From Liz on TheCorporateCounsel.net, here is a short summary of BlackRock Investment Stewardship’s 27-page summary of the 72-page “Voting Spotlight” that it published last week.
The reports detail the asset manager’s engagement & proxy voting stats, its rationale for voting decisions, and its ambitions for the BlackRock Voting Choice program. BlackRock makes sure to note that its core focus continues to be long-term, durable financial performance and that it highly values discussions that come from engagements. Based on the voting results this year, it seems that these conversations have been a valuable use of company & director time.
BIS doesn’t rely on the recommendations of proxy advisors – it follows its own policies. So, what voting outcomes did those policies & engagements yield this year? Here’s an excerpt from page 12 of the Spotlight:
Our voting in support of management was largely consistent with the prior proxy year: globally we voted in support of 90% of directors standing for election and for all items on the agenda at 57% of shareholder meetings (also 57% last year). This year, BIS was more supportive of management in the Americas and EMEA, where companies have made significant progress on the governance and sustainability matters that inform our voting.
In the Americas, we were more supportive of directors as companies made substantial improvements in board diversity; we did not support the election of 4% of directors (6% last year) for lack of board diversity.
In both the Americas and EMEA, we were also more supportive of companies with material climate risk in their business models as they improved their climate action plans and disclosures, voting to signal concern at 155 companies (264 last year).
BIS centers our stewardship work in corporate governance. In our experience, sound governance, in terms of both process and practice, is critical to the success of a company, the protection of shareholders’ interests, and long-term shareholder value creation. That is why board quality and effectiveness remain a top engagement priority, and a key factor in the majority votes cast on behalf of clients. Like last year, our leading reasons for not supporting director elections — and management proposals more broadly — were governance-related: 1) lack of board independence, 2) lack of board diversity, 3) directors having too many board commitments and 4) executive compensation that was not aligned with company strategy or long-term performance.
Recently, BlackRock has been criticized for not supporting every shareholder proposal in environmental and social (E&S) areas. As they have done in the past, the firm explained their perspective:
…in the U.S. we saw a 133% increase in the number of environmental and social (E&S) shareholder proposals, many of them more prescriptive than in prior years, enabled by changing guidance by the U.S. Securities and Exchange Commission (SEC). Further, many climate-related shareholder proposals sought to dictate the pace of companies’ energy transition plans despite continued consumer demand, with little regard to company financial performance. Other proposals failed to recognize that companies had largely already met their ask.
In our voting on behalf of clients, BIS supported 24% of E&S shareholder proposals in the U.S. this year, down from 43% last year, reflecting how these factors made these proposals less supportable in the 2021-22 proxy year. As ever, BIS took a case-by-case approach and voted to advance our clients’ long-term financial interests.
