BlackRock picked its battles in fierce proxy season

Fri Aug 31, 2012 1:44pm EDT
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By Ross Kerber

BOSTON (Reuters) - Funds run by BlackRock Inc (BLK.N: Quote) went along with management during high-profile proxy contests at JPMorgan Chase & Co(JPM.N: Quote) and Citigroup Inc(C.N: Quote), new filings show, limiting gains by dissident shareholders during the noisy spring proxy season.

But even as funds of New York-based BlackRock voted for the status quo at the banks, they dissented in other fights such as at Walt Disney Co(DIS.N: Quote) and Simon Property Group.(SPG.N: Quote)

BlackRock funds also raised the stakes when rejecting executive pay plans by adding votes "against" individual directors, unlike some rival funds.

BlackRock's approach "is not carpet-bombing, it's more smart-bombing," said Robert McCormick, chief policy officer for Glass, Lewis & Co., which advises institutional investors on proxy votes. "They're focusing their ire on the real outliers," he said.

As the world's largest asset manager, BlackRock's votes matter to the outcome of many corporate elections, which have taken on a new edge since the financial crisis. With $1.6 trillion of equity assets, out of $3.6 trillion in total, BlackRock potentially can sway a close proxy battle.

BlackRock Chief Executive Laurence Fink told companies at the start of the year his firm was "willing to support unconventional approaches" to governance so long as they serve shareholders.

Though final tallies are not available, votes shown in filings this week suggest BlackRock often gave executives the benefit of the doubt.

But its less-frequent votes against individual board members like those who sit on compensation committees can be even more powerful, said Paul Hodgson, chief research analyst at consulting firm GMI Ratings. The so-called "Say on Pay" votes now required by financial reforms are only advisory, while directors who lose elections often must step down.   Continued...

The BlackRock logo is seen outside of its offices in New York January 18, 2012. REUTERS/Shannon Stapleton