LONDON/BOOSTON (Businesshala) – BlackRock Inc. plans to give big customers more say on ballots cast at the company’s annual meetings, a move that some industry experts predicted could result in companies facing more opposition from rebellious shareholders. may have to face.
BlackRock — the world’s largest money manager with assets of $9.5 trillion — typically votes shares on behalf of investors in its fund, making it one of Wall Street’s most influential voices as corporate directors. Matters range from elections to climate change and workforce diversity.
Beginning next year, however, some institutional account holders will be able to vote for themselves about 40% of the $4.8 trillion in assets held in BlackRock’s equity index strategies, BlackRock said in a letter to clients.
Others can choose a third party voting policy and use BlackRock to submit votes.
The change could make it difficult for companies to proceed through their choices on shareholder votes because it would give more say to many institutional investors, who often have tougher corporate governance voting policies, such as large pension funds and endowments, said Matt DiGuseppe. Said Vice President of corporate governance software firm Diligent.
“I expect this to have a significant negative impact on the level of support that (the company’s) management receives,” DiGuseppe said.
Not all industry insiders agreed.
Bruce Goldfarb, president of proxy solicitor Okapi Partners LLC, said he expects the changes to have only a minor effect.
“I suspect that the policies of many investors in BlackRock-managed products are very different from those already laid out by BlackRock and well-crafted policies executed by its investment management team,” Goldfarb said.
In any case the move makes business sense for BlackRock, said James MacRitchie, a private investor who files multiple shareholder resolutions, as more investors see the social impact of their portfolios.
“More people are looking at their investments as an engagement mechanism, not just betting on winning alpha,” or higher returns, he said.
BlackRock said the option to cast shareholder votes in companies will be offered in certain index strategies held in separately managed accounts and in some pooled funds in the UK and the United States.
“These options are designed to enable you to speak as much as possible in proxy voting, if that’s important to you,” BlackRock’s letter said. According to the letter, BlackRock aims to add voting options to more investment products.
The huge boom in low-cost index funds has caused BlackRock to often own 5% or more of top corporations. The firm and its rivals have traditionally touted the recommendations of companies over shareholder votes, although this is beginning to change.
Under a new leadership head this year, BlackRock opposed directors and supported climate proposals more often, though it continued to support management at US companies 95% of the time.
University of Pennsylvania law professor Jill Fish praised BlackRock’s changes for allowing pension funds and other large asset owners to have more say on corporate decisions, and said rival fund managers are at least in a similar direction to US investors. can proceed.
“Big asset managers try to do a good job, but they’re not the people I want to run the country,” Fisch said.