In this new stewardship piece: “Vanguard’s approach to board responsiveness,” Vanguard provides comfort to corporates that it will generally look to the board of directors to determine what actions are in shareholders and the company’s best interests and to act accordingly notwithstanding shareholders’ divergent views. While Vanguard expects boards to respond to majority-supported shareholder proposals and will hold relevant directors accountable when it supports a majority-supported proposal if the board fails to act, Vanguard will defer to boards’ judgment on whether and how they respond to proposals on matters that are immaterial to the company’s long-term value that garner significant—but less than majority—support.
More generally, the piece stresses the importance of board engagement mechanisms (e.g., “contact the board” processes/procedures, direct engagement, proxy voting); the board’s thoughtful consideration of the various perspectives expressed through those mechanisms; and disclosure about the process and results of such engagement.