By Cameron Berube
According to yet another investment scorecard, Vanguard is failing to advance the best interests of its investors.
The new scorecard, issued by the Nathan Cummings Foundation, ranks mutual funds based on their support for “Proxy Access” proposals. Seven out of the 10 largest mutual fund companies in the United States voted in favor of proxy access proposals the majority of the time. Vanguard, on the other hand, the largest mutual fund family in the United States, only supported proxy access proposals 18 percent of the time.
Proxy access, or granting significant shareholders (those that hold at least 3 percent of a company’s shares) the ability to nominate a director to the board of a company they invest in, is a bread and butter shareholder rights issue. Control of the board is central to the interests of shareholders because it provides them with a mechanism to weigh in on issues of corporate governance which effect shareholder value. According to the CFA Institute, a global association of investment professionals focused on promoting accountability and integrity in financial markets, “proxy access would serve as a useful tool for shareowners in the United States and would ultimately benefit both the markets and corporate boardrooms, with little cost or disruption to companies and the markets as a whole.”