BlackRock’s corporate governance framework is a set of principles, guidelines and practices that support consistent financial
performance and long-term value creation for our shareholders.
Our commitment to corporate governance is integral to our business and reflects not only regulatory requirements, NYSE listing standards and broadly recognized governance practices, but also effective leadership and oversight by our senior management team and Board.
We regularly meet with our shareholders to solicit feedback on our corporate governance framework. We make an effort to incorporate this feedback through enhanced policies, processes and disclosure.
Our Corporate Governance Framework
Our Board is committed to maintaining the highest standards of corporate governance at BlackRock. Because corporate governance practices evolve over time, our Board
reviews and approves our Corporate Governance Guidelines, Committee charters and other governance policies at least once a year and updates them as necessary and appropriate.
Our Board is guided by our Corporate Governance Guidelines, which address director responsibilities, director access to management, director orientation and continuing education, director retirement, and the annual performance evaluations of the Board and Committees. The Corporate Governance Guidelines also directs that the Governance Committee consider the periodic rotation of Committee members and Committee Chairs as a means of introducing fresh perspectives and broadening and diversifying the views and experience represented on Committees.
BlackRock’s culture is vital to our success
Our Board is deeply engaged in understanding the culture at BlackRock
On-site Visits to BlackRock offices and BlackRock Offices and BlackRock's Technology showcase
In addition to Board and Committee off-site meetings, members of our Board are encouraged to make on-site visits to other BlackRock offices. In 2018, the Audit Committee Chair visited with members of BlackRock’s Asia-Pacific audit and financial control groups in Tokyo, Japan.
Also in 2018, BlackRock inaugurated its “Meet the Board” program – a series of globally broadcast “fire-side” chats and town halls designed to give directors an opportunity to engage with employees directly and afford employees an opportunity to ask questions and get to know members of BlackRock’s Board. This year, five directors participated in the program. Additionally, several of our independent directors attended our 2018 Investor Day presentation and nearly the entire Board attended our 30th Anniversary celebrations in the Spring of 2018, where they engaged directly with, employees and members of the investor community, and heard first-hand how BlackRock is developing its brand and strategy in keeping with its core culture and principles. Finally, in November 2018, two of our independent directors visited our Palo Alto artificial intelligence laboratory to meet with local management and employees, tour our facilities, and expand their knowledge of BlackRock’s use of, and research relating to, artificial intelligence.
Our directors also attended a technology showcase led by BlackRock employees of all levels who specialize in technology development, as part of the Company’s tech2020 strategy, and experienced first-hand our technology and where it is leading us.
Under the oversight of management and the Board, BlackRock provides each new director with an orientation program conducted over the course of the first three months of their tenure. Orientation includes the opportunity to rotate through each of the Board’s standing Committees and presentations by senior management to familiarize our new directors with BlackRock’s:
• Financial position and strategic plans;
• Significant financial, accounting and risk management issues;
• Compliance programs, conflict policies, code of ethics and other controls; and
• Our principal officers and internal and independent auditors.
All directors are encouraged to attend continuing educational programs offered by BlackRock or sponsored by universities, stock exchanges or other organizations related to fulfilling their duties as Board or Committee members. For example, members of our Audit Committee have participated in conferences and symposiums hosted by Deloitte and Ernst & Young.
Every week our directors receive summaries and copies of press coverage, analyst reports and current events relating to our business.
Outside of regularly scheduled Board and Committee meetings, our directors may have discussions with each other and our CEO at their discretion. Directors have access to management at any time and are encouraged to have small group or individual meetings, as necessary.
All directors are encouraged to meet with management outside of Board and Committee meetings and several directors have established informal mentoring relationships with key members of senior management.
Our Board Leadership Structure
Why our Board leadership structure is right for BlackRock
Our Board and Governance Committee regularly review and evaluate the Board’s leadership structure. Mr. Fink serves as both BlackRock’s CEO and Chairman of
the Board, which the Board has determined is the most appropriate and effective leadership structure for the Board and the Company at this time. Mr. Fink has served in this capacity since founding BlackRock in 1988 and, as such, brings over 30
years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairman of the Board.
The Board does not have a policy on whether the roles of the Chairman and CEO should be separated, but believes the current combination of the two roles provides BlackRock with, among other things, a clear and effective leadership structure to communicate the Company’s business and long-term strategy to its clients, shareholders and the public. The combined Chairman-CEO structure also provides for robust and frequent communication between the Board’s independent directors and the management of the Company.
To further facilitate coordination with the independent directors and to ensure the exercise of independent judgment by the Board, the independent directors annually select one of the independent members to serve as the Lead Independent Director.
Under our Lead Independent Director Guidelines, the Lead Independent Director will be elected annually by BlackRock’s independent directors and serve until a successor is elected. Although elected annually, we generally expect the Lead Independent Director to serve for more than one year.
Our Lead Independent
Director: Murry S. Gerber
Serving Since 2017
The Role of the Lead Independent Director
Our Lead Independent Director has significant authority and responsibilities to provide for an effective and independent Board. In this role, Mr. Gerber:
• In consultation with the Chairman and Committee Chairs, develops and approves the agenda for Board meetings and leads executive sessions.
• At each executive session, facilitates discussion of the Company’s strategy, key governance issues (including succession planning), and the performance of BlackRock senior executives.
• Serves as liaison between independent directors and the Chairman.
• Focuses on Board effectiveness, performance and composition with input from the Governance Committee.
• Oversees and reports on annual Board and Committee performance self-evaluations, in consultation with the Governance Committee.
• Serves as the primary Board contact for shareholder engagement.
Executive sessions of non-management directors are held at most regularly scheduled Board meetings, and six executive sessions were held in 2018. Each session is chaired by the Lead Independent Director, who facilitates discussion of the Company’s strategy, key governance issues, succession planning and the performance of senior executives. Any non-management director may request that an additional executive session be scheduled. At least once a year an executive session is held for only those directors determined to be “independent,” within the meaning of the listing standards of the NYSE.
Board Evaluation Process
The effectiveness of the Board and its Committees is critical to BlackRock’s success and to the protection of our shareholders’ long-term interests. To ensure
their effectiveness, the Board and each Committee conduct comprehensive annual self-evaluations to identify and assess areas for improvements.
The evaluation process includes the following steps:
The Governance Committee is responsible for identifying and evaluating potential director candidates, reviewing Board and Committee composition and making recommendations to the full Board. This ongoing process includes:
Each Committee is governed by a Board-approved Charter.
The Board has five committees: the Audit Committee, the Compensation Committee, the Governance Committee, the Risk Committee and the Executive Committee. Below is a summary of our current Committee structure and membership information.
The Board met seven times during 2018. In 2018, each of our directors attended at least 75% of the aggregate of: (i) the total number of meetings of the Board held during the period for which such director was a member of the Board and (ii) the total number of meetings held by all Committees of the Board on which such director served, if any, during the period served by such director. Directors are encouraged to and do attend the annual meetings of BlackRock shareholders. Eighteen directors who were serving on the Board last year attended the 2018 Annual Meeting of Shareholders. Sir Deryck Maughan is retiring from the Board and will not be standing for re-election at the 2019 Annual Meeting of Shareholders.
Board Committee Refreshment
The Governance Committee considers the periodic rotation of Committee members and Committee Chairs to introduce fresh perspectives and to broaden and diversify the views
and experience represented on Committees. On March 15, 2018, the Board appointed Mr. Ford and Ms. Johnson to serve on the Audit and Compensation Committees. Mr. Ford brings CEO, global business and financial services expertise.
Ms. Johnson brings business development, technology, investment and talent management expertise. On March 15, 2018, the Board also appointed Mr. Wilson to serve as a member of the Risk Committee. He brings expertise in global
business, public policy and regulatory affairs as well as experience as a former CEO. On March 14, 2019, the Board appointed Ms. Wagner to serve as Chair of the Risk Committee and a member of the Audit and Executive Committees, each
appointment effective May 23, 2019.
Outlined below are the Company’s Committees with brief descriptions of each Committee’s membership, roles and responsibilities as of the date of this Proxy Statement.
Board and Committee Oversight of Strategy
The Board of Directors actively engages with senior management by providing guidance on the formation and implementation of strategic initiatives. On an annual basis our Global Head of Corporate Strategy previews the Board’s agenda, focusing on business reviews and the strategic topics for the coming year, with the Governance Committee and receives its feedback and input. Based on this agenda, members of senior management and business leads will brief directors on the strategic opportunities, priorities and implementation of strategy for their respective lines of business. These presentations serve as the basis for an active dialogue between the Board and senior management about strategic risks and opportunities facing BlackRock and its lines of business.
Board and Committee Oversight of Risk Management
The Board has ultimate responsibility for
oversight of BlackRock’s risk management activities.
The Risk, Audit, Compensation and Governance Committees assist the Board in fulfilling this important role.
The Committees report to the full Board at least 6 times a year with updates on their areas of designated risk oversight responsibilities. These Committees work together and with the full Board to help ensure that the Committees and the Board have received all information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management activities.
Responsible for assessing and overseeing BlackRock’s levels of risk and risk management and related policies and processes in connection with fiduciary and enterprise risks and other areas of risk determined by the Board. Reflecting the increased importance of information security, the Risk Committee included cybersecurity as a recurring topic at each meeting during 2018.
Oversees the integrity of BlackRock’s financial statements and other disclosures, the effectiveness of the internal control environment, the internal audit function and the external auditors, and compliance with legal and regulatory requirements.
Responsible for overseeing risks associated with BlackRock’s executive and employee compensation practices and the effective management of executive succession.
Oversees risks related to Board and Committee succession and other corporate governance policies and practices.
Our Board Oversight of Cybersecurity
Our Board is actively engaged in the oversight of BlackRock’s cybersecurity and information security programs. Our Risk Committee receives reports on the
Company’s cybersecurity program and developments in information security at each meeting from our Chief Information Security Officer. Additionally, on an annual basis, senior members of BlackRock’s technology, risk and information security
teams provide a comprehensive overview of BlackRock’s cyber risk and information security program to a joint session of the Risk and Audit Committees.
Our global information security team, in collaboration with our technology risk team and independent third parties, assesses both risks and changes in the cyber environment and adjusts our cybersecurity program as needed.
BlackRock employs an in-depth, multi-layer strategy of control programs including monitoring external and internal threats and events, managing access, facilitating use of appropriate authentication options, validating controls and programs by internal teams and independent third parties, and testing various compromise scenarios that are overseen by a global information security team.
BlackRock invests in threat intelligence and participates in financial services industry and government forums to improve both internal and sector cybersecurity defense.
BlackRock routinely performs penetration tests.
BlackRock’s cyber risk program incorporates external expertise.
Corporate Governance Practices and Policies
The Board determines annually the independence of directors in accordance with NYSE listing standards and applicable SEC rules. No director is considered independent unless the Board has determined that he or she has no material relationship with BlackRock. The Board has adopted categorical standards to help determine whether certain relationships between the members of the Board and BlackRock or its affiliates and subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with BlackRock) are material relationships for purposes of NYSE listing standards. The categorical standards provide that the following relationships are not material for such purposes:
Relationships arising in the ordinary course of business, such as asset management, acting as trustee, lending, deposit, banking or other financial service relationships or other relationships involving the provision of products or services, so long as the products and services are being provided in the ordinary course of business and on substantially the same terms and conditions, including price, as would be available to similarly situated customers;
Relationships with companies of which a director is a shareholder or partnerships of which a director is a partner, provided the director is not a principal shareholder of the company or a principal partner of the partnership;
Contributions made or pledged to charitable organizations of which a director or an immediate family member of the director is an executive officer, director or trustee if (i) within the preceding three years, the aggregate amount of such contributions during any single fiscal year of the charitable organization did not exceed the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues for that fiscal year, and (ii) the charitable organization is not a family foundation created by the director or an immediate family member of the director; and
As part of its determination, the Board also considered the relationships described under “Certain Relationships and Related Transactions.” Following its review, the Board has determined that Mses. Daley, Einhorn, Johnson, Mills and Wagner and Messrs. Alsaad, Cabiallavetta, Ford, Freda, Gerber, Nixon, Robbins, Seidenberg, Slim and Wilson are “independent” as defined in the NYSE listing standards and that none of the relationships between these directors and BlackRock are material under the NYSE listing standards. The Board had also previously determined that Sir Deryck Maughan, who was a director for all of 2018 and is not standing for re-election, was “independent.” Following the 2019 Annual Meeting of Shareholders, assuming all of the nominated directors are elected, BlackRock’s Board is expected to consist of 18 directors, 15 of whom, representing approximately 83% of the Board, will be “independent” as defined in the NYSE listing standards.
Management Succession Planning
Our Board plays an integral oversight role in talent development and recognizes the importance of succession planning for the CEO and other key executives at BlackRock. The Board, in consultation with the Compensation Committee, dedicates at least one full meeting per year to talent to ensure BlackRock has the right people in place to execute our long-term strategic plans and appropriate succession for key individuals. The Board also works with the Compensation Committee to consider potential successors to the CEO in the event of an emergency or the CEO’s retirement. Our CEO recommends and evaluates potential successors for BlackRock’s top executives, along with a review of any development plans for these individuals. In the fourth quarter of 2017, we granted long-term 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 regular annual compensation. For more information about these awards, see “Performance-Based Stock Options” on page 62.
BlackRock’s purpose to help our clients build better financial futures is fulfilled by our people. This is what informs our differentiated approach to talent and
Each year, we set corporate objectives specifically related to talent and culture. We achieve these objectives through our commitment to fostering a unifying culture and encouraging innovation, ensuring that we are developing, retaining and recruiting the best talent, and incorporating inclusion and diversity into all levels of our organization.
Our Board plays a critical role in the oversight of talent and culture at BlackRock and devotes one full meeting annually to an in-depth review of the Company’s culture, talent development, retention and recruiting initiatives, inclusion and diversity strategy, leadership and succession planning, and employee feedback.
BlackRock’s talent initiatives are executed by our Human Capital Committee, which is comprised of fifty senior leaders who help design, drive, and sponsor everything we do around talent and culture in partnership with Human Resources.
As BlackRock transformed from an organization of 8 founders to more than 14,900 employees, a focus on autonomy and inclusion has helped foster a culture of emotional ownership and innovation among BlackRock employees around the world. Our culture is what unifies our employees across our diverse business model, ensures we are best positioned to serve our diverse clients globally and propels BlackRock’s continuous evolution. Our culture is rooted in four guiding principles, which you can read about on the back cover of this Proxy Statement.
It is the capabilities of our employees and our leaders that enable us to deliver for our clients, and we are focused on career development and total rewards
programs that meet our employees’ needs. As we continue to grow, and our clients’ challenges become more complex, this focus becomes even more important.
We provide developmental opportunities for our employees through a robust set of formal and informal programs. The BlackRock Academies, for example, focus on enabling employees to build skills and thought leadership in specific facets of our business including client relationships, technology, investments, leadership and management and professional development. Knowing BlackRock Core is a set of resources and immersive experiences built around a series of Harvard Business School case studies about the Company that is designed to help employees explore our history and engage in shaping our future. Our leadership programs make a differentiated investment in our high potential, strong performing employees as we strive to deepen, enhance and diversify our leadership bench. These programs are intense, year-long experiences that include structured learning, assessments, external coaching, sponsorship, and hands-on work and provide a blend of full cohort, small group and individually tailored development.
We deliberately align employee incentives with the risk and performance frameworks of the firm. BlackRock’s Pay for Performance philosophy connects individual, business and company results to employee compensation, providing employees with opportunities to share in the firm’s growth and success. We offer employees a comprehensive Total Rewards package that meets the varying needs of our talent across the firm, including health and wellness, financial, educational and life management benefits. Also, we support employees in making an impact in their local communities and globally through environmental and social efforts that are meaningful to them.
Inclusion & Diversity
BlackRock is committed to cultivating and advancing diversity in all forms because we believe a wide range of perspectives is crucial to creating a richer culture for our employees and better results for our diversified global client base. We hold our businesses accountable for progress in inclusion and diversity. During our Quarterly Business Reviews, we have focused conversations with each business about its plans and progress and we report our progress against our inclusion and diversity initiatives regularly to our Board.
We value continuous dialogue with our employees about their experiences. We have several employee feedback mechanisms including our annual Employee Opinion Survey which has a more than 90% participation rate annually and provides us with actionable feedback for each team and for BlackRock as a whole, an annual People Manager Insights Survey which provides managers with upward feedback on how they are progressing against their expectations as managers and the BlackRock Jam, a 3-day online conversation with employees around the world. Our employees describe our culture in a way that aligns with our principles and we believe the high participation in the mechanisms reflects their belief that their responses will lead to action by management. We continue to build training programs and tools to help managers better understand metrics on talent and culture and create more diverse and inclusive teams. Our businesses use these metrics to make the day-to-day decisions that drive our talent and culture initiatives across the organization.
Employee feedback and metrics on talent and diversity initiatives are shared with and reviewed by the Board on a regular basis. Moreover, senior leaders are held
accountable for progress on diversity through bonus pool allocations and individual compensation decisions.
The Board and Compensation Committee routinely engage with senior leadership on talent and culture. Talent and culture is included in the Organizational Strength component of our NEO (and broader senior leadership) compensation. For more information on organizational strength, see “2018 NEO Compensation and Performance Summaries” beginning on page 66. Talent and culture are integral to BlackRock’s success and its mission to generate long-term shareholder value. As such, BlackRock is committed to a diverse and inclusive workforce, and our Board works with management to provide oversight on culture, succession planning, employee development, recruiting and diversity and inclusion.
As part of our responsibilities to our shareholders and clients, BlackRock advocates for public policies that we believe are in our shareholders’ and clients’ long-term best interests. We support the creation of regulatory regimes that increase financial market transparency, protect investors and facilitate responsible growth of capital markets, while preserving consumer choice and properly balancing benefits versus implementation costs. BlackRock comments on public policy topics through, among other things, our published ViewPoints, which examine public policy issues and assess their implications for investors, and through comment letters and consultation responses that we submit to policy makers. We believe in the value of open dialogue and transparency on these important issues; our position papers and letters are available on the “Insights – Public Policy” section of our website.
Governance of Public Policy Engagement
BlackRock believes that responsible
corporate citizenship requires active engagement in legislative and regulatory processes. Our engagement with policy makers and advocacy on public policy issues is coordinated by our Global Public Policy Group. Members of the Global Public Policy
Group work closely with BlackRock’s business and legal teams to identify legislative and regulatory priorities, both regionally and globally, that will protect investors, increase shareholder value, and facilitate responsible economic growth.
The head of the Global Public Policy Group is a member of BlackRock’s Global Executive and Operating Committees and regularly briefs these committees on our public policy priorities and related advocacy efforts. BlackRock’s Chief Legal Officer and the head of the Global Public Policy Group regularly brief both the Board’s Risk and Governance Committees to keep directors apprised of, and engaged in, BlackRock’s legislative and regulatory priorities and advocacy initiatives. The Global Public Policy Group and executive leadership regularly meet with and exchange views on legislation and regulatory priorities with public officials and policy makers, regionally and globally, and provide such individuals with educational materials to help inform their decisions.
As part of BlackRock’s engagement in the public policy process, BlackRock participates in a number of trade organizations and industry groups. The principal
trade associations that we belong to are the Investment Company Institute, the Asset Management Group of the Securities Industry and Financial Markets Association, the European Fund and Asset Management Association and the Investment Association.
BlackRock makes payments to these organizations, including membership fees and/or dues. However, BlackRock does not control these entities and may not always be aware of the entities’ activities. We recognize that these organizations and groups
represent numerous other companies and there may be instances where their positions on certain issues diverge from those of BlackRock.
As an asset manager, BlackRock focuses on issues that impact the asset management industry and the clients for whom we act as agent in managing assets. In general, BlackRock’s efforts are focused at the national or regional level, rather than at a state-specific level.
Our ability to engage policy makers and participate in
the public policy arena is subject to extensive laws and regulations at the international, federal, state and local levels. Under United States federal law, BlackRock may not contribute corporate funds or make in-kind contributions to candidates for
federal office or to national party committees. In addition to federal limits on corporate political action, our political contributions at the state and local level in the United States are governed by Municipal Securities Rulemaking Board Rule
G-37, SEC Rule 206(4)-5 and CFTC Rule 23.451, as well as applicable state and local law. Accordingly, BlackRock does not contribute corporate funds to candidates, political party committees, political action committees or any political organization
exempt from federal income taxes under Section 527 of the Internal Revenue Code. Although permitted under federal law, BlackRock has voluntarily elected not to spend corporate funds directly on independent expenditures, including electioneering
communications, and does not currently engage in “grassroots lobbying” or support or oppose ballot initiatives. Information about BlackRock’s lobbying activities, including contributions required to be disclosed under the Lobbying
Disclosure Act, is publicly available at https://www.senate.gov/legislative/lobbying.
BlackRock maintains a federal political action committee (“PAC”) that is funded in accordance with applicable federal law on a voluntary basis by U.S.-based employees of the Company. The PAC makes contributions at the federal level on a bi-partisan basis consistent with the Company’s contribution policies and public policy goals and without regard to the private political preferences of management. As required by law, all political contributions by the PAC are reported to the Federal Election Commission and are publicly disclosed at www.fec.gov.
BlackRock maintains compliance processes designed to ensure that its activities are conducted in accordance with this policy and all relevant laws governing political contributions in the United States. All employees are required to annually review and acknowledge their compliance responsibilities regarding political contributions and must submit all of their proposed personal political contributions to our Legal and Compliance Department to determine if such contributions are consistent with applicable legal restrictions.
Shareholder Engagement and Outreach
We conduct shareholder outreach throughout the year to engage with shareholders on issues
that are important to them. We report back to our Board on this engagement as well as specific issues that need to be addressed.
Executive management, Investor Relations and the Corporate Secretary engage on a regular basis with shareholders to solicit feedback on a variety of corporate governance matters, including but not limited to executive compensation, corporate governance policies, and corporate sustainability practices. Our directors have also engaged directly with shareholders during the last two years. BlackRock also routinely interacts and communicates with shareholders through a number of other forums, including quarterly earnings presentations, SEC filings, the Annual Report and Proxy Statement, the annual shareholder meeting, investor meetings and conferences, and web communications. We share our shareholder feedback and trends and developments about corporate governance matters with our Board and its Committees as we seek to enhance our governance and sustainability practices and improve our disclosures. Additionally, 4 of our independent directors attended our 2018 Investor Day presentation.
Also see “Compensation Discussion and Analysis” beginning on page 53 for a discussion of our compensation related shareholder engagement initiatives and our historical say-on-pay vote results.
Communications with the Board
Shareholders and other interested parties may contact any member (or all members) of the Board, any Committee or any Chair of
any such Committee by mail or electronically.
Correspondence may be sent by:
BlackRock’s Corporate Communications, Investor Relations and Legal and Compliance Departments
will review all communications received to determine whether the contents represent a message or matter for our directors’ review. Requests for a meeting with any member of the Board will also be reviewed accordingly and, if appropriate,
arranged by Investor Relations and the Corporate Secretary. Concerns relating to accounting, internal controls or auditing matters are brought to the attention of the Chairperson of the Audit Committee and handled in accordance with procedures
established for reporting certain matters to the Audit Committee.
Shareholders are encouraged to visit the “Our Firm / Investor Relations / Corporate Governance / Governance Overview” page of the BlackRock website at www.blackrock.com to see the Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Chief Executive and Senior Financial Officers and additional information about BlackRock’s Board and its Committees and corporate governance policies.
The charters for each of the Audit Committee, the Compensation Committee, the Governance Committee, the Risk Committee and the Executive Committee can be found at the same website address. BlackRock intends to satisfy any disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Chief Executive and Senior Financial Officers by posting such information on its corporate website.
BlackRock will provide a copy of these documents without charge to each shareholder upon written request. Requests for copies should be addressed to the Corporate Secretary, BlackRock, Inc., 40 East 52nd Street, New York, New York 10022.
2018 Director Compensation
compensation, including retainers and reimbursements of expenses, for their service and dedication to our Company. We recognize the substantial time and effort required to serve as a director of a large global investment firm. The goal of our
director compensation program is to help attract, motivate and retain directors capable of making significant contributions to the long-term success of our Company. In order to align the interest of our directors with the interests of our
shareholders, our independent directors are required to own a minimum target number of shares, having a value equivalent to $375,000 (over four times the annual board retainer) within five years of being elected to the Board.
The Compensation Committee is responsible for reviewing director compensation periodically and making recommendations to the Board. The Compensation Committee also reviews the director compensation practices of peer corporations. For more information on these peer groups, please refer to “Role of the Compensation Consultant” on page 64.
How Our Director Compensation Program Aligns with Long-Term Shareholder Interests
Director Compensation – Changes for 2018
The Compensation Committee engaged its independent compensation consulting firm, Semler Brossy, to conduct a competitive market study of its director compensation program for 2018. Based on the study’s findings, and in light of increasing demands and engagement from our Board, the Compensation Committee determined it was appropriate to simplify and modify its director compensation program effective as of the 2018 Annual Meeting of Shareholders. The compensation program changes included:
The modifications to total director compensation preserve our program’s emphasis on deferred equity compensation, which aligns the interests of our directors with the performance of the firm in addition to promoting long-term shareholder interests.
2018 Elements of Director Compensation
For services provided in 2018 prior to the date of the 2018 Annual Meeting of Shareholders, each independent director received an Annual Retainer
paid quarterly in arrears at an annualized rate of $75,000, as well as Committee Annual Retainers paid quarterly in arrears at the following annualized rates: $30,000 for Chair, and $15,000 for members, of the Audit Committee; $20,000 for Chair, and
$10,000 for members, of the Compensation Committee; and $15,000 for Chairs, and $5,000 for members, of the Governance and Risk Committees. Our Lead Independent Director received an additional Annual Retainer paid quarterly in arrears at an
annualized rate of $40,000. Each independent director also received Board and Committee Meeting Fees of $1,500 and $1,000 respectively, paid quarterly in arrears. At least one-third ($25,000 at the annualized rate) of the Annual Retainer for
services provided through the 2018 Annual Meeting of Shareholders was required to be paid in the form of BlackRock common stock. In addition, each independent director had the right to elect to receive BlackRock common stock valued at an equivalent
fair market value in lieu of all or a portion of his or her Annual Retainer and Committee Annual Retainers in excess of such amount.
For services provided in 2018 on and after the date of the 2018 Annual Meeting of Shareholder, each independent director received an Annual Retainer paid quarterly in arrears at an annualized rate of $85,000, as well as Committee Annual Retainers paid quarterly in arrears at the following annualized rates: $40,000 for Chair, and $25,000 for members of, the Audit Committee; and $30,000 for Chairs, and $15,000 for members of, the Compensation, Governance and Risk Committees. Our Lead Independent director received an additional Annual Retainer paid quarterly in arrears at an annualized rate of $100,000. In addition, each independent Director had the right to elect to receive BlackRock common stock valued at an equivalent fair market value in lieu of all or a portion of his or her Annual Retainer and Committee Annual Retainers.
In addition, deferred stock units valued at $175,000 were granted on the last business day of the first quarter of 2018. Beginning with the 2019 Annual Equity Grant, the deferred stock units will be valued at $240,000. These deferred stock units are fully vested on the date of grant and are generally settled in shares of BlackRock common stock on the earlier of the third anniversary of the date of grant and the date the director ceases to be a member of the Board. Directors also have a right to elect, no later than December of the prior calendar year, to receive their annual retainers or annual equity grant in the form of deferred stock units that are fully vested on the date of grant and are settled in shares of BlackRock common stock in a lump sum on the date the director ceases to be a member of the Board or in five equal installments beginning on the date the director ceases to be a member of the Board and continuing on each of the next four anniversaries of such date. Dividend equivalents accrue with respect to deferred stock units and are paid in the form of cash on the settlement date.
The following table shows the elements of director compensation provided by BlackRock for services on and after the date of the 2018 Annual Meeting of Shareholders.
2018 Total Director Compensation
Directors in 2018 who were also employees of BlackRock or designees of PNC are not listed in the below table because they did not receive compensation for serving as directors or Committee members. In 2018, directors who were not employees of BlackRock or PNC each received the amounts set forth in the below table and were also reimbursed for reasonable travel and related expenses. Each director who received compensation had the right to elect to receive BlackRock common stock valued at an equivalent fair market value in lieu of all or a portion of his or her annual retainer. In addition, each director who received compensation had the right to elect to receive their annual retainer or annual equity grant in the form of deferred stock units that settle in a lump sum on the date the director ceases to be a member of the Board or in five equal installments beginning on the date the director ceases to be a member of the Board and continuing on each of the next four anniversaries of such date.
2018 Total Director Compensation Table
Other Executive Officers
In addition to Messrs. Fink and Kapito, whose biographical information is included on pages 15 and 18, respectively, the following is a list of individuals serving as executive officers of BlackRock as of the date of this Proxy Statement, each of whom also serves on BlackRock’s GEC. All of BlackRock’s executive officers serve at the discretion of the Board and CEO.