The Advisors' Blog

Over on The Proxy Season Blog on TheCorporateCounsel.net, I recently shared some nuggets from Vanguard’s latest Investment Stewardship Report, which covers the asset manager’s voting and engagement activities during the 2025 calendar year.

In addition to the corporate governance matters that I highlighted in that blog, the stewardship report addresses how Vanguard handles executive compensation proposals. Here’s an excerpt:

In evaluating executive compensation proposals, we assessed how a company’s executive pay program aligned pay outcomes with shareholder returns relative to a relevant set of industry peers. We looked to disclosures of the board’s oversight and explanation of the plan structure to provide context for how the board believed pay decisions and plan design would lead to alignment between executive rewards and shareholder returns.

As in previous years, we observed the use of one-time retention equity grants by certain U.S. companies in highly competitive industries, such as technology, biotechnology, pharmaceuticals, and financials. To explain their rationale for granting such awards, boards relayed the need to reengage employees, prevent attrition to competitors or startups, and supplement or replace equity-based compensation that had lost motivational value following stock price declines.

We noted that opportunities existed for companies to provide enhanced contextual disclosure of their board’s decision-making process and rationale in instances where they chose to issue retention equity grants. When engaging with portfolio company leaders, we encourage companies to provide clarity on the specific facts and circumstances underlying their decisions to make one-time awards.

The report provides case studies for say-on-pay and other matters. Overall, Vanguard supported 98% of say-on-pay proposals in the US in 2025 and voted with management on 79% of other pay-related proposals. Vanguard didn’t support any of the 21 pay-related shareholder proposals that hit ballots last year.

– Liz Dunshee