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Sodali & Co Korea recently hosted a webinar on 'Understanding Vanguard’s Investment Stewardship Program,' featuring members of Vanguard’s Investment Stewardship team. The session provided valuable insights into Vanguard's stewardship approach as the market gears up for the upcoming annual general shareholder meetings (AGMs).
Key Takeaways:
- Vanguard's Stewardship Approach - Vanguard focuses on representing shareholders’ best interests by “promoting effective corporate governance practices to support long-term investment returns.” But they “do not seek to influence company strategy or operations.”
- Informed Voting and Engagement - The Vanguard-advised funds’ voting policies serve as a primary guiding principle, but the final voting decisions are built upon various facts and circumstances gathered through diverse channels, such as company disclosures and internal and external/third-party research.1 The Vanguard team seeks to engage directly with companies when it is deemed helpful to gain clarity on proxy voting matters.
- Transparent and Effective Communication - Going into the AGM season, it is vital for companies to be prepared to communicate underlying situations effectively and convey the board’s stance to make engagements efficient and productive when the opportunity arises. The involvement of independent directors in these discussions is encouraged as their participation can enhance Vanguard’s understanding of the company, given their fundamental role in board oversight.
- Managing Material Risks - The webinar highlighted the Board’s crucial role in managing and addressing material risks. Vanguard shared case studies of Korean companies where such risks had previously materialized, underscoring the need for vigilant governance.
- Adapting to Market Dynamics - In a constantly evolving market, maintaining open, transparent, and proactive dialogue with shareholders is essential for demonstrating effective oversight and building long-term trust.
Conclusion
Governance practices play a critical role in supporting sustainable growth. For more information or to discuss how these insights may apply to your organization, please contact Sodali & Co Korea.
[1] Vanguard’s Investment Stewardship program is responsible for proxy voting and engagement on behalf of the quantitative and index equity portfolios advised by Vanguard (together, Vanguard-advised funds). Vanguard’s externally managed portfolios are managed by unaffiliated third-party investment advisors, and proxy voting and engagement for those portfolios are conducted by their respective advisors. As such, throughout this document “the funds” refers to Vanguard-advised funds.
Speakers
- Moderator Kelly Kim, Senior Advisor at Sodali & Co
- Julia Richards, Associate Director in Melbourne, Vanguard-advised funds' stewardship program
- Izabela (Iza) Zurowska, Lead Analyst in London Vanguard-advised funds' stewardship program
