Management Proposal – Amendment to Bylaws to Implement Proxy Access

Management Proposal – Amendment to Bylaws to Implement Proxy Access

The Board is recommending that stockholders approve an amendment to our Amended and Restated Bylaws to implement “proxy access” (the “Amendment”). In October 2015, the Company announced its intention to submit a proxy access bylaw amendment to stockholders for approval at the Annual Meeting. Proxy access allows eligible stockholders to include their own nominees for director in the Company’s proxy materials for an annual meeting of stockholders, along with the candidates nominated by the Board. The Board’s decision to seek stockholder approval of the Amendment reflects its continuing commitment to consider the views of the Company’s stockholders. The Amendment would become effective upon the required approval by our stockholders. The Board believes that the Amendment includes requirements and provisions designed to provide meaningful rights of proxy access to long-term stockholders of BlackRock who have full economic interest in our shares while reducing risks of abuse.

Description of the Proposed Amendment

The following description of the proposed Amendment is only a summary and is qualified in its entirety by reference to the complete text of the Amendment, which is attached to this Proxy Statement as Annex A. You are urged to read the Amendment in its entirety. If the Amendment is approved by stockholders, the Board expects to adopt certain technical and conforming amendments to the advance notice provisions in the bylaws.

Eligibility of Stockholders to Nominate up to 25% of our Directors

Any stockholder or group of up to 20 stockholders who have maintained continuous qualifying ownership of at least 3% of the shares of the Company’s outstanding Common Stock for at least the previous three years would be permitted to include a specified number of director nominees in the Company’s proxy materials for its annual meeting of stockholders. For purposes of the 20-stockholder limit, any two or more funds under common management and investment control or that meet certain other requirements would count as one stockholder.

The maximum number of candidates nominated by all eligible stockholders that the Company would be required to include in the Company’s proxy materials is 25% of the number of directors in office as of the last day on which a notice of proxy access nomination may be delivered to the Company. If the 25% calculation does not result in a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 25%. If one or more vacancies occur on the Board and the Board decides to reduce the size of the Board in connection with the annual meeting, the nominee limit would be calculated based on the reduced number of directors. Any stockholder- nominated candidate who is either subsequently withdrawn or included by the Board in the Company’s proxy materials as a Board-nominated candidate would be counted against the nominee limit, as would any director who was a proxy access nominee for any of the two preceding annual meetings whom the Board decides to nominate for re-election to the Board. No stockholder-nominated candidates would be included in the Company’s proxy materials in the event any stockholder has provided notice of a director nomination under the advance notice provision of our bylaws.

Any nominating stockholder who submits more than one nominee would be required to rank its proposed nominees. If the number of stockholder-nominated candidates exceeds the nominee limit, the highest ranking individual from the list proposed by each nominating stockholder, beginning with the nominating stockholder with the largest qualifying stock ownership and proceeding through the list of nominating stockholders in descending order of qualifying stock ownership, would be selected for inclusion in the proxy materials until the nominee limit is reached.

Calculation of Qualifying Ownership

In order to ensure that the interests of stockholders seeking to include director nominees in the Company’s proxy materials are aligned with those of other stockholders, a nominating stockholder would be deemed to own only those shares of outstanding Common Stock of the Company as to which the stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares. Borrowed or hedged shares would not count as “owned” shares for purposes of the Amendment.

A stockholder will be deemed to “own” shares of outstanding Common Stock that have been loaned by or on behalf of the stockholder to another person if and only if the stockholder has the right to recall such loaned shares on five business days’ notice and agrees to recall the loaned shares promptly upon being notified that any of its nominees will be included in the Company’s proxy materials. A stockholder also will be deemed to own shares of Common Stock held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted in the election of directors and possesses the full economic interest in the shares.

Nominating Procedures

In order to provide adequate time to assess stockholder-nominated candidates, requests to include stockholder- nominated candidates in the Company’s proxy materials must be delivered to or mailed and received at the Company’s principal executive offices no earlier than 150 days and no later than 120 days before the first anniversary of the date that the Company distributed its proxy statement to stockholders for the previous year’s annual meeting of stockholders.

Information Required of All Nominating Stockholders

Each stockholder seeking to include a director nominee in the Company’s proxy materials would be required to provide certain information to the Company, including:

  • verification of, and information regarding, the stockholder’s ownership of shares of the Company’s Common Stock as of the date of the submission of the nomination and continuous qualifying ownership through the record date for the annual meeting;
  • the information required by the advance notice of nomination provisions of the Company’s Amended and Restated Bylaws;
  • a copy of the stockholder’s notice on Schedule 14N that has been filed with the SEC; and
  • the written consent of the stockholder nominee to being named in the Company’s proxy materials and serving as a director, if elected.

Nominating stockholders also would be required to make certain representations to and agreements with the Company, including:

  • lack of intent to change or influence control of the Company;
  • intent to maintain qualifying ownership through the annual meeting date;
  • refraining from nominating any person for election to the Board other than the stockholder’s nominees submitted through the proxy access process;
  • engaging and/or participating only in the solicitation of the stockholder’s nominees or Board nominees;
  • not distributing any form of proxy for the annual meeting other than the form distributed by the Company;
  • complying with solicitation rules and assuming liabilities related to and indemnifying the Company against losses arising out of the nomination; and
  • the accuracy and completeness of all facts, statements and other information provided to the Company.

Information Required of All Stockholder Nominees

Each stockholder nominee would be required to make certain written representations to and agreements with the Company, including:

  • refraining from voting agreements or commitments to act or vote as a director on any issue or question that has not been disclosed to the Company;
  • not becoming a party to any compensatory, reimbursement or indemnification arrangements with a person or entity other than the Company in connection with such nominee’s candidacy for director or service or action as a director that has not been disclosed to the Company; and
  • complying with applicable laws, stock exchange requirements and the Company’s policies and guidelines applicable to directors.

Stockholder nominees also would be required to submit completed and signed questionnaires required of the Company’s directors, and provide any additional information required for the Board’s independence evaluation and determination.

Exclusion of Stockholder Nominees

The Company would not be required to include a stockholder nominee in the Company’s proxy materials if:

  • the nominee is not independent under any applicable independence standards;
  • the election of the nominee would cause the Company to violate its Amended and Restated Bylaws or Amended and Restated Certificate of Incorporation, any stock exchange requirements or any other applicable laws, rules or regulations;
  • the nominee has been an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, within the past three years;
  • the nominee is the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in a criminal proceeding within the past ten years; or
  • the nominee has provided false or misleading information to the Company.

The Board or the chairman of the annual meeting would declare a director nomination by a stockholder to be defective, and such nomination would be disregarded, if (i) the director nominee or the stockholder breaches any of their respective obligations under the Amendment or (ii) the stockholder does not appear at the annual meeting in person or by proxy to present the nomination.

Future Disqualification of Stockholder Nominees

Any stockholder nominee who is included in the Company’s proxy materials but subsequently withdraws from or becomes ineligible for election at the annual meeting, or does not receive at least 25% of the votes cast in favor of his or her election, would be ineligible for nomination for the next two annual meetings.

Supporting Statement

Nominating stockholders would be permitted to include in the Company’s proxy statement for the applicable annual meeting a 500-word statement in support of their nominee(s). The Company may omit any information or statement that the Company, in good faith, believes would violate any applicable law or regulation, including by being materially false or misleading.

Board of Directors Recommendation

The Board of Directors recommends a vote “FOR” the bylaw amendment to implement proxy access.

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