funds those instances in which MFS is not able to timely

recall the loaned securities. MFS generally does not recall non-U.S. securities on loan

because there may be insufficient advance notice of proxy materials, record dates, or vote

3 From time to time, due to travel schedules and other commitments, an appropriate portfolio manager or

research analyst may not be available to provide a vote recommendation. If such a recommendation cannot

be obtained within a reasonable time prior to the cut-off date of the shareholder meeting, the MFS Proxy

Voting Committee may determine to abstain from voting.

‐ 19 ‐

1051727

cut-off dates to allow MFS to timely recall the shares in certain markets on an automated

basis. As a result, non-U.S. securities that are on loan will not generally be voted. If MFS

receives timely notice of what MFS determines to be an unusual, significant vote for a non-

U.S. security whereas MFS shares are on loan and determines that voting is in the best

long-term economic interest of shareholders, then MFS will attempt to timely recall the

loaned shares.

4. Potential impediments to voting

In accordance with local law or business practices, some companies or custodians prevent

the sale of shares that have been voted for a certain period beginning prior to the

shareholder meeting and ending on the day following the meeting (“share blocking”).

Depending on the country in which a company is domiciled, the blocking period may begin

a stated number of days prior or subsequent to the meeting (e.g., one, three or five days) or

on a date established by the company. While practices vary, in many countries the block

period can be continued for a longer period if the shareholder meeting is adjourned and

postponed to a later date. Similarly, practices vary widely as to the ability of a shareholder

to have the “block” restriction lifted early (e.g., in some countries shares generally can be

“unblocked” up to two days prior to the meeting whereas in other countries the removal of

the block appears to be discretionary with the issuer’s transfer agent). Due to these

restrictions, MFS must balance the benefits to its clients of voting proxies against the

potentially serious portfolio management consequences of a reduced flexibility to sell the

underlying shares at the most advantageous time. For companies in countries with share

blocking periods or in markets where some custodians may block shares, the disadvantage

of being unable to sell the stock regardless of changing conditions generally outweighs the

advantages of voting at the shareholder meeting for routine items. Accordingly, MFS will

not vote those proxies in the absence of an unusual, significant vote that outweighs the

disadvantage of being unable to sell the stock.

From time to time, governments may impose economic sanctions which may prohibit us

from transacting business with certain companies or individuals. These sanctions may also

prohibit the voting of proxies at certain companies or on certain individuals. In such

instances, MFS will not vote at certain companies or on certain individuals if it determines

that doing so is in violation of the sanctions.

In limited circumstances, other market specific impediments to voting shares may limit our

ability to cast votes, including, but not limited to, late delivery of proxy materials, untimely

vote cut-off dates, power of attorney and share re-registration requirements, or any other

unusual voting requirements. In these limited instances, MFS votes securities on a bestefforts

basis in the context of the guidelines described above.

D. ENGAGEMENT

As part of its approach to stewardship MFS engages with companies in which it invests on

a range of priority issues. Where sufficient progress has not been made on a particular issue

of engagement, MFS may determine a vote against management may be warranted to

‐ 20 ‐

1051727

reflect our concerns and influence for change in the best long-term economic interests of

our clients.

MFS may determine that it is appropriate and beneficial to engage in a dialogue or written

communication with a company or other shareholders specifically regarding certain

matters on the company’s proxy statement that are of concern to shareholders, including

environmental, social and governance matters. This may be to discuss and build our

understanding of a certain proposal, or to provide further context to the company on our

vote decision.

A company or shareholder may also seek to engage with members of the MFS Proxy

Voting Committee or Stewardship Team in advance of the company’s formal proxy

solicitation to review issues more generally or gauge support for certain contemplated

proposals. For further information on requesting engagement with MFS on proxy voting

issues or information about MFS' engagement priorities, please contact

dlstewardshipteam@mfs.com.

E. RECORDS RETENTION

MFS will retain copies of these MFS Proxy Voting Policies and Procedures in effect from

time to time and will retain all proxy voting reports submitted to the Board of Trustees of

the MFS Funds for the period required by applicable law. Proxy solicitation materials,

including electronic versions of the proxy ballots completed by representatives of the MFS

Proxy Voting Committee, together with their respective notes and comments, are

maintained in an electronic format by the Proxy Administrator and are accessible on-line

by the MFS Proxy Voting Committee and other MFS employees. All proxy voting

materials and supporting documentation, including records generated by the Proxy

Administrator’s system as to proxies processed, including the dates when proxy ballots

were received and submitted, and the votes on each company’s proxy issues, are retained

as required by applicable law.

F. REPORTS

U.S. Registered MFS Funds

MFS publicly discloses the proxy voting records of the U.S. registered MFS Funds on a

quarterly basis. MFS will also report the results of its voting to the Board of Trustees of

the U.S. registered MFS Funds. These reports will include: (i) a summary of how votes

were cast (including advisory votes on pay and “golden parachutes”); (ii) a summary of

votes against management’s recommendation; (iii) a review of situations where MFS did

not vote in accordance with the guidelines and the rationale therefore; (iv) a review of the

procedures used by MFS to identify material conflicts of interest and any matters identified

as a material conflict of interest; (v) a review of these policies and the guidelines; (vi) a

review of our proxy engagement activity; (vii) a report and impact assessment of instances

in which the recall of loaned securities of a U.S. issuer was unsuccessful; and (viii) as

necessary or appropriate, any proposed modifications thereto to reflect new developments

‐ 21 ‐

1051727

in corporate governance and other issues. Based on these reviews, the Trustees of the U.S.

registered MFS Funds will consider possible modifications to these policies to the extent

necessary or advisable.

Other MFS Clients

MFS may publicly disclose the proxy voting records of certain other clients (including

certain MFS Funds) or the votes it casts with respect to certain matters as required by law.

A report can also be printed by MFS for each client who has requested that MFS furnish a

record of votes cast. The report specifies the proxy issues which have been voted for the

client during the year and the position taken with respect to each issue and, upon request,

may identify situations where MFS did not vote in accordance with the MFS Proxy Voting

Policies and Procedures.

Firm-wide Voting Records

MFS also publicly discloses its firm-wide proxy voting records on a quarterly basis.

Except as described above, MFS generally will not divulge actual voting practices to any

party other than the client or its representatives because we consider that information to be

confidential and proprietary to the client. However, as noted above, MFS may determine

that it is appropriate and beneficial to engage in a dialogue with a company regarding

certain matters. During such dialogue with the company, MFS may disclose the vote it

intends to cast in order to potentially effect positive change at a company in regards to

environmental, social or governance issues.

 

_____________________________________________________________________________________

1 MFS’ determination of “independence” may be different than that of the company, the exchange on which the company is listed, or of third party (e.g., proxy advisory firm). 

2 For clarification purposes, note that MFS votes in what we believe to be the best, long-term economic interest of our clients entitled to vote at the shareholder meeting, regardless of whether other MFS clients hold “short” positions in the same issuer or whether other MFS clients hold an interest in the company that is not entitled to vote at the shareholder meeting (e.g., bond holder). 

3 From time to time, due to travel schedules and other commitments, an appropriate portfolio manager or research analyst may not be available to provide a vote recommendation.  If such a recommendation cannot be obtained within a reasonable time prior to the cut-off date of the shareholder meeting, the MFS Proxy Voting Committee may determine to abstain from voting.

 

 

Content under review.

Proxy Voting Records
MFS Firm-Wide Proxy Voting Records

Proxy Voting Reports

 

close video