Newly disclosed proxy records indicate that Vanguard wields considerable power on Wall Street. Last year, the fund giant contested nominations of board members in more than half of the companies in its mutual funds' portfolios, according to the company's Web site.
Proxy data also revealed that Vanguard declined to support at least 30% of the board candidates during the past year. Analysis of the company's voting records also revealed that it voted against 46% of the proposals on compensation last year and only supported one-third of the compensation-related proposals during the previous year.
The mutual fund industry potentially walked into a firestorm Tuesday, when the Security and Exchange Commission's new guidelines publicizing proxy voting guidelines took effect. Mutual fund companies reportedly control roughly 10% of the securities industry's proxy votes. Vanguard, which manages $500 billion of equities, cast a vote last year on 19,000 directorships at more than 4,000 companies. The mutual fund giant backed 40% of a full slate of candidates' directors and withheld votes from at least one corporate board nominee for 60% of the companies in its portfolios during the 12-month period ending June 30.