According to Vanguard, its 2020 proxy voting policies (effective April 1, 2020) are largely unchanged from 2019. Primary updates reportedly include changes to the assessments of key committee independence at controlled companies, and director accountability in compensation-related situations.
As to the latter, the 2020 policy provides for director/committee accountability "because of governance failings or as a means to escalate other issues that remain unaddressed by a company" in these compensation-related situations:
- A [Vanguard] fund will generally vote against compensation committee members when it votes against the company’s say-on-pay proposal in consecutive years unless meaningful improvements have been made to executive compensation practices since the prior year.
- If egregious pay practices are identified, a fund will generally vote against the compensation committee chair and, if the issues persist, a fund may vote against the full compensation committee in subsequent years if say-on-pay is not up for a vote.
- A fund will generally also vote against compensation committee members when voting against an equity compensation plan that includes significantly problematic features (e.g., repricing, evergreen, reload or similar features) or other egregious pay practices.
Vanguard's updated policies last year (see our reports here and here) memorably included a new, more stringent director overboarding standard.
Access additional resources on our Institutional Investors page. This post first appeared in the weekly Society Alert!