BlackRock's newly released "2020 Investment Stewardship Annual Report" - which captures its investment stewardship activities for the 12 months ended June 30 - reveals a plethora of noteworthy statistics, engagement examples, and instructive commentary that should help inform companies' engagement and disclosure going forward.
Key takeaways include:
- Management support: Of 34,755 proposals voted at 4,190 meetings in the US, BlackRock voted against management's recommendations on 7% of proposals. Stated differently, it voted against one or more management recommendations at 30.5% of meetings voted. By management proposal type, votes against management were highest on election of directors and anti-takeover and related proposals.
- Shareholder proposals: BlackRock supported 19% of 27 environmental proposals, 14% of 369 governance proposals, and 8% of 84 social proposals, in the US.
- Board diversity: Insufficient progress on board diversity reportedly was the predominant reason for BlackRock's votes against directors in the US. BlackRock lobbed 1,367 votes against directors at 749 companies based on diversity-related concerns in the Americas region.
- Overboarding: BlackRock's votes against directors for overboarding (page 4) increased to 728 this year, up from 430 two years ago. It also has continued to ramp up its votes against overboarded CEOs (116 votes this year compared to 70 two years ago), having reduced the threshold for outside directorships to no more than one public company board outside the CEO's own company.
- Compensation: BlackRock's votes against compensation committee members were highest at US companies, having voted against directors for poor pay practices at 84 companies - up from 74 and 60 the prior two years, respectively.
- Sustainability: There was a nearly 140% increase in companies publishing SASB-aligned reports so far in 2020 over calendar year 2019, of which 40% are based outside the US.
- HCM: BlackRock engaged 750 companies globally on human capital management this year - representing a dramatic 187% increase year-over-year.
- Activism: BlackRock supported directors nominated by activist shareholders 33% of the time in the 15 campaigns (primarily in the US) that went to a vote, which reportedly is on par with its past voting in activist situations.
The report includes a list of companies BlackRock substantively (more than just a letter) engaged.
See Davis Polk's briefing; this Pensions & Investments article; our recent reports: "BlackRock Keenly Focused on Portfolio Company "People" Practices" and "BlackRock Votes Climate Policy"; and additional information & resources on our Institutional Investors page. This post first appeared in the weekly Society Alert!