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Larry Fink faces a proxy challenge to his dual role as chair and chief executive of BlackRock from a UK activist investor that wants more board oversight of the $10tn money manager’s approach to sustainable investing.
Bluebell Capital Partners, which has $120mn in assets, has put a binding resolution on the company’s annual proxy ballot that would amend the corporate bylaws to require an independent board chair.
The activists contended in a separate presentation that the 17-member board is too large and there has been “an unequivocal failure of BlackRock’s governance to provide independent oversight on the company’s management”. The vote will take place at company’s May 15 annual general meeting.
The challenge to Fink’s dual role comes as BlackRock has been under fire from multiple directions over its use of environmental, social and governance factors in investing. Republican politicians have targeted Fink as a symbol of what they refer to as “woke capitalism”, while progressive Democrats contend the money manager has failed to do enough to stop climate change.
The proxy also reported that Fink’s pay rose 9 per cent to $27.6mn last year. The package included $1.5mn in base salary, a $7.9mn cash bonus, $5mn in deferred equity and a $13.2mn long-term incentive award. Despite the increase, Fink’s pay remains below where it was in 2021 — it was cut 30 per cent last year to reflect declining profitability in volatile markets.
US companies have long been outliers in having their chief executives also serve as chairs of the board. But statistics from ISS-Corporate, the data affiliate of the proxy adviser, shows investor pressure for change. Last year, nearly 14 per cent of S&P 500 companies faced shareholder proposals to split the roles, up from 6 per cent in 2021. Support for the proposals has averaged about 30 per cent.
Demands for a separate chair have come up at companies where management is under scrutiny for other reasons. JPMorgan Chase shareholders rejected an attempt to create an independent chair in 2013 in the wake of $6bn in trading losses as a result of the “London Whale”. In 2020, BlackRock voted for a failed effort to split the CEO and chair roles at ExxonMobil because the company was failing to show a “sense of urgency” over climate change.
Murry Gerber has served as BlackRock’s lead independent director since 2017. Formerly chair and CEO of EQT, Gerber has been on the board since 2010 and had previously announced plans to step down. But BlackRock said last month that he would seek re-election for one more year to oversee the integration of BlackRock’s $12.5bn acquisition of Global Infrastructure Partners.
Bluebell does not publicly disclose its holdings, but co-founder Giuseppe Bivona said BlackRock is one of the largest of its 10 to 15 concentrated positions. It is also waging campaigns against Glencore, BP and Bayer. BlackRock’s market capitalisation is $188bn.
In 2022, Bluebell called for Fink to resign over what it called “apparent hypocrisy” of the asset manager’s positions on climate change and the use of ESG factors in investing.
In its recommendation to shareholders to vote down the proposal, BlackRock wrote that 54 of the 100 largest US public companies combined the chair and CEO role and another 14 had chairs that were not considered independent. BlackRock also said that Bluebell’s “contradictory criticisms are rooted in its disagreement with proxy voting decisions” by BlackRock on shareholder resolutions at other companies. BlackRock did not support Bluebell on resolutions at Glencore and Solvay.
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