Cleary's "How Many Directorships is Too Many? Vanguard’s Evolving View" recaps Vanguard's new, more stringent overboarding policy (reported on here), and advises companies to consider whether they are in a position to take advantage of the policy's limited phase-in exception, as well to heed other opportunites to educate Vanguard on particular company-specific governance practices:
One of the important aspects of Vanguard’s overboarding policy is its explicit statement that it will take into account public commitments by directors to step down. Therefore, if a director finds him/herself a potential candidate for a no-vote, the director should consider whether he or she intends to step down from any of the public company boards on which he or she serves and ensure that such plans are adequately communicated and disclosed. Similarly, if there are other factors that Vanguard should consider, engagement by the affected companies may be warranted.
In addition to changes to their voting guidelines, Vanguard also separately reiterated that companies are encouraged to discuss their governance practices more generally with Vanguard. Director skills, experience and the director selection process are areas on which Vanguard is particularly focused.
See also Barron's "Vanguard’s Tough Stance on Board Seats Is Changing Corporate Governance," and additional information & resources on our Institutional Investors page. This post first appeared in the weekly Society Alert!