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Vanguard founder will retire from board

The mutual fund company denies a policy dispute, saying John Bogle's age makes his resignation mandatory.

John C. Bogle said Thursday he had hoped Vanguard Group would make an exception for him _ the company's founder and spiritual leader _ when it came to the mandatory retirement age of 70.

But the company's directors are saying no. Rules are rules. Even for the man who built Vanguard into the country's second-largest mutual fund company by preaching the gospels of indexing and low-cost investing.

Bogle, who turned 70 in May, will step down from the Valley Forge, Pa., company's board of directors by year end to comply with a Vanguard policy that all directors retire in the year they turn 70.

The news brought to light an apparent rift between Bogle and his hand-picked successor, 45-year-old John Brennan, and the rest of the directors of the nearly $500-billion fund company.

Company officials insisted Thursday that Bogle's retirement from the board had been expected for some time. They had said in interviews as early as last spring that Bogle would be going.

That came as news to Bogle.

"How did everybody know that because I didn't know that myself?" Bogle said, speaking from his Lake Placid, N.Y., vacation home. "This decision as far as I know has not been made, but I think everyone expects it to be made."

He would not say whether he had asked the board to make an exception for him. None of the board members contacted Thursday would comment.

Michael Miller, a Vanguard managing director in charge of planning and development who is not a board member, said the rule applied to Bogle just as it had to every other director.

"My understanding is this issue has been discussed at the board level this year, and it's my understanding that the mandatory retirement policy will apply to Jack Bogle and that it will apply this year," Miller said.

Brennan was on vacation and could not be reached for comment. He rose to chief executive in 1996 while Bogle was hospitalized prior to receiving a heart transplant. Brennan took over as chairman of the board in 1998 when Bogle moved up to senior chairman.

Until recently, news stories have portrayed the transition from Bogle to Brennan as smooth. Brennan often quotes Bogle in interviews. Bogle has taken pains to correct reports that he has disagreed with Brennan's initiatives, including expanding the company's mutual fund supermarket and discount brokerage.

Despite the verbal minuets that occurred on both sides Thursday, Bogle and Vanguard said he would continue to work for the company after he leaves the board.

Neither Bogle nor Miller would specify what Bogle's role would be.

Even though Brennan has been running the company for the last three years, Bogle is still the personification of Vanguard.

The vigorous, Princeton-educated executive has evolved into the role of industry conscience _ or, some say, industry scold _ reminding audiences at investing conferences that mutual fund costs should be lower and standards higher. Vanguard may continue to capitalize on that image in Bogle's new job, industry observers said.

"There's no question that he's the father of indexing. There's no question that he made investors aware of the effects of costs on performance," said Burton Greenwald, a Philadelphia fund consultant.