REQUEST FOR PROPOSAL FOR PROXY ADVISORY AND VOTING SERVICES

Transcription

1 SECTION I: GENERAL INFORMATION 1. Introduction: REQUEST FOR PROPOSAL FOR PROXY ADVISORY AND VOTING SERVICES The State Universities Retirement System of Illinois (SURS) requests proposals from qualified Proxy Service Providers (Responders) to provide fiduciary proxy advisory and voting services. SURS is issuing the RFP for due diligence purposes, to ensure its receipt of quality services at cost-effective, market pricing. 2. Background: Created in 1941, SURS exists as a body politic and corporate governed by a board of trustees in accordance with Illinois Law. The SURS Board of Trustees currently consists of six (6) elected and five (5) appointed members, including the chair of the Illinois Board of Higher Education, who also serves as the chair of the SURS Board of Trustees. The SURS Board of Trustees delegates their authority to the executive director and nearly 130 full-time staff in administering the provisions of Articles 1, 15 and 20 of the Illinois Pension Code (40 ILCS 5). Administrative functions performed by SURS Staff include processing retirement, survivor, disability and death benefits for more than 228,000 members who have current or previous employment with 61 higher education entities in Illinois. Members of SURS make a one-time, irrevocable election upon certification of initial employment to participate in one of three retirement options: the Traditional Plan, the Portable Plan, or the Self-Managed Plan. Funding for SURS generally comes from three main sources: employer (state) contributions, employee contributions and investment returns. Pursuant to Illinois law (40 ILCS 5/15-55), the SURS Board of Trustees annually certifies the required state contribution necessary for the System to reach a funded ratio of 90 percent of assets to liabilities by the end of state Fiscal Year 2045, under the projected unit credit actuarial cost method. Additionally, all members of SURS contribute eight percent of pensionable earnings toward their selected retirement option. SURS invests more than $17 billion in assets to generate investment returns for the defined benefit plans (or the Traditional and Portable Plans). (SURS members in the Self-Managed Plan, or the states only employer-matched defined-contribution plan, invest their own account balances and bear the risk associated with their investment decisions.) Located in Champaign, Illinois SURS offices are roughly 130 miles south of Chicago, 125 miles west of Indianapolis, and 85 miles east of Springfield. Additional information regarding SURS can be obtained at SECTION II: REQUEST FOR PROPOSAL OBJECTIVE 1. Purpose of Request for Proposal SURS is soliciting responses from qualified firms interested in providing Proxy Advisory and Voting Services. This includes proxy policy development, research, analysis, recommendations, and voting services. A more detailed description is set forth in Section III below under the heading Scope of Work. Page 1 of 17

2 2. Issuing Officer, Contacts and Lobbying SURS is issuing this RFP. The Issuing Officer identified below is the sole point of contact regarding this RFP. No contacts with any other employee of SURS, members of the Board of Trustees, or state officials are permitted with respect to this RFP. The prohibition includes, but is not limited to, any lobbying efforts directed at state legislators or any state officer or employee who might reasonably be considered to have influence over the process and final outcome. The Issuing Officer for this RFP is: Ms. Allison Kushner Compliance Officer SURS 1901 Fox Drive PO Box 2710 Champaign, IL (217) Additional information regarding Submission of responses to this RFP is set forth in Section V below under the heading Submission of Proposal and Selection Process SECTION III: SCOPE, QUALIFICATIONS AND INFORMATION REQUESTED 1. Minimum Qualifications Failure to satisfy each of the minimum qualifications will result in the immediate rejection of the proposal. The responder must address each of the qualifications substantiating how the responder satisfies each of the minimum qualifications. The responses must contain sufficient information as prescribed to assure SURS of its accuracy. Failure to provide complete information will result in rejection of the proposal. 1. The responder must have been in the business of providing proxy research services for at least five (5) years, evidenced by a certificate of incorporation as well as documentation of proxy research services dating back a minimum of five (5) years. 2. The primary contact(s) for SURS account and head of domestic and global research must have at least five (5) years of experience directly related to those duties. 3. The responder should have as of February 1, 2016, at least three (3) other large institutional investors, each with at least $10 billion under management with the same type of services. 4. The responder s key professionals and/or organization must not have material conflicts of interest with the SURS Board, its custodian, or its investment managers. 5. The responder must be willing to enter into a most favored nation clause certifying that the fees, costs, or pricing charged to SURS do not exceed the fees, costs, or pricing charged by the responder to any of its clients for the same or similar level of services. Page 2 of 17

3 2. Legislative Considerations The Illinois Governmental Ethics Act, 40 ILCS 420, provides guidelines for ethical practices concerning state and local pension plans. Proxy voting service providers should be familiar with the provisions of this Act. The Act also encourages the Board to increase the racial, ethnic, and gender diversity of its fiduciaries, to the greatest extent feasible within the bounds of financial and fiduciary prudence. In furtherance of this Act, SURS will use its best efforts to increase the racial, ethnic, and gender diversity of its vendors/investment managers. A section of the Illinois Procurement Code 1 concerning prohibitions of political contributions for vendors, 30 ILCS 500/50-37, may or may not apply to SURS investment managers or other service providers. However, each investment manager or service provider should be familiar with the provisions of this section and comply with this section if the investment manager or service provider deems it appropriate. Provisions of Illinois law (40 ILCS 5/ ) encourage certain public retirement funds and investments boards to increase: The utilization of emerging investment managers (with goals for specific asset classes for emerging managers that are minority-owned businesses, female-owned business, and businesses owned by a person with a disability; The racial, ethnic and gender diversity of its fiduciaries, including its consults and senior staff; The utilization of business owned by minorities, females, and persons with disabilities for all contracts and services. The utilization of minority broker-dealers; and The utilization of minority investment funds Public Act establishes the following aspirational goals for certain public retirement systems, pension funds, and investment boards, beginning January 1, 2006: The utilization of emerging investment managers for not less than 20 percent of the total funds under management; That not less than 20 percent of investment advisors are minorities, females, and persons with disabilities; and The utilization of businesses owned by minorities, females, and persons with disabilities for not less than 20 percent of contracts awarded for information technology services, accounting services, insurance brokers, architectural and engineering services, and legal services. For these reasons, the SURS Board of Trustees encourages individuals who are minorities, females, and persons with a disability, as well as firms owned by minorities, females, and persons with a disability to respond to this RFP. 3. Diversity Disclosure Requirements Effective January 1, 2015 Section of the Illinois Pension Code prohibits certain public retirement systems, pension funds, and investment boards from awarding a contract, oral or written, for investment services, consulting services, or commitment to a private market fund, unless the investment advisor, consultant or private market fund first discloses: 1 Note: While SURS is not subject to the Illinois Procurement Code generally (30 ILCS 500/ ), each responder should comply with any applicable sections of the Illinois Procurement Code. Page 3 of 17

4 The number and percentage of its investment and senior staff who are: i) a minority person, ii) a female, and iii) a person with a disability; The number of contracts, oral or written, for investment services, consulting services, and professional and artistic services that the investment advisor, consultant, or private market fund has with i) a minority-owned business, ii) a female-owned business, or iii) a business owned by a person with a disability and; The number of contracts, oral or written, for investment services, consulting services, and professional and artistic services the investment advisor, consultant, or private market fund has with a business other than: i) a minority-owned business, ii) a female-owned business, or iii) a business owned by a person with a disability, if more than 50 percent of services performed pursuant to the contract are performed by i) a minority person, ii) a female, and iii) a person with a disability. Each responder (even if the responder may not be in fact an investment adviser, consultant, or private market fund ) must disclose this information in Appendix A. 4. Scope of Work A. General SURS seeks a qualified proxy advisor and voting provider for services which shall include the following: i) proxy voting guideline review and consulting services to assist SURS with the development of the SURS proxy voting policy; ii) proxy research, recommendations and voting services; and iii) proxy vote reporting. B. Specific 1. Proxy Voting Guideline Review and Development Propose and work with SURS to optimize a proxy voting strategy and policy that is consistent with its fiduciary responsibilities and seeks to enhance long-term shareowner value, which will be integrated into the SURS Proxy Voting Policy. Review and discuss SURS existing proxy voting policy and ascertain the appropriateness of the current policy for SURS in the current corporate governance landscape. Provide proxy guideline review services and recommend amendments to SURS s proxy policy, as necessary after adoption. Provide updates and education to Trustees and staff on relevant issues and other non-routine matters that relate to proxy voting and corporate governance. Provide annual proxy voting policy updates. 2. Proxy Research, Voting and Reporting Provide proxy voting research and recommendations based on SURS s proxy voting guidelines for annual meetings for equity securities held in the portfolio. Manage, as a fiduciary, SURS s domestic (and possibly international) proxy voting activity and execute required votes on SURS behalf in accordance with the proxy voting guidelines or policy adopted by SURS. Monitor meeting schedules and agendas, and receive, open and document all physical proxy voting ballots. Page 4 of 17

5 Provide record keeping services, maintaining detailed records of all recommended and actual votes, as well as any special instructions related to specific securities. Provide comprehensive electronic proxy-voting reports on a quarterly basis and as requested. Keep SURS apprised of proxy voting and corporate governance changes and developments and provide SURS with regular access to any meetings, conference call and/or web casts that might provide timely information on specific issues of concern regarding proxies and corporate governance. Prepare and assist in the preparation of reports on proxy voting and corporate governance issues. Track and monitor the holdings of SURS domestic (and possibly international) equity portfolios managed by external investment advisors, obtaining required proxy voting information from SURS s custodian regarding the same. Cooperate with SURS s custodian to assemble new accounts and close terminated accounts, upon SURS s hiring or termination of external investment managers. Reconcile with the custodian any discrepancies related to voting matters, including, but not limited to, discrepancies in holdings, ballots, numbers of shares held, proxies to be voted, votes against management, votes with management and votes withheld. Provide comprehensive reporting services for domestic proxy votes received on or after September 1, Provide assistance to SURS in respect of a company s special voting instructions and requirements held in the portfolio. SECTION IV: PROPOSAL QUESTIONS AND FEE PROPOSALS A. Proposal Questions 1. Organization and History Provide the name, title, address, address, and telephone number of the individual responsible for responding to this request. 1. Describe your organization providing comment on the following: a. Business background, organizational history (including year founded) and ownership structure, including but not limited to parent organizations, affiliated companies, and joint ventures. If an affiliate, designate percent of parent firm s total revenue generated by your organization. If the firm is a joint venture partner, identify the percentage of ownership and revenues recognized by each partner to the combined association. b. Identify the location of your firm s main office and if different, the office from which services would be provided to SURS. Does your firm have an office located in Chicago, Champaign, or Springfield, Illinois? c. Is your organization a Registered Investment Adviser with the SEC under the Investment Advisers Act of 1940? If yes, please provide a copy of the firm s registration with the SEC with your response. d. State the firm s mission statement and briefly provide the firm s philosophy. e. How many years your firm has been providing proxy services to institutional investors and specifically, to public pension fund clients. Please identify when each type of service became available to clients. f. An overview of your organization and listing of all major business lines. g. Percentage of revenue derived from proxy voting and advisory services. h. Indicate the total number of entities for which you have provided proxy advisory and voting services over the last five years: Page 5 of 17

6 Year Total Number of Entities Total Assets Under Management ($billion/million) Indicate the composition of your firm s client base, both number and percentage of clients. Provide an explanation if your firm is heavily weighted to any particular type of client. Client Type Number Percentage Public Pension Funds Illinois Public Pension Funds Corporate Pension Funds Illinois Corporate Pension Funds Endowments & Foundations Illinois Endowments & Foundations Mutual Funds and TPA s Illinois Mutual Funds and TPA s 3. For your five largest clients, provide the following information: Name Date of Inception Market Value of Assets under Advisement (as of 9/30/15) 1. Provide a list of the two largest public pension fund clients to which your firm provides proxy voting services, including name, contact, telephone number, asset values, number of years the client has retained your firm and the product(s) or service(s) the client uses. Please note, SURS may contact these clients for reference purposes. 2. List all proxy advisory and voting clients gained over the past three years as of September 30, List all proxy servicing clients lost over the past three years as of September 30, 2015 and the reasons why. If relevant, explain any remedies you have employed to address any shortcomings. 4. Provide three references in which your firm provides similar services as requested in this RFP, including entity name, contact name, phone number and address. Provide a short description of the services you provide and the length of the contract. 5. Does your firm qualify as a minority owned business, a female owned business or as a business owned by a person with a disability as these terms are defined in the Illinois Business Enterprise for Minorities, Females, and Persons with Disabilities Act (MWDBE)? If yes, please provide certification. 6. Please provide an organizational chart diagramming your proxy advisory and voting operations. Indicate the number of employees you have in each functional area and the location in which Page 6 of 17

7 those services are provided. Include research, engagement, client service and any other relevant functions. a. Detail the average client ratios in your client-facing areas and the client ratios for the proposed Primary Contact. b. For research professionals, details the average number of proxies per professional. 7. Please provide contact information for each firm representative that will be assigned to SURS in the following grid: Name Address Business Phone Business Fax Address 8. Please attach biographies of the representative(s) who would be assigned to this engagement including i) the role of each representative for this assignment, ii) the year each representative joined your firm, iii) a description of his or her position and current responsibilities, iv) areas of expertise and experience, v) educational and professional designations and memberships, vi) relevant publications and presentations, and vii) the number and names of clients these representatives serves. 9. What measures will your firm employ to ensure that the representative(s) will be readily available to answer questions from SURS staff? 10. What is the turnover of professional staff (senior personnel) over the last five years? 11. Describe any significant developments in the firm s basic ownership structure or any other significant changes in the organization (changes in ownership, personnel reorganizations, substantial downsizing, and substantial growth) in the last five years. 12. Describe the objectives of your firm with respect to future growth, commenting on new products or services over the next three to five years. a. Detail any pending agreements to merge or sell your company or any of its units, or if your firm has any pending agreements to acquire another company offering proxy advisory and voting services. b. Explain how your firm will manage its growth plans, including acquiring additional resources and capacity limitations. c. Describe any anticipated changes in the firm s basic ownership structure or any other significant changes in the organization. d. Please detail plans for personnel growth and succession planning for this period of time as well. 13. Provide a list of any subcontractors that your firm plans to utilize in performing the services required. Indicate the contractual relationship and/or affiliation with the subcontractor(s). Detail the services to be provided by subcontractor(s) and how your firm monitors those services. Describe any licenses and insurance you require of your subcontractors. 2. Legal and Regulatory Compliance 1. Describe the levels (U.S. dollar amounts) of coverage and deductibles for errors and omissions coverage and any other fiduciary or professional liability coverage that your firm carries. List the insurance carriers supplying the coverage. If selected, proof of insurance will be required in an amount to be negotiated. Page 7 of 17

8 2. Does your firm have a written code of conduct or a set of standards for professional behavior? How is employee compliance monitored? Please describe findings of the most recent compliance review. Include a copy of your firm s Code of Ethics. 3. Does your firm have a diversity or inclusion policy? If so, please provide. 4. What is the percentage of minority, female and persons with disabilities of persons on your firm s staff? How diverse is the team that would be assigned to the SURS relationship. Please specific the percentage of African Americans, Asian Americans, Latinos and females. Please fill out the attached Appendix A: Diversity Disclosures for your entire firm. Please also fill out Appendix C: Diversity Profile. 5. Over the past five years, has your firm or any of its affiliates or parent, or any officer, principal, or primary contacts been involved in any litigation relating to fiduciary duties, securities or tax law violation investigations or proceedings, other legal proceedings between an officer or principal and the firm, or in any government investigations. If so, provide a detailed explanation and indicate the current status. 6. Describe in detail any conflicts of interest your firm may have in the management of this accounts. Does your firm or any affiliate provide services to clients other than institutional shareholders? Does the firm provide non-proxy services to any clients? Are there contractual or business relationships with publically traded companies? Please describe any such services and relationships and identify the amount and percentage of income and profit associate with them. How are conflicts of interests identified, managed, disclosed or prevented? Include any other pertinent activities, actions, or relationships not specifically outlined in this question. Does your firm have a conflicts of interest/ethics policy? If so, please provide a copy. 7. Does the firm accept soft dollars as payment for services? If so, please explain why. 8. Does your firm have a business continuation and disaster recovery plan? Please describe the key features of the plan. 9. Has your firm adopted the Principles for Responsible Investment (PRI)? If so, when? If not, has there been any discussion regarding the Principles? If so, what were the key issues or concerns surrounding the PRI? Has your firm adopted a similar set of principles or best business practices? 10. List the professional organizations of which your firm is a member. 11. Please provide any political and/or charitable organization contributions over the last five years. Please disclose the dollar amount for any contributions over $5, Proxy Advisor and Voting Services General Proxy Voting Development Services and Voting Services 1. Describe in detail the proxy policy review and development services that your firm proposes to provide to SURS. Explain what your firm s competitive advantage would be for providing those services to SURS. Describe what differentiates your services from your competition. 2. Please provide a copy of the standard proxy voting guidelines and policies recommended by your firm. If your firm has a separate public-fund voting policy, provide a copy and highlight the differences between it and your standard policy. How are voting decisions made when an issue is not expressly covered by the proxy voting guidelines in force? 3. What are the primary issues and activities on which your firm believes institutional investors such as SURS, should focus on in the areas of corporate governance? Why? 4. Is your firm able to provide SURS with peer benchmarking? If not, please explain. 5. Provide a description of your firm s experience, process, procedures and information technology capabilities for monitoring, researching, analyzing, recommending, and voting domestic and international proxies. 6. Provide a description of your firm s experience, process, procedures, and information technology capabilities for monitoring, researching, analyzing, recommending and voting domestic and Page 8 of 17

9 international proxies. Explain how many companies (proxy issuers) you advise on and to what extent, as well as your criteria for determining which companies to cover. 7. Describe your firm s reporting capabilities and approach, including online and paper reports. a. Provide examples of your annual and quarterly reports. b. Provide screen shots of your online platform. c. Describe the capabilities that your database would have to screen holdings on various metrics and characteristics. 8. Provide your firm s experience, process, procedures and information technology capabilities for monitoring, reporting and documenting records for domestic proxies. Please indicate if any of your public fund clients use The Northern Trust as their custodian. 9. Explain how your firm derives its governance ratings and profiles. Include the metrics used in determining the ratings, the balance between qualitative and quantitative factors, and the frequency at which your firm updates the ratings and profiles. Please describe efforts to verify the validity of your ratings and results. Include a sample copy of a governance ratings and profiles. 10. Provide your firms process for assisting clients in drafting and amending their own voting policies, including the expected time frame and the client resources required. 11. Describe how your firm works with clients to implement routine votes and minimize the administrative burden on your clients while ensuring issues are appropriately raised when necessary. Include how you ensure routine votes are consistent with the fiduciary responsibilities of your clients and their individual proxy voting policies. 12. How does your firm handle case-by-case recommendations? 13. Explain your firm s process for case-by-case-recommendations. Include the criteria for escalating an issue to individualized treatment, the processes in place to ensure consistency in developing individual recommendations, and any procedures for incorporating a client s specific criteria and/or proxy policy when making a recommendation. 14. Describe your quality control procedures, including processes for handling complaints about the accuracy of your reports and analyses. a. Include how many times your reports or analyses have been accused of or found to contain bias or factual inaccuracies in the last three years. Provide an explanation for each. b. Detail any errors or client guideline violations (missed votes) in the last three years. For each instance, explain in detail how the errors were corrected and communicated to the client. 4. Corporate Governance Considerations 1. How does your firm incorporate the UN Principles for Responsible Investments into developing proxy voting guidelines for a client like SURS? 2. Please discuss your firm s ability and willingness, if requested by SURS, to conduct engagements with issuers and/or shareowners regarding proxy matters. 3. Is your firm a member of, or familiar with, the Council of Institutional Investors? If so how do you incorporate their principles of governance and proxy voting into your plan of action for a client like SURS. 4. Describe how your firm incorporates ESG (Environmental, Social and Governance) in developing proxy voting guidelines for a public fund client like SURS. Are there specific metrics or default principles that your firm uses that SURS should be aware of? 5. Outline your process for monitoring and reporting on corporate governance best practices, issues and trends. Please describe the types and frequency of updates, conference, webcasts and informational materials that would be provided to SURS. Please provide an example of your reports, newsletters, and publications generated within the last year on corporate governance issues. Page 9 of 17

10 6. Transparency is a priority at SURS. Please explain which proxy information, both summary and individual data your firm would allow to be disclosed to the general public, and which information your firm would deem as proprietary. Describe any public-relations support you provide for other clients. 7. Identify any circumstances where you would not be able to vote on SURS s behalf. Do you make alternative arrangements for your clients if this situation were to arise? 8. Explain your process for handling proxy fights, comingled accounts, preferred stock, warrants, debt holdings, shareholder proposals, proxies out on loan, class actions and other special circumstances. 9. Provide your firm s analysis on whether exercising shareowner rights will have an effect on the economic value of SURS s investments that outweighs the cost of exercising such rights. 5. Fee Proposals SURS has not fully determined the services for which it will contract, if any. For that reason, responders are requested to price the services individually as requested below and indicate any price differential for bundling or selecting all of the proposed services listed below. Please be sure to include per vote/ballot costs. As the term of the Contract shall be three years, the Proposal shall be guaranteed for a period of not less than three years from the effective date of the Contract. 1. Proxy voting guideline review and development 2. Domestic proxy voting: a. Using proxy service guidelines; b. Using proxy service guidelines with limited customization; c. Using SURS custom guidelines. 3. International proxy voting: a. Using proxy service guidelines; b. Using proxy service guidelines with limited customization; c. Using SURS custom guidelines. 4. Proxy vote reporting a. For the fourth quarter of Fiscal Year 2016 b. Projection for the next three years 5. Proxy vote disclosure (via web-based platform) a. Post-meeting basis; b. Advance-meeting basis. 6. Negotiation of Fees and Best and Final Offers While fees are a material element in selection, SURS shall reserve the right to negotiate fees and request best and final offers. Cost, however, is only one of several factors used to evaluate proposals and SURS may select the organization other than the lowest cost provider. SECTION V: SUBMISSION OF PROPOSAL AND SELECTION PROCESS 1. Schedule SURS reserves the right to alter the following schedule if necessary. If the schedule changes, the SURS representative, Ms. Allison Kushner, will notify the affected responders via . In no event will the dates listed below be changed to earlier dates. Page 10 of 17

11 Schedule Dates RFP Issued February 19, 2016 Deadline for Responder Questions March 15, 2016 Response to Questions April 1, 2016 RFP Responses due 4:00 p.m. CST April 30, 2016 Evaluations May-June 2016 Candidate Interviews/ Selection June 9-10, 2016 Contract Negotiations and Drafting July-August, Submission Process Deadline: To be considered for selection, proposals must be received via in Adobe Acrobat format by Ms. Allison Kushner at no later than 4:00 p.m. CST, April 30, Please reference the Proxy Services Provider RFP in your communications. An confirmation will be sent confirming receipt of the proposal. All materials submitted in response to the RFP become property of SURS. Proposals remain confidential during the selection process. However, upon completion of the selection process, all responses, including that of the individual or firm selected, will be a matter of public information and will be open to public inspection in accordance with the State of Illinois Freedom of Information Act (FOIA). Withdrawal: A proposal may be withdrawn any time prior to the deadline by written notification signed by the individual applicant or authorized agent of the firm and received by Ms. Allison Kushner at akushner@surs.org no later than the deadline of 4:00 p.m. CST, April 30, Please reference the Proxy Services Provider RFP in your communications. An confirmation will be sent confirming withdrawal of the proposal. The proposal may be resubmitted with any modifications no later than the deadline. Modifications offered in any other manner will not be considered. Inquiries: Inquiries seeking clarification as to the intent or content of the RFP must be ed to Ms. Allison Kushner at akushner@surs.org no later than 4:00 p.m., CST on March 15, Please reference the Proxy Services Provider RFP in your communications. No verbal inquiries will be accepted. By no later than 4:00 p.m., CST on April 1, 2016, SURS will the question(s) (without identification of the questioner) and the answer(s) to all parties who have contacted Ms. Kushner via indicating interest in responding to the RFP and will also post them at SURS Quiet Period Policy: Please note the following Quiet Period Policy establishing guidelines by which the SURS Board of Trustees and SURS Staff will communicate with prospective service providers during a search process. The Quiet Period for this RFP began on February 4, The quiet period shall commence upon Committee action (or Board action if the selection is not initiated through a Committee) to authorize a search for a service provider and end once a selection has been made by the Board and accepted by the service provider; Page 11 of 17

12 2. Initiation, continuation and conclusion of the quiet period shall be publicly communicated via the SURS website ( to prevent inadvertent violations; 3. All Board members, and SURS staff not directly involved in the search process, shall refrain from communicating with potential service providers regarding any product or service related to the search offered by the provider throughout the quiet period and shall refrain from accepting meals, travel, hotel, or other value from the providers; 4. Throughout the quiet period, if any Board member or SURS staff member is contacted by a potential service provider, the Board member or SURS staff member shall refer the provider to the SURS staff member directly involved in the search process; 5. All authority related to the search process shall be exercised solely by the relevant Committee or Board as a whole, and not by individual Board Members; 6. All information related to the search process shall be communicated by SURS staff to the relevant Committee or Board as a whole, and not to individual Board Members; 7. The quiet period does not prevent Board approved due diligence, client conference attendance, or communications with an existing service provider that happens to be a provider in the ordinary course of services provided by such service provider; however, discussions related to the pending selection shall be avoided during those activities; 8. The provisions of this policy will apply to potential service providers throughout the quiet period and shall be communicated to providers in conjunction with any competitive proposal process; and 9. A potential service provider may be disqualified from a search process for a violation of this policy. Ex-Parte Communications: The State Officials and Employees Ethics Act (5 ILCS 430) provides that all ex parte communications concerning investment, rulemaking or quasi-adjudicatory matters pending before a state agency must be documented and some must be reported. An ex parte communication is any written or oral communication by any person that imparts or requests material information or makes a material argument regarding potential action concerning an investment, a rulemaking process, or a quasi-adjudicatory matter. An ex parte communication does not include statements publicly made in a public forum or communications among employees of the state agency. An ex parte communication from an interested party or his or her official representative or attorney to an employee or the agency must be memorialized and made a part of the record. An interested party is a person or entity whose rights, privileges, or interests are the subject of or are directly affected by an investment, regulatory or quasi-adjudicatory matter. An ex parte communication other than that described above must be reported by the SURS staff member or Board Trustee immediately to the agency s Ethics Officer. The communication must be memorialized and made a part of the record. The communication must be filed with the Executive Ethics Commission, accompanied by a memorandum from the Ethics Officer. Rights Reserved: SURS reserves the right to amend any segment of the RFP prior to the announcement of a contractor. In such an event, all respondents will be afforded the opportunity to revise their proposals to accommodate the RFP amendment. Page 12 of 17

13 SURS reserves the right to remove any or all of the services from consideration for this contract. At its discretion, SURS may issue a separate contract for any service or groups of services included in this RFP. SURS may negotiate additional provisions to the contract awarded pursuant to this RFP. SURS may request additional information from any or all bidders to assist in the evaluation of proposals, and SURS reserves the right to conduct background investigations of selected individuals or firms prior to awarding a contract under this RFP. SURS does not bear any obligation to complete the RFP process or to select any individual(s) or firm(s). SURS also reserves the right without prejudice to reject any or all proposals submitted. SURS will NOT reimburse any expenses incurred in responding to this RFP. 3. Proposal Evaluation All proposals received by the SURS representative, Ms. Allison Kushner, by the deadline of 4:00 PM, CST, on April 30, 2016, will be reviewed to determine whether they meet the requirements of this RFP. The primary factors that will be considered include, but will not necessarily be limited to: 1. The individual or firm s experience in providing proxy services to public retirement systems, pension funds, or investment boards for other large institutional investors and/or asset owners; 2. The individual or firm s knowledge and experience in providing proxy voting research, proxy policy writing guidance, including but not limited to experience in providing clients with ESG guidance as related to proxy voting services, as well as pre-voting and post proxy voting recommendations and records; 3. The individual or firm s ability to provide the requested services as demonstrated in the Required Services section of this RFP; 4. The quality, conciseness, clarity, and completeness of the individual or firm s proposal; and 5. The individual or firm s competitiveness in proposed fees. Terms and Conditions: Following a review of submitted materials, selected individuals or firms must be prepared to make a presentation to the SURS Board of Trustees at a date and location to be determined by SURS. SURS will NOT provide reimbursement for any costs incurred by the individuals or firms associated with this presentation. Prior to the award of a contract pursuant to this RFP, selected individuals or firms must: 1. Consent to a background check; 2. Provide the Diversity Disclosures as presented in Appendix A and Appendix C; and 3. Agree to the terms and conditions of the Addendum to Contract as presented in Appendix B SECTION VI: DEFINITIONS AND APPENDICES Definitions Under Illinois Law: Link to Illinois Compiled Statutes: Contract means all types of [State] agreements, regardless of what they may be called, for the procurement, use, or disposal of supplies, services, professional or artistic services, or construction or for leases of real property where the [State] is the lessee, or capital improvements, and including renewals, master contracts, contracts for financing through use of installment or lease-purchase arrangements, renegotiated contracts, amendments to contracts, and change orders. Page 13 of 17

14 Minority person means a person who is a citizen or lawful permanent resident of the United States and who is a member of a minority. Minority owned business means a business which is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it. Female owned business means a business which is at least 51% owned by one or more females, or, in the case of a corporation, at least 51% of the stock in which is owned by one or more females; and the management and daily business operations of which are controlled by one or more of the females who own it. Business owned by a person with a disability means a business that is at least 51% owned by one or more persons with a disability and the management and daily business operations of which are controlled by one or more of the persons with disabilities who own it. A not-for-profit agency for persons with disabilities that is exempt from taxation under Section 501 of the Internal Revenue Code of 1986 is also Page 14 of 17

15 APPENDIX A Disclosures Pursuant to Illinois Pension Code Section Beginning January 1, 2015, Section of the Illinois Pension Code requires the following disclosures from an investment advisor, consultant or private market fund prior to the awarding of a contract with such entity: Name of Proxy Provider Firm: 1. The number of its senior staff and the percentage of its senior staff who are (i) a minority person (ii) a female, and (iii) a person with a disability; (If none, state none ) Staff Classification Minority Female Person with a Disability Number of Senior Staff Who Are % Percentage of Investment and Senior Staff Who Are 2. The number of contracts, oral or written, for actuarial services that the firm has with (i) a minority owned business, (ii) a female owned business, or (iii) a business owned by a person with a disability; and (If none, state none ) Contracts Minority Female Person with a Disability Number Contracts Supplemental Information (Optional): If desired, please include additional information on your firm s diversity efforts to supplement the information provided above. This may include initiatives such as internal training and development programs, as well as recruitment and outreach efforts, etc. Page 15 of 17

16 APPENDIX B ADDENDUM TO CONTRACT As an addendum to the contract entered into between State Universities Retirement System (SURS) and (the Contractor ) on, 2016, and in consideration of SURS entering into such contract, the Contractor also agrees to the following: 1) If the Contractor is an individual, he or she certifies that he or she is not in default on an educational loan as provided in Section 3 of the Educational Loan Default Act, 5 ILCS 385/3. 2) The Contractor certifies that it is not barred from being awarded a contract or subcontract because of a conviction or admission of guilt for bribery or for bribing an officer or employee of the State of Illinois or any other state in that officer or employee s official capacity as provided in Section 50-1 of the Illinois Procurement Code, 30 ILCS 500/ ) The Contractor certifies that it will provide a drug free workplace by engaging in the conduct prescribed in Section 3 of the Drug Free Workplace Act, 30 ILCS 580/3. 4) The Contractor certifies that it is not barred from contracting with SURS because of a violation of either Section 33E-3 (bid-rigging) or 33E-4 (bid rotating) of Article 33E of the Criminal Code of 1961, 720 ILCS 5/33E. 5) The Contractor certifies that neither it nor any substantially owned affiliated company is participating or shall participate in an international boycott in violation of the provisions of the U.S. Export Administration Act of 1979 or the regulations of the U.S. Department of Commerce promulgated under that Act. 6) The Contractor certifies that no fees, commissions, or payments of any type have been or will be paid to any third party in connection with the contract to which this is an addendum, except as disclosed in the contract or an exhibit thereto. The Contractor shall promptly notify SURS if it ever has reason to believe that this certification is no longer accurate. 7) To the extent Illinois law is applicable to Contractor, pursuant to 775 ILCS 5/2-105, Contractor agrees to: a) Refrain from unlawful discrimination and discrimination based on citizenship status in employment and undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination; b) Comply with the procedures and requirements of the Illinois Department of Human Rights regulations concerning equal employment opportunities and affirmative action; c) Provide such information, with respect to its employees and applications for employment, and assistance as the Illinois Department of Human Rights may reasonably request; and d) Have written sexual harassment policies that shall include, at a minimum, the following information: i) The illegality of sexual harassment; ii) The definition of sexual harassment under State law; iii) A description of sexual harassment, utilizing examples; iv) Contractor s internal complaint process including penalties; v) The legal recourse, investigative and complaint process available through the Illinois Department of Human Rights and the Illinois Human Rights Commission; vi) Directions on how to contact the Illinois Department of Human Rights and the Illinois Human Rights Commission; and vii) Protection against retaliation as provided by Section of the Illinois Human Rights Act. A copy of the policies shall be provided to the Illinois Department of Human Rights upon request. 8) To the extent it applies to Contractor and this contract, Contractor agrees to comply with the Illinois Prevailing Wage Act, 820 ILCS 130/1, et seq. 9) Contractor shall maintain, for a minimum of five (5) years after the completion of the contract, adequate books, records, and supporting documents to verify the amounts, recipients, and uses of all Page 16 of 17

17 disbursements of funds passing in conjunction with the contract. Contractor shall further make all such books, records, and supporting documents related to the contract available for review and audit by the internal auditor of SURS and by the Illinois Auditor General and shall cooperate fully with any audit conducted by the internal auditor of SURS and the Illinois Auditor General and will further provide the internal auditor of SURS and the Illinois Auditor General full access to all relevant materials. 10) Contractor agrees to notify the SURS Ethics Officer if it solicits or intends to solicit for employment any of the employees of SURS during the term of the contract. 11) Contractor understands that SURS and this contract are subject to the provisions of the Illinois Open Meetings Act (5 ILCS 120/1, et seq) and the Illinois Freedom of Information Act (5 ILCS 140/1, et seq). 12) Counterparts. This Agreement and Addendum may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. The counterparts of this Agreement and Addendum may be executed and delivered by facsimile or other electronic signature by any of the parties to any other party and the receiving party may rely on the receipt of such document so executed and delivered by facsimile or other electronic means as if the original had been received. Under penalties of perjury, Contractor certifies that is its correct Federal Taxpayer Identification Number. Contractor is doing business as a(n) (please circle applicable entity): Individual Sole Proprietorship Partnership Corporation Not-for-Profit Corporation Medical and Health Care Services Provider Corporation Real Estate Agent Governmental Entity Tax Exempt Organization (IRC 501(a) only) Trust or Estate. Dated this day of, Contractor State Universities Retirement System By: By: Name: Name: W. Bryan Lewis Title: Title: Executive Director Page 17 of 17