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Vanguard has issued its 2024 voting policies, which are now effective (for meetings held after February 1st) and apply to Vanguard-advised funds. This Alliance Advisors post discusses key updates and says: “Overall, Vanguard has enhanced its disclosure expectations related to board composition and provided more details on its approach to executive compensation programs, advance notice requirements and exclusive forum provisions.” Here’s an excerpt from the alert:

– Board and committee independence: Vanguard is relaxing its majority independence standard for the entire board at controlled companies (those in which a majority interest is held by company insiders or affiliates). However, it expects a majority of key committee members at controlled companies to be independent.

– Board composition: Vanguard has added a new section to its guidelines on board composition that replaces its discussion on diversity and qualifications disclosure. Vanguard looks to companies to disclose their perspectives on the appropriate board structure and composition and how these elements support the firm’s strategy, long-term performance and shareholder returns. It wants issuers to provide regular disclosure regarding their director nomination process, their process for evaluating board composition and effectiveness, and their identification of gaps and opportunities to be addressed through board refreshment and evolution. Vanguard expects disclosure of each director’s tenure, skills and experience in a skills matrix. Disclosure of directors’ personal characteristics (such as gender, race and ethnicity) may be done on an aggregate or individual director level.

– Escalation process for director and committee accountability: In certain instances, Vanguard will vote against directors as a means of expressing concern regarding governance failings or other issues that are unaddressed by a company. It has eased its policy of penalizing boards for not making sufficient progress on board diversity. Instead, absent a compelling reason, Vanguard will vote against the nominating/governance committee chair, or another relevant board member, if the board is not taking action to achieve board composition that is appropriately representative, relative to its market and the needs of its long-term strategy.

The summary also describes some clarifications or expanded discussions of poison pills, advance notice bylaws and exclusive forum provisions.

Over on the CompensationStandards.com blog yesterday, Liz shared tweaks made to Vanguard’s case-by-case approach to compensation-related ballot items (including say-on-pay). As she reminded readers, Wellington makes voting decisions for some Vanguard funds and also released its policies (see the full policies and a summary of changes on Wellington’s policy portal). And, as always, you now also need to keep track of policies that apply when investors are using “proxy voting choice.”

Yes, voting choice complicates things, but at least the proxy advisors and institutional investors seem to have mostly gone easier on public companies with their policy updates this season (knock on wood). I wonder how often descriptions of these summaries in prior years have used phrases like “relaxing its majority independence standard” or “eased its policy.” And, looking at how we’ve characterized other policy updates this season, we’ve used words like “a holiday miracle” and “a few reasonable updates.”

– Meredith Ervine