BlackRock's voting record clashes with CEO's tough talk on buybacks

Thu Aug 4, 2016 7:13am EDT
 
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By Ross Kerber

BOSTON (Reuters) - When Adam Kanzer wanted to stop the board of 3M Co MMM.N from including the lucrative impact of share buybacks in their chief executive's pay, he quoted Laurence Fink.

Sitting atop the world's largest investment fund manager, BlackRock Inc (BLK.N: Quote), Fink is a vocal critic of companies’ excessive use of share buybacks. The practice is happening at a rapid clip among S&P 500 companies and according to critics is helping boost shareholder returns – and bosses’ pay – to the detriment of long-term growth.

Kanzer, who is managing director of Domini Social Investments, channeled Fink at the top of his firm's resolution to the 3M MMM.N board, quoting his warning that large buybacks send "a discouraging message about a company’s ability to use its resources wisely."

It didn't help. The resolution failed with 94 percent of shares cast voting against it. Shares held by BlackRock, 3M's third-largest investor with a 5.7 percent stake in the maker of Post-it notes and Scotch tape, according to its proxy, apparently were not supportive.

Despite their CEO's strong views, funds run by BlackRock side with company management on questions tied to stock buybacks most of the time, according to filings analyzed by research firm Proxy Insight for Reuters.

BlackRock is not alone. Large asset managers like Fidelity Investments and State Street Corp STT.N have a similar voting record on the matter, according to the analysis.

But Fink's exhortations and BlackRock's size make its voting record stand out.

In the last three years, Fink has made his concerns about buybacks a top theme of an annual letter to other CEOs stressing the importance of companies investing for the long term. His views have been carried widely in the financial press and echoed by U.S. presidential hopeful Hillary Clinton.   Continued...

 
The BlackRock logo is seen outside of its offices in New York January 18, 2012. B REUTERS/Shannon Stapleton/File Photo    GLOBAL BUSINESS WEEK AHEAD PACKAGE - SEARCH "BUSINESS WEEK AHEAD JULY 11" FOR ALL IMAGES - RTSHAA8