Vanguard Investment Stewardship Insights Voting Insights: Independent Chair Proposal and Lobbying Disclosure at Dominion Energy

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Vanguard Investment Stewardship Insights Voting Insights: Independent Chair Proposal and Lobbying Disclosure at Dominion Energy Vanguard Investment Stewardship Insights Voting Insights: Independent chair proposal and lobbying disclosure at Dominion Energy May 2021 Vanguard publishes Investment Stewardship Insights to promote good governance practices and to provide investors and public companies with our perspectives on important governance topics and issues that come up for shareholder votes. Analysis and voting rationale Company: Dominion Energy Inc. (Dominion) Vanguard has held meaningful engagements with members of Meeting date: May 5, 2021 Dominion’s board over many years, including several discussions Proposals: Item 4—Report on Lobbying Payments and Policy; this past year that covered oversight of climate-related strategy Item 5—Require Independent Board Chair and risks. In our latest engagement, board members provided details on several recent enhancements to the governance process, namely: How the funds voted • Separation of the nomination and governance committee At the annual meeting for Dominion Energy, a from the compensation and talent management committee U.S.-based utility company, the Vanguard funds voted against two shareholder proposals. The first • Transition of the audit chair responsibilities away from proposal requested that the board annually publish a report the lead independent director so that person can focus on outlining its oversight of political lobbying activities and the oversight responsibilities company’s lobbying expenditures. The second proposal requested • Succession planning in the wake of the company’s recent that the board adopt a policy that an independent director serve leadership announcements as board chair. We appreciated that the board was receptive to shareholder feedback in implementing these changes. In particular, we Vanguard’s principles and policies were encouraged by the clarity in board committee and role A company’s board of directors should be independent, diverse, structures, the additional attention paid to succession planning, and capable of overseeing strategy and material risks. and the strengthened role of the lead independent director. In light of the company’s recent changes, the Vanguard funds did A company’s political lobbying activity is one of the many not support the shareholder proposal seeking an independent potential material risks that an independent board must oversee. chair, as we do not believe it is warranted at this time. Vanguard believes that poor governance of lobbying activity, coupled with misalignment to a company’s stated strategy or Dominion also received a proposal seeking more comprehensive a lack of transparency about the activity, could manifest into disclosure of its lobbying activities, both direct (hiring lobbyists financial, legal, and reputational risks that can affect long-term to influence legislation) and indirect (informing public opinion value for Vanguard funds. by supporting third-party organizations). Strong independent leadership is a responsibility of a company’s We evaluated Dominion’s disclosures relative to its peers and board. The Vanguard funds will consider supporting proposals industry standards; our analysis showed that its disclosures seeking an independent chair if we believe that there has been were comparable and that, directionally, Dominion continues to a material failure in risk oversight and that the role will enhance make progress in improving its approach. We gave the board a company’s board leadership and benefit shareholders. feedback that the company could further enhance its disclosures For institutional and sophisticated investors only. Not for public distribution. by more clearly demonstrating how its federal and state What we expect from companies on this matter lobbying expenditures and trade association memberships On behalf of Vanguard funds, we expect boards to represent align with the company’s climate-related positions, strategy, the interests of all shareholders and to make independent and ambitions. decisions about a company’s leadership, strategy, and risks to long-term value. Before the shareholder meeting, Dominion filed a revised policy document regarding its political contributions and lobbying; We also expect boards to oversee corporate political activity the document demonstrated directional consistency with the across their enterprise and to communicate the company’s shareholder proposal’s requests and sufficiently addressed philosophy and policies to investors. We look for companies to Vanguard’s feedback. Because of this update, and because disclose the oversight policies and structures they have in place of the board’s responsiveness to shareholder feedback, the to ensure the political activity’s alignment with the company’s Vanguard funds did not support the shareholder proposal this philosophy and long-term strategy. year. Vanguard will continue to monitor Dominion’s progress consistent with industry standards and expectations. INSDOM_052021 © 2021 The VanguardFor institutional Group, Inc. and sophisticated investors only. Not for public distribution. Important Information VIGM, S.A. de C.V. Asesor en Inversiones Independiente (“Vanguard Mexico”) Materials are provided only for their exclusive use and shall not be distributed registration number: 30119-001-(14831)-19/09/2018. The registration of to any other individual or entity. Broker-dealers, advisers, and other Vanguard Mexico before the Comisión Nacional Bancaria y de Valores (“CNBV”) intermediaries must determine whether their clients are eligible for investment as an Asesor en Inversiones Independiente is not a certification of Vanguard in the products discussed herein. Mexico’s compliance with regulation applicable to Advisory Investment Services (Servicios de Inversión Asesorados) nor a certification on the accuracy The information contained herein does not constitute an offer or solicitation and of the information provided herein. The supervision scope of the CNBV is may not be treated as such in any jurisdiction where such an offer or limited to Advisory Investment Services only and not to all services provided by solicitation is against the law, or to anyone for whom it is unlawful to make Vanguard Mexico. such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. This material is solely for informational purposes and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any security, nor THESE MATERIALS ARE PROVIDED AT THE REQUEST OF AND FOR THE shall any such securities be offered or sold to any person, in any jurisdiction in EXCLUSIVE USE OF RECIPIENT AND CONTAIN HIGHLY CONFIDENTIAL which an offer, solicitation, purchase or sale would be unlawful under the INFORMATION, WHICH SHALL NOT BE REPRODUCED OR TRANSMITTED TO securities law of that jurisdiction. Reliance upon information in this material is ANY THIRD PARTIES WITHOUT VANGUARD’S PRIOR WRITTEN CONSENT. THE at the sole discretion of the reader. CONTENTS OF THESE MATERIALS SHALL NOT BE UNDERSTOOD AS AN OFFER OR SOLICITATION TO BUY OR SELL SECURITIES IN BRAZIL AND VANGUARD IS Securities information provided in this document must be reviewed together NOT MAKING ANY REPRESENTATION WITH RESPECT TO THE ELIGIBILITY OF with the offering information of each of the securities which may be found on ANY RECIPIENT OF THESE MATERIALS TO ACQUIRE THE INTERESTS IN THE Vanguard’s website: https://www.vanguardmexico.com/web/cf/ SECURITIES DESCRIBED HEREIN UNDER THE LAWS OF BRAZIL. SUCH mexicoinstitutional/en/home or www.vanguard.com SECURITIES HAVE NOT BEEN REGISTERED IN BRAZIL AND NONE OF THE INTERESTS IN SUCH SECURITIES MAY BE OFFERED, SOLD, OR DELIVERED, Vanguard Mexico may recommend products of The Vanguard Group Inc. and its DIRECTLY OR INDIRECTLY, IN BRAZIL OR TO ANY RESIDENT OF BRAZIL affiliates and such affiliates and their clients may maintain positions in the EXCEPT PURSUANT TO THE APPLICABLE LAWS AND REGULATIONS OF securities recommended by Vanguard Mexico. BRAZIL. ETF Shares can be bought and sold only through a broker and cannot be This document does not constitute, and is not intended to constitute, a public redeemed with the issuing fund other than in very large aggregations. Investing offer in the Republic of Colombia, or an unlawful promotion of financial/capital in ETFs entails stockbroker commission and a bid-offer spread which should be market products. The offer of the financial products described herein is considered fully before investing. The market price of ETF Shares may be more addressed to fewer than one hundred specifically identified investors. The or less than net asset value. financial products described herein may not be promoted or marketed in Colombia or to Colombian residents, unless such promotion and marketing is All investments are subject to risk, including the possible loss of the money you made in compliance with Decree 2555/2010 and other applicable rules and invest. Investments in bond funds are subject to interest rate, credit, and regulations related to the promotion of foreign financial/capital market products inflation risk. Governmental backing of securities apply only to the underlying in Colombia. securities and does not prevent share-price fluctuations. High-yield bonds generally have medium- and lower-range credit quality ratings and are The Product is not and will not be registered before the Colombian National therefore subject to a higher level of credit risk than bonds with higher credit Registry of Securities and Issuers (Registro Nacional de Valores y Emisores
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