when the new CEO was selected, base rates for his background were not inspiring ; he made his bones based on hyperscaling ETFs for fees.
with actually zero 'technology' expertise, the more likely outcome for vanguard was same quality of service costing more, and\or cuts to functionality not serving up profits.
now IAV jumps in on a 'not-for-profit' company whose CEO likely is compensated similar (~$30m/yr) to blackrock's Fink.
IAV post 2025 july:
"Many long-term investors have built wealth using low-cost index funds. But it’s the selling of those index funds—not owning them—that’s been filling Vanguard executives’ bank accounts...
Just because Vanguard is private doesn’t mean it can’t disclose compensation details. It simply chooses not to...
For a firm that prides itself on penny-pinching and low-cost indexing, Vanguard’s leaders sure seem to be stuffing their bank accounts with a lot more than pennies."
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Vanguard employees, including its CEO, are just that - employees. If you believe in an efficient market, then you either pay market rate to get good employees or you provide some other compensating incentive. For example, many people work for lower pay in government or in teaching or at a variety of other places because the difference they feel they can make has value to them. Others may stay with a company even though they can get more elsewhere because they are comfortable with "the familiar".
Vanguard has been falling behind the industry in ease of use, quality of service, and cash management features. I'm sure others can construct a long list of additional areas for improvement. That suggests a need to turn more actively toward the outside for "new blood".
Which is what Vanguard has been doing lately. That means paying "near" market rate wages. As Bloomberg reports: "Insiders say Vanguard is offering pay packages that, while not quite New York-level, nonetheless amount to big money in Malvern. "
Just because Vanguard is private doesn’t mean it can’t disclose compensation details.
Just because Fidelity is private doesn't mean it can't disclose Abigail Johnson's compensation details.
Let's look at that compensation. Vanguard's Partnership Plan was created decades ago by John Bogle. https://www.businessinsider.com/jack-bogle-vanguard-partnership-plan-career-landmark-2019-1
As at other companies, the higher the level the employee, the greater the percentage of compensation that comes from "profit sharing". (The BI piece describes how Bogle created the Partnership Plan to approximate profit sharing at for-profit companies. See below.) The amount of these bonuses wax and wane. The same IVA writer (Jeff DeMaso) who this month complained about "Vanguard’s Partnership Plan: Big Profits ..." last year reported "Vanguard’s Profit-Sharing Stalls Out". Does he have a point or is he filling column inches?
DeMaso says that " It’s Vanguard’s asset growth—not fund performance—that matters." That sounds like it's just sales that are getting rewarded. It also sounds different from what Bogle wrote (see cited BI piece): What matters is "the difference between Vanguard's expense ratios (the percentage of a fund's earnings that go toward operational expenses) and those of their largest competitors applied to Vanguard's assets under management, combined with the extra returns due to funds' performance.
I don't know whether Vanguard will turn itself around. Its metaphor for itself used to be a ship. It's a large tanker that can't turn on a dime. I hope it succeeds.