How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

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iceport
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How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by iceport » Fri Aug 18, 2017 2:40 pm

The current Vanguard proxy vote includes a unique proposal:
  • Proposal 7— A shareholder proposal to institute transparent procedures to avoid holding investments in companies that, in management’s judgement, 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.
As I read the description of the proposal, and Vanguard's official opposition to it, it seemed like there was insufficient information, too little context. Is this a quixotic effort, or does it have the potential to effect meaningful change? Are Vanguard's arguments valid, or mere excuses to avoid the additional effort and expense? I don't feel like I have sufficient information to make a call.

That's when Jack Bogle came to mind. As an unassailable authority on the mutual fund industry — Vanguard in particular — and a pillar of moral standing in general, I wondered: What is Jack Bogle's perspective on the merits of this proposal? Surely, Jack Bogle would be in a good position to assess any potential impacts of well-meaning environmental, social, and governance proposals.

As it turns out, Mr. Bogle has written a great deal on this topic, and he is a champion of greater activism on the part of the mutual fund industry. Below is the closing paragraph of Chapter 3, The Silence of the Funds, from Mr. Bogle's 2012 The Clash of Cultures: Investment vs. Speculation.
Jack Bogle wrote:Since 2004, the SEC has mandated that our nation's mutual fund agents break their silence and disclose to their principals how they have voted. But in terms of being active participants in corporate governance, the silence of nearly all mutual funds remains. The same silence also emanates from pension funds and their managers. With critical issues like executive compensation and political contributions now in the spotlight, it is high time for fund managers to stand up and be counted on the controversial issues of the day. They also must break their long silence and actually make their own proposals, demanding that they be placed in corporate proxies. I see these steps toward greater activism in corporate governance by our giant investor/agents who represent the shareholder/principals, as essential to sound long term investing, to our system of modern capitalism, and to the national interest. The mutual fund industry should be in the, well, vanguard of this movement. I discuss its evolution in the chapter that follows.
Considering Jack Bogle's informed advocacy, and based on the 5 points articulated (see Pages 50 - 52 of Vanguard's proxy booklet), and what seems like a reasonable proposal, I am inclined to support Proposal 7.

Your thoughts?


Note: I realize there is a current thread on the general topic of the proxy campaign, and many members have expressed their own views. However, I didn't want this question to be lost in that thread with a broader topic.

Thanks!
"Discipline matters more than allocation.” ─William Bernstein

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iceport
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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by iceport » Sat Aug 19, 2017 12:30 pm

bump... revised OP to reflect additional information on Bogle's perspective.
"Discipline matters more than allocation.” ─William Bernstein

rkhusky
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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by rkhusky » Sat Aug 19, 2017 12:35 pm

I haven't read the proxy language yet, but want to point out that being more involved in corporate governance is different than not investing in certain companies in an index.

Nate79
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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by Nate79 » Sat Aug 19, 2017 2:57 pm

I seriously doubt that Bogle would disagree with the fund trustees who are against this ridiculous shareholder led proxy. Trying to force an index to make active decisions is very in Bogle-like behavior. Fix the index. Fix thru political efforts.

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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by rob » Sat Aug 19, 2017 3:06 pm

Reads to me like active mgt forced into an index fund in my case (not sure what other funds this was include against)..... It calls for a subjective judgment and IMO that's not the intention of index funds - if the security meets the definition it should be included in the index. There are other laws to deal with crimes like those listed and I wish they were enforced more rigorously but that gets into politics.
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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JoMoney
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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by JoMoney » Sat Aug 19, 2017 5:14 pm

There are already "Socially Responsible" index funds, trying to change a fund that doesn't have that objective is ridiculous. The people who want that should switch to a fund that meets their objectives.
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stlutz
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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by stlutz » Sat Aug 19, 2017 8:51 pm

If you want to change something in the way a company is run, you need to own it.

Avoiding ownership in certain companies is mostly about preserving one's own moral purity.

Bogle's promotion of more shareholder activism means actually taking a position in the company and then trying to create change.

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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by TIAX » Sat Aug 19, 2017 9:28 pm

Your suggestion that Jack Bogle would advocate his index funds divesting from securities in indexes they track based on politics is absurd.

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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by tfb » Sun Aug 20, 2017 12:14 am

I don't get what Bogle's view on corporate governance has anything to do with the topic at hand.
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Re: How Might Bogle View Proxy Vote Prop 7? Here's a Hint.

Post by LadyGeek » Sun Aug 20, 2017 7:23 am

This thread has run its course and is locked (not actionable). See: Non-actionable (Trolling) Topics
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