Vanguard to Take Tougher Stance Against Overextended Board Members

The index-fund giant is preparing to issue updated proxy-voting guidelines

The Wall Street Journal | April 11, 2019

The Wall Street Journal article, "Vanguard to Take Tougher Stance Against Overextended Board Members," quoted Russell Reynolds Associates Consultant Jack "Rusty" O'Kelley III on the reasoning behind Vanguard's new policy limiting the number of board seats directors can have. The article is excerpted below.

Vanguard Group is taking a tougher stance against companies whose board members it believes are stretched too thin. 

The world’s second-largest asset manager plans to vote, in most cases, against corporate executives running for two or more public-company board seats beyond where they are employed, a Vanguard spokeswoman said. Vanguard said it would generally vote against other board candidates seeking more than four board seats at one time.

Vanguard, which has roughly $5.3 trillion under management, is a large shareholder in many major public companies. It has recently begun informing U.S. companies it invests in about the new policy, which is part of a broader update on corporate-governance guidance planned for release this week. Vanguard said it is following the new policy as it votes on proxies at this year’s annual meetings.


“Overboarding has become a bigger and bigger issue because the role of the director has increased over time,” said Jack “Rusty” O’Kelley, who leads Russell Reynolds Associates’ board advisory and effectiveness practice. “To serve on a board is requiring more time and effort.”

The executive-search firm estimated in a recent report that each public-company directorship requires an average of 200 hours a year, not including the time it takes to travel to board meetings and other events.

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Vanguard to Take Tougher Stance Against Overextended Board Members