Vanguard Shareholder Meeting - Proxy Voting

[Imustacheyouaquestion]

I got an email about proxy voting for a special joint meeting of Vanguard Shareholders. You'll have a message in your Vanguard inbox, and then click through to a secure voting site that only lets you vote on proposals for funds whose shares you owned as of a couple days ago. Voting closes on Nov 15, 2017.

For folks interested in reading the proposals and the board's recommendations for each (I was interested in reading why the board opposed divestment from companies engaged in genocide for the Total Stock Market fund, for example), here's a link to the pdf: http://www.proxy-direct.com/Vanguard/Materials/Vanguard%20Complete%20Definitive%20Proxy%20Statement%202017.pdf.

[marcus0aurelius]

Thanks for posting that, I just got that email and really have no idea how to vote here.


Your link includes the period at the end, so it freaks out. If you delete that period it's all good though.

[Paul der Krake]

Interesting tidbits, according to me:

- you get paid around 250k per year for being a Vanguard trustee. Nice gig. Where do I sign?
- REITs are to restrictive, apparently
- people who work for large corporations are about to get even better pricing as the asset threshold for getting to Institutional and Institutional Plus will be lowered (if shareholders vote for it)

[PlainsWalker]

For Proposal 7 Vanguard says they are in the business of running index funds not socially responsible index funds. Although they say it much nicer. The proxy statement goes on to say divesting from companies some folks don't like doesn't actually cause social change. And placing additional constraints on what the funds can invest in is not in the fund shareholders best interests.
It's a nice thought that Vanguard divesting from  PetroChina would get them to shape up, but it seems unlikely. I'm with the board on this one voting against.

[gmdv]

Interesting tidbits, according to me:

- you get paid around 250k per year for being a Vanguard trustee. Nice gig. Where do I sign?

Nice indeed, especially the part about how the gig lasts until they turn 72 or voted out by shareholders with combined assets equal to 2/3 of the fund.

[Imustacheyouaquestion]

Your link includes the period at the end, so it freaks out. If you delete that period it's all good though.

Thank you, fixed the link now.

[aboatguy]

I'm a little concerned that Vanguard would even have a vote on social responsibility for their index funds.  If I want to mirror the whole market and I buy a fund that mirrors the market , that fund should mirror the market.

If I want to be a socially responsible investor I should invest in socially responsible funds and not try to get an index fund to change their investments to mirror my beliefs in social responsibility .

I'm interested in how this vote finally pans out.

Mike

[Paul der Krake]

It's a shareholder proposal. Any shareholder can submit one.

[seattlecyclone]

I'm a little concerned that Vanguard would even have a vote on social responsibility for their index funds.  If I want to mirror the whole market and I buy a fund that mirrors the market , that fund should mirror the market.

A shareholder proposed it, so they have to include it in the voting materials. The board encourages shareholders to vote no.

That said, I voted in favor. I don't believe that divestment is a sound strategy for effecting change in companies, as it just transfers ownership from people who have reservations about profiting from <unpopular thing> to people who have fewer reservations about owning a company that does <unpopular thing>. It doesn't affect the ability of the company to continue with business as usual, not one bit.

The language of this particular proposal seemed to include allowing Vanguard's leaders to negotiate with the company in question as a precursor to dumping the shares. Vanguard has a pretty large minority stake in basically every public company out there. Their votes could be quite a force for good if they chose to use them as such. I'm not sure where I draw the line at where a mutual fund company should or should not intervene in the internal affairs of the companies they invest in. However I'd argue that if this type of activism is ever warranted, genocide should be one of the least controversial reasons to do it.

[Imustacheyouaquestion]

That said, I voted in favor. I don't believe that divestment is a sound strategy for effecting change in companies

I'm confused why you voted for the proposal if you don't think divestment is an effective strategy. The "against" vote recommended by the board is the option that would not allow index fund managers to divest.

[seattlecyclone]

That said, I voted in favor. I don't believe that divestment is a sound strategy for effecting change in companies

I'm confused why you voted for the proposal if you don't think divestment is an effective strategy. The "against" vote recommended by the board is the option that would not allow index fund managers to divest.

The proposal isn't completely about divestment. It reads as follows (emphasis mine):

Shareholders request that the Board institute transparent procedures to avoid holding investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights. Such procedures may include time-limited engagement with problem companies if management believes that their behavior can be changed.

If passed, the proposal would give Vanguard fund managers some latitude about what to do with stock in companies deemed to be engaging in genocide. Divestment is one option, but another option would be for Vanguard to put forth a shareholder proposal for the company to shape up and/or talk to the company's management to urge a change in behavior. If none of those options succeed in a reasonable amount of time, divestment would then be required.

If I were writing the proposal I would put more emphasis on retaining the stock and using those voting rights to create change, maybe even overweighting the company slightly in order to gain more sway over decisions. Like I said, I think that divestment has little effect on a company's behavior, but the other options that this proposal would allow leading up to divestment are something I do believe in.

[Paul der Krake]

I agree that genocide is pretty much as uncontroversial as it can get. I too would like to see Vanguard take more principled stands and flex their muscle in the board rooms, but I worry it may not always align with my values.

I don't know anything about the other millions Vanguard shareholders and what they believe in. What if they want to lean on a company to do things I find reprehensible? The current status quo of almost always voting for the management side of things is neutral.

[solon]

What I want is market returns. That's the reason I'm invested in these funds. Anything that skews results from market is to be opposed.

We shouldn't mix investing and politics, no matter how reprehensible. If we want to change conditions, we can do that, but changing investment practices hurts no one but the investors.

[seattlecyclone]

What I want is market returns. That's the reason I'm invested in these funds. Anything that skews results from market is to be opposed.

We shouldn't mix investing and politics, no matter how reprehensible. If we want to change conditions, we can do that, but changing investment practices hurts no one but the investors.

That's a perfectly valid and consistent viewpoint. I have a tough time taking it to such absolutes though. If I can make a difference in the amount of genocide in the world by sacrificing a couple of basis points in returns (if it even would result in a worse return), that's a trade I'm quite willing to make. But as Paul pointed out, it's hard to say where the line should be if the funds do stray from the path of simply investing in every business regardless of any negative impact those businesses might have on real people or the world as a whole.