Vanguard Founder Urges Disclosure

Vanguard Group founder John Bogle, a longtime critic of the mutual fund industry, is pushing the Securities and Exchange Commission to expand its disclosure rules on the pay of top executives at fund firms.

Issuers of open- and closed-end mutual funds should be required to disclose how they compensate their highest-paid officers, Bogle wrote in a Monday letter to the SEC posted on the agency’s website. He also recommended that the deferred compensation provided to senior executives be disclosed.

The SEC in January proposed rules that would force executives of public companies to reveal in “plain English” more information about benefits and perks given to top executives.

“Given the clear abuses that we have witnessed in executive compensation by regular companies and the many instances in which disclosure is weak and ‘fringe benefits’ and ‘perquisites’ are often hidden, it is high time that the compensation of executives of fund management companies be disclosed to fund owners,” Bogle wrote in the letter.

Vanguard has long stressed low operating fees in its funds, and Bogle, who retired from the firm in 1999, often has attacked what he regards as high expenses elsewhere in the fund industry.

In a recent interview, Bogle said that fund investors have paid “a far greater penalty [via] grossly excessive management fees and fund operating costs” than they have because of the trading abuses exposed at many fund companies since 2003.