The WSJ reported on three key updates to Vanguard's proxy voting guidelines effective April 1st, which Vanguard highlighted here:
- Overboarding: Vanguard will generally vote against:
- NEO directors (e.g., CEO/Chairs) who sit on more than one outside public company board, and against the director at each company where he/she is a nonexecutive except the one where he/she serves an NEO.
- Other directors who sit on more than four public company boards, and generally against the director at each of these companies except one where he/she serves as chair of the board.
Notwithstanding the thresholds, Vanguard may vote for an overboarded director if the director has publicly committed to stepping down from the other directorship(s) necessary to fall within its guidelines.
- Board skills/qualifications/diversity shareholder proposals: Vanguard will vote for a shareholder proposal if:
- The proposal seeks disclosure related to directors’ diversity of personal characteristics (including gender and race/ethnicity) or skills and qualifications, and this information is not already disclosed.
- The proposal asks companies to adopt policies designed to ensure appropriate diversity on boards, and appropriate policies do not already exist.
- Independent Chair shareholder proposals: Absent board independence or effectiveness concerns, Vanguard generally believes that the determination of an appropriate board leadership structure is within the Board's purview and thus won't support these proposals. If these concerns are present, it will consider a number of factors - i.e., no lead independent director role, lack of board accessibility, low level of board independence, governance practices/structure shortcomings, lack of board responsiveness to shareholders, and governance failings such as crises or decisions that impair shareholder rights - in evaluating whether to support a proposal.
Also new & notable:
- Vanguard's "Common questions for portfolio companies" sets forth a series of questions on each of its "long-term value creation" principles: Board Composition, Strategy & Risk Oversight, Executive Compensation, and Governance Structures - which it encourages directors and management to address in their engagements.
- Vanguard's "engagment guide" describes strategic, event-driven, and topic-driven engagement; how to set up an engagement, who should attend, and other practical considerations; and the type of information Vanguard will focus on in these discussions, which generally relate to board oversight of matters that impact the company over the long-term.
Access additional information & resources on our Institutional Investors page. This post first appeared in the weekly Society Alert!