Ethics

CFB UK Equity Fund Voting Policy

The CFB has worked with the Church Investors Group to produce a UK voting policy available to all church investors. It is CFB policy to vote on all resolutions at the AGMs and EGMs of companies in its portfolios. We use Pensions and Investment Research Consultants Ltd (PIRC) to vote shares in CFB portfolios. PIRC is mandated to vote the shares in accordance with this policy or in some cases refer back to us for a decision. We will also instruct PIRC to override the template where appropriate.

This system has now been in operation since March 2010. A full report, produced by PIRC each quarter describing each vote, is available on request.

Resolution Voting	Policy or Consultation Trigger
Report and Accounts	Vote For in all cases unless the auditors have not given the company a clean bill of health, in which case query for decision.
Remuneration Report	We look for remuneration policies to be fully disclosed. Policies should link remuneration to superior performance and should not be excessive. Contracts should not provide for high termination payments. We use PIRC ratings to assess remuneration. PIRC ratings consist of three letters, where each can range from A to E. First letter: Disclosure Second letter: Performance Third letter: Contracts We focus on performance in particular, represented by the second letter in the rating. Vote For: AAA to CBC. Abstain: ACA to CCC, or a rating with one D for disclosure or contracts. Oppose: a rating with two Ds or lower, or where performance (second letter) is rated D.
Remuneration Committee Members	Where remuneration reports fall well below best practice we will vote against remuneration committee members. Vote against re-election of remuneration committee members at the same AGM where remuneration report contains an E in the rating for performance criteria.
New Share Scheme	We assess new share-linked pay schemes (such as Long Term Incentive Plans) on the same basis as remuneration reports. PIRC ratings consist of two letters, which can range from A to E: First letter: Performance Second letter: Disclosure and other issues Vote For: AA to BC. Abstain: first letter of rating a C and no Es; any results not captured by the Vote For and Oppose criteria. Oppose: first letter of rating a D, or any Es in the rating.
All Directors	It is important that shareholders have sufficient information about the directors they are asked to appoint. It is also important that directors are able to devote sufficient time to their roles.
Chairman/Chief Executive	These two roles should not be combined unless for a temporary period. There may be valid exceptions in the case of smaller companies. Vote Oppose on election/re-election where roles are combined unless for a temporary period. PIRC to refer to us if the company is outside the FTSE 350 index.
Executive Chairman	A chairman should normally be in a non-executive role but there can be circumstances where an executive role is appropriate. Vote For but PIRC will alert us to any such resolution.
Executive Directors	In principle we will vote for all executive directors except in exceptional circumstances. Contractual concerns will be addressed when the remuneration report is considered rather than via elections of directors, except in exceptional circumstances when CIG members will inform PIRC. PIRC will draw our attention to where insufficient biographical disclosure. PIRC will draw to our attention where evidence that other time commitments may potentially affect ability to fulfil the role.
Non-executive Directors	Non executive directors should be independent and those classed as such should represent at least 40% of the board, except where the Code provides for a lower ratio based on the size of the company. We will vote accordingly. If the company is outside the FTSE 350 but the above conditions do not apply, PIRC will refer to us for a voting decision. Vote abstain where insufficient biographical data is disclosed. Vote abstain where evidence that other time commitments may potentially affect ability to fulfil the role.
Appointment of Auditors	Auditors should not be paid more for non-audit work than for auditing. We look at the average of three years rolling. We compare audit fees plus non-audit fees that are for audit-related, mandatory, or regulatory work and we compare them with total non-audit fees (minus audit-related, mandatory, and regulatory work). If the figure is negative ie effectively non-audit fees are larger than audit fees we will vote to oppose the reappointment of auditors. Otherwise we will vote For.
Political Donations	Companies should not make direct donations to political parties. Some expenditure, while not direct political donations, is covered by the Political Parties and Referendums Act and by law authority must be sought from shareholders. We will Oppose resolutions giving authority where specific donations to parties in the European Union have been given in the previous year. We will vote For authorising resolutions in all other cases, even for periods of up to three years, providing the aggregate amounts per annum are not greater than £100k. We will Abstain on votes to give authority for expenditure above £100k and below £200k. We will Oppose expenditure £200k and above.
Share Issue with Pre-emption Rights	Vote Abstain if the authority represents more than one third of the issued share capital or expires after the next AGM (consistent with Institutional Shareholder Committee Guidelines). However, if there is sufficient independent supervision on the Board to monitor the use of the authority, and if the company has stated that all directors will seek re-election if the authority is used, we will support issues of up to 2/3 of issued share capital (this is consistent with guidance from the Rights Issue Review Group).
Disapply Pre-emption Rights	We will vote Oppose if the authority represents more than 5% of the issued share capital, or expires after the next AGM (consistent with Institutional Shareholder Committee Guidelines).
Purchase of Shares for Cancellation	We will vote Abstain if the authority represents more than 15% of the issued share capital (maximum that can be held in treasury), or expires after the next AGM or requires only an ordinary majority (consistent with PIRC’s guidelines).
EGM Resolutions	Vote for resolutions which seek to enable mergers, acquisitions, demergers, disposals, or capital reorganisations, except in exceptional circumstances, when we will advise PIRC. PIRC to draw to our attention when it suggests advice to the contrary, PIRC will query with us for decisions on EGM resolutions on matters distinct from the above. Where significant governance concerns exist PIRC will query with us for a decision. Where a vote For is not appropriate for investment decisions we will inform PIRC.
Shareholder resolutions	We will consider all shareholder resolutions on a case by case basis. PIRC will not vote our shares without instruction from us.
Other Resolutions	Default to a vote for all resolutions not specifically covered by this template (eg including voting for dividends); will advise PIRC when there is an exception.