Item 2. Code of Ethics.
On June 12, 2003, the Board of Directors adopted a code of ethics
that applies to the registrant's principal executive officer and principal financial officer. The code of ethics is available on the
registrant's website at: www.adamsfunds.com.
Item 3. Audit Committee Financial Expert.
The Board of Directors has determined that at least one of the
members of the registrant's audit committee meets the definition of audit committee financial expert as that term is defined by the
Securities and Exchange Commission. The directors on the registrant's audit committee whom the Board of Directors has determined
meet such definition are Kenneth J. Dale, Frederich A. Escherich, Mary Chris Jammet, Lauriann C. Kloppenburg, and Jane Musser
Nelson, who are each independent pursuant to paragraph (a)(2) of this Item.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees for professional services rendered
by the registrant's independent registered public accounting firm, PricewaterhouseCoopers LLP, for the audit of the registrant's annual
financial statements for 2023 and 2022 were $122,011 and $115,105, respectively.
(b) Audit-Related Fees. There were no audit-related fees in 2023 or
2022.
(c) Tax Fees. The aggregate fees for professional services rendered
to the registrant by PricewaterhouseCoopers LLP for the review of the registrant's excise tax calculations and preparations of federal,
state, and excise tax returns for 2023 and 2022 were $14,310 and $13,500, respectively.
(d) All Other Fees. The aggregate other fees rendered to the
registrant by PricewaterhouseCoopers LLP for 2023 and 2022 were $725 and $3,532, respectively. Fees were related to licenses for
technical reference tools.
| (e) |
(1) |
The audit committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent accountants. In assessing requests for services by the independent accountants, the audit committee considers whether such services are consistent with the auditor's independence; whether the independent accountants are likely to provide the most effective and efficient service based upon their familiarity with the registrant; and whether the service could enhance the registrant's ability to manage or control risk or improve financial statement audit quality. The audit committee may delegate pre-approval authority to its Chair. Any pre-approvals by the Chair under this delegation are to be reported to the audit committee at its next scheduled meeting. |
| |
|
|
| |
(2) |
Zero percent of services performed by PricewaterhouseCoopers LLP pursuant to paragraphs (b) through (d) for the registrant in
2023 and 2022 were approved pursuant to pre-approval waivers described in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation
S-X. |
(f) Not applicable.
(g) The aggregate fees for non-audit professional services rendered
by PricewaterhouseCoopers LLP to the registrant for 2023 and 2022 were $15,035 and $17,032, respectively.
(h) The registrant's audit committee has considered the provision by
PricewaterhouseCoopers LLP of the non-audit services described above and found that they are compatible with maintaining PricewaterhouseCoopers
LLP's independence.
(i) Not applicable.
(j) Not applicable.
Item 5. Audit Committee of Listed Registrants.
(a) The registrant has a standing audit committee established in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee are: Kenneth J. Dale, Frederich A. Escherich, Mary Chris Jammet, Lauriann C. Kloppenburg, and Jane Musser Nelson.
(b) Not applicable.
Item 6. Investments.
(a) This schedule is included as part of the Report to Stockholders
filed under Item 1 of this form.
(b) Not applicable.
Item 7. Financial Statements and Financial Highlights for Open-End
Management Investment Companies.
(a) Not applicable.
(b) Not applicable.
Item 8. Changes in and Disagreements with Accountants for Open-End
Management Investment Companies.
Not applicable.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
(1) Not applicable.
(2) Not applicable.
(3) Not applicable.
Item 10. Remuneration Paid to Directors, Officers, and Others of
Open-End Management Investment Companies.
(1) Not applicable.
(2) Not applicable.
(3)
Not applicable.
(4) Not applicable.
Item 11. Statement Regarding Basis for Approval of Investment Advisory
Contract.
(1) Not applicable.
(2) Not applicable.
Item 12. Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management Investment Companies.
PROXY VOTING GUIDELINES
The registrant follows long-standing general guidelines for the
voting of portfolio company proxies and takes very seriously its responsibility to vote all such proxies. The portfolio company
proxies are evaluated by our research staff and voted by our portfolio management team, and we annually provide the Board of
Directors with a report on how proxies were voted during the previous year. We do not use an outside service to assist us in voting
our proxies.
While the policy is to vote all of the proxies for portfolio companies,
as a general matter, securities that the registrant has loaned will not be recalled to facilitate proxy voting (in which case the borrower
of the security is entitled to vote the proxy). However, if the registrant's management becomes aware of a material vote with respect
to the loaned securities in time to recall the security and has determined in good faith that the importance of the matter to be voted
on outweighs the loss in lending revenue that would result from recalling the security (i.e., a controversial upcoming merger or acquisition,
or some other significant matter), the security will be recalled for voting.
As an internally-managed investment company, the registrant uses its
own staff of research analysts and portfolio managers. In making the decision to invest in a company for the portfolio, among the factors
the research team analyzes is the integrity and competency of the company's management. We must be satisfied that the companies we invest
in are run by managers with integrity. Therefore, having evaluated this aspect of our portfolio companies' managements, we give significant
weight to the recommendations of the company's management in voting on proxy issues.
We vote proxies on a case-by-case basis according to what we deem to
be the best long-term interests of our shareholders. The key over-riding principle in any proxy vote is that stockholders be treated fairly
and equitably by the portfolio company's management. In general, on the election of directors and on routine issues that we do not believe
present the possibility of an adverse impact upon our investment, after reviewing whether applicable corporate governance requirements
as to board and committee composition have been met, we will vote in accordance with the recommendations of the company's management.
When we believe that the management's recommendation is not in the best interests of our stockholders, we will vote against that recommendation.
Our general guidelines for when we will vote contrary to the portfolio
company management's recommendation are:
Stock Options
Our general guideline is to vote against stock option plans that we
believe are unduly dilutive of our stock holdings in the company. We use a general guideline that we will vote against any stock option
plan that results in dilution in shares outstanding exceeding 4%.
Most stock option plans are established to motivate and retain
key employees and to reward them for their achievement. An analysis of a stock option plan cannot be made in a vacuum but must be
made in the context of the company's overall compensation scheme. In voting on stock option plans, we give consideration to whether
the stock option plan is broad-based in the number of employees who are eligible to receive grants under the plan. We generally vote
against plans that permit re-pricing of grants or the issuance of options with exercise prices below the grant date value of the
company's stock.
Executive Compensation
On proposals relating to executive compensation, we generally vote
against proposals that fail to require or demonstrate effective linkage between pay and the company's performance over time, and for proposals
that require or demonstrate such effective linkage.
It is our general policy to vote against proposals relating to future
employment contracts that provide that compensation will be paid to any director, officer or employee that is contingent upon a merger
or acquisition of the company.
Corporate Control/Governance Issues
Unless we conclude that the proposal is favorable to our interests
as a long-term shareholder in the company, we have a long-standing policy of voting against proposals to create a staggered board of directors.
In conformance with that policy, we will generally vote in favor of shareholder proposals to eliminate the staggered election of directors.
Unless we conclude that the proposal is favorable to our interests
as a long-term shareholder in the company, our general policy is to vote against amendments to a company's charter that can be characterized
as blatant anti-takeover provisions.
We generally vote for proposals to require that the majority of a board
of directors consist of independent directors and vote against proposals to establish a retirement plan for non-employee directors.
We generally vote for proposals to require that all members of the
company's Audit, Compensation, and Nominating committees be independent of management.
We have found that most stockholder proposals relating to social issues
focus on very narrow issues that either fall within the authority of the company's management, under the oversight of its board of directors,
to manage the day-to-day operations of the company or concern matters that are more appropriate for global solutions rather than company-specific
ones. We consider these proposals on a case-by-case basis but usually are persuaded if management's position is reasonable and vote in
accordance with management's recommendation on these types of proposals.
Item 13. Portfolio Managers of Closed-End Management Investment
Companies.
| (a) |
(1) As of the date of this filing,
James P. Haynie, Chief Executive Officer, and D. Cotton Swindell, President, comprise the two-person portfolio management team for
the registrant. Mr. Haynie has been a member of the portfolio management team since August 19, 2013, serving as President until
January 21, 2015, and Executive Vice President until April 20, 2023. D. Cotton Swindell has been a member of the portfolio
management team since January 21, 2015, serving as Executive Vice President until April 20, 2023. Prior thereto, Mr. Swindell served as Vice President -
Research beginning in 2004, and as a research analyst beginning in 2002. Mr. Haynie is the lead member of the portfolio management team. Messrs. Haynie and Swindell receive investment
recommendations from a team of research analysts and make decisions jointly about any investment transactions in the
portfolio. |
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|
| |
(2) As of December 31, 2023, Mr. Haynie also serves on
the portfolio management team as Chief Executive Officer and President for the registrant's non-controlled affiliate, Adams Natural
Resources Fund, Inc. ("PEO"), an internally managed registered investment company with total net assets of $633,446,941. PEO is a
non-diversified fund specializing in the energy and natural resources sectors and the registrant is a diversified product with a
broader focus. There are few material conflicts of interest that may arise in connection with the portfolio management of the funds.
The funds do not buy or sell securities or other portfolio holdings to or from the other, and policies and procedures are in place
covering the sharing of expenses and the allocation of investment opportunities, including bunched orders and investments in initial
public offerings, between the funds. |
| |
|
| |
(3) As of December 31, 2023, the registrant's portfolio
managers are compensated through a plan consisting of salary and annual cash incentive compensation, of which the amount in any year is
determined by the Compensation Committee, comprised primarily of independent director members of the Board of Directors ("Committee").
The structure and methods used to determine the
compensation of the portfolio managers were as follows: Salaries are determined by using appropriate industry surveys and information
about the local market. Incentive compensation is based on a combination of relative fund performance of the registrant and PEO, and individual
performance. Target incentives are set annually based on aggregate compensation less salary for each position. Fund performance used in
determining incentive compensation is measured over a one-year period, accounting for one-fourth of the calculation, a three-year period,
which accounts for one-half, and a five-year period, which accounts for one-fourth. The registrant's return on portfolio assets over each
of these periods is used to determine performance relative to a 50/50 blend of the S&P 500 Index and the Morningstar U.S. Large Blend
Funds Category. Using these calculations, the incentive compensation can be less than or exceed the established target.
The structure of the
compensation that the portfolio manager receives from PEO is the same as that for the registrant with the exception that the
portfolio manager's incentive compensation is based on a comparison with the performance of a blend of the S&P 500 Energy Sector and the S&P 500 Materials Sector.
|
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|
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(4) Using a valuation date of December 31, 2023, Messrs.
Haynie and Swindell each beneficially owned equity securities in the registrant valued over $1,000,000. |
| |
|
| (b) |
Not applicable. |
Item 14. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
| |
| |
Total Number
of Shares (or Units) Purchased | | |
Average Price Paid
per Share (or Unit) | | |
Total Number of Shares
(or Units) Purchased as
Part of Publicly Announced Plans or Programs | | |
Maximum Number of
Shares (or Units) that
May Yet Be Purchased
Under the Plans or Programs | |
| 1/1/23-1/31/23 |
| |
| 57,434 | | |
$ | 14.83 | | |
| 57,434 | | |
| 4,863,818 | |
| 2/1/23-2/28/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,863,818 | |
| 3/1/23-3/31/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,863,818 | |
| 4/1/23-4/30/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,863,818 | |
| 5/1/23-5/31/23 |
| |
| 21,000 | | |
| 15.70 | | |
| 21,000 | | |
| 4,842,818 | |
| 6/1/23-6/30/23 |
| |
| 10,000 | | |
| 16.32 | | |
| 10,000 | | |
| 4,832,818 | |
| 7/1/23-7/31/23 |
| |
| 4,000 | | |
| 17.11 | | |
| 4,000 | | |
| 4,828,818 | |
| 8/1/23-8/31/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,828,818 | |
| 9/1/23-9/30/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,828,818 | |
| 10/1/23-10/31/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,828,818 | |
| 11/1/23-11/30/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,828,818 | |
| 12/1/23-12/31/23 |
| |
| 0 | | |
| -- | | |
| 0 | | |
| 4,828,818 | |
| Total |
| |
| 92,434 | | |
$ | $15.29 | | |
| 92,434 | | |
| | |
(1) There were no shares purchased other than through a publicly announced
plan or program.
(2a) The share repurchase plan was announced on December 11, 2014,
with an additional authorization announced on December 18, 2018. On September 22, 2020, the Fund announced an enhanced discount management
and liquidity program whereby the Fund will purchase shares, subject to certain restrictions, when the discount exceeds 15% of net asset value for at least 30 consecutive trading days. The enhanced program also provides the Fund will engage in a proportional tender offer to purchase shares when the discount exceeds 19% of net asset value for 30 consecutive trading days, not to exceed one such offer in any twelve-month period.
(2b) The share amount approved in 2014 was 5% of then-outstanding shares,
or 4,667,000 shares, and 5,314,566 additional shares were approved in 2018.
(2c) The share repurchase plan has no expiration date.
(2d) None.
(2e) None.
Item 15. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Directors made or implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (as required by Item 22(b)(15) of Schedule 14A), or this Item.
Item 16. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing
date of this report.
(b) There have been no significant changes in the registrant's internal
control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period
covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over
financial reporting.
Item 17. Disclosures of Securities Lending Activities for
Closed-End Management Investment Companies.
| (a) Dollar amounts of income and fees/compensation related to securities lending activities during the most recent fiscal year are: |
| |
| |
(1) |
Gross income from securities lending activities was $227,381. |
| |
| |
(2) |
Rebates paid to borrowers were $115,191, fees deducted from
a pooled cash collateral reinvestment product were $110, and revenue generated by the securities lending program paid to the securities
lending agent was $33,620. |
| |
| |
(3) |
The aggregate fees related to securities lending activities
were $148,921. |
| |
| |
(4) |
Net income from securities lending activities was $78,460. |
| |
| (b) Services provided by the securities lending agent in the most recent fiscal year for lending of the Fund's portfolio securities in accordance with its securities lending authorization agreement, included: identifying and approving borrowers, selecting securities to be loaned, negotiating loan terms, recordkeeping of all loan and dividend activity, receiving and holding collateral from borrowers, monitoring loan and collateral values on a daily basis, requesting additional collateral as required, and arranging for return of loaned securities at loan termination. When cash collateral is received from the borrower, the security lending agent invests the cash in a registered money market fund. |
Item 18. Recovery of Erroneously Awarded Compensation.
(a) Not applicable.
(b) Not applicable.
Item 19. Exhibits.
(b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Adams Diversified Equity Fund, Inc. |
|
| |
|
|
| By: |
/s/ James P. Haynie |
|
| |
James P. Haynie |
|
| |
Chief Executive Officer |
|
| |
(Principal Executive Officer) |
|
| |
|
|
| Date: |
February 20, 2024 |
|
Pursuant to the requirements of the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: |
/s/
James P. Haynie |
|
| |
James P. Haynie |
|
| |
Chief Executive Officer |
|
| |
(Principal Executive Officer) |
|
| |
|
|
| Date: |
February 20, 2024 |
|
| |
|
|
| By: |
/s/
Brian S. Hook |
|
| |
Brian S. Hook |
|
| |
Vice President & Chief
Financial Officer |
|
| |
(Principal Financial Officer)
|
|
| |
|
|
| Date: |
February 20, 2024 |
|
I, Brian S. Hook, certify that:
In connection with the Certified Shareholder Report of Adams
Diversified Equity Fund, Inc. (the Fund) on Form N-CSR for the year ended December 31, 2023, as filed with the Securities
and Exchange Commission on the date hereof (the Report), I, James P. Haynie, Chief Executive Officer of the
Fund, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
A signed original of this written statement required by Section 906,
or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form with the electronic
version of this written statement required by Section 906, has been provided to the Fund and will be retained by the Fund
and furnished to the Securities and Exchange Commission or its staff upon request.
In connection with the Certified Shareholder Report of Adams
Diversified Equity Fund, Inc. (the Fund) on Form N-CSR for the year ended December 31, 2023, as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, Brian S. Hook, Vice President and Chief Financial
Officer of the Fund, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
A signed original of this written statement required by Section 906,
or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form with the electronic
version of this written statement required by Section 906, has been provided to the Fund and will be retained by the Fund
and furnished to the Securities and Exchange Commission or its staff upon request.