The Vanguard Group Inc Board Elections

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The Vanguard Group Inc Board Elections

Post by zmaqoptyxbglp »

The Investment Company Act of 1940 requires at least two-thirds of the board of directors of every mutual fund to have been elected by the shareholders. In the case of Vanguard, the very same directors of the funds also serve on the board of The Vanguard Group Inc, together representing the interests of the funds.

But I have still heard people on this board complain that they do not get to elect the board of directors of VGI. Why is this the case? I would like to understand if I am misunderstanding the way this works.
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Re: The Vanguard Group Inc Board Elections

Post by Oicuryy »

VGI is owned by some Delaware statutory trusts. Those trusts are investment companies registered under the 1940 act. Shareholders of beneficial interest of the trusts vote to approve the trustees of each trust. Those trustees appoint the directors of VGI. Their practice is to appoint themselves as directors.

The last joint shareholder meeting of the trusts was in 2017. Here is the SEC version of the proxy statement for that meeting. There was only one slate of candidates for trustee. ... def14a.htm

Here is a quote from the proxy statement describing the connection of VGI to the trusts.
Vanguard is a Pennsylvania corporation that has been in the business of providing corporate, administrative, investment advisory, and distribution services since May 1975. The principal business address for Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. Vanguard is collectively owned by thirty-five Delaware statutory trusts, each of which is registered as an investment company under the Investment Company Act of 1940, as amended (the “Vanguard Trusts”). The Vanguard Trusts’ series portfolios represent approximately 191 individual mutual funds which comprise the Vanguard family of mutual funds that are currently party to the FSA. As of May 31, 2017, Vanguard had assets under management of approximately $3.4 trillion. A list of each Vanguard fund that owns 10% or more of the outstanding capital stock of Vanguard is included in Exhibit 6.3 to this proxy statement.
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