On shareholder vote reforms, BlackRock sits on the fence
By Ross Kerber
NEW YORK (Reuters) - BlackRock Inc <BLK.N> declined to back or reject a regulatory proposal to reform the shareholder resolution process in a long-awaited letter distributed on Thursday, seeking instead a middle ground on a hotly contested, politicized issue.
The letter provided by a spokesman for the world's largest asset manager was just one of thousands of comments filed with the U.S. Securities and Exchange Commission (SEC). These were due Monday, but so many were filed they caused a backlog on the agency's website and some were still appearing on Thursday.
Shareholder activists said their supporters filed a record number of critical comments against changes they worry would make it harder to bring attention to environmental, social and governance issues. Meanwhile, corporations supportive of the rule changes want them in order to streamline annual meetings.
Both sides had hoped that BlackRock -- with $7.4 trillion under management -- would support them before the SEC finalises the rule in or around March, especially after BlackRock Chief Executive Larry Fink said last month the company would focus more on climate issues.
But the company disappointed both sides.
"I think it would have been more to the point for BlackRock’s letter to have said simply: Dear SEC: We don’t have a clear position," Jon Hale, global head of sustainable investing research for Morningstar, who has previously criticized the rules, said in an email.
BlackRock Vice Chairman Barbara Novick did not directly address controversial ideas the SEC proposed in a November draft, such as raising the current ownership threshold of $2,000 worth of stock required to file some resolutions.
"Shareholder proposals can be a valuable part of an investment stewardship process, however, it should be acknowledged that the costs of these proposals are borne by all shareholders," Novick wrote.
A BlackRock spokesman did not respond to requests for comment on Thursday.
Among other big passive fund managers, Vanguard Group, in its own comment supported a longer holding period for investors looking to file proposals. A State Street Corp <STT.N> executive said in an interview last week the firm did not have a view on the matter. Some smaller active managers have criticized the reforms.
Richard Fields, a King & Spalding LLP attorney, said that in avoiding specifics in its SEC comments, "BlackRock has chosen to stay squarely on the fence." While BlackRock's clients may have a wide range of views on the proposals, "one might have assumed that Fink’s January letter would herald a more assertive posture," he added.
NEW VOTE DETAILS
Separately, BlackRock has begun to offer more details about its proxy votes, as it had pledged at the time of Fink's letter.
Among other things new disclosures on BlackRock's site showed it backed management at American Outdoor Brands Corp <AOBC.O> in September on several matters "upon engagement" with the gunmaker.
BlackRock also opposed executive pay at cosmetics company Coty Inc <COTY.N> in November as "not aligned with performance and peers."
And in September BlackRock opposed a shareholder measure on supply chain pesticides at food giant Kraft Heinz Co <KHC.O> as matters that "should be left to the board" absent demonstrable harm to investors.
A Kraft Heinz spokesman declined to comment. Coty representatives did not immediately comment.
A spokeswoman for American Outdoor, Elizabeth Sharp, did not provide details of its talks with BlackRock but said investor feedback helps it "better understand our stockholders' priorities and perspectives."
(Reporting by Ross Kerber; Additional reporting by Tim McLaughlin; Editing by Jonathan Oatis, Tom Brown and Daniel Wallis)