Shareholder Proposals

Shareholder Proposals

Item 5 Shareholder Proposal — Proxy Voting Record on Executive Compensation

The Stephen M. Silberstein Revocable Trust (the “Proponent”), 29 Eucalyptus Road, Belvedere, CA 94920, the holder of 582 shares of common stock (according to information provided to BlackRock by the Proponent), has advised us that it intends to introduce the following resolution:

Whereas: BlackRock, like all investment managers, is responsible for voting proxies of companies in its portfolios. It has a fiduciary responsibility (or duty) to vote proxies in a responsible manner, including ensuring executive pay is sufficiently tied to performance and discourages excessive and unwarranted CEO pay.

From July 1, 2015 through June 30, 2016, BlackRock approved, with Its “Say on Pay” proxy votes, 99 percent of CEO pay packages In the S&P 500 companies. This level of support was higher than that of other investment managers; the average approval rating of 200 fund families surveyed was 89% percent support.

We find BlackRock’s voting record inconsistent with evidence on the ways CEO pay impacts corporation long term performance. BlackRock’s publication “Our Approach to Executive Compensation” states that it will oppose advisory votes in specific cases, including when: “We determine that compensation is excessive relative to peers without appropriate rationale or explanation, including the appropriateness of the company’s selected peers.”

The company has voted in favor of most executive compensation advisory votes (Say on Pay proposals). Yet, a report by As You Sow, The 100 Most Overpaid CEOS, shows that when viewed over the long term, growth in executive compensation of S&P 500 companies has generally outpaced performance.

Numerous academic studies, including Lucien Bebchuck’s “Pay Without Performance”, have shown a history of growing executive pay disconnected from company performance. Even when companies purport to link performance, in reality they often do not. For example, improved company performance is frequently determined by forces outside the executives’ control. Other analyses have highlighted weak performance targets, for example revenue growth merely equal to the inflation rate.

At BlackRock’s annual meeting on May 25, 2016, over 6 million shares were voted in favor of the Steven Silberstein trust proposal on proxy voting practices on compensation. The shares voted in favor of the proposal represented significant shareholder support. Among those that supported the proposal were pension the giants California Public Employees’ Retirement System and Ohio Public Employees Retirement System. Investment companies have a fiduciary responsibility to act in the best interest of their customers and an obligation to vote accordingly. It is not in the best interests of investors, or BlackRock’s shareholders, to have ever-escalating CEO pay, or even high CEO pay, at the companies in which they invest.

Resolved: Shareowners request that the Board of Directors issue a report to shareholders by December 2017, at reasonable cost, omitting proprietary information, which evaluates options for BlackRock to bring its voting practices in line with its stated principle of linking executive compensation and performance, including adopting changes to its proxy voting guidelines, adopting best practices of other asset managers and independent rating agencies, and including a broader range of research sources and principles for interpreting compensation data. Such report should assess whether and how the proposed changes would advance the interests of its clients and shareholders.

The Board’s Statement in Opposition

The Board believes that the actions requested by the Proponent are unnecessary and not in the best interests of our shareholders and unanimously recommends that you vote “AGAINST” this proposal for the following reasons:

BlackRock’s proxy voting decisions are made by its Investment Stewardship Team, a professional, independent team within the BlackRock investment function.

As a fiduciary to its clients, BlackRock has a duty to act in its clients’ best interests. Consistent with these duties, BlackRock has established a highly-regarded Investment Stewardship Team (the “Stewardship Team”), that numbers over 30 corporate governance professionals. The Stewardship Team undertakes all of its engagements with the goal of protecting and enhancing the long-term value of clients’ assets. BlackRock has designed reporting and oversight structures to seek to ensure that the Stewardship Team is independent, focuses on voting in our clients’ long-term economic interests, and is not influenced by BlackRock’s management and commercial interests.

BlackRock’s Stewardship Team’s voting guidelines, engagement priorities and reports provide a detailed description of its approach to analyzing and assessing compensation policies and outcomes, and are updated regularly to reflect governance practices that protect clients.

Engagement is at the core of the Stewardship Team’s function. The Stewardship Team believes engaging companies in a dialogue on governance matters, including executive compensation, is the most effective method for building mutual understanding with a company’s management and influencing behavior. The Stewardship Team assesses a range of factors that might affect the long-term financial sustainability of the companies in which we invest. The Stewardship Team’s voting guidelines, voting record, engagement priorities and reports are published on the BlackRock website at under the headings “About Us / Investment Stewardship” to provide companies, clients and the public with an indication of the corporate governance matters of most importance to the Stewardship Team, including compensation matters, and how it might vote on key items. Annually, the Stewardship Team reviews its proxy voting policies in light of corporate governance and proxy voting trends and its experience engaging with companies to seek to ensure its policies continue to reflect governance practices that protect the economic interests of our clients. Periodically, the Stewardship Team benchmarks its voting guidelines against those of peers and proxy advisors to check relevance, understand relative positioning, and identify market developments.

The Stewardship Team’s publication “Our Approach to Executive Compensation”, which is available at under the headings “About Us / Investment Stewardship / Guidelines, Reports and Position Papers”, describes in significant detail the Stewardship Team’s approach to executive compensation. As noted in the publication, the Stewardship Team expects companies to set out a compensation policy reflecting their strategic objectives and linking executive rewards to building shareholder value over time. The publication does not set forth a prescriptive position on structure, performance metrics or level of payouts. The publication and the voting guidelines do not state that the Stewardship Team will vote against compensation policies in all instances when the Stewardship Team determines that compensation is excessive as the Proponent suggests, nor is that the Stewardship Team’s approach to optimizing its engagement efforts.

When the Stewardship Team has concerns about a company’s compensation policies or practices, it will generally first identify its concerns to management or the board of such company, and encourage change rather than vote against compensation. If the company chooses not to engage, or should the Stewardship Team consider management’s or the board’s explanations on compensation outcomes unacceptable, the Stewardship Team will consider voting against compensation and against the re-election of the compensation committee members, who ultimately are responsible for determining the appropriate level of executive pay.

In 2016 BlackRock voted against “Say on Pay” proposals and/or directors on the compensation committee at approximately 20% of the top 50 companies identified by Equilar¹ as having the highest paid CEOs in the United States. In several of those cases where we voted against members of the Compensation Committee, “Say on Pay” was not up for a shareholder vote.


We received a nearly identical proposal from the Proponent last year. We engaged with the Proponent prior to last year’s annual meeting and in advance of this year’s meeting. We also engaged with many of our other shareholders prior to last year’s annual meeting and will do so again in advance of this year’s meeting. At our annual meeting last year nearly 133 million votes, representing over 95% of the votes cast, were cast against the Proponent’s proposal.

We do not believe that additional reporting on the Stewardship Team’s approach to compensation policies is warranted or would add value to our shareholders’ understanding of the Stewardship Team’s approach to compensation. We are also concerned that the shareholder proposal, if implemented, would place undue emphasis on the voting record of the Stewardship Team and jeopardize their ability to engage with companies on behalf of BlackRock’s clients. Moreover, introducing the proposed level of intrusive oversight by management or our Board over the Stewardship Team’s voting record would place undue influence on the Stewardship Team and threaten the independence of its function.

Board Recommendation

For the reasons stated above, the Board of Directors unanimously recommends that you vote “AGAINST” the shareholder proposal.

Item 6 Shareholder Proposal — Production of an Annual Report on Certain Trade Association and Lobbying Expenditures

The American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”), 815 16th St. NW, Washington DC 20006, the holder of 72 shares of common stock, has advised us that it intends to introduce the following resolution:

Whereas, we believe in full disclosure of our company’s direct and indirect lobbying activities and expenditures to assess whether our company’s lobbying is consistent with BlackRock’s expressed goals and in the best interests of shareholders.

Resolved, the shareholders of BlackRock request the preparation of a report, updated annually, disclosing:

  1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
  2. Payments by BlackRock used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
  3. BlackRock’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.
  4. Description of management’s and the Board’s decision making process and oversight for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which BlackRock is a member. Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels. The report shall be presented to the Audit Committee of the Board or other relevant oversight committees of the Board and posted on the company’s website.

Supporting Statement

As shareholders, we encourage transparency and accountability in BlackRock’s use of corporate funds to influence legislation and regulation. Transparent reporting of all lobbying activity will reveal whether company assets are being used for objectives contrary to BlackRock’s long-term interests.

According to the Center for Responsive Politics, BlackRock spent approximately $2.5 million dollars annually on federal lobbying expenditures in 2014 and 2015 ( These figures do not include lobbying expenditures to influence legislation in states or countries where BlackRock operates and disclosure requirements are uneven or absent. In addition, BlackRock does not disclose the dollar amounts of its payments to trade associations or the amounts used by these trade associations for lobbying.

For these reasons, we urge you to vote FOR this proposal.

The Board’s Statement in Opposition

The Board believes that the actions requested by the Proponent are unnecessary and not in the best interests of our shareholders and unanimously recommends that you vote “AGAINST” this proposal for the following reasons:


We believe that advocating for public policies that increase financial transparency, protect investors and facilitate responsible growth of capital markets is an important part of our responsibilities to our shareholders and clients. We provide extensive disclosure of our public policy engagement efforts, political activities and the decision-making and oversight associated with these efforts and activities on our website. The comment letters we file, policy papers published through our ViewPoints series and our Public Policy Engagement and Political Participation Policies statement can all be found on our website at We are also compliant with all lobbying and political contribution disclosure rules and regulations.

We review our public disclosure on our public policy engagements and political activities at least annually to ensure it accurately reflects our activities and policies and provides our shareholders with a clear understanding of our priorities. As part of our process we consider feedback from our shareholders and other stakeholders. Last fall and prior to our engagement with the proponent, we updated our disclosure to make clear that the contributions made by BlackRock’s political action committee were made without regard to the private political preferences of management and that we have compliance processes in place to ensure political activities at BlackRock are conducted in accordance with our policies and applicable law and regulations. We engaged extensively with this year’s proponent on the issues raised in its proposal and made additional enhancements and improvements to our disclosures as a result of this cooperative dialogue. These additional enhancements included identifying the principal trade associations in which we actively participate and providing links directly on our website to government websites reporting our federal lobbying activities and political contributions made by BlackRock’s political action committee.

We believe that our enhanced disclosures are responsive to the request made in the proposal. A report beyond what has been published on our website and required in our public filings would impose a significant additional administrative burden on the Company, but provide minimal additional information of value to BlackRock’s shareholders. As a result, we believe that adoption of the proposal is unnecessary and not in the best interest of BlackRock or our shareholders.

As detailed in our statement of Public Policy Engagement and Political Participation Policies on our website, BlackRock is committed to:

Full Transparency of Positions:

  • BlackRock comments on public policy topics through its ViewPoints publications, and comment letters and consultation responses to policy makers, which are available on the Company’s website.

Effective Oversight and Governance:

  • The head of BlackRock’s Government Relations and Public Policy team attends meetings of the Board’s Risk Committee and keeps Directors apprised of, and engaged in, the Company’s legislative and regulatory priorities and advocacy initiatives.
  • BlackRock’s Government Relations and Public Policy team coordinates the Company’s engagement with policy makers and advocacy on public policy issues.
  • The Government Relations and Public Policy team works closely with the Company’s business and legal teams to identify legislative and regulatory priorities that will protect investors, increase shareholder value and facilitate responsible economic growth.
  • As an asset manager, BlackRock focuses on issues that impact the asset management industry and the clients for whom we act as agent in managing assets.
  • BlackRock’s efforts are generally focused at the national level, rather than at a state-specific level.
  • As part of BlackRock’s engagement in the public policy process, the Company participates in a number of trade organizations and industry groups, examples of which are publicly disclosed.

Full Compliance with Restrictions on Political Contributions, and Filing and Disclosure Obligations:

  • In compliance with federal regulations, as well as applicable state and local law, BlackRock does not contribute corporate funds to federal, state or local candidates, political party committees, political action committees or any political organization exempt from federal income taxes under Section 527 of the Internal Revenue Code.
  • Although permitted under federal law, BlackRock does not spend corporate funds directly on independent expenditures, including electioneering communications.
  • BlackRock’s political action committee is funded voluntarily by employees and its contributions are publicly disclosed to the Federal Election Commission.
  • BlackRock publicly discloses all U.S. federal lobbying costs and the issues to which our lobbying efforts relate, on a quarterly basis, as required under the Lobbying Disclosure Act. BlackRock also makes such disclosures at the state or local level to the extent required to do so under applicable lobbying laws.

Board Recommendation

For the reasons stated above, the Board of Directors unanimously recommends that you vote “AGAINST” the shareholder proposal.

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