From the Veritas Compensation in Context newsletter, courtesy of John Galloway, how Vanguard evaluates shareholder proposals:

We assess each proposal through a fiduciary lens. First we look for alignment with the Vanguard funds’ corporate governance principles in the company’s board composition, the board’s oversight of strategy and risk, executive compensation, and shareholder rights. We then weigh additional considerations that include:

1. Does the proposal address a material issue relevant to the company? We look for a clear link between the topic(s) raised by the proposal and the risks or benefits to the company’s long-term value. Our analysis considers sector, geographic, and jurisdictional factors. Our evaluation of the relevance and materiality of a given topic can change from year to year as the business and market environment changes for companies. If our materiality assessment fails to show a clear link to long-term value, the funds may withhold support from the proposal.
   
2. Does the proposal suggest a change that advances longterm shareholder interests? We believe that shareholder proposals should promote good governance and disclosure practices and not dictate a company’s business practices or strategy. The funds may support proposals that improve governance and improve a company’s approach to material risks, but that are not so narrow—or so sweeping—that they are impossible or impractical to enact. If we find a proposal to be overly prescriptive, the funds may withhold support.
   
3. Does the proposal address gaps in the company’s current practices or stated intentions? We assess whether the company already has practices in place that sufficiently address the topic of shareholder concern. We also evaluate whether the company has made a credible, specific, public commitment to address the shareholder’s request. If the company follows such practices or has credibly committed to act in a reasonable time frame, the funds may find the proposal to be misdirected and withhold support.