Tag Archives: BlackRock

BlackRock sets its priorities for board engagement

by Cydney Posner

Asset management firm BlackRock (reportedly the largest, with $5.1 trillion under management) has identified its “Investment Stewardship” priorities for 2017-2018, intended to help companies prepare for engaging with BlackRock. Among the hot topics are governance (including board composition and diversity), corporate strategy for long-term value creation in light of shifting assumptions, executive pay linked to long-term strategy, climate risk disclosure and human capital management.  According to BlackRock, its engagement process is designed to be constructive, and its goal is “to build mutual understanding and ask probing questions, not to tell companies what to do. Where we believe a company’s business or governance practices fall short, we explain our concerns and expectations, and then allow time for a considered response.” However, Blackrock’s approach is not limited to engagement; although, as a long-term investor, the firm will be “patient” as companies work to address concerns, in the absence of progress, BlackRock “will not hesitate to exercise our right to vote against management recommendations.” Continue reading

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Filed under Corporate Governance, Executive Compensation

BlackRock CEO’s annual letter asks companies to address impact of changes in global environment

by Cydney Posner

This year, in his annual letter to corporate CEOs, Laurence D. Fink, CEO of asset manager BlackRock, challenges companies to address the impact of significant political, economic, societal and technological changes on their current strategies for long-term value creation: “As BlackRock engages with your company this year, we will be looking to see how your strategic framework reflects and recognizes the impact of the past year’s changes in the global environment. How have these changes impacted your strategy and how do you plan to pivot, if necessary, in light of the new world in which you are operating?”

What are these changes?  To Fink, dramatic changes — such as Brexit, global upheaval and the new administration in the U.S. — could affect assumptions underlying many companies’ long-term strategic plans, such as plans for continued international expansion.  At “the root of many of these changes,” he contends, is the “growing backlash against the impact globalization and technological change are having on many workers and communities.” Although he continues to believe that, on balance, globalization provides benefits, “there is little doubt that globalization’s benefits have been shared unequally, disproportionately benefitting more highly skilled workers, especially those in urban areas.” In addition, technology, while creating new jobs for highly skilled employees, is eliminating millions of jobs for other workers, many of whom face “retirement with inadequate savings, in part because the burden for retirement savings increasingly has shifted from employers to employees.” The political and economic consequences of these dynamics, he asserts, “impact virtually every global company.” Continue reading

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Filed under Corporate Governance, Securities

BlackRock CEO asks companies to provide board-approved strategic framework for long-term value creation

by Cydney Posner

While Laurence D. Fink, co-founder and chief executive of BlackRock, has been decrying short-termism for a number of years, in his 2016 corporate governance letter to CEOs, he takes his advocacy a step further.  According to this DealBook column, the letter was sent to 500 chief executives late Monday. Continue reading

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Filed under Corporate Governance