BlackRock, the world’s largest asset manager, has advised its own shareholders to vote against a shareholder proposal calling for it to rethink how it votes at company annual meetings on executive pay, saying it could threaten the independence of its in-house Stewardship Team.
The Stephen M. Silberstein Revocable Trust, a California-based trust linked to the retired software executive and philanthropist of that name, has called on BlackRock’s board to report to shareholders on the options for bringing its voting practices in line with its stated principle of linking executive compensation and performance.
It wants the firm, which has $4.6trn under management, to look at adopting changes to proxy voting guidelines, adopting best practices of other asset managers and independent rating agencies, and include a broader range of research sources and principles for interpreting compensation data.
The motion, in the firm’s new proxy statement, says that over the July 1, 2014-June 30, 2015 period, BlackRock approved 99% of CEO pay packages in the S&P 500. But the company – whose CEO Larry Fink iscampaigning against corporate short-termism – argues the resolution is unnecessary and not in the best interests of stockholders. It points out that its proxy voting decisions are made by a 20-strong independent team within its investment function: “The Stewardship Team undertakes proxy voting as its broadest form of engagement.” The team is headed by Michelle Edkins, Managing Director at BlackRock.
“We are concerned that the stockholder proposal, if implemented, would impose undue influence on our Stewardship Team by our Board of Directors,” it adds, saying engagement is at the core of the Stewardship Team’s function and is “the most effective method of building mutual understanding” with corporate management.
It’s also concerned the Silberstein resolution places undue emphasis on the team’s voting record and “jeopardize” its ability to engage with firms.
“Moreover, introducing the proposed level of intrusive oversight by BlackRock’s Board of Directors would place undue influence on the Stewardship Team and threaten the independence of its function.” BlackRock holds its AGM on May 25 in New York.