January 8, 2015 / 12:06 PM / 3 years ago

Exclusive: Vanguard to offer more detail on corporate governance voting

BOSTON (Reuters) - Vanguard Group Inc plans to publish new details about how it voted at annual shareholder meetings, in a move likely to raise the heat on some of the nation’s top companies.

Vanguard, which has $3 trillion of assets under management, is making the change as activist investors pressure top shareholders to take a more vocal role on questions of corporate governance. It follows the lead of BlackRock Inc, the world’s largest asset manager, which ramped up its publishing of similar reports last year.

“We have said for a long time that engagement is important for us, and we want to provide more context around that,” Glenn Booraem, who overseas corporate governance for Vanguard, told Reuters in a telephone interview.

He said his company will describe on its website as early as this week the reasoning around five or so recent cases in which it raised concerns about board actions, or voted against executive pay plans, and some changes that followed.

Like BlackRock, Vanguard will not name specific companies in its commentaries. Booraem said the goal is not to pressure companies but rather to show investors how Vanguard advocates on their behalf.

Even so, the action will put company directors on notice, said Jonathan Macey, a Yale Law School professor. “It’s like when the teacher says, ‘I know who you are,’ the message gets across,” Macey said.

While mutual funds already disclose proxy votes, they have lately faced activist pressure to become more vocal about how they feel about issues like executive pay and corporate director leadership. Among the critics is Vanguard founder John Bogle.

So far, BlackRock has posted two quarterly reports on its website providing more detail on votes it cast or talks it held with dozens of companies worldwide.

Michelle Edkins, who oversees BlackRock’s governance programs, said the firm wanted to provide more transparency to clients. The reports left aside company names, Edkins said, to strike “a reasonable balance between informing our clients about our governance program and maintaining constructive relationships with companies.”

Nonetheless, BlackRock’s reports offer enough specifics to allow investors to identify the likely subjects. In one, BlackRock said it raised concerns with “a global retailer after allegations of bribery surfaced at the company,” and that it voted against certain directors and opposed a number of management recommendations.

The descriptions match filings showing how BlackRock funds voted at Wal-Mart Stores Inc, which faces bribery investigations.

A Wal-Mart spokeswoman declined to comment.

Reporting by Ross Kerber; Editing by Richard Valdmanis and Leslie Adler

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