BlackRock, the world’s largest asset manager, is for the second year opposing a shareholder resolution calling for it to look at how it votes on executive pay at company annual meetings.
The resolution has been filed by the Stephen M. Silberstein Revocable Trust, which is the investor which last year gained support for a similar resolution at BlackRock from the likes of PGGM, CalPERS and the Ohio Public Employees Retirement System.
Dutch pension investment giant PGGM even went so far as to conduct an analysis of BlackRock’s voting in the context of the Silberstein resolution, in which it criticised what it termed a “mismatch” between BlackRock’s stated ambitions on ESG topics like climate change and its actual voting decisions at company AGMs.
The trust’s proposal this year calls for a report which “evaluates options” for BlackRock to bring its voting practices “in line” with its stated principle of linking executive compensation and performance. The report should also look at potentially “adopting changes to its proxy voting guidelines, adopting best practices of other asset managers and independent rating agencies, and including a broader range of research sources and principles for interpreting compensation data”.
The report should also “assess whether and how the proposed changes would advance the interests of its clients and shareholders”.
The filing claims that for the year to June 30 2016 the fund giant backed 99% of CEO pay packages at S&P 500 companies – “higher than that of other investment managers”.“We find BlackRock’s voting record inconsistent with evidence on the ways CEO pay impacts corporation long term performance,” the resolution states.
The Financial Times has reported that BlackRock’s chairman and CEO Larry Fink was awarded a $25.5m pay package in 2016, a year in which the paper said it “laid off some of its employees and campaigned against excessive executive pay”.
BlackRock, explaining its opposition to the Silberstein proposal, says that when its Stewardship Team has concerns about a company’s compensation policies or practices, it will generally first identify its concerns to management or the board and “encourage change rather than vote against compensation”.
If the company doesn’t engage the team will consider voting against compensation and against the re-election of the compensation committee members, who ultimately are responsible for determining the appropriate level of executive pay.
It adds that in 2016 BlackRock voted against “Say on Pay” proposals and/or directors on the compensation committee at approximately 20% of the top 50 companies identified by Equilar as having the highest paid CEOs in the US.
The company added that it is concerned that, if implemented, the proposal would place “undue emphasis” on the team’s voting record and jeopardize its ability to engage with companies on behalf of clients.
BlackRock, which holds its AGM in New York on May 25, is also facing a proposal on lobbying expenditures from union group the AFL–CIO. BlackRock proxy