BlackRock flexes shareholder muscle and ups votes against company management
The world’s largest asset manager has toughened its stance on corporate governance and increased its votes against board proposals and executive pay at large public companies worldwide.
In its quarterly stewardship report published on Tuesday, BlackRock said it voted against management on 33 per cent of “say-on-pay” proposals in European companies in the year to the end of June – up from 26 per cent last year.
Its shareholder vote against higher executive pay in companies that had cut jobs and struggled during the pandemic marks a turn-up for the books at BlackRock, which has been criticised in the past for not taking enough action on ESG standards at the companies where it holds major shares.
This increase in opposition votes was “largely attributed” to BlackRock’s opposition to adjustments that companies made during the pandemic.
Such adjustments allowed them to give pay rises and bonuses to those at the top despite missing financial targets, laying off workers, or accepting government coronavirus support – as seen at UK supermarket Wm Morrison, where BlackRock voted against an executive pay hike.
“BlackRock opposed executive pay programmes when companies were not able to explain how these adjustments supported long-term, sustainable value creation for shareholders,” said Sandy Boss, global head of investment stewardship.
Boss has taken a more critical approach since joining BlackRock last year as the pandemic took hold and prompted a renewed focus on ESG factors among clients.
She has previously said in an interview that BlackRock has “made adjustments in our approach”, as clients began to cost climate change issues.
In today’s update, BlackRock said it supported 64 per cent of the environmental shareholder proposals it voted on.
The asset management titan also cited lack of boardroom diversity and a lack of director independence as reasons for votes against company management in the period.
Overall, BlackRock didn’t support management on 35 per cent of shareholder resolutions this year – almost double that of 2020. It also voted against almost two thirds of environmental proposals, up 11 per cent on last year.
“We’ve made adjustments in our approach,” Boss said in an interview, noting that executives are often more responsive as they factor in the costs of climate change.
However, in the US the approach on executive pay remained unchanged from last year, as BlackRock voted in favour of management in 95 per cent of say-on-pay proposals.
The tougher stance on executive pay comes a week after the asset manager announced it was providing its own employees with an “off-cycle” salary boost of 8 per cent for their work during the pandemic.