BlackRock Declares Independence from Proxy Advisors

Marty Lipton and David Karpview view as “significant” the announced effort by BlackRock Inc., which invests over $3.345 trillion of client assets, to take a direct interest in the governance of the companies in which they invest. According to this 1/21/2012 post, Disintermediating the Proxy Advisory Firms, at the Harvard corpgov blog:

BlackRock CEO Larry Fink recently sent a letter to 600 companies which constitute some of the largest holdings in BlackRock portfolios. In the letter, BlackRock advises these companies to engage with BlackRock to address potential governance issues prior to engaging with proxy advisory firms. BlackRock encouragingly offers a “fair, respectful and in particular, open minded airing of views” in which it is “willing to support unconventional approaches as long as they can be expected to serve the interests of long-term shareholders.” In his letter, Fink specifically states that BlackRock reaches its proxy voting decisions independently of proxy advisory firms on the basis of internal guidelines that are “pragmatically” applied.

We commend BlackRock’s leadership in recognizing the importance of a longterm investment perspective in corporate governance. This perspective is critical to generating sustainable value not only for those who entrust BlackRock to invest their savings, but also for corporate America and our economy as a whole.

How is this any different than how BlackRock has been approaching proxy voting for years? To my knowledge, they have never slavishly followed recommendations of proxy advisors. Anyone have additional information? Speaking to a BlackRock employee this morning; they don’t know what’s changed… maybe a more active press office.

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