BlackRock's Fink tells S&P 500 firms to think long-term

Tue Apr 14, 2015 5:07pm EDT
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By Jessica Toonkel

NEW YORK (Reuters) - BlackRock Inc chief Larry Fink has asked the top executives of the 500 largest publicly listed U.S. companies urging them to take a long-term approach to create value for shareholders or risk losing his firm's support.

In a letter to the chief executive officers of the Standard & Poor's 500 Index, Fink asked the companies to avoid short-term pressures created by the increasing activist shareholder activity of recent years.

"It is critical ... to understand that corporate leaders' duty of care and loyalty is not to every investor or trader who owns their companies' shares at any moment in time, but to the company and its long term owners," Fink wrote in the letter, dated March 31.

BlackRock is the world's largest asset manager. At the end of 2014, it had $4.65 trillion of assets under management.

In 2014, dividends and buybacks in the United States totaled $900 billion, the highest ever, according to the letter. Through March, buyback authorizations totaled $257 billion, the fastest start to any year on record, according to Birinyi Associates.

Many market analysts expect that a rise in interest rates will not derail the buyback boom bolstering stocks.

The company made Fink's letter available to Reuters after The New York Times first reported on the document on Monday evening, ahead of the company's scheduled release of first-quarter results on Thursday.

Given the low interest rate environment, such moves "send a discouraging message about a company's ability to use its resources wisely and develop a coherent plan to create value over the long-term," Fink wrote   Continued...

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