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Common questions for portfolio companies

An important part of Vanguard's role as an engaged shareholder is to understand the governance perspectives and practices of the companies in which our funds invest. We encourage companies to tell their governance story, whether it's through their public filings and publications or through direct engagements with Vanguard.

Vanguard's approach to investment stewardship is grounded in four principles that we believe support long-term value creation by boards: board composition, oversight of strategy and risk, executive compensation, and governance structures. Below are some of the common questions that company leaders and directors should address in their disclosure to and interaction with shareholders.

Board composition

  1. Based on your company's strategy, what skills and experience are most critical for board members, now and in the future?
  2. How does the board plan for evolution and future director selection (that is, for strategic board evolution)?
  3. How do your company's disclosure and shareholder communications articulate board committee structure and oversight?
  4. How does the board define and consider diversity in the director selection process?
  5. How does the board assess director, committee, and board effectiveness over time?
  6. How does your company ensure effective independent oversight through the composition of the board and selection of board and committee leaders?

Oversight of strategy and risk

  1. What role does the board play in your company strategy?
  2. What is the company's long-term strategy, and how might your value proposition evolve over time? How do the board and management team track and measure performance of the strategy?
  3. How is the board involved in the oversight of company risks?
  4. What are the primary long-term risks to your company? What processes/systems are in place to mitigate risk?
  5. How are risks identified and elevated within the company? How is the board involved in that process?
  6. How do the board and management determine the company’s approach to risk disclosure?

Executive compensation

  1. Describe your company's compensation philosophy and how the measures you've chosen align with long-term company strategy and shareholder value.
  2. How does the compensation committee set goals for those measures? How does it determine that the goals are set at rigorous performance levels?
  3. How does the compensation committee seek to align executive pay with the company's performance relative to peers and the market?
  4. What is the process for selecting your company's peer group, and what factors in the selection process are most important?

Governance structures

  1. How does your company ensure that shareholders have a voice and a vote on governance matters?
  2. How do the company's shareholders have basic foundational rights (such as annual election of directors, proxy access, and majority vote standard)?