SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
240.14a-11(c) or 240.14a-12
WESTERN ASSET INCOME FUND
-------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
WESTERN ASSET INCOME FUND
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2006
------------------------
To the Stockholders of
WESTERN ASSET INCOME FUND
The Annual Meeting of Stockholders of Western Asset Income Fund (the
"Fund") will be held in the Board Room, Fifth Floor, 385 E. Colorado Boulevard,
Pasadena, California, on Tuesday, May 9, 2006 at 8:00 a.m., Pacific time, for
the following purposes:
(1) Electing six Directors to the Board of Directors of the Fund;
(2) Approving an amendment to the Fund's Certificate of Incorporation
to add an exculpatory provision; and
(3) Transacting such other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on March 17, 2006 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting and any adjournment thereof.
By Order of the Board of Directors
Lisa G. Mrozek, Secretary
Pasadena, California
March [ ], 2006
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE
URGED TO DATE, FILL IN, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
WESTERN ASSET INCOME FUND
385 EAST COLORADO BOULEVARD
PASADENA, CALIFORNIA 91101
------------------------
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of the Fund
for use at the annual meeting of stockholders of the Fund to be held on May 9,
2006 at 8:00 a.m., Pacific time (the "Annual Meeting"), and at any adjournment
thereof. At the Annual Meeting, stockholders of the Fund will be asked to
consider (1) the election of six Directors to the Board of Directors of the Fund
and (2) an amendment to the Fund's Certificate of Incorporation to add an
exculpatory provision. This Proxy Statement and the form of proxy were first
mailed to stockholders on or about March [ ], 2006.
The Board of Directors has fixed the close of business on March 17, 2006 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof. As of the close of
business on March 17, 2006, there were [ ] shares of the Fund's common
stock (the "Common Stock") outstanding and entitled to one vote per share (and a
fractional vote with respect to fractional shares) with respect to each matter
to be voted on at the Annual Meeting. The outstanding shares of Common Stock
constitute the only outstanding voting securities of the Fund entitled to be
voted at the Annual Meeting. As of the close of business on March 17, 2006, no
person owned of record, or to the Fund's knowledge, beneficially, more than 5%
of the Fund's Common Stock, except that Cede & Co., as nominee for participants
in The Depository Trust Company, held of record [ ] shares of Common
Stock, representing approximately [ ]% of the Fund's Common Stock. Cede & Co.'s
address is 55 Water Street, 25th Floor, New York, New York 10041-0001.
A majority of the outstanding shares of Common Stock as of the close of
business on March 17, 2006 must be represented in person or by proxy to
constitute a quorum for the Annual Meeting. Directors will be elected by a
plurality of the votes of the shares of the Fund's Common Stock present in
person or represented by proxy and entitled to vote on the election of
Directors. In all matters other than the election of Directors, including the
proposed amendment to the Fund's Certificate of Incorporation, the affirmative
vote of the majority of shares of the Fund's Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the subject
matter will be the act of the stockholders. Each stockholder has the right to
revoke his or her proxy at any time before it is voted. A proxy may be revoked
by filing with the Secretary of the Fund a written revocation or a properly
executed proxy bearing a later
1
date or by voting in person at the Annual Meeting. Any stockholder may attend
the Annual Meeting, whether or not he or she has previously given a proxy.
The solicitation of proxies for the Annual Meeting will be made primarily
by mail. However, if necessary to ensure satisfactory representation at the
Annual Meeting, additional solicitation may take place in writing or by
telephone or personal interview by officers of the Fund (or their designees),
who will not receive compensation from the Fund for such services. As the date
of the meeting approaches, if we have not received your proxies, you may receive
a telephone call from our proxy solicitor, [ ] ("[ ]"), which
has been retained to assist stockholders in the voting process. For these
services, the Fund will pay [ ] a fee that is not expected to exceed
$[ ]. The Fund will reimburse brokers and other nominees, in accordance with
New York Stock Exchange approved reimbursement rates, for their expenses in
forwarding solicitation material to the beneficial owners of stock of the Fund.
All expenses incurred in connection with the solicitation of proxies, including
the services of [ ], will be borne by the Fund.
Abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or nominee does not
have discretionary voting power on a particular matter) will be counted as
shares present for purposes of determining whether a quorum is present, but will
not be counted as having been voted on the matter in question. Assuming that a
quorum would otherwise be present, abstentions and broker non-votes will
accordingly have no effect for the purpose of determining whether a Director has
been elected, but will have the effect of a negative vote on Proposal 2 below.
James W. Hirschmann III, Lisa G. Mrozek and Ilene S. Harker, the persons
named as proxies on the proxy card accompanying this Proxy Statement, were
selected by the Board of Directors to serve in such capacity. Mr. Hirschmann and
Mses. Mrozek and Harker are each officers of the Fund. Each executed and
returned proxy will be voted in accordance with the directions indicated thereon
or, if no direction is indicated, such proxy will be voted for the election as
Directors of the Board of Directors' nominees listed in this proxy statement and
the approval of the amendment to the Fund's Certificate of Incorporation.
Discretionary authority is provided in the proxy as to any matters not
specifically referred to therein. The Board of Directors is not aware of any
other matters which are likely to be brought before the Annual Meeting. However,
if any such matters properly come before the Annual Meeting, the persons named
in the proxy are fully authorized to vote thereon in accordance with their
judgment and discretion. In all matters other than the election of Directors,
except where a different vote is required by any provision of law or the
Certificate of Incorporation or Bylaws, the affirmative vote of a majority of
shares of the Fund's Common Stock present in person or represented by proxy at
the Annual Meeting and entitled to vote on the subject matter will be the act of
the stockholders.
2
PROPOSAL 1
ELECTION OF DIRECTORS
Six Directors are to be elected at the Annual Meeting to serve until their
successors have been duly elected and qualified or until they shall resign or
shall have been removed, subject to applicable law and the rules of the New York
Stock Exchange. Information about each nominee is set forth in the table below.
Each of the nominees is presently a Director of the Fund.
It is the intention of the persons designated as proxies in the proxy card,
unless otherwise directed therein, to vote at the Annual Meeting for the
election of the nominees named below as Directors of the Fund. Each of the
nominees has agreed to serve if elected at the Annual Meeting. If any nominee is
unable or unavailable to serve, the persons named in the proxies will vote the
proxies for such other person as the Board of Directors may recommend.
Information Regarding the Nominees. Information about the nominees is set
forth below. No nominee serves as an officer of the Fund. The address of each
nominee is c/o the Fund at its principal business address (385 East Colorado
Boulevard, Pasadena, California 91101).
SHARES OF
COMMON
NUMBER OF STOCK
PORTFOLIOS OF THE
TERM OF IN FUND FUND
OFFICE AND COMPLEX OTHER BENEFICIALLY
POSITION(S) LENGTH OF OVERSEEN DIRECTORSHIPS OWNED ON
HELD WITH TIME PRINCIPAL OCCUPATIONS BY HELD BY MARCH 1,
NAME AND YEAR BORN FUND SERVED+ DURING THE PAST 5 YEARS NOMINEE++ NOMINEE 2006
------------------ ----------- -------------------- ----------------------- ---------- ------------- ------------
Ronald J. Arnault Director Served since 1997 Retired 14 None [ ]
1943 (1)(4)
3
SHARES OF
COMMON
NUMBER OF STOCK
PORTFOLIOS OF THE
TERM OF IN FUND FUND
OFFICE AND COMPLEX OTHER BENEFICIALLY
POSITION(S) LENGTH OF OVERSEEN DIRECTORSHIPS OWNED ON
HELD WITH TIME PRINCIPAL OCCUPATIONS BY HELD BY MARCH 1,
NAME AND YEAR BORN FUND SERVED+ DURING THE PAST 5 YEARS NOMINEE++ NOMINEE 2006
------------------ ----------- -------------------- ----------------------- ---------- ------------- ------------
Anita L. DeFrantz Director Served since 1998 President 14 OBN Holdings [ ]
1952 (2)(3)(4) (1987-present) and Inc.
Director (1990-
present) of Amateur
Athletic Foundation of
Los Angeles; President
and Director of Kids in
Sports (1994-present);
Vice President and
Director of the
International Rowing
Federation (1997-
present); Member of the
International Olympic
Committee ("IOC")
(1986-present); Member,
of the IOC Executive
Board (1992-2001);
Member of the U.S.
Olympic Committee
("USOC") (1976-
present); Member of the
USOC Executive Board
(1977-present).
William E. B. Siart Director Served since 1997 Chairman of Walt Disney 14 None 4,000
1946 (1)(2) Concert Hall, Inc.
(1998-present);
Chairman of Excellent
Education Development
(2000-present).
Louis A. Simpson Director Served since 1994 President and Chief 14 VeriSign, 10,000
1936 (1)(4) Executive Officer, Inc.
Capital Operations of
GEICO Corporation
(1993-present).
4
SHARES OF
COMMON
NUMBER OF STOCK
PORTFOLIOS OF THE
TERM OF IN FUND FUND
OFFICE AND COMPLEX OTHER BENEFICIALLY
POSITION(S) LENGTH OF OVERSEEN DIRECTORSHIPS OWNED ON
HELD WITH TIME PRINCIPAL OCCUPATIONS BY HELD BY MARCH 1,
NAME AND YEAR BORN FUND SERVED+ DURING THE PAST 5 YEARS NOMINEE++ NOMINEE 2006
------------------ ----------- -------------------- ----------------------- ---------- ------------- ------------
Jaynie Miller Studenmund Director Served since 2004 President and Chief 14 aQuantive None
1954 (1)(3) Executive Officer of Inc.
eHarmony.com, Inc.
(2005-present); Chief
Operating Officer of
Overture Services, Inc.
(2001-2004); President
and Chief Operating
Officer of
Paymybills.com
(2000-2001).
Interested Nominee
Ronald L. Olson Director Served since 2005(5) Senior Partner of 14 Edison [ ]
1941 Munger, Tolles & Olson International,
International (a law City National
partnership) (1968- Corporation,
present). The
Washington
Post Company,
and Berkshire
Hathaway,
Inc.
---------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Executive and Contracts Committee of the Board of Directors.
(3) Member of the Governance and Nominating Committee of the Board of Directors.
(4) Member of the Compensation Committee of the Board of Directors.
(5) Mr. Olson is an "interested person" (as defined in section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund
because his law firm has provided legal services to the Fund's investment
adviser, Western Asset Management Company (the "Investment Adviser").
5
+ Each of the Directors of the Fund holds office until his or her successor
shall have been duly elected and shall qualify or until he or she shall
resign or shall have been removed, subject to applicable law and the rules
of the New York Stock Exchange.
++ Each Director also serves as a Trustee for Western Asset Premier Bond Fund
(closed-end investment company) and a Director of Western Asset Funds, Inc.
(open-end investment company), which are considered part of the same Fund
Complex as the Fund. The Investment Adviser and the Fund's subadviser,
Western Asset Management Company Limited (the "Subadviser"), also serve as
adviser and subadviser, respectively, to Western Asset Premier Bond Fund,
and each serves as subadviser to one or more series of Western Asset Funds,
Inc.
The following table states the dollar range of equity securities
beneficially owned as of March 1, 2006 by each nominee in the Fund and, on an
aggregate basis, in any registered investment companies overseen or to be
overseen by the nominee in the same "family of investment companies."
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL FUNDS OVERSEEN
DOLLAR RANGE OF EQUITY OR TO BE OVERSEEN BY NOMINEE IN
NAME OF NOMINEE SECURITIES IN THE FUND FAMILY OF INVESTMENT COMPANIES
--------------- ------------------------- --------------------------------
Ronald J. Arnault.......................... $[ ] $[ ]
Anita L. DeFrantz.......................... $[ ] $[ ]
William E. B. Siart........................ $50,001 - $100,000 $50,001 - $100,000
Louis A. Simpson........................... Over $100,000 Over $100,000
Jaynie Miller Studenmund................... None None
Interested Nominee
Ronald L. Olson............................ $[ ] $[ ]
As of March 1, 2006, all Directors and officers of the Fund as a group
beneficially owned less than 1% of the outstanding shares of the Fund on such
date.
Audit Committee. The Board of Directors has established an Audit Committee
composed solely of Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Investment Adviser or Subadviser, consisting of
Messrs. Arnault, Siart and Simpson and Ms. Studenmund. Each member of the Audit
Committee is "independent," as independence for audit committee members is
defined in the currently applicable listing standards of the New York Stock
Exchange, on which the Common Stock of the Fund is listed and traded. The Audit
Committee provides oversight with respect to the accounting and financial
reporting policies and procedures of the Fund and, among other things, considers
the selection of the independent registered public accounting firm for the Fund
and the scope of
6
the audit and approves services proposed to be performed by the independent
registered public accounting firm on behalf of the Fund and, under certain
circumstances, the Investment Adviser, Subadviser and certain affiliates. The
Directors have adopted a written charter for the Audit Committee, a copy of
which was attached as Appendix A to the Fund's proxy statement dated March 31,
2004.
The Audit Committee of the Fund has submitted the following report:
The Audit Committee has reviewed and discussed with management of the Fund
the audited financial statements for the last fiscal year. The Audit Committee
has discussed with the Fund's independent registered public accounting firm the
matters required to be discussed by Statements on Auditing Standards No. 61 (SAS
61). SAS 61 requires the independent registered public accounting firm to
communicate to the Audit Committee matters including, if applicable: (1) methods
used to account for significant unusual transactions; (2) the effect of
significant accounting policies in controversial or emerging areas for which
there is a lack of authoritative guidance or consensus; (3) the process used by
management in formulating particularly sensitive accounting estimates and the
basis for the independent registered public accounting firm's conclusions
regarding the reasonableness of those estimates; and (4) disagreements with
management over the application of accounting principles and certain other
matters. The Audit Committee has received the written disclosures and the letter
from the Fund's independent registered public accounting firm required by
Independence Standards Board Standard No. 1 (requiring the independent
registered public accounting firm to make written disclosures to and discuss
with the Audit Committee various matters relating to its independence), and has
discussed with such independent registered public accounting firm the
independence of such independent registered public accounting firm. Based on the
foregoing review and discussions, the Audit Committee recommended to the
Directors the inclusion of the audited financial statements for the last fiscal
year in the Fund's annual report to stockholders.
Ronald J. Arnault (Chairman)
William E. B. Siart
Louis A. Simpson
Jaynie Miller Studenmund
Governance and Nominating Committee. The Board of Directors has
established a Governance and Nominating Committee composed solely of Directors
who are not "interested persons" (as defined in the 1940 Act) of the Fund or the
Investment Adviser or Subadviser, consisting of Mses. DeFrantz and Studenmund.
The Governance and Nominating Committee meets to select nominees for election as
Directors of the Fund and consider other matters of Board policy. The Directors
have adopted a written charter for the Governance and Nominating Committee, a
copy of which was included as Appendix B to
7
the Fund's proxy statement dated March 31, 2004. The Fund does not currently
maintain a website on which the charter is available.
The Governance and Nominating Committee requires that Director candidates
have a college degree or equivalent business experience, but has not otherwise
established specific, minimum qualifications that must be met by an individual
to be considered by the Committee for nomination as a Director. The Governance
and Nominating Committee may take into account a wide variety of factors in
considering Director candidates, including, but not limited to: (i) availability
and commitment of a candidate to attend meetings and perform his or her
responsibilities to the Board of Directors, (ii) relevant industry and related
experience, (iii) educational background, (iv) financial expertise, (v) an
assessment of the candidate's ability, judgment and expertise and (vi) overall
diversity of the Board's composition. The Governance and Nominating Committee
may consider candidates for Director recommended by the Fund's current
Directors, officers, Investment Adviser or Subadviser, shareholders or any other
source deemed to be appropriate by the Governance and Nominating Committee.
Candidates properly submitted by stockholders (as described below) will be
considered and evaluated on the same basis as candidates recommended by other
sources.
The policy of the Governance and Nominating Committee is to consider
nominees recommended by stockholders to serve as Director, provided that any
such recommendation is submitted in writing to the Fund, to the attention of the
Secretary, at the address of the principal executive offices of the Fund, not
less than one hundred and twenty calendar days nor more than one hundred and
thirty-five calendar days prior to the date of the meeting at which the nominee
would be elected and that such shareholder recommendation contains the
information about such nominee required by the Fund's procedures for
stockholders to submit nominee candidates, which are a part of the Governance
and Nominating Committee's Charter. The Governance and Nominating Committee has
full discretion to reject nominees recommended by stockholders, and there is no
assurance that any such person so recommended and considered by the Governance
and Nominating Committee will be nominated for election to the Fund's Board of
Directors.
Executive and Contracts Committee. The Board of Directors has established
an Executive and Contracts Committee consisting of Mr. Siart and Ms. DeFrantz.
The Executive and Contracts Committee may meet from time to time between Board
meetings in order to consider appropriate matters and to review the various
contractual arrangements between the Fund and its affiliated persons.
Compensation Committee. The Board of Directors has established a
Compensation Committee consisting of Messrs. Arnault and Simpson and Ms.
DeFrantz. The Compensation Committee meets to review and make recommendations to
the Board with respect to Director compensation for services to the Fund.
8
Meetings. During 2005, the Board of Directors held [ ] meetings, the
Audit Committee held [ ] meetings, the Governance and Nominating Committee held
[ ] meetings, the Compensation Committee held [ ] meetings and the Executive
and Contracts Committee held [ ] meetings. Each Director attended at least 75%
of the aggregate of the meetings of the Board of Directors and the Committees of
the Board of Directors on which he or she served. Although the Fund's policies
do not require the Directors to attend the Fund's annual stockholder meetings,
annual meetings are generally held in connection with regularly scheduled
meetings of the Board of Directors. [Each current Director attended the Fund's
annual stockholder meeting in May 2005.]
Stockholder Communications. The Board of Directors has adopted a process
for stockholders to send communications to the Board of Directors. Stockholders
may mail written communications to the attention of the Board of Directors, care
of the Fund's Secretary, at the principal executive offices of the Fund. The
written communication must include the stockholder's name, be signed by the
stockholder, refer to the Fund, and include the class and number of shares held
by the stockholder as of a recent date.
Director Compensation. Effective February 2006, each Director of the Fund
who is not an "interested person" (as defined in the 1940 Act) of the Fund, the
Investment Adviser or the Subadviser receives an aggregate fee of $[ ]
annually for serving on the combined Board of Directors/Trustees of the Fund,
Western Asset Funds, Inc. and Western Asset Premier Bond Fund. Each Director
also receives a fee of $[ ] and related expenses for each meeting of the
Board attended in-person and a fee of $[ ] for participating in each
telephonic meeting. The Chairman of the Board and the Chairman of the Audit
Committee each receive an additional $[ ] per year for serving in such
capacities. Each member of the Audit Committee receives a fee of $[ ] for
serving as a member of the Audit Committee. Other committee members receive
$[ ] for serving as a member of each committee upon which they serve.
Committee members also receive a fee of $[ ] for participating in each
telephonic committee meeting. All such fees are allocated among the Fund,
Western Asset Funds, Inc. and Western Asset Premier Bond Fund according to each
such investment company's average annual net assets.
9
For the fiscal year ended December 31, 2005, the Directors received the
compensation set forth in the following table for serving as Directors of the
Fund and as Directors or Trustees of other funds in the same "Fund Complex."
AGGREGATE PENSION OR RETIREMENT ESTIMATED TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS ANNUAL FROM THE FUND
FROM THE PART OF FUND'S BENEFITS UPON AND ITS FUND COMPLEX
NAME OF NOMINEE FUND EXPENSES RETIREMENT PAID TO DIRECTORS(1)
--------------- ------------ --------------------- ------------- --------------------
Ronald J. Arnault........... $ [ ] $0 $0 $ [ ]
Anita L. DeFrantz........... $ [ ] $0 $0 $ [ ]
William E. B. Siart......... $ [ ] $0 $0 $ [ ]
Louis A. Simpson............ $ [ ] $0 $0 $ [ ]
Jaynie M. Studenmund........ $ [ ] $0 $0 $ [ ]
Interested Nominee
Ronald L. Olson............. $ 0 $0 $0 $ 0
---------------
(1) Includes amounts received in 2005 from the Fund and from Western Asset
Funds, Inc. and Western Asset Premier Bond Fund, which are considered part
of the same Fund Complex as the Fund. Effective February 2006, the Directors
earn compensation for their service as described above.
During 2005, the Fund paid no remuneration to its officers, all of whom
were also officers or employees of the Investment Adviser or one of its
affiliates.
Required Vote. The Directors of the Fund will be elected by a plurality
vote of the shares of the Fund's Common Stock present in person or represented
by proxy and entitled to vote on the election of Directors. The Directors
unanimously recommend that stockholders vote to elect each of the nominees
listed above to the Board of Directors.
PROPOSAL 2
PROPOSAL TO AMEND THE FUND'S CERTIFICATE OF INCORPORATION
The Directors of the Fund are proposing to amend the Fund's Certificate of
Incorporation (the "Certificate") to add the following exculpatory provision to
be inserted as Paragraph Tenth:
"Paragraph TENTH: A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that exculpation from
liability is not permitted under the General Corporation Law of the State
of
10
Delaware. No amendment or repeal of this paragraph TENTH shall apply to or
have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal."
The proposed amendment would add to the Fund's Certificate a provision
intended to grant the Directors protection from liability to the Fund and its
stockholders under certain circumstances. Pursuant to Section 102(b)(7) of the
Delaware General Corporation Law, a certificate of incorporation can include a
provision eliminating the personal liability of a director for monetary damages
to the corporation or its stockholders for breach of fiduciary duty as a
director, except with respect to liability of a director for: (i) breaches of
the director's duty of loyalty to the corporation or its stockholders; (ii) acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) the willful or negligent declaration of unlawful
dividends or stock repurchase or redemption; or (iv) any transaction from which
the director derived an improper personal benefit. The amendment, if adopted,
would not retroactively eliminate liability for any act or omission occurring
prior to the date when it becomes effective.
If Proposal 2 is approved at the Annual Meeting, it is expected that the
amendment of the Fund's Certificate of Incorporation would be effective on or
about May 10, 2006.
Required Vote. Approval of Proposal 2 will require the affirmative vote of
a majority of the Fund's Common Stock entitled to vote on the matter. If the
vote required to approve Proposal 2 is not obtained, the Fund's Certificate of
Incorporation will not be amended and Directors will consider what other
actions, if any, to take in the best interests of the Fund. The Directors
unanimously recommend that stockholders vote for Proposal 2.
INFORMATION CONCERNING THE INVESTMENT
ADVISER AND SUBADVISER AND THE FUND'S OFFICERS
The Investment Adviser and the Subadviser are subsidiaries of Legg Mason,
Inc., a holding company which, through its subsidiaries, is engaged in providing
investment advisory services to individuals and institutions. The address of
Legg Mason, Inc. is 100 Light Street, Baltimore, Maryland 21202. The Investment
Adviser's address is 385 East Colorado Boulevard, Pasadena, California 91101.
The Subadviser's address is 155 Bishopsgate, London, England EC2N3TY. An
affiliate of the Investment Adviser, Legg Mason Fund Adviser, Inc., 100 Light
Street, Baltimore, Maryland 21202, provides administrative services to the Fund.
11
Information regarding the executive officers of the Fund and their
ownership of Common Stock is set forth below. Unless otherwise noted, the
address of each officer is c/o the Fund at the address listed above.
SHARES OF
COMMON STOCK
OF THE FUND
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 1, 2006
------------------ ---------------- ----------------- ------------------------ -------------
James W. Hirschmann III President Served since 1999 Director, President and [ ]
1960 Chief Executive Officer
of the Investment
Adviser (1999-present);
Director of the
Subadviser (1999-
present); President of
Western Asset Funds,
Inc. (1999-present) and
Western Asset Premier
Bond Fund
(2001-present).
Scott F. Grannis Vice President Served since 1990 Chief Economist of the [ ]
1949 Investment Adviser
(1989-present); Vice
President of Western
Asset Funds, Inc.
(1990-present).
Ilene S. Harker Vice President Served since 1996 Head of Enterprise Risk [ ]
1955 of the Investment
Adviser (2003-present);
Vice President of
Western Asset Funds,
Inc. (1990-present) and
Western Asset Premier
Bond Fund
(2001-present).
Formerly: Secretary and
Director of Compliance
and Controls of the
Investment Adviser
(1978-2003).
12
SHARES OF
COMMON STOCK
OF THE FUND
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 1, 2006
------------------ ---------------- ----------------- ------------------------ -------------
S. Kenneth Leech Vice President Served since 1998 Chief Investment Officer [ ]
1954 of the Investment
Adviser (1998-present);
Vice President of
Western Asset Funds,
Inc. (1990-present) and
Western Asset Premier
Bond Fund
(2001-present).
Stephen A. Walsh Vice President Served since 1999 Deputy Chief Investment [ ]
1958 Officer of the
Investment Adviser
(2000-present); Vice
President of Western
Asset Funds, Inc. (1994-
present).
13
SHARES OF
COMMON STOCK
OF THE FUND
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 1, 2006
------------------ ---------------- ----------------- ------------------------ -------------
Marie K. Karpinski Treasurer and Served since 2001 Vice President, Legg 500
1949 Principal Mason & Co., LLC (2005-
100 Light Street Financial and present); Vice
Baltimore, MD 21202 Accounting President, Legg Mason
Officer Wood Walker,
Incorporated
(1992-2005); Vice
President
(1986-present),
Treasurer (1986-2006)
and Chief Financial
Officer (2006-present)
of all Legg Mason retail
funds, open-end
investment companies;
Treasurer and Principal
Financial and Accounting
Officer of Western Asset
Funds, Inc. (1990-
present), Western Asset
Premier Bond Fund (2001-
present), Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund (2003-present) and
Western Asset/Claymore
U.S. Treasury Inflation
Protected Securities
Fund 2 (2004-present).
14
SHARES OF
COMMON STOCK
OF THE FUND
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 1, 2006
------------------ ---------------- ----------------- ------------------------ -------------
Erin K. Morris Assistant Served since 2001 Assistant Vice President None
1966 Treasurer and Manager, Funds
100 Light Street Accounting, Legg Mason &
Baltimore, MD Co., LLC (2005-
21202 present); Assistant Vice
President (2002-2005)
and Manager, Funds
Accounting (2000-2005),
of Legg Mason Wood
Walker, Incorporated;
Treasurer of Legg Mason
Income Trust, Inc. and
Legg Mason Tax-Free
Income Fund (2006-
present); Assistant
Treasurer of Western
Asset Funds,
Inc.(2001-present),
Western Asset Premier
Bond Fund
(2001-present), Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund (2003-present),
Western Asset/Claymore
U.S. Treasury Inflation
Protected Securities
Fund 2 (2004-present),
Legg Mason Income Trust,
Inc. (2001-2006) and
Legg Mason Tax-Free
Income Fund (2001-2006).
15
SHARES OF
COMMON STOCK
OF THE FUND
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 1, 2006
------------------ ---------------- ----------------- ------------------------ -------------
Amy M. Olmert Chief Compliance Served since 2004 Senior Vice President of [ ]
1963 Officer Legg Mason, Inc. (2004-
100 Light Street present); Vice President
Baltimore, MD 21202 and Chief Compliance
Officer of all Legg
Mason retail open-end
investment companies
(2004-present); Vice
President and Chief
Compliance Officer of
Legg Mason Charles
Street Trust, Inc., an
open-end investment
company (2004-present);
Chief Compliance Officer
of Western Asset Funds,
Inc., Western Asset
Premier Bond Fund,
Western Asset/Claymore
U.S. Treasury Inflation
Protected Securities
Fund and Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2 (2004-present).
Formerly, Director
(2000-2003) and Managing
Director (2003-2004) of
Deutsche Asset
Management.
Lisa G. Mrozek Secretary Served since 1999 Senior Compliance [ ]
1962 Officer of the
Investment Adviser
(1999-present);
Secretary of Western
Asset Funds, Inc.
(1999-present) and
Western Asset Premier
Bond Fund
(2001-present).
16
---------------
(1) Each officer holds office until his or her respective successor shall have
been duly chosen and shall qualify or until his or her resignation or
removal.
STOCKHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
Proposals that stockholders wish to present to the 2007 Annual Meeting and
to have included in the Fund's proxy materials relating to such meeting must be
delivered to the Secretary of the Fund not less than 120 days prior to [MAILING
DATE], 2007.
Stockholders who wish to make a proposal at the 2007 Annual
Meeting -- other than one that will be included in the Fund's proxy
materials -- should notify the Fund not less than 45 days prior to [MAILING
DATE], 2007.
The proper submission of a stockholder proposal does not guarantee that it
will be included in the Fund's proxy materials or presented at a stockholder
meeting. Stockholder proposals are subject to the requirements of applicable law
and the Fund's Certificate of Incorporation and Bylaws.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act and Section 16(a) of the Securities Exchange
Act of 1934, as amended, require the Fund's officers and Directors, the
Investment Adviser, the Subadviser, certain affiliates of the Investment Adviser
or Subadviser, and persons who beneficially own more than ten percent of a
registered class of the Fund's equity securities, among others, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC") and the New York Stock Exchange. These persons are required
by SEC regulation to furnish the Fund with copies of all Section 16(a) forms
they file.
[Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Fund believes that,
during 2005, all such filing requirements were met.]
ANNUAL REPORT TO STOCKHOLDERS
The Fund's Annual Report to Stockholders for the fiscal year ended December
31, 2005 contains financial and other information pertaining to the Fund. The
Fund will furnish without charge to each person whose proxy is being solicited,
upon request of such person, a copy of the Annual Report to Stockholders.
Requests for copies of the Annual Report to Stockholders should be directed to
Western
17
Asset Income Fund, Attention: Investor Relations, 385 E. Colorado Boulevard,
Pasadena, California 91101 or you may call 800-426-5523.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected
PricewaterhouseCoopers LLP as the independent registered public accounting firm
of the Fund for the fiscal year ending December 31, 2006, and the Board of
Directors, including a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Fund, has unanimously ratified such
selection. PricewaterhouseCoopers LLP's service is subject to termination by a
majority of the outstanding shares of the Fund. [Representatives of
PricewaterhouseCoopers LLP are currently expected to attend the meeting, and
may, as they see fit, make a statement and/or respond to appropriate questions.]
The following table presents fees billed in each of the last two fiscal
years for services rendered to the Fund by PricewaterhouseCoopers LLP:
FISCAL YEAR ENDED AUDIT FEES AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
----------------- ---------- ------------------ -------- --------------
December 31, 2004 $36,000 $2,500 $ 950 $0
December 31, 2005 $32,200 $2,500 $1,050 $0
"Audit Fees" represents fees billed for each of the last two fiscal years
for professional services rendered for the audit of the Fund's annual financial
statements for those fiscal years or services that are normally provided by the
accountant in connection with statutory or regulatory filings or engagements for
those fiscal years.
"Audit-Related Fees" represents fees billed for each of the last two fiscal
years for assurance and related services reasonably related to the performance
of the audit of the Fund's annual financial statements for those years,
including interim audit security pricing.
"Tax Fees" represents fees billed for each of the last two fiscal years for
professional services related to tax compliance, tax advice and tax planning,
including preparation of federal and state income tax returns and preparation of
excise tax returns.
"All Other Fees" represents fees, if any, billed for other products and
services rendered by PricewaterhouseCoopers LLP to the Fund for the last two
fiscal years.
For the fiscal years ended December 31, 2004 and December 31, 2005,
PricewaterhouseCoopers LLP billed aggregate non-audit fees in the amounts of
$372,631 and $202,047, respectively, to the Fund, the
18
Investment Adviser and any entity controlling, controlled by or under common
control with the Investment Adviser that provides ongoing services to the Fund.
Pre-Approval Policies of the Audit Committee. The Audit Committee has
determined that all work performed for the Fund by PricewaterhouseCoopers LLP
will be pre-approved by the full Audit Committee and, therefore, has not adopted
pre-approval procedures. Since May 6, 2003, all audit and non-audit services
performed by PricewaterhouseCoopers LLP for the Fund, and all non-audit services
performed by PricewaterhouseCoopers LLP for the Investment Adviser and any
entity controlling, controlled by or under common control with the Investment
Adviser that provides ongoing services to the Fund (a "Service Affiliate"), to
the extent that such services related directly to the operations and financial
reporting of the Fund, have been pre-approved by the Audit Committee. No
"Audit-Related Fees," "Tax Fees" and "Other Fees" set forth in the table above
were waived pursuant to paragraph (c)(7)(i)(c) of Rule 2-01 of Regulation S-X.
PricewaterhouseCoopers LLP did not bill fees for non-audit services that
required pre-approval by the Audit Committee pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X during the Fund's fiscal year ended December 31,
2004. PricewaterhouseCoopers LLP billed "Audit-Related Fees" in the amount of
$127,460 for non-audit services (a SAS 70 audit to review and test operating
effectiveness of controls placed in operation for the Investment Adviser) that
required pre-approval by the Audit Committee pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X during the Fund's fiscal year ended December 31,
2005.
PricewaterhouseCoopers LLP did not bill any "Tax Fees" or "All Other Fees"
that required pre-approval by the Audit Committee pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X during the Fund's fiscal year ended
December 31, 2005.
The Audit Committee has considered whether the provision of the non-audit
services rendered by PricewaterhouseCoopers LLP since May 6, 2003 to the
Investment Adviser and any Service Affiliate that were not required to be
pre-approved by the Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-
01 of Regulation S-X is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
ADJOURNMENT
In the absence of a quorum at the Annual Meeting, or (even if a quorum is
so present) if sufficient votes in favor of a proposal set forth in the Notice
of Annual Meeting are not received by the time scheduled for the Annual Meeting,
the persons named as proxies may propose one or more adjournments of the Annual
Meeting after the date set for the original Annual Meeting, with no other notice
than announcement at the Annual Meeting, to permit further solicitation of
proxies with respect to such proposal. In addition, if, in the judgment of the
persons named as proxies, it is advisable to defer action on a
19
proposal, the persons named as proxies may propose one or more adjournments of
the Annual Meeting with respect to such proposal for a reasonable time. Any
adjournments with respect to a proposal will require a majority in voting
interest of the stockholders present in person or represented by proxy and
entitled to vote at the Annual Meeting or, in the absence therefrom of all the
stockholders, any officer entitled to preside at, or to act as secretary of, the
Annual Meeting, may adjourn such meeting from time to time. The persons named as
proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the proposal in question. They will vote against
any such adjournment those proxies required to be voted against such proposal.
The costs of any additional solicitation and of any adjourned session will be
borne by the Fund. Any proposals for which sufficient favorable votes have been
received by the time of the Annual Meeting may be acted upon and, if so, such
action will be final regardless of whether the Annual Meeting is adjourned to
permit additional solicitation with respect to any other proposal. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.
OTHER BUSINESS
The Fund is not aware of any other matters to be presented for action at
the Annual Meeting. However, if any such other matters are properly presented,
it is the intention of the persons designated in the enclosed proxy to vote in
accordance with their best judgment.
By Order of the Board of Directors
Lisa G. Mrozek, Secretary
March [ ], 2006
20
WESTERN ASSET INCOME FUND
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are several issues related to the management and operation of your Fund
that require your immediate attention and approval. These matters are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope. Your vote must be received prior to the Annual Meeting of
Stockholders, May 9, 2006.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Western Asset Income Fund
DETACH HERE
--------------------------------------------------------------------------------
WESTERN ASSET INCOME FUND
ANNUAL MEETING OF STOCKHOLDERS - MAY 9, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WESTERN ASSET INCOME FUND
The undersigned, revoking all prior proxies, hereby appoints James W. Hirschmann
III, Lisa G. Mrozek and Ilene S. Harker, and each of them, attorneys and proxies
of the undersigned, each with full power of substitution, to attend the Annual
Meeting of the Stockholders of Western Asset Income Fund, a Delaware corporation
(the "Fund"), to be held in the Board Room, Fifth Floor, 385 E. Colorado Blvd.,
Pasadena, California, on May 9, 2006, at 8:00 a.m., Pacific time, and at any
adjournments thereof, and thereat to vote as indicated all shares of the Common
Stock of the Fund which the undersigned would be entitled to vote if personally
present with respect to the matters listed on the reverse, which are more fully
described in the Notice of Meeting and Proxy Statement of the Fund, receipt of
which is acknowledged by the undersigned.
PLEASE VOTE, DATE, SIGN ON REVERSE AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign this Proxy exactly as your name(s) appear(s) on the reverse side.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WESTERN ASSET INCOME FUND
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE
[X] Please mark
votes as in
this example
WESTERN ASSET INCOME FUND
1. Election of Directors.
(01) RONALD J. ARNAULT, (03) ANITA L. DEFRANTZ, (04) RONALD L. OLSON,
(05) WILLIAM E.B. SIART, (06) LOUIS A. SIMPSON,
(07) JAYNIE MILLER STUDENMUND
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] For all nominees except as noted above
2. Amendment to the Fund's Certificate of Incorporation to add the proposed
exculpatory provision.
FOR [ ] [ ] AGAINST [ ] ABSTAIN
With discretionary power upon such other matters as may properly come before the
meeting or any adjournment thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES OF THE BOARD OF
DIRECTORS AND FOR THE AMENDMENT TO THE FUND'S CERTIFICATE OF INCORPORATION.
Please be sure to sign and date this Proxy.
Signature: --------------------------------- Date: -----------
Signature: --------------------------------- Date: -----------