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BlackRock’s shareholders are being urged to vote against chief executive Larry Fink’s pay at the group’s upcoming annual meeting, setting up a tense remuneration vote at the world’s biggest asset manager for the second year in a row.
Proxy adviser Institutional Shareholder Services said the $11.6tn asset manager had fallen short in addressing shareholder concerns over executive pay, despite the group suffering a revolt against remuneration last year. BlackRock’s board added disclosures in response, but these “provide limited additional insights into pay determination”, leading ISS to conclude support for this year’s proposal was “not warranted”.
While BlackRock’s shareholder returns have been strong, ISS’s recommendation on Monday means the group faces another difficult vote on Fink’s remuneration at its May 15 shareholder meeting. BlackRock won just 59 per cent support for its pay last year. While pay votes in the US are typically nonbinding, they send a message to company boards about investors’ discontent.
According to ISS, Fink’s pay is closer to $36.7mn versus the $30.1mn the company disclosed. By “adjusting for the lag in equity grant reporting”, Fink’s awards increased by about 33 per cent from 2023, ISS said.
“BlackRock has a long-standing pay-for-performance culture,” a spokesperson for the company said in a statement. “We value the opinion of our shareholders and look forward to continued engagement.”
While ISS voting recommendations sway investor votes, they are not definitive when they go against a company. Goldman Sachs shareholders last week approved executive bonuses despite recommendations against the packages from ISS and rival Glass Lewis. Still, Goldman only won 66 per cent support for pay.
ISS also raised concerns with a new carried interest pay programme that BlackRock launched in February. Like Goldman earlier this year, the BlackRock chief’s bonus will include the new award, entitling Fink to a share of the profits generated by the group’s private markets funds for generating growth in this segment.
Although this new bonus is not relevant for this year’s pay vote, “[it] will likely add pay programme complexity, particularly in light of the long-term outlook of proxy pay disclosure and uncertainty of pay outcomes”, ISS said. “There is no indication that this new incentive is intended to offset a portion of current pay opportunities.”
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