SUMMARY OF MATERIAL MODIFICATION TO THE VANGUARD GROUP, INC. BENEFIT PLAN THE VANGUARD GROUP, INC. SEVERANCE PLAN SUMMARY PLAN DESCRIPTION

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1 SUMMARY OF MATERIAL MODIFICATION TO THE VANGUARD GROUP, INC. BENEFIT PLAN THE VANGUARD GROUP, INC. SEVERANCE PLAN SUMMARY PLAN DESCRIPTION This Summary of Material Modification (SMM) summarizes key provisions of The Vanguard Group, Inc. Severance Plan (the Severance Plan or Plan ) that was first established on, and became effective September 14, This SMM serves as the first summary plan description for the Severance Plan and supplements the Summary Plan Description (SPD) for The Vanguard Group Inc. Benefit Plan (the Benefit Plan) effective September 14, Going forward, this SMM for the Severance Plan will become part of, and incorporated into the Benefit Plan SPD. If this SMM has been delivered to you electronically, you have the right to request a paper copy of this SMM at no charge by contacting Crew Central at 844-VG1-CREW ( ) or extension 1CREW. Please remember this SMM is a summary of the Severance Plan. It is not the plan document itself. Your rights under the Severance Plan are governed exclusively by the Severance Plan document. If there is any conflict between this SMM and the Severance Plan document, the Severance Plan document is the final authority and will govern in all cases. The Plan Administrator retains exclusive authority and discretion to interpret the terms of the Severance Plan. PURPOSE The Severance Plan has been established for the benefit of eligible U.S. crew members of The Vanguard Group, Inc. and participating subsidiaries (The Vanguard Group, Inc. and its participating subsidiaries are referred to as Vanguard"). The purpose of the Plan is to define when Vanguard may, in its sole discretion, provide severance pay to certain crew members who are involuntarily terminated from employment. The legal rights and obligations of any crew member having an interest in the Severance Plan are determined solely by the provisions of the Severance Plan, as interpreted by the Plan Administrator. ELIGIBILITY FOR COVERAGE All regular crew members, full-time or part-time, who are (i) actively employed by Vanguard (or on an approved leave of absence), (ii) employees for income and employment tax withholding purposes, (iii) have completed a Year of Service, and (iv) on the U.S. payroll, are eligible for coverage under the Plan. Contingent workers are not eligible to participate in the Plan. Contingent workers perform services for Vanguard: (i) as independent contractors, (ii) as workers performing services on behalf of a consulting firm or other service provider, (iii) pursuant to an arrangement with a third party outsourcing, leasing, or staffing organization, or (iv) as workers performing services to Page 1 of 9

2 Vanguard on behalf of an independent organization with expertise in specific functions, including functions peripheral to the core business of Vanguard. If a person who is a contingent worker is subsequently determined to be a common law employee of Vanguard by a governmental agency, a court or by Vanguard, such person still will not be eligible for coverage under the Plan. Vanguard pays the full cost of this Plan. COST OF COVERAGE ELIGIBLE TERMINATION An eligible crew member (as described above) is only eligible for severance benefits under the Plan if he or she meets all of the following requirements: 1. He or she is involuntarily terminated, but see below for types of involuntary terminations that are not eligible for severance. 2. He or she signs (and does not revoke) a waiver and release of all claims, agrees in writing to other provisions that may be required, such as confidentiality, non-solicitation, non-competition and non-disparagement provisions, and returns all Vanguard owned property. 3. He or she meets any other eligibility provisions that may be required as a condition of receiving severance benefits. A crew member who voluntarily resigns or who fails to return from an approved leave of absence (including leaves of absence for medical reasons) is not eligible for severance benefits. A crew member whose employment is terminated under the following circumstances, is not eligible for severance benefits: 1. Termination for disciplinary reasons such as insubordination, misconduct, or violation of Vanguard policies or rules. 2. Before or after the termination of employment, it is determined that the crew member violated any: (i) terms or conditions of employment or (ii) Vanguard policies or rules. 3. Termination for willful failure to improve performance despite communication(s) from the crew member s manager or Crew Relations regarding the performance improvements needed. 4. Death, or termination after experiencing a physical or mental condition that started while employed and entitles the crew member to short term or long term disability benefits under a Vanguard plan or a government provided program (such as social security or workers compensation). 5. The crew member is offered employment by another Vanguard affiliate (U.S. or non- U.S.) or transfers employment to another Vanguard affiliate (U.S. or non-u.s.). Page 2 of 9

3 6. The crew member is eligible to receive severance or other separation benefits under any other agreement with Vanguard. PLAN BENEFITS An eligible crew member who: (i) has incurred an eligible termination of employment, (ii) Crew Relations has, in its sole discretion, determined is eligible for severance benefits, (iii) has signed a waiver and release of all claims, agreed in writing to other provisions that may be required, such as confidentiality, non-solicitation, non-competition and non-disparagement provisions, and returned all Vanguard owned property, and (iv) satisfied any other eligibility conditions that may apply, will be considered a Qualifying Crew Member. Absent a different determination by Crew Relations, Qualifying Crew Members will receive the standard package of severance benefits described below. Crew Relations may determine, in its sole discretion, to provide severance benefits in a greater or lesser amount (including no severance benefits) than the standard package of severance benefits: 1. Two Weeks Advance Notice, or Pay in lieu of Notice: Two weeks advance notice of termination of employment, or weekly base pay in lieu of some or all of such notice. Unlike all other severance benefits under the Plan, a Qualifying Crew Member does not need to sign a release to receive this advance notice/pay. 2. Severance Pay = cash payment based on completed Years of Service: Severance Pay equal to one week of weekly base pay for each completed Year of Service. A Year of Service is a full twelve months of service without rounding. Service starts on a Qualifying Crew Member s most recent date of hire by Vanguard and ends on the last day of employment. If the Qualifying Crew Member previously terminated and has been rehired by Vanguard, any prior period of Vanguard service will be added to the most current period. The starting date is shown on CrewNet as the hire date, or for rehires, the continuous service date on Workday. Weekly base pay is the weekly rate of base salary in effect immediately prior to termination of employment, excluding all extra pay such as performance and other incentive bonuses, partnership, overtime pay, commissions or other allowances. Severance Pay may be reduced by (i) severance pay previously paid under the Plan, (ii) amounts the crew member owes to Vanguard, (iii) amounts paid by Vanguard (or payable by the crew member) under all federal, state and local tax or other applicable laws, and (iv) amounts any crew member is entitled in connection with any statute, regulation or agreement that relates to notice, severance or separation benefits (including but not limited to the Worker Adjustment and Retraining Notification Act and any state or local statute concerning notice, severance or separation benefits). Severance Pay will be paid to a Qualifying Crew Member in a lump sum as soon as practical after such Qualifying Crew Member satisfies all the conditions under the Plan for such payment (e.g. signing the release of claims, etc.). Crew Relations may in its Page 3 of 9

4 sole discretion decide to instead pay such Severance Pay in regular payroll installments over a period not longer than 24 months from the date of termination. 3. Subsidy or Cash for COBRA. If a Qualifying Crew Member who is covered by a Vanguard health and/or dental benefit plan at termination of employment timely elects to continue such medical and/or dental coverage under COBRA, Vanguard will cover the cost of the full COBRA premium for three months for such Qualifying Crew Member and any covered dependents. (See the Benefit Plan SPD for more information on electing COBRA.) Alternatively, Crew Relations may in its sole discretion decide to instead pay the cost of such COBRA premiums to the Qualifying Crew Member in a taxable cash lump sum (even if he or she did not elect COBRA), without any gross up for taxes. Any cash will be paid at the same time as Severance Pay (described in 2 above). 4. Outplacement Services. Qualifying Crew Members will also receive outplacement services for up to a 3-month period following termination of employment. Crew Relations will determine, in its sole discretion, the specific outplacement program. The outplacement agency will contact Qualifying Crew Members with information about these services. If a Qualifying Crew Member dies before receiving all of the severance payments payable under the Plan, any remaining cash payments will be paid in a lump sum to the Qualifying Crew Member s beneficiary as determined by the Vanguard group life insurance plan. RESERVATION OF DISCRETION While the Plan provides the standard eligibility provisions that apply as well as the standard types and amounts of severance benefits payable under the Plan, both the Plan Administrator and Crew Relations retain the sole discretion to add to or waive Plan eligibility provisions at any time for any reason. Under the Plan, both the Plan Administrator and Crew Relations have the right (a) to establish additional eligibility requirements and conditions, (b) to determine that a terminated crew member who meets the eligibility criteria spelled out above is nonetheless not eligible, (c) to determine that a terminated crew member who does not meet the eligibility criteria, nonetheless is eligible, and (d) subject to certain guardrails set forth by ERISA and the Internal Revenue Code, to award severance benefits to a terminated crew member in a greater or lesser amount (including no severance benefits at all), in a different manner, or based on different specific circumstances, than provided for in the Plan. ERISA CLAIMS PROCEDURE First Level Claim. A terminated crew member does not need to apply for benefits under the Plan. However, if the terminated crew member (the Claimant ) (or his or her authorized representative) wishes to file a claim for benefits, the claim must be in writing and filed with the Plan Administrator (or its delegate) at the address provided below, and must be received by the Plan Administrator (or its delegate) within ninety (90) days after the effective date of Page 4 of 9

5 employment termination, or, if benefits have started, within ninety (90) days of any reduction or cessation of benefits. Decision Timeline for First Level Appeal. If the Plan Administrator (or its delegate) denies a claim in whole or in part, the Plan Administrator (or its delegate) will provide notice to the Claimant, in writing, within 90 days after the claim is filed, unless the Plan Administrator (or its delegate) determines that additional time is needed. If additional time is needed, the Plan Administrator (or its delegate) will give the Claimant written notice of the need for additional time prior to the end of the first 90-day period. The extension may not go beyond 90 days from the end of the first 90 day period and the notice must explain the special circumstances requiring more time as well as the date the Plan Administrator (or its delegate) expects to make the benefit decision. Notice of Denial of First Level Appeal. The written notice of a denial of a claim shall provide the Claimant the following information: 1. the specific reason or reasons for the denial; 2. the specific Plan provisions on which the denial is based; 3. any additional material or information necessary for the Claimant to perfect the claim and an explanation as to why such information is necessary; and 4. an explanation of the Plan s claims procedure and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on appeal. Appeal of Adverse Benefit Determinations. If the first level of appeal is denied, the Claimant (or his or her duly authorized representative) may request the Plan Administrator (or its delegate) to conduct a full and fair review of the claim and its denial. Such request must be sent in writing to the Plan Administrator (or its delegate) at the address provided below and such request must be sent within 60 days after receiving notice that the claim for benefits has been denied. The Claimant (or his or her duly authorized representative) may: 1. request a review upon written notice to the Plan Administrator (or its delegate) within 60 days after receipt of a notice of the denial of a claim for benefits; 2. submit written comments, documents, records, and other information relating to the claim for benefits; and 3. examine the Plan and obtain, upon request and without charge, copies of all documents, records, and other information relevant to the Claimant s claim for benefits. Decision Timeline for Appeal of Adverse Determination. The Plan Administrator (or its delegate) will provide a decision on the review not later than 60 days after receipt of a request for review, unless the Plan Administrator (or its delegate) determines that additional time is needed. If additional time is needed, the Plan Administrator (or its delegate) will give the Claimant written notice of the need for additional time prior to the termination of the first 60-day period. The extension may not go beyond 60 days from the end of the first 60 day period and Page 5 of 9

6 the notice must explain the special circumstances requiring more time for the decision as well as the date the Plan Administrator (or its delegate) expects to make the decision on review. Notice of Denial of Review. The written determination of the Plan Administrator (or its delegate) shall provide the Claimant the following information: 1. the specific reason or reasons for the decision; 2. the specific Plan provisions on which the decision is based; 3. the Claimant s right to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; and 4. a statement of the Claimant s right to bring a civil action under section 502(a) of ERISA. Claimants Must Follow Claims Procedure. No person may bring an action for any alleged wrongful denial of Plan benefits in a court of law unless these claims procedures are exhausted and a final determination is made by the Plan Administrator (or its delegate). If the Claimant or other interested person challenges a decision of the Plan Administrator (or its delegate), a review by the court of law will be limited to the facts, evidence and issues presented to the Plan Administrator (or its delegate) during the claims procedure set forth above. Facts and evidence that become known to the Claimant or other interested person after having exhausted the claims procedure must be brought to the attention of the Plan Administrator (or its delegate) for reconsideration of the claims determination. Issues not raised with the Plan Administrator (or its delegate) will be deemed waived. Time Limit For Legal Action. Any suit or legal action brought by a Claimant under the Plan must be brought by the Claimant no later than one year following the final determination by the Plan Administrator (or its delegate) regarding the claim for benefits under these claims procedures. The one-year statute of limitations on suits for benefits applies in any forum where a Claimant brings such suit or legal action. If a civil action is not filed within this one year period, the Claimant s benefit claim is deemed permanently waived and abandoned. Address for Claims and Appeals to Plan Administrator The Vanguard Group, Inc. Benefits Committee P.O. Box 876 Valley Forge, PA ERISA RIGHTS STATEMENT As a participant in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Plan participants shall be entitled to: Receive Information about Your Plan and Benefits Examine, without charge, at the Plan Administrator s office and at other specified locations, such as worksites and union halls, all documents governing the plan, including insurance contracts and collective bargaining agreements, and a copy of the latest annual report Page 6 of 9

7 (Form 5500 Series) filed by the plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The Plan Administrator may make a reasonable charge for the copies. Prudent Actions by Plan Fiduciaries In addition to creating rights for Plan participants ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called fiduciaries of the plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA. Enforce Your Rights If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that the Plan fiduciaries misuse the Plan s money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. Assistance with Your Questions If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, D.C You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publication hotline of the Employee Benefits Security Administration. Page 7 of 9

8 OTHER GENERAL ERISA INFORMATION 1. Plan Name: The Vanguard Group Inc. Severance Plan (also part of The Vanguard Group, Inc. Benefit Plan) 2. Plan Number: 506 (same plan number as The Vanguard Group, Inc. Benefit Plan) 3. Employer/Plan Sponsor: The Vanguard Group, Inc. Vanguard Marketing Corporation Vanguard Advisors, Inc. Vanguard Fiduciary Trust Company Vanguard National Trust Company 4. Employer Identification Number: Type of Plan: Employee Welfare Benefit Severance Pay Plan 6. Plan Administrator: The Vanguard Group, Inc. Benefits Committee P.O. Box 876 Valley Forge, PA Agent for Service of Legal Process: The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA Service of Process may also be made on the Plan Administrator. 8. Sources of Contributions: The Severance Plan is unfunded and all benefits are paid from the general assets of the Employer/Plan Sponsor. 9. Type of Administration: The Severance Plan is administered by the Plan Administrator. 10. Plan Year: January 1 through December 31 OTHER LEGAL NOTICES AND DISCLAIMERS While the Benefit Plan SPD also serves as a plan document for the other benefits described within the Benefit Plan SPD, there is a separate plan document for the Severance Plan. You have the right to request a paper copy of the Severance Plan document (reasonable fees may be charged for copying costs) by sending a written request to the Plan Administrator at The Vanguard Group, Inc. Benefits Committee Page 8 of 9

9 P.O. Box 876 Valley Forge, PA The Vanguard Group, Inc. (Vanguard) reserves the right, in its sole discretion, to amend, change, suspend or terminate the Severance Plan at any time and for any reason. Vanguard does not have any obligation to and nothing contained in this SMM or the Plan shall be construed as creating an express or implied obligation or promise on the part of Vanguard to maintain or continue to offer the Severance Plan. Eligibility for severance, including the receipt of severance benefits, does not constitute a promise or right of continued employment or render any person a crew member or employee of Vanguard. Page 9 of 9