Executive Compensation

Executive Compensation

Item 2 Approval, in a Non-Binding Advisory Vote, of the Compensation for Named Executive Officers

We are asking our shareholders to approve the compensation of our named executive officers as disclosed in this Proxy Statement.

While this vote is advisory, and not binding on the Company, it will provide information to our Board and the Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices. Our Board and the Compensation Committee value the opinions of our shareholders and, to the extent there is any significant vote against the compensation of NEOs as disclosed in this Proxy Statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

Before You Vote

In considering your vote, we encourage shareholders to review the information on BlackRock’s compensation policies and decisions regarding the NEOs presented in the discussion regarding the Compensation Committee on page 65, as well as “Compensation Discussion and Analysis” beginning on page 46.

Our pay-for-performance compensation philosophy is structured to align management’s interests with our shareholders’ interests. A significant portion of total compensation for executives is closely linked to BlackRock’s financial and operational performance as well as BlackRock’s common stock price performance. BlackRock has adopted strong governance practices for its employment and compensation programs. Compensation programs are reviewed annually to ensure that they do not promote excessive risk taking.


Board Recommendation

The Board of Directors recommends you vote “FOR” the approval of the compensation of our NEOs.

Management Development and Compensation Committee Report

Management Development and Compensation Committee Report on Executive Compensation for Fiscal Year 2017

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

MEMBERS OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

Ivan G. Seidenberg, Chair
Jessica P. Einhorn
Murry S. Gerber
James Grosfeld
Cheryl D. Mills
Gordon M. Nixon
Marco Antonio Slim Domit

Compensation Discussion and Analysis

BlackRock’s executive compensation program is designed to align management incentives with the long-term interests of our shareholders. Our total annual compensation structure embodies our commitment to align pay with performance. This Compensation Discussion and Analysis (“CD&A”) provides shareholders with information about BlackRock’s business and 2017 financial performance, our disciplined compensation approach and 2017 compensation decisions for our NEOs, listed below.

Laurence D. Fink
Chairman and Chief Executive Officer (“CEO”)
Robert S. Kapito
President
Robert L. Goldstein
Chief Operating Officer (“COO”)
Mark S. McCombe
Head of Americas
Gary S. Shedlin
Chief Financial Officer (“CFO”)

Table of Contents

Shareholder Engagement on Executive Compensation

Our Board recognizes the importance of executive compensation decisions to our shareholders. The annual say-on-pay advisory vote provides our shareholders with the opportunity to:

  • evaluate our executive compensation philosophy, policies and practices;
  • evaluate the alignment of the compensation of BlackRock’s NEOs with BlackRock’s results; and
  • cast an advisory vote to approve the compensation of BlackRock’s NEOs.

At the 2017 Annual Meeting of Shareholders, the say-on-pay advisory vote received majority support, with 90% of the votes cast in favor of our executive compensation. Our Board encourages an open and constructive dialogue with shareholders on compensation to ensure alignment on policies and practices.

The Compensation Committee considered shareholder input when it designed the CEO and President compensation framework as well as the BPIP Awards and the December 2017 grants of performance-based stock options.

As in prior years, we engaged shareholders in advance of this year’s annual meeting to incorporate their views as we continue to enhance our compensation programs.

BlackRock Shareholder Value Framework

BlackRock is committed to delivering long-term shareholder value. While our financial results can be affected by global capital market conditions that are beyond our control, management has the ability to influence key drivers of shareholder value.

As described below, BlackRock’s framework for long-term value creation is based on our ability to:

  • Generate differentiated organic growth;
  • Use our scale to deliver operating leverage; and
  • Return capital to shareholders on a consistent and predictable basis.

BlackRock’s commitment to delivering shareholder value is aligned with the way we manage our business. By putting clients’ interests first and delivering investment, risk management and technology solutions to help meet their objectives, we are able to build our business by adding new assets under management (“AUM”) and growing risk management and technology offerings, resulting in Organic Revenue growth.(1)

BlackRock’s scale is one of the firm’s key strategic advantages and is an important driver of operating leverage that benefits clients and shareholders. We take advantage of scale in numerous areas of our business including through our index-based investment strategies, brand spend, technology platform, including our Aladdin business and our external vendor relationships.

Investing for the long-term is a key element of our strategy. Our diversified platform, in terms of styles, products, client types and geographies, enables stable cash flow through market cycles, positioning BlackRock to invest for future growth and consistently return capital to our shareholders. For more details, refer to “Business Outlook” on page 34 of our 2017 Form 10-K.

During 2017, we returned $2.8 billion to our shareholders through a combination of share repurchases and dividends.

1 Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net new Aladdin revenue, excluding the effect of market appreciation/(depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in such given year.

BlackRock 2017 Performance(1)

The strength of BlackRock’s 2017 results reflect the long-term strategic advantages we have created by consistently investing in our business. Full-year results reflected industry-leading organic growth, with record full-year net inflows of $367 billion, continued Operating Margin expansion and consistent capital management. Investment performance results across our alpha-seeking and index strategies as of December 31, 2017 remain strong, and are included in Item 1 of our 2017 Form 10-K.

Differentiated Organic Growth

Organic asset growth of 7% in 2017 contributed to strong Organic Revenue growth2

  • Total net inflows of $367 billion were a record and were positive across client type, asset class, region and investment style;
  • Long-term net inflows of $330 billion reflected 7% organic asset growth;
  • Technology and risk management revenue grew 14% year-over-year led by continued momentum in Aladdin; and
  • Total revenue increased 12% from 2016 to $12,491 million.

Operating Leverage

We continued to invest in our business while simultaneously expanding our Operating Margin by 40 bps

  • Operating income, as adjusted, of $5,287 million was up 13% versus 2016, reflecting continued margin expansion and investment into the business; and
  • Compensation and benefits expense, as adjusted, as a percent of total revenue was 33.9%, representing a decrease of 60 bps from 2016, while G&A expense increased 12% year-over-year, reflecting higher technology and data spend.

Consistent Capital Return

$2.8 billion was returned to shareholders in 2017

  • Annual dividend of $10.00 per share, reflected an increase of 9% from $9.16 in 2016; and
  • $1.1 billion of outstanding shares were repurchased in 2017, driving a reduction in net share count of 2.6 million shares.

Earnings Growth

Diluted earnings per share, as adjusted, of $22.60 increased 17% versus 2016

  • Execution of our shareholder value framework – strong organic growth, Operating Margin expansion and consistent repurchases – in 2017 drove a 17% increase in earnings per share.

1 Amounts in this section, where noted, are shown on an “as adjusted” basis. For a reconciliation with GAAP in the United States, please see Annex A.
2 Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net new Aladdin revenue, excluding the effect of market appreciation/ (depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in such current year.

Our Compensation Framework

Our compensation program for NEOs continues to include base salary, annual incentive awards (cash and deferred equity) and longterm performance-based incentive awards.

In the fourth quarter of 2017, we implemented a key strategic part of our long-term management succession plans by granting longterm incentive awards in the form of performance-based stock options to a select group of senior leaders who we believe will play critical roles in BlackRock’s future. We do not consider these awards to be part of our annual compensation framework. For more information regarding performance-based stock options, see “Performance-Based Stock Options” on page 55.

Annual Incentive Awards – Pay and Performance Alignment for CEO and President

Under this program, target annual cash incentive awards (“cash bonus”) have been established at $8.0 million and $6.5 million for our CEO and President, respectively. Actual cash bonuses can range from 0% up to a maximum of 125% of the target amount ($10.0 million and $8.125 million for the CEO and President, respectively). To determine the actual cash bonus amount, the Compensation Committee used the framework below to assess individual performance. The Compensation Committee created three categories and assigned a weighting factor to each, with 50% of the award opportunity dependent on BlackRock’s financial performance. To assess the performance of our business and organizational strengths, the Compensation Committee uses internal BlackRock performance measures and also considers peer group comparisons.

CategoryBlackRock Performance
% of Award Opportunity
Measures Include
(internal BlackRock metrics and/or peer comparisons are considered)
Financial Performance
  • Net New Business

  • Net New Base Fees

  • Organic Revenue Growth

  • Operating Income, as adjusted(1)

  • Operating Margin, as adjusted(1)

  • Diluted EPS, as adjusted(1)

  • Total Shareholder Return and P/E Multiple
Business Strength
  • Deliver Superior Client Experience

  • Drive Organization Discipline

  • Lead in a Changing World
Organizational Strength
  • Drive High Performance

  • Build a more Diverse and Inclusive Culture

  • Develop Great Managers and Leaders
1. For reconciliation with GAAP in the United States, please see Annex A.

In addition to the annual cash incentive awards, the Compensation Committee expects to continue to make annual grants of longterm equity awards to both Messrs. Fink and Kapito, with at least half of such equity awards being long-term and contingent on future financial or other business performance requirements in addition to share price performance.

The Compensation Committee maintains accountability in setting the final awards in order to determine the quality of the outcomes and to reflect the executives’ ability to adapt to the evolving business environment throughout the year.

How We Determine Other NEO Compensation

DETERMINATION OF OTHER NEOs’ ANNUAL INCENTIVE COMPENSATION IS BASED ON:

  • An assessment of the individual NEO’s contributions to overall Company results and individual business results throughout the year; and
  • Each NEO’s influence on setting long-term strategy and in executing long-term objectives.

INPUTS TO INDIVIDUAL NEO TOTAL ANNUAL COMPENSATION DECISIONS INCLUDE:

  • Financial factors, such as revenue, Operating Income, Diluted EPS and Operating Margin, in each case, as adjusted1;
  • Non-financial factors such as individual NEO performance in running their respective businesses, overall investment performance, client relationship strength, organizational discipline and inclusion and diversity commitment; and
  • Other considerations such as external market conditions and market intelligence on competitive compensation. See “Competitive Pay Positioning – Market Data” on page 57.

The deferred equity component of each of our other NEOs’ annual incentive award is determined by a Company-wide deferral policy. Higher annual incentive awards are subject to higher deferral percentages. All long-term equity-based incentive awards granted under BPIP are funded and awarded separately from the total bonus pool and are determined on a subjective basis as part of the Compensation Committee’s total annual compensation decision.

NEO Total Annual Compensation Summary

Following a review of full-year business and individual NEO performance, the Compensation Committee determined 2017 total annual compensation outcomes for each NEO, as outlined in the table below.

In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see “Performance-Based Stock Options” on page 55.

The amounts listed above as “2017 Annual Incentive Award: Deferred Equity” and “Long-Term Incentive Award (BPIP)” were granted in January 2018 in the form of equity and are separate from the cash award amounts listed above as “2017 Annual Incentive Award: Cash.” In conformance with SEC requirements, the 2017 Summary Compensation Table on page 68 reports equity in the year granted, but cash in the year earned.

1. For reconciliation with GAAP in the United States, please see Annex A.

Pay-for-Performance Compensation Structure for NEOs

Our total annual compensation structure embodies our commitment to align pay with performance. More than 90% of our regular annual executive compensation is performance based and “at risk.” Compensation mix percentages shown below are based on 2017 year-end compensation decisions for individual NEOs by the Compensation Committee.

1 All grants of BlackRock equity (including the portion of the annual incentive awards granted in RSUs and BlackRock Performance Incentive Plan (“BPIP”) Awards) are approved by the Compensation Committee under the Stock Plan, which has been previously approved by shareholders. The Stock Plan allows multiple types of awards to be granted.
2 The value of the 2017 long-term incentive BPIP Awards and the value of the equity portion of the bonus for 2017 annual incentive awards was converted into RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018.
3 For NEOs other than the CEO and President, higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy, as detailed on page 50.

Compensation Program Objectives

Our compensation program is designed to:

  • appropriately balance BlackRock’s financial results between shareholders and employees;
  • determine overall compensation based on a combination of firm, business area and individual employee performance;
  • align the interests of our senior-level employees, including NEOs, with those of shareholders through the use of long-term performance-based equity awards and accumulation of meaningful share ownership positions;
  • discourage excessive risk-taking; and
  • attract, motivate and retain high-performing employees.

 

Compensation Elements

Element/How it is PaidPurposeDescription
BASE SALARY
Cash
To provide competitive fixed compensation based on knowledge, skills, experience and responsibilities.Base salary is a relatively small portion of total annual compensation for NEOs and other senior-level employees; this approach allows BlackRock to effectively manage its fixed expenses.

Base salary levels are reviewed periodically in light of market practices and changes in responsibilities.
ANNUAL INCENTIVE AWARD

Cash and Deferred Equity

(Time-vested RSUs)

Terms:
The deferred equity portion of the annual incentive award is converted into a fixed number of RSUs using a conversion price.(1)

The deferred equity portion of the annual incentive award vests in equal installments over the three years following grant.

Dividend equivalents accumulate during the vesting period and are paid following delivery of shares.

Expense is recognized over the vesting period.
To reward achievement of goals and objectives.

Aligns with Company-wide performance and business unit/function performance.

Deferred equity component aligns compensation with multi-year shareholder outcomes.
For CEO and President

Annual incentive award determinations for CEO and President are based upon the pay framework outlined on page 49.

Annual cash incentive awards may range from 0% to 125% of a pre-defined target amount.

The time-based RSU component of the annual incentive award is determined separately by the Compensation Committee; however, it is expected that up to, but no more than, 50% of total equity compensation value granted with respect to a particular performance year will be time-based with the remainder in the form of performance-based equity.

For Other NEOs

Annual incentive award determinations do not rely on a specific formula. A variety of factors are considered to determine the size of an NEO’s annual incentive award. The Compensation Committee considers absolute and/or relative performance outcomes against Company, business and individual NEO goals and objectives, as well as the context in which they were achieved. These goals and objectives are set in the first quarter and performance against them is assessed at year-end. See “Compensation Determination Process” beginning on page 56.

Higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy. Deferral amounts follow a step-function approach, starting at 15% of award and increasing to 50% of award for the portion of the bonus in excess of $3.0 million.
(1) For 2017 deferred equity, the award value was converted into a number of RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of BlackRock common stock on January 16, 2018.
Element/How it is PaidPurposeDescription
LONG-TERM INCENTIVE AWARD (“BPIP”)

BlackRock
Performance Incentive Plan (BPIP)


(Performance Based RSUs)

Terms:
The target BPIP Award value is converted into a base number of RSUs using a conversion price.(1)

The final number of RSUs delivered at settlement is variable based on certain financial metrics achieved over a three-year performance period.

Dividend equivalents accumulate during the vesting period and are paid in cash after the performance period with respect to the number of shares that are delivered in settlement of the award.

Expense, based on the expected number of awards to be delivered, is recognized over the vesting period.
To recognize the scope of an individual employee’s role, business expertise and leadership skills.

To recognize prior year performance and anticipate continued performance and long-term focus over a multi- year period.

Aligns the interests of senior- level employees with those of shareholders by aligning compensation with long-term drivers of shareholder value.
While no specific formulas or weights are used to determine the size of long- term incentive awards, the Compensation Committee considers the role and influence of the NEO on setting long-term strategy and in executing long- term objectives in determining individual award amounts. See “Compensation Determination Process” beginning on page 56.

The performance-based RSUs are settled in a number of shares of common stock that is determined based on the level of attainment of pre-established Organic Revenue and Operating Margin, as adjusted, targets over a three- year performance period.

The maximum number of shares that may be earned under the program is equal to 165% of the base number of RSUs granted. No shares will be earned in the event of negative Organic Revenue and Operating Margin, as adjusted, below a threshold level of performance over a three-year performance period.
(1) For 2017 long-term incentive BPIP Awards, the award value was converted into a number of RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018.

BlackRock Performance Incentive Plan (BPIP)

BlackRock believes in aligning the interests of our senior-level employees, including our NEOs, with those of our shareholders and in closely aligning compensation with long-term performance.

In January 2015, with the advice of the Compensation Committee’s independent compensation consultant, Semler Brossy, the Compensation Committee approved a new form of performance-based equity awards, referred to as BPIP Awards, following a comprehensive review of future performance goals and expectations, potential pay outcomes for employees, shareholder input and market trends. BPIP was designed to further align compensation with management’s long-term creation of shareholder value.

Each NEO was granted a BPIP Award in January 2015, 2016 and 2017 as part of his or her incentive compensation for their 2014, 2015 and 2016 performance, respectively. Similarly, a portion of each NEO’s incentive compensation for 2017 was in the form of a BPIP Award granted in January 2018. In addition to recognizing an NEO’s performance in the prior year, the BPIP Awards are intended to incentivize continued performance and long-term focus over a multi-year period. The January 2018 BPIP grants (for 2017 performance) are described in further detail below.

BlackRock is focused on achieving the right balance of investing to drive future growth in Organic Revenue, and the impact those investments have on our expense base and Operating Margin, as adjusted.

BPIP Awards are granted in the form of RSUs that vest after three years. The number of shares vesting under BPIP is based on the attainment of specified levels of Organic Revenue and Operating Margin, as adjusted over a three-year performance period.

BPIP FINANCIAL METRICS

BPIP is tied to two key drivers of shareholder value – Organic Revenue and Operating Margin, as adjusted, over a three-year performance period – that are directly influenced by BlackRock’s senior-level employees across market cycles.

  • Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net new Aladdin revenue, excluding the effect of market appreciation/(depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in such given year.
  • Operating Margin, as adjusted, is a measure of BlackRock’s ability to efficiently manage our expense base in the context of the revenue we generate.

Similar to previous BPIP Awards, the January 2018 BPIP Awards have a three-year performance period that commenced on January 1, 2018 and end on December 31, 2020. Each BPIP Award consists of a “base” number of RSUs granted to the recipient. Distributions will be in the form of common stock.

BPIP Award Determination

For the January 2018 BPIP Awards, the number of shares that a recipient ultimately receives upon settlement will be equal to the base number of RSUs granted, multiplied by a percentage determined in accordance with the January 2018 BPIP Award Determination Matrix below. The percentage will be determined by BlackRock’s annual average Organic Revenue and Operating Margin, as adjusted, during the performance period; performance between two adjacent points on the matrix will be extrapolated.

A summary version of the matrix for the January 2018 BPIP Awards is set forth below.

2018 BPIP AWARD DETERMINATION MATRIX

If target level performance is achieved (i.e., during the three-year performance period, BlackRock has average annual Organic Revenue equal to $500 million and average annual Operating Margin, as adjusted, equal to 44.5%), then a participant will receive a number of shares equal to 100% of the base number of units granted to the participant.

If during the three-year performance period, BlackRock has zero or negative average Organic Revenue and average Operating Margin, as adjusted of, 38.5% or less then, the participant will not be entitled to a distribution of any shares under their 2018 BPIP Award.

If during the three-year performance period, BlackRock were to deliver average Organic Revenue of $700 million and average Operating Margin, as adjusted, of 44.5%, then a recipient receiving a BPIP Award valued at $2.0 million in January 2018 would receive a distribution of 4,096 shares, or 116% of the base number of RSUs granted. Outlined below is an example of how this above-target level achievement would be calculated.

JANUARY 2018 BPIP GRANT: EXAMPLE

BPIP Award Value
For Performance Year 2017 and in anticipation of continued performance and long-term focus over a multi-year period
$2,000,000
Conversion Price
The average of the high and low prices per share of common stock of BlackRock on January 16, 2018 (the grant date)
$566.44
Base number of units granted
Determined by dividing the dollar value of the recipient’s award by the conversion price
3,531
($2,000,000 / $566.44)
Hypothetical Performance Results
Jan 1, 2018 to Dec 31, 2020 (3-year) average Organic Revenue
Jan 1, 2018 to Dec 31, 2020 (3-year) average Operating Margin, as adjusted
$700M
(i.e., above target)
44.5%
(i.e., at target)
Resulting Award Payout (%)
Based on Award Determination Matrix
116%
Resulting Award Payout (Number of units)
Base number of units granted x Award Payout (%)
4,096
(3,531 x 116%)

If maximum level performance is achieved, then a participant will receive the maximum number of shares (meaning that during the performance period, BlackRock delivered average Organic Revenue equal to or greater than $900 million and average Operating Margin, as adjusted, equal to or greater than 50.5%). The maximum number of shares a participant may receive under BPIP is equal to 165% of the base number of units.

Performance-Based Stock Options

BlackRock has a robust leadership plan that is reviewed regularly by the Compensation Committee and the full Board, including ongoing succession planning and development initiatives for the senior leadership team. In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017.

The Compensation Committee approved these grants in December 2017 in consultation with Semler Brossy, and following a comprehensive review of leadership and development plans, potential value outcomes, shareholder input and market trends. One-third of these performance-based stock options will vest on each of the fifth, sixth and seventh anniversaries of the date of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on the date of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth during the performance period is achieved. The term of the stock options is nine years. Consistent with the intent of these grants, if a participant voluntarily terminates employment for any reason, including retirement, all unvested awards are forfeited.

The Compensation Committee believes that the stock options drive increased equity ownership for a select group of future leaders and create economic incentives that more closely align the recipients of the stock options with the original entrepreneurial spirit of BlackRock’s founders. The structure of these awards seeks to retain key participants with BlackRock for an extended period, recognizing their important contributions to growing the Company and their potential in leading it into the future. In concert with their regular annual compensation, these awards seek to maximally align participants with our shareholders over a sustained number of years.

The Compensation Committee structures the timing and process for determining individual NEO compensation so that compensation is appropriately aligned with the financial performance of BlackRock. This also ensures recognition of individual NEO leadership and operating contributions toward achieving our overall strategic priorities.

STEP ONE I January-March
SET GOALS AND OBJECTIVES


Review Budget/Set CEO Goals and Objectives
At the start of each year, management reviews the annual budget with the Compensation Committee. The Compensation Committee and CEO establish financial and business goals and objectives. The Board is regularly updated on progress against the business goals and objectives, which provide the context for performance evaluations at year-end.
STEP TWO I March-January of following year
REVIEW YEAR-END FINANCIALS


Review Year-End Financials
The Compensation Committee regularly meets with the CFO to review actual and projected financial information and reviews and verifies full-year financial information after year-end. Throughout the year, all members of the Board review strategic plans, financial and business results, talent development and succession planning, as well as other areas relevant to BlackRock’s performance.

The Compensation Committee also reviews other measures of our financial, investment and operating performance, market intelligence on compensation and information about market conditions.
STEP THREE I November-January of following year
ASSESS PRELIMINARY PERFORMANCE


Review Peer Market Data
In December, management reports on absolute and relative performance metrics compared to major competitors, year-over-year and budget. These metrics include growth in revenues, operating income, net income, operating margin and net new inflows of AUM and other quantitative and strategic measures.

Review Consultant Reports on Compensation
Our compensation consultant also provides an independent report on publicly disclosed financial and compensation information for certain publicly traded financial services companies to understand performance and trends in compensation among public asset managers.

Review Preliminary NEO Performance / Discuss NEO Pay
In December, during an executive session with the Compensation Committee, the CEO reviews the performance of all individual NEOs against business goals and objectives. During an executive session that excludes all members of management, the non-management directors assess the performance of the CEO against business goals and objectives.
STEP FOUR I January of following year
ASSESS FINAL PERFORMANCE AND DETERMINE COMPENSATION


Review Final NEO Performance
In early January, the Compensation Committee reviews and confirms each NEO’s performance against individual and Company objectives based on the final year-end results.

Approve Final Total Annual Cash Incentive Awards
The Compensation Committee reviews and verifies year-end financial results and other performance metrics as well as external data for comparison. The Compensation Committee then determines final total annual incentive award amounts for each of our NEOs. The Compensation Committee determines annual cash incentive award amounts for the CEO and President utilizing the annual cash incentive award framework, based on financial performance, business strength and organizational strength, supported by performance measures.

Approve BPIP Award Determination Matrix
The Compensation Committee also determines equity awards made through BPIP. This timing allows the Compensation Committee to consider full-year individual NEO performance assessments along with full-year financial and non-financial results in its final determination of compensation. The Compensation Committee also determines the Award Determination Matrix for the three-year BPIP performance cycle. In setting financial performance requirements for BPIP, the Compensation Committee considers BlackRock’s past performance and the current market environment. Compensation decisions are made on a total annual compensation basis, with consideration of each element of compensation, as described on pages 52 to 55.

Competitive Pay Positioning – Market Data

Management engages McLagan Partners (“McLagan”), a compensation consultant that specializes in conducting proprietary compensation surveys and interpreting compensation trends. Management used McLagan surveys to evaluate BlackRock’s competitive position overall, as well as by functional business and by title and make comparisons on an individual NEO basis, where survey data was available and appropriate.

Survey results were analyzed to account for differences in the scale and scope between BlackRock and other survey participants.

Survey participants include both stand-alone, publicly traded asset management companies as well as a broader set of privately held or subsidiary asset management organizations for which publicly available compensation data is not available. Confidentiality obligations to McLagan and to its survey participants prevent BlackRock from disclosing the companies included in the surveys.

The Compensation Committee reviews market data to understand compensation practices and trends in the broader marketplace. Individual NEO compensation decisions are primarily based on assessments of individual NEO and Company performance.

Role of the Compensation Consultant

In 2017, the Compensation Committee continued to engage Semler Brossy for objective advice on compensation practices and the competitive landscape for the compensation of BlackRock’s executive officers.

Semler Brossy reports directly to the Compensation Committee and interacts with BlackRock management when necessary and appropriate. Semler Brossy provides services only to the Compensation Committee as an independent consultant and does not have any other consulting engagements with, or provide any other services to, BlackRock. The independence of Semler Brossy has been assessed according to factors stipulated by the SEC and the Compensation Committee concluded that no conflict of interest exists that would prevent Semler Brossy from independently advising the Compensation Committee.

A representative from Semler Brossy met with the Compensation Committee in formal Committee meetings and at key points throughout the year to provide objective advice to the Compensation Committee on existing and emerging compensation practices among financial services companies, as well as companies in the asset management sector.

Peer Group Composition – Changes in 2017

The Compensation Committee, with assistance from Semler Brossy, regularly reviews the composition of our peer group to ensure the group continues to serve as an appropriate market reference for executive compensation purposes. In considering the composition of our peer group, the Compensation Committee considers companies that are in our industry or have similar lines of business, are competitors for our executive talent, are large, complex organizations with global reach and/or are similarly sized from a revenue and market cap perspective. During 2017, the Compensation Committee determined that the peer group should be updated to more closely reflect our current scale, business and strategic priorities. Given that determination, in the fall of 2017 the Compensation Committee removed four companies whose market caps were below $10 billion (BlackRock’s market cap as of December 31, 2017 was $84 billion) and added the three new companies shown on the right of the chart below:

As previously noted, the McLagan analyses, which include both publicly traded companies as well as private companies in a variety of industries and sectors, offer additional comparisons through which BlackRock can understand the competitiveness of its executive compensation programs overall, by functional business and by title/individual. Semler Brossy independently reviewed the results and the companies included in the McLagan analyses. BlackRock does not engage in formal benchmarking in setting executive compensation levels.

Risk Assessment of Compensation Plans

Our employee compensation program is structured to discourage excessive and unnecessary risk taking. The Board recognizes that potential risks to BlackRock may be inherent in compensation programs. The Board reviews BlackRock’s executive compensation program annually to ensure that it is structured so as not to unintentionally promote excessive risk taking. As a result of this annual review, we believe that the compensation plans are appropriately structured and do not pose risks that could have a materially adverse effect on BlackRock.

The Compensation Committee considers the following when evaluating whether employee compensation plans and policies encourage BlackRock employees to take unreasonable risks:

  • Performance goals that are reasonable in light of past performance and market conditions;
  • Longer-term expectations for earnings and growth;
  • The base salary component of compensation does not encourage risk taking because it is a fixed amount;
  • A greater portion of annual compensation is deferred at higher annual incentive award levels; and
  • Deferred compensation is delivered in the form of equity, vests over time, and the value is therefore dependent on the future performance of BlackRock.

Essential to the success of BlackRock’s business model is the ability to both understand and manage risk. These fundamentals are inherent in the design of our compensation programs, which reward employees for strong performance in their management of client assets and in managing risk within the risk profiles appropriate to each of BlackRock’s clients. As such, employees are not rewarded for engaging in high-risk transactions outside of established parameters.

Our compensation practices reinforce the fundamentals of BlackRock’s business model in that they:

  • Do not provide undue incentives for short-term planning or action toward short-term financial rewards;
  • Do not reward unreasonable risk-taking; and
  • Provide a reasonable balance between the risks that are inherent in the business of investment management, risk management and advisory services.

The Company’s operating income, as adjusted, on which compensation is primarily based, does not include net investment income or gains/losses on BlackRock’s seed or co-investments. While BlackRock may make seed or co-investments in its various funds alongside clients, it does not engage in proprietary trading.

Linking Pay and Performance

Here we provide 2017 compensation decisions for each NEO and a summary of his individual performance accomplishments relative to achieving BlackRock’s annual and long-term performance goals.

Laurence D.
Fink

Chairman and CEO
2017 CompensationResponsibilities:

Mr. Fink develops and guides BlackRock’s long-term strategic direction to deliver value for clients and shareholders.

He is responsible for senior leadership development and succession planning, defining and reinforcing BlackRock’s vision and culture, and engaging with key strategic clients, industry leaders, regulators and policy makers.
(Thousands)
Base Salary$900
Annual Incentive Award - Cash$10,000
Annual Incentive Award - Equity$4,600
Long-Term Incentive Award$12,450
Total Annual Compensation$27,950
The Compensation Committee determined Mr. Fink’s total annual compensation based on an assessment of performance in alignment with the compensation structure outlined on pages 52 to 55.Based on BlackRock’s financial performance, strong business results and organizational improvement in 2017, the Compensation Committee determined to award Mr. Fink $27.95 million in total compensation, up 10% from his 2016 compensation.The Compensation Committee assessed Mr. Fink’s strategic leadership and partnership with the GEC and took into account the key performance factors outlined below.
2017 Key AccomplishmentsFINANCIAL PERFORMANCE
  • Under Mr. Fink’s leadership, supported by his reputation as a thought leader for the broader financial services industry and the relationships he has built for BlackRock with institutions, governments and central banks around the world, BlackRock generated total net inflows of $367 billion in 2017, the strongest flows in BlackRock’s history. Total net inflows included long-term net inflows of $330 billion, representing organic asset growth of 7%.

  • Long-term organic growth outperformed peers, demonstrating the strength of BlackRock’s diverse platform, global footprint, strategic relationships with clients and its differentiated ability to use technology to create solutions for clients.

  • Total revenue increased 12% relative to 2016, primarily driven by base fee growth, as a result of strong organic growth and market appreciation, strong performance fees and continued momentum in our technology and risk management businesses.

  • Operating income, as adjusted, increased 13% year-over-year and 2017 Operating Margin, as adjusted, of 44.1% expanded 40 basis points, even as BlackRock continued to invest in the business for future growth.

  • Diluted Earnings Per Share, as adjusted, increased 17% year-over-year.

  • BlackRock‘s 2017 total shareholder return of 38.2% including both stock price appreciation and dividend payout, exceeded our Peer Group average.


BUSINESS STRENGTH
  • Mr. Fink’s strategic and talent leadership, with the partnership of Mr. Kapito, helped enable BlackRock’s active investments platform to deliver strong performance in 2017 and improved performance relative to peers.

  • BlackRock demonstrated successful execution across several strategic initiatives, in-line with the Company’s long-term strategy, that have positioned the firm for future growth, including technology, factors/smart beta, ETFs and infrastructure.

  • Mr. Fink’s focus on technology has elevated its use across the organization. BlackRock made significant progress in advancing its technology agenda, including evolving the Digital Wealth platform, implementing Aladdin Risk for Wealth Management and increasing reach with financial advisors through enhanced U.S. Wealth Advisory sales enablement technology capabilities.

  • With Mr. Fink’s engagement, BlackRock increased market share with key clients and distributors, maintaining its #1 market share of ETF AUM and net flows globally and sustaining momentum across the Institutional platform with two consecutive years of organic asset growth.

  • Under Mr. Fink’s guidance, BlackRock continued to drive its growth strategy through several tactical acquisitions and investments. BlackRock expanded its infrastructure platform with the acquisition of First Reserve’s Infrastructure Funds, continued to build its digital distribution capabilities with the acquisition of Cachematrix and a minority investment in Scalable Capital and reaffirmed its conviction for the Mexican market with BlackRock’s announcement of its agreement to acquire Citibanamex’s asset management business, which is expected to close in the second half of 2018.


ORGANIZATIONAL STRENGTH
  • Mr. Fink continued to drive the Company’s succession planning, improve the leadership bench, enhance the talent review process and proactively develop key talent. This included naming Rachel Lord as head of EMEA, David Blumer as head of BlackRock Alternative Investors, Mark McCombe as Head of Americas and Frank Cooper as Chief Marketing Officer.

  • Under Mr. Fink’s leadership, as measured by BlackRock’s 2017 Employee Opinion Survey, employee engagement and enablement remains strong, with over 70% of employees showing positive scores in engagement, enablement and satisfaction.

  • Additionally, Mr. Fink strengthened BlackRock’s focus on inclusion and diversity. BlackRock showed strong progress in ethnically diverse hiring and global female hiring during 2017 and is on track to meet or exceed firm wide 2020 diversity targets. Mr. Fink also oversaw the Company’s efforts to create functional and regional diversity progress reports to drive accountability and added two new diverse members to his executive team.

  • Mr. Fink’s focus on formalizing and institutionalizing BlackRock’s culture throughout the organization drove the launch of Knowing BlackRock Core and the BlackRock Academies, unique learning platforms grounded in BlackRock’s “One BlackRock” culture and made available to all employees of the firm.
Robert S.
Kapito

President
2017 CompensationResponsibilities:
Mr. Kapito is responsible for executing BlackRock’s strategic plans and overseeing the global business operations of the Company.

He ensures connectivity and coordination of operating processes across all groups in the organization, in part through his leadership, along with Mr. Goldstein, of the Global Operating Committee.

He is also responsible for spearheading initiatives to drive investment performance and the results within each of BlackRock’s businesses.
(Thousands)
Base Salary$750
Annual Incentive Award - Cash$8,125
Annual Incentive Award - Equity$3,514
Long-Term Incentive Award$9,626
Total Annual Compensation$22,015
The Compensation Committee determined Mr. Kapito’s total annual compensation in alignment with the compensation structure on pages 52 to 55.The Compensation Committee awarded Mr. Kapito $22.02 million in total compensation for 2017, up 10% from his 2016 compensation.The Compensation Committee assessed Mr. Kapito’s leadership and took into account the key performance factors outlined below.
2017 Key AccomplishmentsFINANCIAL PERFORMANCE
Mr. Kapito partnered with Mr. Fink to help lead the BlackRock Global Executive Committee and deliver all of the financial results outlined in the 2017 performance section on page 48.

Mr. Kapito’s operational responsibility for BlackRock’s distribution channels and client-facing businesses, including significant relationships with key intermediary partners, contributed to BlackRock’s net inflows of $367 billion in 2017, including long-term net inflows of $330 billion, representing organic growth of 7% and driving strong Organic Revenue growth for the firm. These successes helped support BlackRock’s outperformance relative to peers in capturing long-term asset flows.

He provided day-to-day oversight of the business that was instrumental in achieving a 44.1% Operating Margin, as adjusted, expanding 40 basis points from 2016.

Mr. Kapito maintained responsibility for all of the firm’s investments, distribution and technology businesses, thereby overseeing continued growth in most of BlackRock’s key franchises (particularly ETFs and Index Investments, Global Fixed Income and Aladdin).

Under his direct leadership, helped by strategic oversight by Mr. Fink, BlackRock’s investment teams generated strong long-term performance:

  • For taxable Fixed Income, 73% and 90% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

  • For tax-exempt Fixed Income, 68% and 72% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

  • For Fundamental Equity, 72% and 73% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

  • For Systematic Equity, 87% and 90% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.


Mr. Kapito also played a pivotal role in overseeing the Company’s response to regulatory changes, including MiFID II, and the continued evolution and preparations taken in our businesses in connection with the Department of Labor’s Fiduciary Rule.

Mr. Kapito transformed the Active Equities platform, in partnership with Mark Wiseman, through the buildout of the internal equity research capabilities and merging together two distinct cultures (fundamental and systematic) to produce better results for clients and BlackRock.

He increased BlackRock’s focus on inclusion and diversity. BlackRock showed strong progress in ethnically diverse hiring and global female hiring during 2017 and is on track to meet or exceed firm wide 2020 diversity targets. Mr. Kapito exemplifies BlackRock culture and Principles internally through sponsorship of key programs, support of the growth and development of our employee networks and diversity initiatives.

Robert L.
Goldstein

COO
2017 CompensationResponsibilities:

As COO, Mr. Goldstein is responsible for ensuring that the Company’s investment, client, risk analytics and technology functions have the necessary connectivity, coordination and operating processes in place to succeed.

Mr. Goldstein also leads the BlackRock Solutions business, delivering investment and risk analytics technology to clients.

Along with Mr. Kapito, Mr. Goldstein co-chairs the BlackRock Global Operating Committee. With Mr. Shedlin, he also co-chairs the Planning, Budgeting and Alignment Committee, which is responsible for developing the firm’s budget, evaluating new initiatives aimed at driving growth and achieving strategic objectives of the firm.
(Thousands)
Base Salary$500
Annual Incentive Award - Cash$3,275
Annual Incentive Award - Equity$2,325
Long-Term Incentive Award$2,100
Total Annual Compensation$8,200
2017 Key AccomplishmentsMr. Goldstein continued to deliver on critical priorities and make key contributions to help drive success for BlackRock in 2017, including:

  • Growing tech and tech-enabled revenue;

  • Leading the firm-wide business review and budgeting process;

  • Effectively managing risk and driving efficiencies; and

  • Inspiring and sponsoring the next generation of leaders at BlackRock.


Mr. Goldstein continued to partner with Mr. Kapito to lead BlackRock’s Global Operating Committee, as well as led the C-20 (COO Executive Committee), creating an inclusive environment in service of advancing the business agenda.

Under his leadership, BlackRock’s tech agenda and businesses continued to demonstrate record-setting, double-digit revenue growth, while also expanding capabilities. Mr. Goldstein continued to execute upon and drive growth within Aladdin Risk for Wealth Management, as well as launched the Digital Wealth organization to seize opportunities in transformation of the wealth landscape.

Mr. Goldstein drove the firm’s strategic growth initiatives in 2017, including guiding organization and planning and ensuring appropriate allocation of resources to drive success.

He continued to lead and streamline the business review and budgeting processes, while reducing organizational tax and driving connectivity. Mr. Goldstein ensured cross-functional priorities had the appropriate focus and leadership, including projects related to index and market data, BlackRock’s global footprint and BlackRock’s response to MiFiD II.

Mr. Goldstein drove operating leverage and efficiency in 2017, resulting in reduced trade processing costs, among other enhancements. Mr. Goldstein also contributed meaningfully to BlackRock’s overall diversity efforts by building a diverse technology talent pipeline and leading the business review process, which includes an accountability mechanism for increasing under-represented populations across the firm.
(1) In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see “Performance-Based Stock Options” on page 55.
Mark S.
McCombe

Head of Americas
2017 CompensationResponsibilities:

As Head of Americas, Mr. McCombe is responsible for driving growth in BlackRock’s businesses in the US, Canada and Latin America and Iberia. He oversees key client relationships in the region and ensures greater connectivity to stay ahead of regulatory, technology and client preference changes in the Americas.

He also oversees other distribution businesses in the Americas, including North American Institutional clients, Aladdin and Digital Wealth in the Americas.
Thousands
Base Salary$500
Annual Incentive Award - Cash$2,725
Annual Incentive Award - Equity$1,775
Long-Term Incentive Award$1,950
Total Annual Compensation(1)$6,950
2017 Key AccomplishmentsMr. McCombe was appointed Head of Americas in January 2017. In this role, he has led the integration of the Americas businesses and drove cross-Americas dialogue on key opportunities and threats. He oversaw strong growth across the Americas franchise, with $300 billion of net inflows, representing 9% organic growth, in 2017.

During the first part of the year, Mr. McCombe continued to lead BlackRock Alternative Investors where he built out an Alternatives vision with a 5-year strategic growth plan and drove commercial impact with record Alternatives capital raising and improved investment performance.

Mr. McCombe played a leadership role in advancing BlackRock’s culture and diversity agenda through executive sponsorship of a number of firm-wide programs, including serving as the executive sponsor of the Leadership Excellence and Development (LEAD) program, a firm initiative focused on developing diverse high performing Vice Presidents, and an executive sponsor of the BlackRock OUT & Allies network; and also served as Chairman of the Toigo Foundation, an organization supporting diverse MBA candidates in securing elevated roles in financial services.
(1) In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see “Performance-Based Stock Options” on page 55.
Gary S.
Shedlin
CFO
2017 CompensationResponsibilities:

As CFO, Mr. Shedlin is responsible for managing BlackRock’s overall financial condition, including resource and capital allocation and expense discipline.

He is also responsible for overseeing all corporate finance functions, including financial planning and analysis, accounting, finance operations and controls, tax, treasury, investor relations and corporate development.

Mr. Shedlin also co-chairs, along with Mr. Goldstein, the Planning, Budgeting and Alignment Committee, which is responsible for developing the firm’s budget, evaluating new initiatives aimed at driving growth and achieving strategic objectives of the firm.
(Thousands)
Base Salary$500
Annual Incentive Award - Cash$2,700
Annual Incentive Award - Equity$1,750
Long-Term Incentive Award$1,850
Total Annual Compensation$6,800
2017 Key AccomplishmentsDuring 2017, Mr. Shedlin continued to make key contributions in support of the Company’s priorities and resource deployment and managing BlackRock’s outreach with key investors and financing counterparties.

Mr. Shedlin provided critical oversight and planning related to the financial impact of a number of regulatory and fiscal changes, including Brexit, MiFID II and U.S. Tax Reform.

Mr. Shedlin continued to optimize BlackRock’s balance sheet, successfully refinancing the Company’s $700 million 2017 maturity, and capital management strategy by executing a consistent and predictable dividend and share repurchase policy.

He also oversaw the execution of several targeted transactions to drive future growth. BlackRock expanded its infrastructure platform with the acquisition of First Reserve’s Infrastructure Funds, continued to build on its digital distribution capabilities with the acquisition of Cachematrix and a minority investment in Scalable Capital and reaffirmed the conviction for the Mexican market with BlackRock’s announcement of its agreement to acquire Citibanamex’s asset management business, which is expected to close in the second half of 2018.

Mr. Shedlin played a key role in driving the Company’s diversity efforts, including hiring and elevating a number of female finance executives.
1 In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see “Performance-Based Stock Options” on page 55.

Summary of Executive Compensation Practices

Our compensation program reflects our commitment to responsible financial and risk management and is exemplified by the following policies and practices:

What We Do
Review pay and performance alignment;
Balance short- and long-term incentives, cash and equity and fixed and variable pay elements;
Maintain a clawback policy that allows for the recoupment of annual and long-term performance-based compensation in the event that financial results are restated due to the actions of an employee;
Require a one-year minimum vesting for awards granted under our Stock Plan, subject to limited exceptions;
Maintain robust stock ownership and retention guidelines;
Maintain a trading policy that:
  • Prohibits executive officers from short selling BlackRock securities;

  • Prohibits executive officers from pledging shares as collateral for a loan (among other items);

  • Prohibits engaging in any transactions that have the effect of hedging the economic risks and rewards of BlackRock equity awards;
Limit perquisites;
Assess and mitigate risk in compensation plans, as described in “Risk Assessment of Compensation Plans” on page 58;
Solicit an annual advisory vote on executive compensation in order to provide shareholders with a frequent opportunity to give feedback on compensation programs; and
Annually review the independence of the Compensation Committee’s independent compensation consultant.
What We Don't Do
No employment agreements or guaranteed compensation arrangements with our NEOs;
No arrangements with our NEOs providing for automatic single trigger vesting of equity awards upon a change-in-control or transaction bonus payments upon a change-in-control;
No dividends or dividend equivalents on unearned RS or RSUs; no dividend equivalents on stock options or stock appreciation rights;
No repricing of stock options;
No cash buyouts of underwater stock options;
No tax reimbursements for perquisites or tax gross-ups for excise taxes incurred due to the application of Section 280G of the Internal Revenue Code;
No supplemental retirement benefit arrangements with our NEOs; and
No supplemental severance benefit arrangements with our NEOs outside of the standard severance benefits under BlackRock’s Severance Pay Plan (the “Severance Plan”).

Stock Ownership Guidelines

Our stock ownership guidelines require the Company’s GEC members to own and maintain a target number of shares (i.e., shares owned outright, not including unvested shares or unexercised stock options), the dollar amount of which is set out below. Until these stock ownership guidelines are met, GEC members must retain 50% of the net (after-tax) shares delivered from BlackRock equity awards. The Compensation Committee monitors the progress made by our NEOs in achieving their stock ownership guidelines and, if circumstances warrant, may modify the guidelines and/or time frames for one or more of our NEOs.

As of December 31, 2017, all of our NEOs exceeded the stock ownership guidelines.

  • $10 million for the CEO;
  • $5 million for the President; and
  • $2 million for all other GEC members.

Clawback Policy

All performance-based compensation (including annual and long-term incentive awards and all equity compensation) is subject to BlackRock’s Clawback Policy and is subject to recoupment if an employee is found to have engaged in fraud or willful misconduct that caused the need for a significant restatement of BlackRock’s financial statements.

Benefits

BlackRock provides medical, dental, life and disability benefits and retirement savings vehicles in which all eligible employees participate. Our NEOs also have the option to participate in a comprehensive health exam offered to our executives. BlackRock makes contributions to 401(k) accounts of our NEOs on a basis consistent with other employees. None of our NEOs participate in any Company-sponsored defined benefit pension program.

Other benefits include voluntary deferrals of all or a portion of the cash element of our NEOs’ annual incentive awards pursuant to the Amended and Restated BlackRock, Inc. Voluntary Deferred Compensation Plan (the “VDCP”).

Severance

Our NEOs are eligible for standard severance benefits under the Severance Plan in the event of involuntary termination of employment without cause (as defined under the Severance Plan) by BlackRock. The Severance Plan provides a lump sum cash payment equal to two weeks of salary per year of service, with a minimum of 12 weeks and a maximum of 54 weeks, to all U.S.-based employees who are involuntarily terminated without cause in conjunction with a reduction in force or position elimination.

Perquisites

Perquisites and other benefits available to our NEOs, such as financial planning, investment opportunities and personal use of travel services are considered a reasonable part of the executive compensation program. A financial planning perquisite is offered to our NEOs. In addition, investment offerings may be provided without charging management or performance fees consistent with the terms offered to other employees who meet the same applicable legal requirements.

Messrs. Fink and Kapito are required by the Board to utilize private airplane services for all business and personal travel in the interest of protecting their personal security. Our NEOs reimburse BlackRock for a portion of the cost of personal airplane services.

Transportation services are provided by BlackRock and/or third-party suppliers and are made available to our NEOs for business and personal use. The compensation attributed to each of our NEOs for 2017 for perquisites is described in footnote (4) to the “2017 Summary Compensation Table” on page 68.

Tax Reimbursements

BlackRock did not provide tax reimbursements for any perquisites or other compensation paid to our NEOs.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation paid to any executive officers subject to Section 162(m) (the “Covered Employees”) to $1 million during any fiscal year unless such compensation qualifies as “performance-based” (although this exception is severely limited beginning in 2018, as described below). Historically, the Company administered its incentive compensation arrangements in a manner that would comply with these tax rules. However, the Compensation Committee maintained the flexibility to pay non-deductible incentive compensation if it determines it is in the best interest of the Company and its shareholders.

Separately from determining the total bonus pool in respect of calendar year 2017, the Compensation Committee established the method for calculating the Section 162(m) compliant aggregate cap (the “Aggregate 162(m) Cap”) for annual incentive awards to each of our NEOs pursuant to the shareholder-approved Amended and Restated BlackRock, Inc. 1999 Annual Incentive Performance Plan (the “Performance Plan”). The Aggregate 162(m) Cap, as well as each NEO’s maximum allocable portion of the overall Aggregate 162(m) Cap (the “Individual 162(m) Caps”), was calculated in accordance with the requirements of Section 162(m). Neither the Aggregate 162(m) Cap nor the Individual 162(m) Caps served as a basis for the Compensation Committee’s compensation decisions for our NEOs; instead, these caps served to establish a ceiling on the amount of annual incentive awards which the Compensation Committee can award to the NEOs on a tax deductible basis. In determining final awards for each NEO, the Compensation Committee ensured that such awards do not exceed the executive officer’s Individual 162(m) Cap.

The Tax Cuts and Jobs Act, enacted on December 22, 2017, substantially modifies Section 162(m) and, among other things, eliminates the performance-based exception to the $1 million deduction limit effective as of January 1, 2018. As a result, beginning in 2018, compensation paid to Covered Employees in excess of $1 million will generally be nondeductible, whether or not it is performance-based. In addition, beginning in 2018, the Covered Employees will include any individual who served as the CEO or CFO at any time during the taxable year and the three other most highly compensated officers (other than the CEO and CFO) for the taxable year, and once an individual becomes a Covered Employee for any taxable year beginning after December 31, 2016, that individual will remain a Covered Employee for all future years, including following any termination of employment.

The Tax Cuts and Jobs Act includes a transition relief rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Company may avail itself of this transition relief rule. However, because of uncertainties as to the application and interpretation of the transition relief rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition relief rule. Moreover, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals in the best interest of the Company and its shareholders, the Compensation Committee does not limit its actions with respect to executive compensation to preserve deductibility under Section 162(m) if the Compensation Committee determines that doing so is in the best interests of the Company and its shareholders.

Summary of Executive Compensation Tables

The following 2017 Summary Compensation Table contains information concerning compensation provided by BlackRock for the years indicated to the NEOs. Pursuant to SEC rules, the compensation table below includes only those equity-based awards granted in a particular year and not any awards granted after year-end, even if awarded for services in that year. It additionally discloses any cash compensation earned in a particular year, even if such payments are made after year-end.

2017 Summary Compensation Table

(1) These amounts represent the cash portion of discretionary annual bonuses for the respective periods awarded pursuant to the Performance Plan. To secure the deductibility of annual incentive awards (including cash bonuses) awarded to the NEOs, each NEO’s total incentive award is awarded under the Performance Plan, which permits deductibility of compensation paid to the NEOs under Section 162(m) of the Internal Revenue Code. Satisfaction of the performance criteria under the Performance Plan determines only the maximum amount of incentive compensation that may be awarded to NEOs for the fiscal year. The amount of incentive compensation awarded to each NEO in January 2018 (for fiscal year 2017) was based on subjective criteria, as more fully described on pages 46 to 67 of the “Compensation Discussion and Analysis”, and was less than the portion of the performance-based bonus pool available for awards to each NEO under the Performance Plan.
As described on page 50 of the “Compensation Discussion and Analysis”, on January 16, 2018, Messrs. Fink, Kapito, Goldstein, McCombe and Shedlin were awarded RSUs as part of their discretionary annual bonuses for the 2017 fiscal year. In accordance with FASB ASC Topic 718, these awards had grant date values of $4,600,000, $3,514,000, $2,325,000, $1,775,000 and $1,750,000, respectively, based on the average of the high and low prices per share of BlackRock common stock on January 16, 2018, which was calculated to be $566.44. Additionally, Messrs. Fink, Kapito, Goldstein, McCombe and Shedlin received discretionary BPIP Awards consisting of performance-based RSU awards with grant date values of $12,450,000, $9,626,000, $2,100,000, $1,950,000 and $1,850,000, respectively. The base number of units granted pursuant to BPIP Awards was determined by dividing the individual’s award value by the average of the high and low prices per share of BlackRock common stock on January 16, 2018.
(2) Reflects the grant date fair value of awards made during each calendar year as determined pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note (14) to the consolidated financial statements in our Form 10-K filed on February 28, 2018. The amount included with respect to the BPIP Awards granted in January 2017 is based on the grant date fair value assuming target level of performance. If maximum level of performance had been assumed, the grant date fair value of the BPIP Awards would have been (i) $20,542,169 for Mr. Fink, (ii) $15,882,687 for Mr. Kapito, (iii) $3,464,406 for Mr. Goldstein, (iv) $3,216,761 for Mr. McCombe, and (v) $3,052,039 for Mr. Shedlin.
(3) In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. Amounts reflect the grant date fair value of performance-based option awards made during the calendar year as determined pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note (14) to the consolidated financial statements in our Form 10-K filed on February 28, 2018.
(4) For each of the NEOs, $18,500 was attributable to contributions made by BlackRock under its tax-qualified defined contribution (401(k)) plan in 2017. In 2017, $4,825 was attributable to an executive health benefit used by Mr. Goldstein. For Messrs. Fink, Kapito, Goldstein, McCombe and Shedlin, $0, $31,175, $31,175, $31,175 and $0, respectively, was attributable to financial planning services. In 2017, $225,000 was attributable to personal use by each of Messrs. Fink and Kapito, respectively, of company-provided aircraft services. These amounts reflect the incremental cost to BlackRock to provide the aircraft services. Aircraft incremental cost is based on, as applicable, (i) variable operating cost per flight hour for the BlackRock corporate aircraft (including fuel and variable maintenance expenses) plus any trip-specific incremental costs (such as crew expenses, catering expenses and fees associated with landing, parking and flight planning) or (ii) actual charter cost, in each case, less reimbursement received from the NEO. Messrs. Fink and Kapito are required by the Board to utilize these airplane services for all business and personal travel in the interest of protecting their personal security. For more information regarding perquisites, see “Perquisites.” on page 66. No nonqualified deferred compensation earnings were determined to be above-market. None of the NEOs participate in any BlackRock-sponsored defined benefit pension plans.
(5) Mr. McCombe was not an NEO prior to 2017.

2017 Grants of Plan-Based Awards

The following table sets forth information concerning equity incentive plan-based compensation provided by BlackRock in 2017 to our NEOs.

(1) Grant date is the date on which approved award values excluding options were converted to a number of RSUs based on the average of the high and low prices of BlackRock common stock on that date.
(2) These January 17, 2017 awards represent grants of RSUs awarded to Messrs. Fink, Kapito, Goldstein, McCombe and Shedlin as part of their 2016 bonus awards and represent the stock portion of such annual bonuses. These awards vest one-third on each of the first three anniversaries of January 31, 2017. At the time of vesting, the NEOs are entitled to payment of accrued dividends with respect to the shares underlying the vested RSUs/RS.
(3) These January 17, 2017 awards represent BPIP Awards granted to Messrs. Fink, Kapito, Goldstein, McCombe and Shedlin in respect of services performed in 2016. To determine the base number of RSUs comprising each BPIP Award, the award value was divided by the grant price ($375.22). The grant price represents an average of the high and low price of BlackRock common stock on January 17, 2017 (two trading days following earnings release for the fourth quarter of 2016). The BPIP Awards will be eligible to vest on January 31, 2020, subject to the Company’s attainment of the applicable financial targets during the three-year performance period commencing on January 1, 2017 and ending on December 31, 2019. The number of shares of common stock each NEO will receive upon settlement of the award will be equal to the base number of RSUs, multiplied by a percentage determined by application of the award determination matrix set forth in the award agreement. The percentage multiplier is determined by the Company’s average annual Operating Margin, as adjusted, and Organic Revenue during the performance period. If performance is below the minimum thresholds set forth on the award determination matrix for both performance metrics, the award payout will be zero. If the Company attains the maximum (or greater) level of performance for both performance metrics, the award payout will be equal to 165% of the base number. Performance at target would result in the NEO receiving 100% of the base number.
(4) In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. These awards represent performance-based option awards granted to Messrs. Goldstein, McCombe and Shedlin in connection with the strategic initiative. One-third of these performance-based stock options will vest on each of the fifth, sixth and seventh anniversaries of the date of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on the date of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth during the performance period is achieved. The term of the stock options is nine years. Consistent with the intent of these grants, if a participant voluntarily terminates employment for any reason, including retirement, all unvested awards are forfeited.
(5) Reflects the grant date fair value of awards as determined pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note (14) to the consolidated financial statements in our 2017 Form 10-K. The amount included with respect to the BPIP Awards is based on the grant date fair value assuming target level of performance. The amount included with respect to the performance-based option awards is based on the grant date fair value assuming the performance hurdles are achieved.

2017 Outstanding Equity Awards at Fiscal Year-End

(1) Amounts reflect the year-end value of RS, RSUs, Challenge Awards and BPIP Awards, based on the closing price of $513.71 per share of BlackRock common stock on December 29, 2017. With respect to the BPIP Awards, the value shown is based on the number of shares that the NEO would receive upon settlement of the award assuming actual performance through December 31, 2017 and 100% of target for the remainder of the performance period.
(2) These Challenge Award RSUs require that separate 15%, 25% and 35% stock price targets (based on the grant price) be achieved during the six-year term of the awards in order for each respective tranche to be delivered. The stock price targets may be met at any time during the award term, but the delivery of shares may occur only on the fourth, fifth or sixth anniversary of January 31 of the year of grant, provided that the price on the delivery date meets the lowest stock price target. Any tranche of the award that has not met the applicable stock price target will be forfeited on the sixth anniversary of January 31 of the year of grant. As of December 31, 2017, all three of the stock price targets related to the Challenge Awards granted on January 17, 2014 had been met. The Challenge Awards granted on January 17, 2014 became fully vested on January 31, 2018 and have been settled. See “Potential Payments Upon Termination or Change in Control” beginning on page 72 for additional details regarding these awards.
(3) These RS/RSUs vest one-third on January 31 of each of the first anniversaries of after the year in which the grant date occurs.
(4) These BPIP Awards vest subject to the Company’s attainment of certain financial targets during the three-year performance period commencing with the year of grant. The number of units shown reflects the number of shares that the NEO would receive upon settlement of the award assuming actual performance relative to the performance targets through December 31, 2017 and target-level performance for the remainder of the performance period (which equals 109.5% of target for the BPIP Awards granted January 16, 2015, 109% of target for the BPIP Awards granted January 19, 2016, and 119% of target for the BPIP Awards granted January 17, 2017). See “Potential Payments Upon Termination of Employment or a Change in Control” on page 72 for additional details regarding these awards.
(5) In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. These awards represent performance-based option awards granted to Messrs. Goldstein, McCombe and Shedlin in connection with the strategic initiative. One-third of these performance-based stock options will vest on each of the fifth, sixth and seventh anniversaries of the date of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on the date of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth during the performance period is achieved. The term of the stock options is nine years. Consistent with the intent of these grants, if a participant voluntarily terminates employment for any reason, including retirement, all unvested awards are forfeited.

2017 Option Exercises and Stock Vested

The following table sets forth information concerning the number of shares acquired and the value realized by our NEOs during the fiscal year ended December 31, 2017 on the exercise of options or the vesting and/or settlement of RS and RSUs.

(1) Value realized reflects (i) the closing price per share of BlackRock common stock on the day prior to the vesting date, multiplied by (ii) the number of RS or RSUs that vested.

2017 Nonqualified Deferred Compensation

(1) Includes earnings on balances in the VDCP (as defined below), none of which were determined to be above-market.

Voluntary Deferred Compensation Plan

BlackRock maintains the VDCP, which allows participants to elect to defer between 1% and 100% of the cash element of their annual incentive compensation that is not mandatorily deferred under another arrangement. The participants must specify a deferral period of up to 10 years and distributions may be in up to 10 installments. The benchmark investments available for the NEOs are the same as those for all other participants. Deferred amounts and any benchmark returns are vested at the time of deferral or crediting, as applicable, under the VDCP.

Potential Payments Upon Termination or Change in Control

As described previously, the NEOs do not have individual employment, severance or change in control agreements with BlackRock.

Pursuant to the terms of the applicable equity award agreements, an NEO whose employment is terminated may be entitled to accelerated vesting and payment (or continued eligibility for vesting and payment) with respect to such NEO’s outstanding awards. In addition, upon a termination of employment by the Company without cause, an NEO may be eligible to receive severance benefits under the Severance Plan. The applicable terms and estimated payment amounts with respect to the foregoing are set forth in the tables on pages 73 and 74, in each case assuming a termination of employment of the NEO on December 31, 2017.

Upon a change in control of BlackRock or a termination (with respect to deferrals prior to the 2016 plan year) of an NEO’s employment for any reason, such NEO’s VDCP balance would be paid out. Upon a termination of an NEO’s employment for any reason with respect to deferrals for the 2016 plan year and beyond, such NEO’s VDCP balance would be paid in accordance with their deferral election. All outstanding VDCP balances were fully vested as of December 31, 2017. Accordingly, no amounts have been included in the table on page 74 with respect to VDCP balances. For additional information, please refer to the “2017 Nonqualified Deferred Compensation” table above.

Treatment of Outstanding Equity Awards Upon Termination of Employment or a Change in Control

Type of AwardVoluntary ResignationTermination For CauseInvoluntary Termination Without Cause(1)Qualified Retirement / DisabilityDeath
RS/RSUs Granted as Part of Annual Incentive Awards (“Year-End Awards”)Unvested awards are forfeited.Unvested awards are forfeited.Awards will continue to vest in accordance with their schedule following termination. Any portion of the award that remains unvested on the one-year anniversary of termination will become fully vested on that date. With respect to awards granted after 2015, if such termination occurs within the one-year period following a change in control of BlackRock, the awards will vest at the time of termination.Awards will continue to vest in accordance with their schedule following termination. Any portion of the award that remains unvested on the one-year anniversary of termination will become fully vested on that date.Immediate vesting and settlement.
RSUs Granted as Challenge AwardsUnvested awards are forfeited.Unvested awards are forfeited.Any portion of the award that has achieved its stock price target remains eligible for vesting and settlement (subject to attainment of the minimum stock price target on the fourth, fifth or sixth anniversary of the grant date); a pro rata portion of the award that has not attained its stock price target will remain outstanding and eligible to vest; the remainder of the award will be forfeited.Awards will continue to be eligible to vest and be settled in accordance with their terms, subject to attainment of the applicable stock price targets.Awards will continue to be eligible to vest and be settled in accordance with their terms, subject to attainment of the applicable stock price targets.
RSUs Granted as BPIP AwardsUnvested awards are forfeited.Unvested awards are forfeited.Awards granted prior to 2016 will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets. Awards granted after 2015 will be eligible to vest on a pro rata basis (based on length of service during the performance period), subject to attainment of the applicable performance targets. If such termination occurs within the 12-month period following a change in control, awards granted after 2015 will fully vest at target level.Awards will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets.Awards will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets.
Performance-Based Option AwardsUnvested awards are forfeited; vested but unexercised awards remain exercisable for a 90-day period following separation.Unvested awards are forfeited; vested and unexercised awards are cancelled.Awards will vest on a pro rata basis with respect to each tranche (based on length of service during the vesting period) plus a one-year service credit, and will remain exercisable through the full term, subject to achievement of the applicable performance conditions. If such termination occurs within the 12-month period following a change in control, awards will fully vest and remain exercisable through the full term.Qualified Retirement: Unvested awards are forfeited; vested but unexercised awards remain exercisable for a 90-day period following separation.

Disability: Awards will continue to be eligible to fully vest on each vesting date, subject to achievement of the applicable performance conditions. Any vested options will remain exercisable through the full term.
Awards will continue to be eligible to fully vest on each vesting date, subject to achievement of the applicable performance conditions. Any vested options will remain exercisable through the full term.
(1) Treatment described in the event of a termination without cause following a change in control applies if outstanding awards are assumed or substituted by the acquirer. If outstanding awards are not assumed or substituted, such awards would become vested at the time of the change in control (at target level for performance-based awards).

Potential Payments Upon Termination of Employment or a Change in Control

The amounts in the table below reflect an assumed termination of employment on December 31, 2017 and are based on the closing price of BlackRock common stock on December 29, 2017, which was $513.71. Any amounts payable upon or due to an NEO’s termination by BlackRock other than for cause, due to the NEO’s disability or upon a qualified retirement (as such terms are defined in the applicable award agreements) are subject to the NEO’s (i) execution of a release of claims against BlackRock and (ii) continued compliance with covenants restricting the NEO’s solicitation of clients or employees of BlackRock for the one-year period following termination.

(1) This reflects an amount equal to (i) the number of unvested RS/RSUs awarded as Year-End Awards outstanding as of December 31, 2017, multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). For additional detail on the Year-End Awards, please refer to the “2017 Outstanding Equity Awards at Fiscal Year-End” table on page 70 and the “Treatment of Outstanding Equity Awards Upon Termination of Employment or a Change in Control” table on page 73.
(2) Reflects an amount equal to (i) the number of outstanding unvested RSUs awarded as Challenge Awards held by the NEO for which the applicable stock price targets had been attained as of December 31, 2017, multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). As of December 31, 2017, all of the stock price targets had been attained for the Challenge Awards granted in January 2014. As described in the “Treatment of Outstanding Equity Awards Upon Termination of Employment or a Change in Control” table on page 73. As described above, delivery of shares relating to the Challenge Awards for which the stock price targets have been attained will occur only if the minimum stock price target applicable to the award is also attained on the fourth, fifth or sixth anniversary of January 31 (or the next following business day) in which the grant date occurred. The January 2014 Challenge Awards fully vested on January 31, 2018 and have been settled. For additional detail on the Challenge Awards, please refer to the “2017 Outstanding Equity Awards at Fiscal Year-End” table on page 70 and the “Treatment of Outstanding Equity Awards Upon Termination of Employment or a Change in Control” table on page 73.
(3) BPIP Awards upon an involuntary termination without cause (other than following a change in control): This row reflects the sum of the value attributable to the January 2015 BPIP Awards, January 2016 BPIP Awards, and January 2017 BPIP Awards. For the January 2015 BPIP Awards, the value reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2017 multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). For January 2016 BPIP Awards and January 2017 BPIP Awards, the value reflects an amount equal to the product of (A) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2017 and target-level performance for the remainder of the applicable performance period, multiplied by $513.71, and (B), a fraction, the numerator of which is the number of completed months of service during the performance period as of December 31, 2017, and the denominator of which is the total number of months during the performance period. The actual number of shares that an NEO would receive following the end of the three-year performance period will be based on the Company’s actual performance over the duration of the performance period. For additional detail on the BPIP awards, please refer to the “2017 Grants of Plan-Based Awards” table on page 69, the “2017 Outstanding Equity Awards at Fiscal Year-End” table on page 70 and the “Treatment of Outstanding Equity Awards Upon Termination of Employment or a Change in Control” table on page 73.
(4) BPIP Awards upon an involuntary termination without cause within 12 months following a change in control: This row reflects the sum of the value attributable to the January 2015 BPIP Awards, January 2016 BPIP Awards, and January 2017 BPIP Awards. For the January 2015 BPIP Awards, the table reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2017 multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). For the January 2016 and 2017 BPIP Awards, the table reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award at target-level performance during the performance period, multiplied by (ii) $513.71. Under the terms of the Stock Plan, any outstanding awards that are not assumed by the acquirer in the event of a change in control would become fully vested (at target level for performance-based awards).
(5) BPIP Awards upon a termination due to death, disability or qualified retirement: For January 2015 BPIP Awards, the value shown reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2017 multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). For both January 2016 BPIP Awards and January 2017 BPIP Awards, the value shown reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming (A) actual performance relative to the performance targets through December 31, 2017 and (B) target-level performance for the remainder of the applicable performance period, multiplied by (ii) $513.71.
(6) In the fourth quarter of 2017, we implemented a key strategic part of our long-term management succession plans by creating equity incentive grants of performance-based stock options for a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. These awards were part of a strategic initiative and we do not consider them to be part of our regular annual compensation.
(7) Option Awards upon an involuntary termination without cause: Assuming a termination date of December 29, 2017, the closing price of BlackRock common stock was $513.71 as of such date and, therefore, the stock price hurdle would not have been met. The amounts shown represent the value of a pro rata portion of unvested options as of December 29, 2017, at the closing price on that date. The pro rata portion (with respect to each tranche) which can be earned based on, and subject to, the achievement of the performance conditions is determined by multiplying the unvested options at termination of employment by a fraction, the numerator of which is the number of full months, rounded down, the executive was employed from the date of grant through the termination date plus 12 months, and the denominator of which is the number of full months elapsed from the grant date through the applicable vesting date.
(8) Option Awards upon a termination without cause within 12 months following a change in control or due to death or disability: Assuming a termination date of December 29, 2017, the closing price of BlackRock common stock was $513.71 as of such date and, therefore, the stock price hurdle would not have been met. The amounts shown represent the value of unvested options as of December 29, 2017.
(9) Option Awards upon qualified retirement: all unvested options will be forfeited.
(10) Reflects the amount that would have been payable to the NEO in a lump sum pursuant to the Severance Plan, assuming the NEO’s termination of employment by BlackRock other than for cause on December 31, 2017.
(11) Values for Year-End Awards, Challenge Awards, BPIP Awards, Option Awards and Severance are rounded to the nearest whole number and, as a result of such rounding, the sum of such amounts may differ slightly from the amounts set forth in the line item titled “Total”.

CEO Pay Ratio for 2017

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation our CEO:

For 2017, our last completed fiscal year:

  • The median of the annual total compensation of all employees of our Company (other than our CEO) was $141,987; and
  • The annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $27,743,233.

Based on this information, the ratio of our CEO’s annual total compensation to the median of the annual total compensation of all employees was 195:1. This result is broadly consistent with our historical pay practices.

2017 CEO Pay Ratio = 195:1

Methodology

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:

  1. Selection of Determination Date. We determined that, as of December 31, 2017, our employee population consisted of approximately 13,900 employees globally (as reported in Item 1, Business, in our Annual Report on Form 10-K filed on February 28, 2018 (our “Annual Report”). This population included all of our full-time and part-time employees.
  2. Identification of Median Employee. To identify the “median employee” from our employee population, we reviewed 2017 total compensation of our employees. Total compensation includes base salary, overtime, 2017 annual incentive award, direct incentives, commission payments and long-term equity incentive grants as reflected in the 2017 annual compensation statements provided to each employee as part of the year-end compensation process.We identified our median employee using this compensation measure, which was consistently applied to all our employees
    included in the calculation. We did not make any cost-of-living adjustments in identifying the “median employee.”
  3. Calculation of Annual Total Compensation. Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $141,987. The difference between such employee’s total compensation and the reported amount for the ratio calculation is the contributions made by BlackRock under its tax qualified defined contribution (401(k)) plan for 2017 to such employee, which totaled $11,417.For our CEO’s annual total compensation, we used the amount reported in the “Total” column (column (j)) of our 2017 Summary Compensation Table included in this Proxy Statement on page 68.

Equity Compensation Plan Information

The following table summarizes information, as of December 31, 2017, relating to BlackRock equity compensation plans pursuant to which grants of options, restricted stock, restricted stock units or other rights to acquire shares of BlackRock common stock may be granted from time to time.

(1) Includes 3,765,532 shares subject to RSUs (including RSUs which are settled in cash) and BPIP Awards (assuming payout at target levels) and 2,147,562 stock options. On December 31, 2017, 246,522 shares were available for contribution by PNC pursuant to the Share Surrender Agreement between BlackRock and PNC to settle awards outstanding under the Stock Plan and for future BlackRock stock grants under any other plan in accordance with the terms of the Share Surrender Agreement. Since February 2009, these shares were held by PNC as Series C Preferred stock. In February 2018, 103,064 shares were surrendered. As of March 31, 2018, 143,458 shares remain available for contribution by PNC. Pursuant to SEC guidance, unvested shares of restricted stock that were issued and outstanding on December 31, 2017 are not included in the first or third column of this table.
(2) Represents the weighted-average exercise price of stock options only.
(3) Includes 542,359 shares remaining available for issuance under the Employee Stock Purchase Plan, of which 5,821 were subject to purchase during the open offering period that included December 31, 2017.

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