Vanguard Revised Proxy Voting Guidelines on Proxy Access Proposals (February 2016)

    View Authors February 2016

    Dear Corporate Governance Colleagues and Friends:

    I'm writing to pass along an update on Vanguard's proxy voting guideline on proxy access proposals.  While we are not doing any proactive PR outreach on this change, given the role that you and your organizations play in supporting our portfolio companies on governance matters, we felt it was important to provide you with this information.

    We will continue to evaluate proxy access proposals on a case by case basis, however we've lowered the ownership threshold for likely support from 5% to 3%. This change is informed by our engagement with companies and other stakeholders over the past year, as well as the critical mass of access adoption at the 3% ownership level by an increasingly wide range of companies.  We continue to believe that robust, ongoing engagement among companies, their boards and shareholders is the best way to ensure the alignment of interests among stakeholders, and that exercise of the access right should be reserved for those instances in which such engagement has failed to yield meaningful progress. As structural support for shareholders' rights to determine who represents their interests on the board - through annual elections, majority voting and now proxy access - becomes the rule rather than the exception, we believe that our engagement time with companies and their boards can be much more productively focused on matters of strategy and the ways in which the firm's board, governance and compensation practices protect and enhance value for shareholders over the long term.