Vanguard calls for greater boardroom shareholder contact

Vanguard has called for dramatic changes to the relationships between company directors and shareholders and raised concerns around the quality of US firms’ corporate governance.

The FT reports the firm is set to propose the idea of “shareholder liaison committees” in letters to company boards it will send in the new year.

The proposals are significant as Vanguard is a permanent shareholder in all major companies and is the world’s second largest fund group.

Chief executive Bill McNabb told the FT it is wrong that many company directors have never met shareholders.

He says: “Independent directors are doing a good job but we find they are not as engaged with shareholders as they should be.

“Directors are standing in on behalf of owners — it is an important concept — and there are many independent directors who have never met an investor.”

He adds meetings with shareholder liaison committees would allow investors to express their opinions on a company’s strategy compared with its competitors, or to suggest questions that independent directors should be asking of management.