In anticipation of the 2014 proxy season, Vanguard is sending letters to approximately 350 companies to proactively engage with them on governance issues. The letters are tailored to the individual companies and identify governance practices at the companies that Vanguard believes are not in line with what Vanguard views as best practices.
At an October 16, 2013 conference on the 2014 Proxy Season sponsored by the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, Glenn Booraem, a Vanguard Fund Controller who heads its corporate governance program, stated that while engagement with Vanguard historically has been initiated by companies, Vanguard has this year undertaken a proactive targeted outreach program. He stated that the goal of the outreach program is to engage in a more nuanced conversation than would be possible after a company’s proxy statement has been filed.
Mr. Booraem indicated that the companies being targeted by this outreach program include, among others, companies with classified boards of directors, plurality voting in uncontested director elections or that do not permit shareholders to call special meetings. Vanguard generally favors annual director elections and supports shareholders’ right to call special meetings of shareholders (although it typically votes “against” shareholder proposals asking that 10% of outstanding shares be allowed to call special meetings). Vanguard also believes that directors should be subject to election by majority vote in uncontested director elections.
Vanguard funds own over $1 trillion in common stocks. Vanguard’s proxy voting guidelines and its other publications on corporate governance and executive compensation are available at https://investor.vanguard.com/about/vanguard-proxy-voting.