Is it better than competitors?Because it was better than before? I used to have a glorious 40 page white paper on the history of mutual fund governance.
- We can comprehend Abigail Johnson and Johnson family wanting to manage Fidelity responsibly. Because their family net worth is tied in Fidelity's valuation. Even privately held companies have valuations.
- What happens when Vanguard shareholders' interests come into conflict with the board/management's personal interests? For example, shareholders and board/management may differ on pay. Also for example, shareholders and board/management can (and likely already do) differ on the quality of customer service offered to investors.
In any healthy organization, the chain of command ends with the owner/owners (collectively).
Correct me if wrong, but a "customer" votes with their feet. An "owner" votes for the desired board/management.“Agency Issues”, when ownership and management is separated, are tricky. Separate control and manage conflicts of interest. While many of the relationships are circular you do have sign offs.
I personally, working in accounting (on group) created presentations to the fund’s board (a different entity) showing how our expenses ranked with our competitors when the fund’s board negotiated the portfolio managers salary.
Now maybe this was used to hold to account the portfolio manager. Maybe not. Maybe it only gave pause for the most egregious errors. But at least a paper trail was formed.
The SEC strongly believes people should vote with their feet.
Are owners of other companies (Johnson family for Fidelity) as blinded and powerless as Vanguard's owners? Issue of moral hazard.
Statistics: Posted by pennsylvania211 — Sun Aug 18, 2024 1:25 pm — Replies 196 — Views 19251