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Vanguard Publishes 2018 Investment Stewardship Annual Report

Highlighting their active engagement with 721 companies during the past proxy season (down from the 954 engagements in the prior year), Vanguard’s primary focus was placed on companies’ boards composition – specifically director independence, diversity of skills and tenure (discussed in half of conversations with companies). The alignment of executives’ pay with performance and the magnitude of total compensation received a similar amount of consideration. Aside from these two, other emerging topics included  the annual elections for directors (discussed in approximately one-quarter of meetings) and conversations regarding risk oversight and strategy.

Vanguard has identified the significance of certain Environmental and Social matters and how they affect a companies’ long-term financial value. Citing the need for greater transparency, disclosure and dual management and board oversight surrounding these topics, Vanguard increasingly engaged with carbon intensive companies.

The passive investor acknowledges the rise in activism in recent years – and importantly, that certain activists can raise legitimate concerns about a company which can usher in necessary changes. While historically cautious to support an activist, Vanguard has shown a willingness to listen, having supported them in five out of 13 US proxy contests last year.

The full report can be found on Rivel’s Gateway in the Governance Library Reading Room.