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Proxy Voting Policy
I. GENERAL PRINCIPLES The Roxbury Funds and Roxbury Capital Management, LLC ("Roxbury") recognize their responsibility to vote proxies in respect of securities owned by shareholders in the economic best interests of shareholders and without regard to the interests of Roxbury or any other client of Roxbury. These Proxy Voting Policies and Procedures (“Policies”) apply to securities held in the Funds in which Roxbury has direct voting authority. Roxbury’s policy is to exercise its proxy voting discretion absent special circumstances and in accordance with the guidelines set forth in the “Proxy Voting Guidelines” below. Any changes to the Proxy Voting Guidelines must be pre-approved in writing by the Proxy Voting Committee (“Committee”). II. VOTING PROCESS Roxbury votes all proxies on behalf of client portfolios in fundamentally driven strategies, unless a) the client requests in writing that Roxbury not vote, b) the proxies are associated with unsupervised securities, c) the proxies are associated with securities transferred to Roxbury’s management then liquidated because Roxbury does not follow those securities, or d) the costs of voting the proxies outweigh the benefits. In addition, Roxbury does not vote proxies for some accounts that it manages under agreements it has with certain brokerage consultant firms whereby clients pay a single fee based on a percentage of assets under management for brokerage, custody, and Roxbury’s investment management services (“Wrap Fee Agreement”). If Roxbury does not vote the proxies, it may make proxy voting recommendations to the brokerage consultant firm with which it has a Wrap Fee Agreement and allow that firm to vote the proxies. Roxbury does not vote proxies for holdings in its quantitative strategies, such as All-Cap Equity and All-Cap Income, given that proxy actions are not relevant to the stock selection process for these strategies. Roxbury has therefore determined that the cost of voting proxies for its quantitative strategies could put clients at a disadvantage. The Operations Department (“Operations”) is responsible for voting proxies received by Roxbury. Operations will forward proxy proposals to the appropriate industry analyst or portfolio manager. The analyst or portfolio manager will review the issues to be voted upon, related information, and the research provided by a proxy research service. The proxy research service also provides customized proxy research consistent with Roxbury’s policies for accounts with special vote sensitivities, including Taft Hartley accounts. The analyst or portfolio manager will make a recommendation to the Proxy Voting Committee as to how the proxy issues should be voted. The Proxy Voting Committee provides centralized management of the proxy voting process and makes all proxy voting decisions except under special circumstances as noted below. The Committee: a) supervises the proxy voting process, including the identification of potential material conflicts of interest involving Roxbury and the proxy voting process in respect of securities owned by a client; b) determines how to vote proxies relating to issues not covered by these Policies; and c) determines when Roxbury may deviate from these Policies. The Proxy Voting Committee has at least three members at all times. Members of the Committee are comprised of portfolio managers, analysts, and one other Roxbury employee. The Proxy Voting Committee will review the recommendations provided by Roxbury’s analyst or portfolio manager. After review of these recommendations, the proxy will be voted according to the majority vote of the Committee. If a Committee member disagrees with the recommendations of the analyst or portfolio manager, the reasons for the disagreement will be documented. Operations will keep documents of proxy decisions made by the Committee. Since Roxbury generally considers the quality of a company’s management in making investment decisions, Roxbury regularly votes proxies in accordance with the recommendations of a company’s management if there is no conflict with shareholder value. Roxbury may determine not to vote proxies in respect of securities of any issuer if it determines it would be in its clients' overall best interests not to vote. Such determination may apply in respect of all client holdings of the securities or only certain specified clients, as Roxbury deems appropriate under the circumstances. As an example, the Proxy Voting Committee may determine not to vote certain securities positions if, in its judgment, the expense and administrative inconvenience outweigh the benefits to clients of voting the securities. Roxbury uses a proxy voting agent to ensure that, as much as possible, votable shares get voted and timely reporting is provided for Roxbury and its clients. Operations submits proxy votes for a portfolio to the proxy voting agent if the custodian of the portfolio’s assets has a relationship with the agent. Proxies for portfolios not set up at the proxy voting agent will be voted using other means. III. CONFLICTS OF INTEREST Potential or actual conflicts of interest relating to a particular proxy proposal may be handled in various ways depending on the type and materiality. Depending upon the facts and circumstances of each situation and the requirements of applicable law, options include:
Voting the securities of an issuer where the following relationships or circumstances exist is deemed to give rise to a material conflict of interest for purposes of these Policies: a) The issuer is a client of Roxbury and Roxbury manages its portfolio or its retirement plan. In such case, Roxbury will obtain an independent, third party opinion and will follow the recommendation of such third party. b) The issuer is an entity in which the Roxbury industry analyst assigned to review the proxy has a relative (spouse, minor children or stepchildren or children or stepchildren sharing the person's home) in management of the issuer or an acquiring company. In such case, the analyst will not make any vote recommendations and another analyst will review the proxy. Although the proxy will be assigned to a different analyst, the industry analyst will still be available to answer questions about the issuer from other Proxy Committee members. d) The issuer is an entity in which an officer or director of Roxbury or a relative of any such person is or was an officer, director or employee, or such person or relative otherwise has received more than $500 annually during Roxbury’s last three fiscal years. In such case, Roxbury will obtain an independent, third party opinion and will follow the recommendation of such third party. e) The issuer is Wilmington Trust Corporation. Due to Wilmington Trust Corporation’s partial ownership of Roxbury, Roxbury would have a conflict of interest in voting proxies on Wilmington’s stock; however, as a matter of policy, Roxbury does not purchase shares of Wilmington Trust Corporation for client portfolios. f) Another client or prospective client of Roxbury, directly or indirectly, conditions future engagement of Roxbury on voting proxies in respect of any client's securities on a particular matter in a particular way. g) Conflict exists between the interests of an employee benefit plan’s portfolio and the plan sponsor’s interests. In such case, Roxbury will resolve in favor of the plan’s portfolio. h) Any other circumstance where Roxbury’s duty to serve its clients' interests, typically referred to as its "duty of loyalty," could be compromised. Notwithstanding the foregoing, a conflict of interest described above shall not be considered material for the purposes of these Policies in respect of a specific vote or circumstance if: The securities in respect of which Roxbury has the power to vote account for less than 1% of the issuer's outstanding voting securities, but only if: (i) such securities do not represent one of the 10 largest holdings of such issuer's outstanding voting securities and (ii) such securities do not represent more than 2% of the client's holdings with Roxbury. The matter to be voted on relates to a restructuring of the terms of existing securities or the issuance of new securities or a similar matter arising out of the holding of securities, other than common equity, in the context of a bankruptcy or threatened bankruptcy of the issuer. For clients that are registered investment companies ("Funds"), where a material conflict of interest has been identified and the matter is not covered by the Policies, Roxbury will disclose the conflict and the Proxy Voting Committee's determination of the manner in which to vote to the Fund's Board or committee of the Board. The Proxy Voting Committee's determination will take into account only the interests of the Fund, and the Proxy Voting Committee will document the basis for the decision and furnish the documentation to the Fund’s Board or committee of the Board. For clients other than Funds, where a material conflict of interest has been identified and the matter is not covered by the Policies, the Proxy Voting Committee will disclose the conflict to the client and advise the client that its securities will be voted only upon the recommendations of an independent third party. IV. RECORDKEEPING AND RETENTION Operations retains records relating to the voting of proxies, including: a) a copy of these Policies and any amendments thereto; b) a copy of each proxy statement that Roxbury receives regarding client securities; c) a record of each vote cast by Roxbury on behalf of clients; d) a copy of any document created by Roxbury that was material to making a decision on how to vote or that memorialized the basis for that decision; e) a copy of each written request for information on how Roxbury voted proxies on behalf of the client, and a copy of any written response by Roxbury to any oral or written request for information on how Roxbury voted. Roxbury will maintain and preserve these records for such period of time as required to comply with applicable laws and regulations. Roxbury may rely on proxy statements filed on the SEC's EDGAR system or on proxy statements and records of votes cast by Roxbury maintained by a third party, such as a proxy voting service (provided Roxbury had obtained an undertaking from the third party to provide a copy of the proxy statement or record promptly on request). V. CLIENT DISCLOSURE Roxbury will provide a report of how proxies were voted and copy of its specific guidelines to those clients who request such information. Requests for proxy information may be sent to the VI. PROXY VOTING GUIDELINES 1. OPERATIONAL ITEMS We support policies that strengthen shareholders’ rights in relation to annual and special shareholder meetings, ratification of auditors, maintaining shareholders’ ability to vote on transactions, compensation or other general corporate issues that may arise. 2. BOARD OF DIRECTORS We support policies that allow for strong corporate governance, including a majority of independent board directors, and key committees that are chaired by independent board directors. 3. EXECUTIVE AND DIRECTOR COMPENSATION We support executive and director compensation policies that appropriately align management incentives with creating long-term shareholder value. We consider the salaries, annual bonuses and option/restricted stock programs together in determining the reasonableness of compensation packages. We support salaries that are consistent with industry standards. We support annual bonuses that require management to achieve key business metrics that are definable, measurable, and are components to increasing shareholder value through sound business policies. We support stock compensation programs that limit the dilution to public shareholders while providing incentive to management and directors to increase shareholder value. We oppose restricted stock programs that do not require management to achieve key business metrics that are definable, measurable, and are components to increasing shareholder value through sound business policies. We oppose accelerated vesting of stock options or restricted stock as a result of short term stock price fluctuations. We oppose retirement and health care plans for non-employee directors. We support employee stock ownership plans (ESOPs) and 401(k) savings plans for employees. We generally oppose golden and tin parachute programs. 4. PROXY CONTESTS In a contested election of directors, we take into account the target company’s long-term financial performance relative to its industry, management’s track record, background to the proxy contest, qualifications of director nominees (both slates), stock ownership positions, and evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and goals can be met. We support confidential voting. 5. ANTI-TAKEOVER DEFENSES AND VOTING RELATED ISSUES We oppose policies that weaken shareholders’ rights in the event of proposed mergers and acquisitions. We oppose poison pills and supermajority voting requirements. We also oppose giving the board of directors exclusive authority to amend the bylaws, and we support proposals to allow or make easier shareholder actions by written consent. We support reasonable proposals for shareholders to call special meetings. 6. MERGERS AND CORPORATE RESTRUCTURINGS Proposals pertaining to asset purchases or sales, bundled proposals, securities conversions, reorganizations, restructurings, joint ventures, leverage buy-outs, liquidations, mergers and acquisitions, spin-offs, or other such corporate actions are evaluated on a case-by-case basis taking into consideration the terms of the transaction, the proposed benefit to shareholders, and the likelihood of achieving such benefit. 7. STATE OF INCORPORATION We support reincorporation proposals that are based on sound business reasons and do not infringe upon or weaken shareholders’ rights. 8. CAPITAL STRUCTURE Proposals to change capital structure are evaluated for their impact and ability to strengthen shareholder rights. We oppose creating new classes of stock with different voting rights. We oppose increasing authorized common stock for the explicit purpose of implementing a shareholder rights plan (poison pill). We oppose increases in common stock that allow for excessive granting of options. We oppose authorizing new classes of stock with unspecified voting, conversion, dividend distribution, and other rights. 9. SOCIAL AND ENVIRONMENTAL ISSUES Proposals in this category, initiated primarily by shareholders, typically request that the company disclose or amend certain business practices. We generally believe that these are “ordinary business matters” that are primarily the responsibility of management and should be evaluated and approved solely by the corporation’s board of directors. Many times, such proposals are for items in which the company already makes disclosures and is bound by rules from various existing regulatory or enforcement agencies. Often, proposals may address concerns with which we philosophically agree, but absent a compelling economic impact on shareholder value, we will typically vote with management on these proposals. This reflects our opinion that regardless
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