Toggle SGML Header (+)


Section 1: DEF 14A (DEFINITIVE PROXY STATEMENT)

Definitive Proxy Statement
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant    

Filed by a Party other than the Registrant    

 

Check the appropriate box:

 

    
    Preliminary Proxy Statement        

Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

    Definitive Proxy Statement

 

    

    Definitive Additional Materials

 

    

    Soliciting Material Pursuant to §240.14a-12

 

    

BlackRock, Inc.

 

(Name of Registrant as Specified in Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

    No fee required.

 

    

    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

  1) Title of each class of securities to which transaction applies:

 

 

 

  2) Aggregate number of securities to which transaction applies:

 

 

 

  3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

  4) Proposed maximum aggregate value of transaction:

 

 

 

  5) Total fee paid:

 

 

 

  Fee paid previously with preliminary materials.

 

  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  1) Amount Previously Paid:

 

 

 

  2) Form, Schedule or Registration Statement No.:

 

 

 

  3) Filing Party:

 

 

 

  4) Date Filed:

 

 


Table of Contents

LOGO


Table of Contents

Generating Long-Term

Shareholder Value

 

BlackRock’s mission is to provide better financial futures for our clients. Our framework for creating long-term shareholder value is directly aligned with that mission.

BlackRock, Inc. (“BlackRock” or the ”Company”) has purposefully built a broad, diverse investment platform, strong technology and risk management capabilities and a global presence, in order to meet clients’ needs in all market environments.

Our diverse platform enables us to generate consistent financial results and invest in our business through market cycles. We believe that continuously investing in our platform to meet clients’ evolving needs will enable us to:

 

 

Generate differentiated organic growth

(net new asset

flows from clients)

 

     

 

Leverage our

scale for the

benefit of clients

and shareholders

     

 

Return capital

to shareholders

on a consistent and predictable basis

  

This framework was developed in close collaboration with our Board of Directors (the “Board” or the “Board of Directors”), and the Board continues to play an active role in overseeing our broader strategy and in measuring our ability to successfully execute it.

BlackRock is focused on positioning its investment platform and technology capabilities in advance of change. Throughout BlackRock’s history, we have demonstrated an ability to optimize organic growth in the most efficient way possible while prudently returning capital to shareholders. We prioritize investment in our business to drive growth first and then return “excess” cash flow to shareholders. Our capital repatriation strategy is balanced between dividends, where we target a 40-50% payout ratio, and a consistent share repurchase program.

In 2017, we will continue to make investments in BlackRock’s future – to grow our technology footprint, to expand our investment capabilities and to further enhance our talent and global reach. We are continuously driven by a responsibility to create better financial futures for clients and to deliver long-term value for shareholders.


Table of Contents

LOGO

 

LOGO

 

LOGO

BlackRock, Inc.

55 East 52nd Street

New York, New York, 10055

April 13, 2017

To Our Shareholders:

Thank you for your confidence in BlackRock. It is my pleasure to invite you to our 2017 Annual Meeting, which will be held on May 25, 2017 at the Lotte New York Palace Hotel. As we do each year, we will review our business and financial results for the year, address the voting items in the Proxy Statement and take your questions. Whether you plan to attend the meeting or not, your vote is important and we encourage you to review the enclosed materials and submit your proxy.

In 2016, a year dominated by extraordinary macro and geopolitical uncertainty, BlackRock continued to earn clients’ trust and delivered on each component of our framework for value creation. We generated $202 billion of total net inflows, including long-term net inflows of $181 billion, representing 4% annual organic asset growth. We expanded our operating margin during 2016 while continuing to invest in our business for future growth. And we returned $2.7 billion to shareholders through a combination of dividends and share repurchases. These results highlight the benefits of our differentiated investment, technology and risk management platform and the impact of the strategic investments we’ve made over time to build and evolve our business.

Our diversified business model allows us to manage for the long-term, investing in future growth areas as we adapt to stay ahead of clients’ changing needs. In today’s rapidly evolving environment, investors are looking to BlackRock more than ever before, and the responsibility that we feel for clients has never been greater. We have a responsibility to be a thought and opinion leader for clients. We also have a responsibility to continue to focus on broadening and deepening our investment platform. You can find more detail about BlackRock’s strategy for future growth in my letter to shareholders in this year’s Annual Report.

As both a fiduciary and a public company, we also believe that good corporate governance is critical to maximizing long-term shareholder value. That includes engaging with you, our shareholders, to better understand and address issues that are important to you. We are vocal advocates for the adoption of sound corporate governance policies that include strong Board leadership, prudent management practices and transparency. We believe that we have implemented such a corporate governance framework, and hope that you will agree as you read the Proxy Statement.

It has always been important that BlackRock’s Board of Directors function as a key strategic partner, challenging our leadership team to be better and more innovative. BlackRock’s Board continues to play an integral role in our growth and success. As BlackRock has evolved, so has our Board’s pursuit of strong corporate governance and standards of excellence, and this year, we’ve included additional information in our Proxy Statement related to the role and evolution of our Board.

Thank you again for your commitment to BlackRock. Our Board of Directors and I look forward to seeing you on May 25, 2017 in New York City.

Sincerely,

 

LOGO

Laurence D. Fink

Chairman and Chief Executive Officer

 


Table of Contents

LOGO

 

Notice of 2017

Annual Meeting

of Shareholders

Annual Meeting of Shareholders

 

 

Date:

 

 

 

Thursday, May 25, 2017

 

 

Time:

 

 

 

8:00 am EST

 

Place:  

Lotte New York Palace Hotel

455 Madison Avenue

New York, New York 10022

 

Record Date:

 

 

 

March 30, 2017

 

Agenda and Voting Matters

At or before our Annual Meeting, we ask that you vote on the following items:

 

Proposal

  Board
Recommendation
    Page
Reference
 

Item 1 Election of Directors

    FOR       8  

Item 2 Non-Binding Advisory Vote on Compensation for

Named Executive Officers

    FOR       45  

Item 3 Non-Binding Advisory Vote on Frequency of Future

Executive Compensation Advisory Votes

    ONE YEAR       74  

Item 4 Ratification of Appointment of Independent

Registered Public Accounting Firm

    FOR       75  

Item 5 Shareholder Proposal – Proxy Voting Record on
Executive Compensation

    AGAINST       78  

Item 6 Shareholder Proposal – Production of an Annual Report on

Certain Trade Association and Lobbying Expenditures

    AGAINST       81  


Table of Contents
     
    

 

How to vote: Your vote is important

 

   
    

LOGO

 

Internet

 

LOGO

 

Mail

 

LOGO

 

Telephone

 

LOGO

 

In Person

   
     Visit the website listed on your proxy card. You will need the control number that appears on your proxy card when you access the web page.   Complete and sign the proxy card
and return it in the enclosed postage pre-paid envelope.
 

If your shares are held in the name of a broker, bank or other nominee: Follow
the telephone voting instructions, if any, provided on your voting instruction card. If your shares are registered in your name:
Call 1-800-690-6903 and follow the telephone voting instructions. You will
need the control number that appears
on your proxy.

 

  You may attend the Annual Meeting
and vote by ballot. Your admission ticket to the Annual Meeting is either attached to your proxy card or is in the email by which you received your Proxy Statement.

Please note that we are furnishing proxy materials and access to our Proxy Statement to our shareholders via our website instead of mailing printed copies to each shareholder. By doing so, we save costs and reduce our impact on the environment.

Beginning on April 13, 2017, we will mail or otherwise make available to each of our shareholders a Notice of Internet Availability of Proxy Materials, which contains instructions about how to access our proxy materials and vote online. If you attend the Annual Meeting, you may withdraw your proxy and vote in person, if you so choose.

Your vote is important and we encourage you to vote promptly whether or not you plan to attend the 2017 Annual Meeting of Shareholders of BlackRock, Inc.

By Order of the Board of Directors,

 

LOGO

 

R. Andrew Dickson III

Corporate Secretary

April 13, 2017

 

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Shareholders to be held on Thursday, May 25, 2017: Our Proxy Statement and 2016 Annual Report are available free of charge on our website at www.blackrock.com/corporate/en-us/investor-relations.


Table of Contents

Contents

 

Proxy Summary

    1  
ITEM 1 Election of Directors     8  

Director Nominees

    8  

Director Nomination Process

    9  

Criteria for Board Membership

    10  

Director Candidate Search

    11  

Director Nominee Biographies

    12  

Corporate Governance

    21  

Our Corporate Governance Framework

    21  

Board Leadership Structure

    22  

Board Committees

    25  

Corporate Governance Practices and Policies

    30  

Shareholder Engagement and Outreach

    32  

Communications with the Board

    32  

2016 Director Compensation

    33  

Other Executive Officers

    36  
Ownership of BlackRock Common and Preferred Stock     37  
Section 16(a) Beneficial Ownership Reporting Compliance     39  
Certain Relationships and Related Transactions     40  
Management Development and Compensation Committee Interlocks and Insider Participation     44  
ITEM 2 Non-Binding Advisory Vote on Compensation for Named Executive Officers     45  
Management Development and Compensation Committee Report     46  

Executive Compensation

    47  

Compensation Discussion and Analysis

    47  

Summary of Executive Compensation Tables

    67  
ITEM 3 Non-Binding Advisory Vote on Frequency of Future Executive Compensation Advisory Votes     74  
ITEM 4 Ratification of Appointment of Independent Registered Public Accounting Firm     75  

Fees Incurred by BlackRock for Deloitte & Touche LLP

    76  

Audit Committee Pre-Approval Policy

    76  
Audit Committee Report     77  
ITEM 5 Shareholder Proposal – Proxy Voting Record on Executive Compensation     78  
ITEM 6 Shareholder Proposal – Production of an Annual Report on Certain Trade Association and Lobbying Expenditures     81  

Annual Meeting Information

    84  

Questions and Answers about the Annual Meeting and Voting

    84  

Deadlines for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders

    87  
Other Matters     88  

ANNEX A Non-GAAP Reconciliation

    A-1  
 


Table of Contents
          LOGO

 

Proxy Summary

This summary gives you an overview of selected information in this year’s proxy statement. We encourage you to read the entire Proxy Statement before voting.

Annual Meeting of Shareholders

 

Date:   Thursday, May 25, 2017  
Time:   8:00 am EST  
Location:   Lotte New York Palace Hotel, 455 Madison Avenue, New York, New York 10022  
Record Date:   March 30, 2017  

Voting Matters

Shareholders will be asked to vote on the following matters at the Annual Meeting:

 

    

Board

Recommendation

 

ITEM 1. Election of Directors

 

The Board believes that the director nominees have the knowledge, experience, skills and backgrounds necessary to contribute to an effective and well-functioning Board.

    

Vote FOR

each director nominee

 

 

ITEM 2. Non-Binding Advisory Vote on Compensation for Named Executive Officers

 

BlackRock seeks a non-binding advisory vote from its shareholders to approve the compensation of the named executive officers (“NEOs”) as disclosed and discussed in this Proxy Statement. The Board values the opinions of our shareholders and will take into account the outcome of the advisory vote when considering future executive compensation decisions.

     Vote FOR  

ITEM 3. Non-Binding Advisory Vote on Frequency of Future Executive Compensation Advisory Votes

 

BlackRock seeks a non-binding advisory vote from its shareholders to recommend the frequency of future executive compensation advisory votes for the NEOs. The Board values the opinions of our shareholders and will take into account the outcome of this advisory vote when considering the frequency with which advisory votes are sought.

     Vote ONE YEAR  

ITEM 4. Ratification of Appointment of Independent Registered Public Accounting Firm

 

The Audit Committee has appointed Deloitte & Touche LLP to serve as BlackRock’s independent registered public accounting firm for the 2017 fiscal year and this appointment is being submitted to our shareholders for ratification. The Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP to serve as BlackRock’s independent auditors is in the best interests of the Company and its shareholders.

     Vote FOR  

ITEM 5. Shareholder Proposal – Proxy Voting Record on Executive Compensation

 

The Board believes that the actions requested by the proponent are unnecessary and not in the best interest of our shareholders.

     Vote AGAINST  

ITEM 6. Shareholder Proposal – Production of an Annual Report on Certain Trade Association

and Lobbying Expenditures

 

The Board believes that the actions requested by the proponent are unnecessary and not in the best interest of our shareholders.

     Vote AGAINST  

 

BLACKROCK, INC. 2017 PROXY STATEMENT    1


Table of Contents
     Proxy Summary    Board Composition     

 

 

 

   What’s

   New?

 

      Updates to our Proxy      

      Statement this year

 

    

We have updated our Proxy Statement this year to help our shareholders better understand our Company’s governance and compensation practices. We believe a broader understanding of our Company and our perspective on governance will be beneficial to you as you consider many of the matters on which we are asking you to vote.

 

    

In this year’s Proxy Statement you will find new content and a new format to help facilitate your understanding of key corporate governance metrics and executive compensation policies. In addition, this year’s Proxy Statement includes a discussion of recent changes to our governance policies, including the adoption of our new Lead Independent Director Guidelines as well as enhanced disclosure on Board and executive succession and compensation.

 

Board Composition

18 director nominees

The Nominating and Governance Committee (the “Governance Committee”) regularly reviews the overall composition of the Board and its Committees to assess whether it reflects the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to BlackRock’s current and future global strategy, business and governance.

Board Tenure

The Board considers length of tenure when reviewing nominees in order to maintain an overall balance of experience, continuity and fresh perspective.

 

 

 

   0 - 5 Years:

 

 

 

 

6 - 10 Years:

 

 

 

 

11+ Years:

 

 

 

 

8 years: Average tenure of all director nominees

 

   8 director nominees

   (44%)

 

 

 

6 director nominees

(33%)

 

 

4 director nominees

(22%)

 

  6 years: Average tenure of independent director nominees

Board Diversity

 

LOGO   

Current & Former CEOs

13 of 18

 

   LOGO   

Non-U.S. or Dual Citizens

6 of 18

 

   LOGO   

Women

4 of 18

 

Board Independence and Lead Independent Director

Each year the Board reviews and evaluates our Board leadership structure. The Board has appointed Laurence Fink as its Chairman and Murry Gerber as its Lead Independent Director.

 

                                        15  

of BlackRock’s 18 director

nominees are independent

 

2    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Proxy Summary    Our Director Nominees      LOGO

 

Our Director Nominees

 

Nominee

  Age at
Annual
Meeting
  Primary Occupation   Director Since  

Other Public Co.
Boards

(within 5 years)

  Committee
Memberships

 

Abdlatif Yousef Al-Hamad

 

 

79

 

 

Director General & Chairman, Arab Fund for Economic and Social Development

 

 

 

2009

 

 

0

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Mathis Cabiallavetta

 

 

72

 

 

Former Chairman of UBS, Vice Chairman of Swiss Re Ltd. and Marsh & MacLennan Companies, Inc.

 

 

 

2007

 

 

2

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Pamela Daley

 

 

64

 

 

Former Senior Vice President, General Electric Company Corporate Business Development and Senior Advisor to Chairman

 

 

 

2014

 

 

3

  LOGO   LOGO   LOGO   LOGO   LOGO

 

William S. Demchak

 

 

 

54

 

 

 

Chairman, CEO and President of PNC Financial Services Group, Inc. (“PNC”)

 

 

 

2003

 

 

 

1

 

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Jessica P. Einhorn

 

 

69

 

 

Former Dean of Paul H. Nitze School of Advanced International Studies at The Johns Hopkins University; former Managing Director, World Bank

 

 

 

2012

 

 

1

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Laurence D. Fink

 

 

 

64

 

 

 

Chairman and CEO of BlackRock

 

 

 

1998

 

 

 

0

 

 

 

LOGO   LOGO   LOGO   LOGO   LOGO

 

 

Fabrizio Freda

 

 

59

 

 

President and CEO of The Estée Lauder Companies Inc.

 

 

 

2012

 

 

1

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Murry S. Gerber

 

 

64

 

 

Former Executive Chairman, Chairman and CEO of EQT Corporation

 

 

 

2000

 

 

3

 

  LOGO   LOGO   LOGO   LOGO   LOGO

 

James Grosfeld

 

 

79

 

 

Former Chairman and CEO of Pulte Homes, Inc.

 

 

 

1999

 

 

2

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Robert S. Kapito

 

 

 

60

 

 

 

President of BlackRock

 

 

 

2006

 

 

 

0

 

 

 

LOGO   LOGO   LOGO   LOGO   LOGO

 

 

Sir Deryck Maughan

 

 

69

 

 

Former Senior Advisor, Partner and Managing Director of Kohlberg Kravis Roberts & Co. L.P.

 

 

 

2006

 

 

2

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Cheryl D. Mills

 

 

52

 

 

Founder and CEO of BlackIvy Group and former Chief of Staff to Secretary of State Hillary Clinton

 

 

 

2013

 

 

0

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Gordon M. Nixon

 

 

60

 

 

Former President, CEO and Director of Royal Bank of Canada

 

 

 

2015

 

 

2

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Charles H. Robbins

 

 

 

51

 

 

 

CEO and Director of Cisco Systems, Inc.

 

 

 

N/A

 

 

 

1

 

 

 

LOGO   LOGO   LOGO   LOGO   LOGO

 

 

Ivan G. Seidenberg

 

 

70

 

 

Former Chairman and CEO of Verizon Communications Inc.

 

 

 

2011

 

 

2

  LOGO   LOGO   LOGO   LOGO   LOGO

 

Marco Antonio Slim Domit

 

 

49

 

 

Chairman of Grupo Financiero Inbursa, S.A.B. de C.V.

 

 

 

 

2011

 

 

4

 

  LOGO   LOGO   LOGO   LOGO   LOGO

 

John S. Varley

 

 

 

61

 

 

 

Former CEO of Barclays PLC

 

 

 

2009

 

 

 

2

 

 

 

LOGO   LOGO   LOGO   LOGO   LOGO

 

 

Susan L. Wagner

 

 

55

 

 

Former Vice Chairman of BlackRock

 

 

 

2012

 

 

2

 

 

LOGO   LOGO   LOGO   LOGO   LOGO

 

          LOGO

 

BLACKROCK, INC. 2017 PROXY STATEMENT    3


Table of Contents
     Proxy Summary    Governance Highlights     

 

Governance Highlights

We are vocal advocates for the adoption of sound corporate governance policies that include strong Board leadership, prudent management practices and transparency.

Highlights of our governance practices include:

 

  Annual Election of Directors

 

  Majority Voting for Directors in Uncontested Elections

 

  Lead Independent Director May Call Special Meetings of Directors Without Management Present

 

  Executive Sessions of Independent Directors

 

  Annual Board and Committee Evaluations

 

  Risk Oversight by Board and Committees

 

  Strong Investor Outreach Program

 

  Robust Stock Ownership Requirements for Directors and Executives

 

  Annual Advisory Approval of Executive Compensation

 

  Adoption of Proxy Access
 

 

Stock Ownership Guidelines

Our stock ownership guidelines require the Company’s Global Executive Committee (“GEC”) members to own and maintain shares with a target value of:

 

    $10 million for the CEO;   

 

As of December 31, 2016, all NEOs exceeded our stock ownership guidelines.     

 

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

Shareholder Engagement and Outreach

We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important to you. We report back to our Board on this engagement and on specific issues to be addressed.

Executive management, Investor Relations and the Corporate Secretary engage on a regular basis with shareholders to understand their perspectives on a variety of corporate governance matters, including executive compensation, corporate governance policies and corporate sustainability practices. We also communicate with shareholders through a number of routine forums, including quarterly earnings presentations, U.S. Securities and Exchange Commission (“SEC”) filings, the Annual Report and Proxy Statement, the annual shareholder meeting, investor meetings and conferences and web communications. We relay shareholder feedback and trends on corporate governance developments to our Board and its Committees and work with them to both enhance our governance practices and improve our disclosures.

 

4    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Proxy Summary    Compensation Policies And Practices      LOGO

 

Compensation Policies and Practices

Our commitment to design an executive compensation program that is consistent with responsible financial and risk management is reflected in the following policies and practices:

 

 

 

What We Do

 

LOGO  Review pay and performance alignment;

 

LOGO  Balance short and long-term incentives, cash and equity and fixed and variable pay elements;

 

LOGO  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;

 

LOGO  Apply a one-year minimum vesting requirement to awards granted under our stock incentive plan, subject to limited exceptions;

 

LOGO  Maintain robust stock ownership and retention guidelines;

 

LOGO  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); and

 

prohibits engaging in any transactions that have the effect of hedging the economic risks and rewards of BlackRock equity awards.

 

LOGO  Limit perquisites;

 

LOGO  Assess and mitigate risk in compensation plans, as described
in “Risk Assessment of Compensation Plans” on page 58;

 

LOGO  Hold an advisory vote on executive compensation on an
annual basis in order to provide shareholders with
a frequent opportunity to give feedback on compensation
programs; and

 

LOGO  Review the independence of the Management Development and Compensation Committee’s (“MDCC”) independent compensation consultant on an annual basis.

     

 

What We Don’t Do

 

LOGO  No ongoing employment agreements or guaranteed compensation arrangements
with our NEOs;

 

LOGO  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;

 

LOGO   No dividends or dividend equivalents on unearned RS or RSUs; no dividend equivalents on stock options or stock appreciation rights;

 

LOGO  No repricing of stock options;

 

LOGO  No cash buyouts of underwater stock options;

 

LOGO  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;

 

LOGO  No supplemental retirement benefit arrangements with our NEOs; and

 

LOGO  No supplemental severance benefit arrangements with our NEOs outside of the standard severance benefits under BlackRock’s Severance Pay Plan (the “Severance Plan”).

           

 

BLACKROCK, INC. 2017 PROXY STATEMENT    5


Table of Contents
     Proxy Summary    2016 Performance Highlights     

 

2016 Performance Highlights1

BlackRock’s 2016 results demonstrated the strength and stability of our diversified, multi-client platform. Full-year results reflected industry-leading organic growth, continued operating margin expansion and consistent capital management. Investment performance results across our active and index strategies as of December 31, 2016 are detailed in Item 1 of our 2016 Form 10-K.

 

Differentiated Organic Growth

Organic asset growth of 4% in 2016 contributed to positive Organic Revenue growth2:

 

  Long-term net inflows of $181 billion reflected positive net inflows across asset classes and benefitted from significant inflows into iShares;

 

  Flows contributed to long-term annual organic asset growth of 13% in iShares, 2% in Institutional and (2)% in Retail;

 

  BlackRock Solutions achieved 11% revenue growth; and

 

  Total revenue declined 2% from 2015 to $11,155 million driven by a decline in performance fees.

 

 

LOGO

Consistent Capital Return

$2.7 billion was returned to shareholders in 2016:

 

  Annual dividend of $9.16 per share, reflected an increase of 5% from $8.72 in 2015; and

 

  $1.1 billion of outstanding shares were repurchased in 2016, driving a reduction in net share count of 2.5 million shares.

 

 

LOGO

Operating Leverage

Operating income, as adjusted, was flat versus 2015. Continued margin expansion was driven by realizing the benefits of scale and expense discipline:

 

  As adjusted operating income of $4,674 million was flat versus 2015, despite a 2% decline in revenue;

 

  As adjusted compensation and benefits expense-to-revenue ratio was 34.5%, representing a decrease of 40 basis points (“bps”) from 2015;

 

  G&A expense of $1.3 billion was 6% below 2015 levels despite the impact of acquisitions, reflecting expense awareness in a volatile market environment; and

 

  Operating Margin, as adjusted, of 43.7% was up 80 bps from 2015.

 

 

LOGO

Earnings Growth

As adjusted diluted earnings per share (“EPS”) of $19.29 declined 2% versus 2015:

 

  Despite organic growth, operating margin expansion and share repurchases in 2016, EPS declined versus 2015 due to lower non-operating income and a higher tax rate in 2016.

 

LOGO

 

 

 

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

 

6    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Proxy Summary    Pay-for-Performance Compensation Structure for NEOs      LOGO

 

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 executive compensation is performance based and “at risk.” Compensation mix percentages shown below are based on 2016 year-end compensation decisions for individual NEOs by the MDCC.

 

 

LOGO

 

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 MDCC under the Second Amended and Restated 1999 Stock Award and Incentive Plan (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 2016 long-term incentive BPIP awards and the value of the equity portion of the bonus for 2016 annual incentive awards was converted into RSUs by dividing the award value by $375.22, which represented the average of the high and low prices per share of common stock of BlackRock on January 17, 2017.

 

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 54.

NEO Total Annual Compensation Summary

Following a review of full-year business and individual NEO performance, the MDCC determined 2016 total annual compensation outcomes for each NEO, as outlined in the table below.

 

                2016 Annual Incentive Award                                    
           

Name

     Base
Salary
       Cash        Deferred
Equity
       Long-Term
Incentive Award
(“BPIP”)
       Total Annual
Compensation
(“TAC”)
       % change in
TAC vs. 2015
 

Laurence D. Fink

     $ 900,000        $ 8,000,000        $ 4,150,000        $ 12,450,000        $ 25,500,000          -2%  

Robert S. Kapito

     $ 750,000        $ 6,500,000        $ 3,209,000        $ 9,626,000        $ 20,085,000          1%  

Robert L. Goldstein

     $ 500,000        $ 2,850,000        $ 1,900,000        $ 2,100,000        $ 7,350,000          1%  

J. Richard Kushel

     $ 500,000        $ 2,490,000        $ 1,540,000        $ 1,970,000        $ 6,500,000          1%  

Gary S. Shedlin

     $ 500,000        $ 2,350,000        $ 1,400,000        $ 1,850,000        $ 6,100,000          2%  

The amounts listed above as “2016 Annual Incentive Award: Deferred Equity“ and “Long-Term Incentive Award (“BPIP”)“ were granted in January 2017 in the form of equity and are separate from the cash award amounts listed above as “2016 Annual Incentive Award: Cash.” In conformance with SEC requirements, the 2016 Summary Compensation Table on page 67 reports equity in the year granted, but cash in the year earned.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    7


Table of Contents
         

 

Item 1:

Election of Directors

 

 

LOGO

Laurence D. Fink

Chairman and Chief Executive Officer

Director Nominees

Our Board has nominated 18 directors for election at this year’s Annual Meeting on the recommendation of our Governance Committee. Each director will serve until our next annual meeting and until his or her successor has been duly elected, or until his or her earlier death, resignation, removal or retirement.

We expect each director nominee to be able to serve if elected. If a nominee is unable to serve, proxies will be voted in favor of the remainder of those directors nominated and may be voted for substitute nominees, unless the Board decides to reduce its total size.

All of the nominees have agreed to serve if elected. If all 18 nominees are elected, BlackRock’s Board will consist of 18 directors, 15 of whom, representing approximately 83% of the Board, will be “independent” as defined in the New York Stock Exchange (the “NYSE”) listing standards.

Stockholder Agreement with The PNC Financial Services Group, Inc.

BlackRock’s stockholder agreement with The PNC Financial Services Group, Inc. (the “PNC Stockholder Agreement”) provides, subject to the waiver provisions of the agreement, that BlackRock will use its best efforts to cause the election at each annual meeting of shareholders so that the Board will consist of:

 

  no more than 19 directors,

 

  not less than two nor more than four directors who will be members of BlackRock management,

 

  two directors who will be designated by PNC, and

 

  the remaining directors being independent for purposes of the rules of the NYSE and not designated by or on behalf of PNC or any of its affiliates.

PNC has designated one member of the Board, William S. Demchak, Chairman, President and Chief Executive Officer of PNC. PNC has notified BlackRock that for the time being it will not designate a second director to the Board, although it retains the right to do so at any time in accordance with the PNC Stockholder Agreement. PNC has additionally been permitted to invite an observer to attend meetings of the Board as a non-voting guest. The PNC observer is Gregory B. Jordan, the General Counsel and Head of Regulatory and Governmental Affairs of PNC. Laurence D. Fink and Robert S. Kapito are members of BlackRock’s management team and are currently members of the Board. For additional detail on the PNC Stockholder Agreement, see “Certain Relationships and Related Transactions – Stockholder Agreement with PNC” on page 41.

 

 

8    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Item 1: Election of Directors    Director Nominees     

 

Majority Vote Standard for Election of Directors

Directors are elected by a majority of the votes cast in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of shares voted “against” that director nominee). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors would be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. Whether an election is contested is determined seven days in advance of when we file our definitive Proxy Statement with the SEC.

Director Resignation Policy

Any incumbent director who fails to receive a majority of votes cast must tender his or her resignation to the Board. The Governance Committee would then make a recommendation to the Board about whether to accept or reject the resignation or take other action. The Board will act on the Governance Committee’s recommendation and publicly disclose its decision and rationale within 90 days from the date the election results are certified. The director who tenders his or her resignation under the Director Resignation Policy will not participate in the Board’s decision.

The Board established a mandatory retirement age of 75 years for directors, as reflected in BlackRock’s Corporate Governance Guidelines. When the mandatory retirement age of 75 was adopted, the Board determined that it was in the best interest of the Company to allow directors who had already reached the age of 70 to serve until reaching the age of 80.

Director Nomination Process

The Governance Committee oversees the director nomination process. The Committee leads the Board’s annual review of Board performance and reviews and recommends to the Board BlackRock’s Corporate Governance Guidelines, which include the minimum criteria for membership on the Board. The Governance Committee also assists the Board in identifying individuals qualified to become Board members and recommends to the Board a slate of candidates, which may include both incumbent and new director nominees, to submit for election at each annual meeting of shareholders. The Committee may also recommend that the Board elect new members to the Board to serve until the next annual meeting of shareholders.

Identifying and Evaluating Candidates for Director

The Governance Committee seeks advice on potential director candidates from current directors and executive officers when identifying and evaluating new candidates for director. The Governance Committee also may direct management to engage third-party firms that specialize in identifying director candidates to assist with its search. Shareholders can recommend a candidate for election to the Board by submitting director recommendations to the Governance Committee. For information on the requirements governing shareholder nominations for the election of directors, please see “Deadlines for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders” on page 87.

The Governance Committee then reviews publicly available information regarding each potential director candidate to assess whether the candidate should be considered further. If the Governance Committee determines that the candidate warrants further consideration, the Chairperson (or a person designated by the Governance Committee) will contact the candidate. If the candidate expresses a willingness to be considered and to serve on the Board, the Governance Committee typically requests information from the candidate and reviews the candidate’s accomplishments and qualifications against the criteria described below. The Governance Committee’s evaluation process does not vary based on whether a candidate is recommended by a shareholder, although the Governance Committee may consider the number of shares held by the recommending shareholder and the length of time that such shares have been held.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    9


Table of Contents
     Item 1: Election of Directors    Criteria for Board Membership     

 

Criteria for Board Membership

Director Qualifications and Attributes

The Governance Committee and the Board take into consideration a number of factors and criteria in reviewing candidates for nomination to the Board. The Board believes that at a minimum a candidate must demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of BlackRock. Equally important, a director candidate must have an impeccable record and reputation for honest and ethical conduct in his or her professional and personal activities.

In addition, nominees for director are selected on the basis of experience, diversity, knowledge, skills, expertise, an ability to make independent analytical inquiries, an understanding of BlackRock’s business environment and a willingness to devote adequate time and effort to the responsibilities of the Board.

Diversity

Although the Board has not set specific goals for diversity, it believes a diverse mix of knowledge, experience, skills, backgrounds and viewpoints enhances the Board’s capabilities. In reviewing candidates, the Governance Committee takes into consideration a candidate’s professional background, gender, race, national origin and age. The Board addresses whether it has achieved an appropriate level of diversity as part of its consideration of the Board’s composition in its annual self-evaluation process. The Governance Committee periodically reviews the overall composition of the Board and its Committees to assess whether it reflects the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to BlackRock’s current and future global strategy, business and governance.

Our 18 director nominees offer a diverse set of qualifications and perspectives and possess a wealth of leadership and professional experience in areas relevant to BlackRock’s business and strategy. Core qualifications and areas of expertise represented on our Board include:

 

Senior Executive & Corporate Governance     Public Company & Financial Reporting
                                                                   
                                                                       
   LOGO     18 of 18                              LOGO     12 of 18                    
                                                                       
Directors bring senior executive experience on matters relating to corporate governance, management, operations and compensation.     Directors have experience in the oversight and reporting of public company financial and operating results.
                                                                   
Global Business     Public Policy & Government/Regulatory Affairs
                                                                   
                                                                       
   LOGO     16 of 18                              LOGO     10 of 18                    
                                                                       
Directors have extensive global operating expertise.     Directors possess experience in managing governmental and regulatory affairs.
                                                                   
Risk Management & Compliance     Branding & Marketing
                                                                   
                                                                       
   LOGO     13 of 18                            LOGO     6 of 18                          
                                                                       

Directors have experience in risk management and compliance oversight relevant to corporate and fiduciary responsibilities.

   

Directors have expertise in brand development, marketing and sales in local markets at a global scale.

                                                                   

Financial Services

    Technology
                                                                   
                                                                       
   LOGO     12 of 18                          LOGO     of 18                          
                                                                       

Directors possess in-depth knowledge of the financial services industry.

    Directors possess experience in the development of new technology and leading innovation initiatives.

 

10    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Item 1: Election of Directors    Criteria for Board Membership     

 

Board Tenure

To ensure the Board has an appropriate balance of experience, continuity and fresh perspective, the Board considers length of tenure when reviewing nominees. The average tenure of BlackRock’s director nominees is approximately 8 years, while the average tenure for independent director nominees is 6 years.

Four directors, comprising 22% of the Board, have served more than 10 years and bring a wealth of experience and knowledge concerning BlackRock. Six directors, comprising 33% of the Board, have served between 6 and 10 years.

Following the 2017 Annual Meeting of Shareholders, assuming the nominated directors are elected, there will be eight directors, comprising 44% of the Board, who have joined the Board over the past five years and bring fresh perspective to Board deliberations.

Compliance with Regulatory and Independence Requirements

The Governance Committee takes into consideration regulatory requirements, including competitive restrictions and financial institution interlocks, independence requirements under the NYSE listing standards and our Corporate Governance Guidelines in its review of candidates for the Board and Board Committees. The Governance Committee also considers a candidate’s current and past positions held, including past and present board and committee memberships, as part of its evaluation.

Service on Other Public Company Boards

Each of our directors must have the time and ability to make a constructive contribution to the Board as well as a clear commitment to fulfilling the fiduciary duties required of directors and serving the interests of the Company’s shareholders. BlackRock’s Chief Executive Officer does not currently serve on the board of directors of any other public company, and none of our current directors serve on more than four public company boards, including BlackRock’s Board.

Director Candidate Search

Consistent with BlackRock’s age-based retirement policy, at least six of BlackRock’s current directors will retire within the next six years. In order to maintain a Board with an appropriate mix of experience and qualifications, the Chair of the Governance Committee initiated a search for new Board member candidates this past year. Consistent with our long-term strategic goals and the qualifications and attributes described above, early search criteria include significant experience in financial services, the technology sector and consumer branding as well as experience in the Middle East and Asia-Pacific regions. In February of this year, the Governance Committee identified Charles H. Robbins as a candidate with significant leadership and experience in the technology field and recommended him to the Board for consideration. Mr. Robbins was recommended for consideration to the Governance Committee by a third party search firm. On April 5, 2017 the Board voted unanimously to nominate him to join our Board.

Board Recommendation

For this year’s election, the Board has nominated 18 candidates. The Board believes these nominees provide BlackRock with the combined depth and breadth of skills, experience and qualities required to contribute to an effective and well-functioning Board. The composition of the current Board reflects a diverse range of skills, qualifications and professional experience that is relevant to our global strategy, business and governance.

The following biographical information about each director nominee highlights the particular experience, qualifications, attributes and skills possessed by each director nominee that led the Board to determine that he or she should serve as director. All director nominee biographical information is as of March 30, 2017.

 

 

 

LOGO

 

 

  The Board of Directors recommends shareholders vote “FOR” the election of each of the following 18 director nominees.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    11


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

Director Nominee Biographies

 

 

LOGO

    

Abdlatif Yousef Al-Hamad

 

Mr. Al-Hamad has served as Director General and Chairman of the board of directors of the Arab Fund for Economic and Social Development since 1985. He was the Minister of Finance and Planning of Kuwait from 1981 to 1983 and prior to that served for 18 years as the Director General of the Kuwait Fund for Arab Economic Development. He is also a member of the Board of the Kuwait Investment Authority. Mr. Al-Hamad chaired the Development Committee Task Force on Multilateral Development Banks and has served on the International Advisory Boards of Morgan Stanley, Marsh & McLennan Companies, Inc., American International Group, Inc. and the National Bank of Kuwait.

 

Qualifications

Mr. Al-Hamad’s extensive experience in the strategically important Middle East region and his expertise in international finance, economic policy and government relations provide the Board with an experienced outlook on international business strategy and global capital markets.

 

Other Public Company Directorships (within the past 5 years)

 

    None

LOGO     

Mathis Cabiallavetta

 

Mr. Cabiallavetta has served as a member of the board of directors of Swiss Re Ltd. since 2008 and as the Vice Chairman of its board between 2009 and 2015. Mr. Cabiallavetta retired as Vice Chairman, Office of the Chief Executive Officer of Marsh & McLennan Companies, Inc. and as Chairman of Marsh & McLennan Companies International in 2008. Prior to joining Marsh & McLennan Companies, Inc. in 1999, Mr. Cabiallavetta was Chairman of the board of directors of Union Bank of Switzerland (UBS A.G.).

 

Qualifications

As a former leader of Swiss Re Ltd. and Marsh & McLennan Companies, Inc. as well as Union Bank of Switzerland (UBS A.G.), Mr. Cabiallavetta brings executive experience from these large and complex multinational businesses and provides substantial expertise in global capital markets, and as a result he offers unique insights to the Board’s oversight of BlackRock’s global operations and risk management.

 

Other Public Company Directorships (within the past 5 years)

 

    Swiss Re Ltd. (2008 – present) (Vice Chairman from 2009 – April 2015)

 

    Philip Morris International Inc. (2002 – 2014)

 

Age 79 Tenure 8 Years Committees Nominating & Governance Risk Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Public Policy & Government/Regulatory Affairs Risk Management & Compliance Age 72 Tenure 9 Years Committees Audit Risk Nominating & Governance Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services Risk Management & Compliance

 

12    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

Pamela Daley

 

Ms. Daley retired from General Electric Company (“GE”) in January 2014, having most recently served as a Senior Advisor to its Chairman from April 2013 to January 2014. Prior to this role, Ms. Daley served as Senior Vice President of GE’s Corporate Business Development from 2004 to 2013 and as Vice President and Senior Counsel for Transactions from 1991 to 2004. As Senior Vice President, Ms. Daley was responsible for GE’s mergers, acquisitions and divestiture activities worldwide. Ms. Daley joined GE in 1989 as Tax Counsel. Previously, Ms. Daley was a Partner of Morgan, Lewis & Bockius, where she specialized in domestic and cross-border tax-oriented financings and commercial transactions. Ms. Daley currently serves as a director of both Patheon N.V. and SecureWorks Corp. Ms. Daley previously served on the board of BG Group, an international oil and gas company traded on the London Stock Exchange until it was acquired by Royal Dutch Shell on February 15, 2016.

 

Qualifications

With over 35 years of transactional experience and more than 20 years as an executive at GE, one of the world’s leading multinational corporations, Ms. Daley brings significant experience and strategic insight to the Board in the areas of leadership development, international operations, transactions, business development and strategy.

 

Other Public Company Directorships (within the past 5 years)

 

    SecureWorks Corp. (2016 – present)

 

    Patheon N.V. (2016 – present)

 

    BG Group (2014 – February 2016)

LOGO     

William S. Demchak

 

Mr. Demchak has served as Chairman of the board of directors of PNC since April 2014, as Chief Executive Officer since April 2013 and as President since April 2012. Prior to that, Mr. Demchak held a number of supervisory positions at PNC, including Senior Vice Chairman, Head of Corporate and Institutional Banking and Chief Financial Officer. Before joining PNC in 2002, Mr. Demchak served as the Global Head of Structured Finance and Credit Portfolio for J.P. Morgan Chase & Co. and additionally held key leadership roles at J.P. Morgan prior to its merger with Chase Manhattan Corporation in 2000.

 

Qualifications

As the Chairman, President and Chief Executive Officer of PNC, a large, national diversified financial services company providing traditional banking and asset management services, Mr. Demchak brings substantial expertise in financial services, risk management and corporate governance to bear as a member of the Board. Mr. Demchak was designated to serve on the Board by PNC pursuant to the PNC Stockholder Agreement.

 

Other Public Company Directorships (within the past 5 years)

 

    PNC (2013 – present) (Chairman from April 2014 – present)

 

BLACKROCK, INC. 2017 PROXY STATEMENT    13

Age 64 Tenure 3 Years Committees Audit (Chair) Executive Risk Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services Public Policy & Government/Regulatory Affairs Age 54 Tenure 14 Years Committees Executive Risk Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Financial Services Risk Management & Compliance Branding & Marketing


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

Jessica P. Einhorn

 

Ms. Einhorn served as Dean of the Paul H. Nitze School of Advanced International Studies at The Johns Hopkins University from 2002 until June 2012. Prior to becoming Dean, she was a consultant at Clark & Weinstock, a strategic consulting firm. Ms. Einhorn also spent nearly 20 years at the World Bank, concluding as Managing Director in 1998. Between 1998 and 1999, Ms. Einhorn was a Visiting Fellow at the International Monetary Fund. Prior to joining the World Bank in 1978, she held positions at the U.S. Treasury, the U.S. State Department and the International Development Cooperation Agency of the United States. Ms. Einhorn currently serves as a Director of both the Peterson Institute for International Economics and the National Bureau of Economic Research. As of July 2012, Ms. Einhorn is resident at The Rock Creek Group in Washington, D.C., where she is a Senior Advisor and longstanding member of The Rock Creek Group Advisory Board.

 

Qualifications

Ms. Einhorn’s leadership experience in academia and at the World Bank, along with her experience in the U.S. government and at the International Monetary Fund, provides the Board with a unique perspective and an in-depth understanding of international finance, economics and public policy. Through her service with other public companies, Ms. Einhorn also has developed expertise in corporate governance and risk oversight.

 

Other Public Company Directorships (within the past 5 years)

 

    Time Warner, Inc. (2005 – present)

LOGO

 

    

Laurence D. Fink

 

Mr. Fink is Founder, Chairman and Chief Executive Officer of BlackRock, Inc. He also leads the firm’s Global Executive Committee. He is responsible for senior leadership development and succession planning, defining and reinforcing BlackRock’s vision and culture, and engaging relationships with key strategic clients, industry leaders, regulators and policy makers. Mr. Fink co-founded BlackRock in 1988, and under his leadership, the firm has grown into a global leader in investment management, risk management and advisory services for institutional and retail clients.

 

Qualifications

As one of the founding principals and Chief Executive Officer of BlackRock since 1988, Mr. Fink brings exceptional leadership skills and in-depth understanding of BlackRock’s businesses, operations and strategy. His extensive and specific knowledge of BlackRock and its business enable him to keep the Board apprised of the most significant developments impacting the Company and to guide the Board’s discussion and review of the Company’s strategy.

 

Other Public Company Directorships (within the past 5 years)

 

     None

 

14    BLACKROCK, INC. 2017 PROXY STATEMENT

Age 69 Tenure 4 Years Committees Risk Qualifications Senior Executive & Corporate Governance Global Business Financial Services Public Policy & Government/Regulatory Affairs Risk Management & Compliance Age 64 Tenure 17 Years Committees Executive (Chair) Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Company & Financial Reporting Public Policy & Government/Regulatory Affairs


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

Fabrizio Freda

 

Mr. Freda has served as President and Chief Executive Officer of The Estée Lauder Companies Inc. (“Estée Lauder”) since July 2009, and is also a member of its board of directors. Mr. Freda previously served as Estée Lauder’s President and Chief Operating Officer from 2008 to July 2009. Estée Lauder is a global leader in beauty with more than 25 brands and over 40,000 employees worldwide. Prior to joining Estée Lauder, Mr. Freda held various senior positions at Procter & Gamble Company over the span of 20 years. From 1986 to 1988, Mr. Freda directed marketing and strategic planning for Gucci SpA.

 

Qualifications

Mr. Freda’s extensive experience in product strategy, innovation and global branding brings valuable insights to the Board. His chief executive experience at Estée Lauder, an established multinational manufacturer and marketer of prestige brands, provides the Board with unique perspectives on its own marketing, strategy and innovation initiatives.

 

Other Public Company Directorships (within the past 5 years)

 

    The Estée Lauder Companies Inc. (2009 – present)

LOGO     

Murry S. Gerber*

 

Mr. Gerber has served as a member of the boards of directors of U.S. Steel Corporation since July 2012 and Halliburton Company since January 2012. Previously, Mr. Gerber served as Executive Chairman of EQT Corporation, an integrated energy production company, from 2010 until May 2011, as its Chairman from 2000 to 2010, as its President from 1998 to 2007 and as its Chief Executive Officer from 1998 to 2000.

 

Qualifications

As a former leader of a large, publicly traded energy production company and as a current or former member of the board of directors of three large, publicly traded companies, Mr. Gerber brings to the Board extensive expertise and insight into corporate operations, management and governance matters, as well as expert knowledge of the energy sector.

 

Other Public Company Directorships (within the past 5 years)

 

    U.S. Steel Corporation (2012 – present)

 

    Halliburton Company (2012 – present)

 

    EQT Corporation (1998 – 2012) (Chairman from 2000 – 2010 and Executive Chairman from 2010 – 2011)

 

*   The Board has elected Mr. Gerber to serve as the new Lead Independent Director effective as of May 25, 2017.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    15

Age 59 Tenure 4 Years Committees Nominating & Governance Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Technology Branding & Marketing Age 64 Tenure 17 Years Committees Audit Executive Management Development & Compensation (chair) Qualifications 1 Senior Executive & Corporate Governance 4 Public Company & Financial Reporting 3 2 Global Business 3 Risk Management & Compliance 5 Technology


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

James Grosfeld

 

Mr. Grosfeld was formerly Chairman of the board of directors and Chief Executive Officer of Pulte Homes, Inc. (renamed PulteGroup, Inc. in 2010), a home builder and mortgage banking and financing company, from 1974 to 1990 and rejoined its board from 2015 to 2016 as an independent director. Mr. Grosfeld served as a trustee of Lexington Realty Trust from 2003 to 2015.

 

Qualifications

As the former Chairman and Chief Executive Officer of Pulte Homes, Inc., the nation’s largest homebuilder, Mr. Grosfeld provides our Board with practical management and leadership insight on public company governance as well as expertise in financial services and real estate matters.

 

Other Public Company Directorships (within the past 5 years)

 

    Lexington Realty Trust (2003 – December 2015)

 

    PulteGroup, Inc. (2015 – April 2016)

LOGO     

Robert S. Kapito

 

Mr. Kapito has been President of BlackRock since 2007 and is a member of BlackRock’s Global Executive Committee and Chairman of the Global Operating Committee. Mr. Kapito co-founded BlackRock in 1988 and is also a director of iShares, Inc. He is responsible for the day-to-day oversight of BlackRock’s key operating units including Investment Strategies, Client Businesses, Technology & Operations, and Risk & Quantitative Analysis. Prior to 2007, Mr. Kapito served as Vice Chairman of BlackRock and Head of BlackRock’s Portfolio Management Group.

 

Qualifications

As one of our founding principals, Mr. Kapito has served as an executive leader of BlackRock since 1988. He brings to the Board industry and business acumen in addition to in-depth knowledge about BlackRock’s businesses, investment strategies and risk management, as well as extensive experience overseeing day-to-day operations.

 

Other Public Company Directorships (within the past 5 years)

 

     None

 

16    BLACKROCK, INC. 2017 PROXY STATEMENT

Age 79 Tenure 17 Years Committees Management Development & Compensation Nominating & Governance Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services Public Policy & Government/Regulatory Affairs Age 60 Tenure 10 Years Committees None Qualifications Senior Executive & Corporate Governance Global Business Financial Services Risk Management & Compliance Branding & Marketing


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

Sir Deryck Maughan

 

Sir Deryck served as a Senior Advisor of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) from January 2013 until December 2014. Previously, he was a Partner and Head of the Financial Institutions Group of KKR since 2009 and Managing Director since 2005. He was Chairman of KKR Asia from 2005 to 2009. Prior to joining KKR, Sir Deryck served as Vice Chairman of Citigroup from 1998 to 2004, as Chairman and Chief Executive Officer of Salomon Brothers from 1992 to 1997 and as Chairman and Chief Executive Officer of Salomon Brothers Asia from 1986 to 1991. He also was Vice Chairman of the U.S.-Japan Business Council from 2002 to 2004. Prior to joining Salomon Brothers in 1983, Sir Deryck worked at Goldman Sachs. He served in H.M. Treasury (UK Economics and Finance Ministry) from 1969 to 1979. Sir Deryck has also served as a board director of GlaxoSmithKline plc since 2004 and Thomson Reuters from 2008 to 2014.

 

Qualifications

Sir Deryck’s internationally focused leadership positions at KKR, a global leader in private equity, fixed income and capital markets, and at Citigroup and Salomon Brothers provide the Board with a valuable perspective on international finance and global capital markets and extensive experience in assessing value, strategy and risks related to various business models.

 

Other Public Company Directorships (within the past 5 years)

 

    GlaxoSmithKline plc (2004 – 2016)

 

    Thomson Reuters (2008 – 2014)

LOGO     

Cheryl D. Mills

 

Ms. Mills is Founder and Chief Executive Officer of the BlackIvy Group, an investment company that grows and builds businesses in Sub-Saharan Africa. Previously, she served as Chief of Staff to Secretary of State Hillary Clinton and Counselor to the U.S. Department of State from 2009 to 2013. Ms. Mills was with New York University from 2002 to 2009, where she served as Senior Vice President for Administration and Operations and as General Counsel. She also served as Secretary of the University’s Board of Trustees. From 1999 to 2001, Ms. Mills was Senior Vice President for Corporate Policy and Public Programming at Oxygen Media. Prior to joining Oxygen Media, Ms. Mills served as Deputy Counsel to President Clinton and as the White House Associate Counsel. She began her career as an Associate at the Washington, D.C. law firm of Hogan & Hartson. Ms. Mills previously served on the boards of Cendant Corporation (now Avis Budget Group, Inc.), a consumer real estate and travel conglomerate, and Orion Power, an independent electric power generating company.

 

Qualifications

Ms. Mills brings to the Board a range of leadership experiences from government and academia, and through her prior service on the boards of corporations and non-profits she provides expertise on issues concerning government relations, public policy, corporate administration and corporate governance.

 

Other Public Company Directorships (within the past 5 years)

 

     None

 

BLACKROCK, INC. 2017 PROXY STATEMENT    17

Age 69 Tenure 10 Years Committees Audit Executive Management Development & Compensation Risk (Chair) Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services Risk Management & Compliance Age 52 Tenure 3 Years Committees Management Development & Compensation Qualifications Senior Executive & Corporate Governance Global Business Public Policy & Government/Regulatory Affairs Risk Management & Compliance Branding & Marketing


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

Gordon M. Nixon, C.M., O.Ont.

 

Mr. Nixon was President, Chief Executive Officer and a director of Royal Bank of Canada from 2001 to 2014. He first joined RBC Dominion Securities Inc. in 1979, where he held a number of operating positions and served as Chief Executive Officer from December 1999 to April 2001. Mr. Nixon has served on the board of directors of BCE Inc. since 2014 and was named Chairman of the board upon his re-election in April 2016. He is also a director of George Weston Limited and is on the advisory board of Kingsett Capital.

 

Qualifications

With 13 years of experience leading a global financial institution and one of Canada’s largest public companies, Mr. Nixon brings extensive expertise and perspective to the Board on global markets and an in-depth knowledge of the North American market. His experience growing a diversified, global financial services organization in a highly regulated environment also provides the Board with valuable insight into risk management, compensation and corporate governance matters.

 

Other Public Company Directorships (within the past 5 years)

 

    BCE Inc. (2014 – present)

 

    George Weston Limited (2014 – present)

LOGO     

Charles H. Robbins

 

Mr. Robbins serves as the Chief Executive Officer of Cisco Systems, Inc. (“Cisco”) and a member of its board of directors. Prior to assuming this role in July 2015, he was Senior Vice President of Cisco’s Worldwide Field Operations and led its Worldwide Sales and Partner Organization where he helped drive and execute many of Cisco’s investment areas and strategy shifts. He serves as Chairman of the U.S.-Japan Business Council, Chair of the IT Governors Steering Committee for the World Economic Forum and is a Member of the International Business Council for the World Economic Forum and The Business Roundtable.

 

Qualifications

Mr. Robbins would bring to the Board extensive experience in the fields of technology, global sales and operations acquired over his 18 years at Cisco, one of world’s leading information technology companies.

 

Other Public Company Directorships (within the past 5 years)

 

    Cisco Systems, Inc. (2015 – present)

 

18    BLACKROCK, INC. 2017 PROXY STATEMENT

Age 60 Tenure 1 Year Committees Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Financial Services Public Policy & Government/Regulatory Affairs Risk Management & Compliance Age 51 Tenure 0 Years Committees None Qualifications Senior Executive & Corporate Governance Global Business Public Policy & Government/Regulatory Affairs Branding & Marketing Technology


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

Ivan G. Seidenberg

 

Mr. Seidenberg retired as the Chairman of the board of Verizon Communications Inc. in December 2011 and previously served as its Chief Executive Officer from 2002 to 2011. Prior to the creation of Verizon Communications Inc., Mr. Seidenberg was the Chairman and Chief Executive Officer of Bell Atlantic and NYNEX Corp. Mr. Seidenberg has been an Advisory Partner of Perella Weinberg Partners, a global independent advisory and asset management firm, since June 2012.

 

Qualifications

Mr. Seidenberg brings extensive executive leadership, technological and operational experience to the Board from his tenure at Verizon Communications Inc., one of the world’s leading providers of communications services. Through his extensive experience on the boards of public companies, he has developed an in-depth understanding of business and corporate governance.

 

Other Public Company Directorships (within the past 5 years)

 

    Verizon Communications Inc. (2002 – 2011) (Chairman from 2004 – 2011)

 

    Boston Properties, Inc. (2014 – 2016)

LOGO     

Marco Antonio Slim Domit

 

Mr. Slim has been Chairman of the board of directors of Grupo Financiero Inbursa, S.A.B. de C.V. since 1997 and previously served as Chief Executive Officer of Grupo Financiero Inbursa from 1997 until April 2012. Mr. Slim is also a member of the board of directors of Grupo Carso, S.A.B. de C.V. and Chairman of The Carlos Slim Health Institute and of Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL), an infrastructure company. Mr. Slim was a member of the board of directors of Teléfonos de México, S.A.B. de C.V. from 1995 until April 2014.

 

Qualifications

Mr. Slim’s experience at Grupo Financiero Inbursa provides the Board with knowledge and expertise in international finance, and particular insight into emerging and Latin American markets. In addition, as a member of the board of directors of several international companies that invest globally, Mr. Slim brings substantive expertise in developing new businesses in international markets, shareholder rights and business strategy and integration to the Board.

 

Other Public Company Directorships (within the past 5 years)

 

    Grupo Carso, S.A.B. de C.V. (1991 – present)

 

    Grupo Financiero Inbursa, S.A.B. de C.V. (Chairman from 1997 – present)

 

    Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (Chairman from 2012 – present)

 

    Teléfonos de México, S.A.B. de C.V. (1995 – 2014)

 

BLACKROCK, INC. 2017 PROXY STATEMENT    19

Age 70 Tenure 6 Years Committees Audit Executive Nominating & Governance (Chair) Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Public Policy & Government/Regulatory Affairs Technology Branding & Marketing Age 48 Tenure 5 Years Committees Audit Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services Risk Management & Compliance


Table of Contents
     Item 1: Election of Directors    Director Nominee Biographies     

 

 

LOGO

    

John S. Varley

 

Mr. Varley was Chief Executive of Barclays PLC and Barclays Bank PLC (“Barclays”) from 2004 to 2010. Previously, he served as the Finance Director of Barclays from 2000 until the end of 2003. Mr. Varley joined the Barclays Executive Committee in 1996 and was appointed to the boards of directors of Barclays PLC and Barclays Bank PLC in 1998, positions he held until retiring in December 2010. From 1998 to 2000, Mr. Varley was the Chief Executive of Barclays’ Retail Financial Services and from 1995 to 1998 was the Chairman of its Asset Management Division. Mr. Varley has served as a member of the board of directors of Rio Tinto PLC since 2011 and has served as its Senior Independent Director since 2012. Mr. Varley also joined the board of directors of AstraZeneca PLC in 2006 as a Non-Executive Director, then served as the Senior Independent Director from 2012 until April 2015.

 

Qualifications

Mr. Varley brings to the Board valuable insights on asset management, risk management and international finance acquired through his leadership of Barclays, a large, complex and heavily-regulated financial services organization with global operations. Mr. Varley’s service on the board of directors and committees of several other companies provides him with valuable perspectives on global management and corporate governance to share with our Board.

 

Other Public Company Directorships (within the past 5 years)

 

    Rio Tinto PLC (2011 – present)

 

    AstraZeneca PLC (2006 – 2015)

LOGO     

Susan L. Wagner

 

Ms. Wagner retired as a Vice Chairman of BlackRock on July 1, 2012. In addition to serving as Vice Chairman from 2006 to 2012, Ms. Wagner also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee. Ms. Wagner previously served as BlackRock’s Chief Operating Officer and as Head of Corporate Strategy. She currently serves as a director of Color Genomics, Apple Inc. and Swiss Re Ltd.

 

Qualifications

As one of the founding principals of BlackRock, Ms. Wagner has over 25 years of experience across various positions. Accordingly, she is able to provide the Board with valuable insight and perspective on risk management, operations and strategy, as well as a broad and deep understanding of the asset management industry.

 

Other Public Company Directorships (within the past 5 years)

 

    Apple Inc. (2014 – present)

 

    Swiss Re Ltd. (2014 – present)

 

20    BLACKROCK, INC. 2017 PROXY STATEMENT

Age 60 Tenure 7 Years Committees Audit Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services Public Policy & Government/Regulatory Affairs Age 55 Tenure 4 Years Committees Risk Qualifications Senior Executive & Corporate Governance Global Business Financial Services Risk Management & Compliance Public Company & Financial Reporting


Table of Contents
         

 

Corporate Governance

BlackRock’s corporate governance framework is a set of principles, guidelines and practices that support sustainable 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 conduct calls 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 Board Committees. The Board recently amended the Corporate Governance Guidelines to have 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 the Board’s Committees.

 

The full text of our Corporate Governance Guidelines, Board Committee Charters, Code of Business Conduct and Ethics and other corporate governance policies are available on our website at www.blackrock.com under the headings “Our Company and Sites / Our Firm / Investor Relations / Corporate Governance”.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    21


Table of Contents
     Corporate Governance    Our Corporate Governance Framework     

 

 

Our Board: “Engaged and vital to our success”

 

At BlackRock, we believe our Board should be deeply engaged, provide informed and frank guidance and feedback, and maintain an open dialogue with management, based on a clear understanding of our short and long-term strategic plan.

BlackRock’s Board plays an integral oversight role in our growth and success. At each Board meeting, we review components of our strategy with our Directors and engage in constructive dialogue, which our leadership team embraces. These discussions are not without disagreement — and those tough conversations push us to make the difficult decisions required to build a better BlackRock.

The Board plays an active part in our talent development as well, dedicating at least one meeting per year to talent

to ensure we have the right people in the right places to execute our strategy, as well as to make certain we are developing others to fill these roles in the future. Building a generation of leaders open to both Board and external ideas is vital to BlackRock’s long-term success.

Our Board also takes an active role in ensuring we embrace “best practices” in corporate governance. In 2016, we incorporated feedback from shareholders on proxy access policies and practices to inform management’s proposal for proxy access that was voted on and approved in 2016.

The partnership and oversight of a strong and multi-faceted Board with diverse perspectives rooted in deep experience in finance, industry, academia and government is essential to creating long-term shareholder value.

 

 

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 Chief Executive Officer 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 25 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 its independent members to serve as the Lead Independent Director.

 

22    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    Board Leadership Structure     

 

 

How we select our Lead Independent Director

 

Thomas H. O’Brien served as BlackRock’s Lead Independent Director since the role was first established in 2008. As the Lead Independent Director, Mr. O’Brien was instrumental in guiding the Board’s oversight of management’s strategy and succession planning and also led a number of key governance initiatives including BlackRock’s rotation policy for Board Committee chairs and the Board’s proactive recommendation to include management’s proposal for proxy access that was voted on and approved in 2016.

 

In anticipation of Mr. O’Brien’s retirement from the Board this year, the Governance Committee reviewed the purpose and role of the Lead Independent Director with management. Together they developed a set of guidelines that incorporates feedback from our shareholders and describes in greater detail the authority and responsibilities of the position, as well as other criteria independent directors of the Board should consider in choosing a successor to Mr. O’Brien, as well as for future Lead Independent Directors. The Board approved these guidelines in September 2016.

 

In designating a director to serve in the capacity of Lead Independent Director, the independent directors of the Board take into account many factors, including the director’s:

 

    understanding of the business and affairs of BlackRock;

 

    willingness and ability to devote a substantial amount of time to the position;

 

    experience serving on public company boards and/or in senior management
roles; and

 

    judgment and leadership skills.

 

Our enhanced focus on the role and the criteria for serving as Lead Independent Director helped create a process, led by Mr. O’Brien, to choose his successor. Following one-on-one meetings by Mr. O’Brien with each of the independent directors, discussions were held collectively with all the independent directors in executive sessions. After review and careful consideration, the independent members of the Board selected Murry Gerber as the new Lead Independent Director, effective as of May 25, 2017.

  

 

Lead Independent Director Role

 

LOGO   Setsand approves agenda for Board meetings and leads executive sessions.

 

LOGO   Ateach executive session, facilitates discussion of the Company’s strategy, key governance issues (including succession planning) and the performance of BlackRock senior executives.

 

LOGO   Servesas liaison between independent directors and the Chairman.

 

LOGO   Focuseson Board effectiveness, performance and composition with input from the Governance Committee.

 

LOGO   Overseesand reports on annual Board and Committee performance self-evaluations, in consultation with the Governance Committee.

 

LOGO   Servesas the primary Board contact for shareholder engagement.

 

Under our guidelines, the Lead Independent Director will be elected annually by BlackRock’s independent directors and serve until a successor is appointed. Although elected annually, we generally expect the Lead Independent Director to serve for more than one year.

 

The full versions of our Lead Independent Director Guidelines, Corporate Governance Guidelines, Board Committee Charters, Code of Business Conduct and Ethics and other corporate governance policies are available on our website at www.blackrock.com under the headings “Our Company and Sites / Our Firm / Investor Relations / Corporate Governance”.

 

   

 

 

LOGO

 

Murry S. Gerber

  

 

Our new Lead Independent Director

 

Murry Gerber was elected by the independent directors of our Board to serve as Lead Independent Director, effective May 25, 2017. This position comes with significant authority and responsibilities to provide effective and independent board oversight.

 

Mr. Gerber brings a wealth of knowledge to his new role as Lead Independent Director. He has served as a director of BlackRock since March 2000. Since joining the Board, Mr. Gerber has served on the Audit Committee, including as its chair from 2009 to 2016, as well as on the MDCC and Risk Committee. He has also served on the board of one of our principal subsidiaries, BlackRock Institutional Trust Company, N.A. (“BTC”) since June 2012.

 

In his capacity as a member of the boards of BlackRock and BTC and of their respective Audit Committees, Mr. Gerber is well versed in both the legal and regulatory framework that BlackRock must operate under, as well as our strategic priorities at both the parent and business level.

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    23


Table of Contents
     Corporate Governance    Board Leadership Structure     

 

Executive Sessions

Executive sessions of non-management directors are held at every regularly scheduled round of Board meetings, totaling six in 2016. Each session is chaired by the Lead Independent Director, who facilitates discussion of the Company’s strategy, 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 of only those directors determined to be “independent,” within the meaning of the listing standards of the NYSE.

Board Evaluations

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. Tailored assessments, conducted through questionnaires, are reviewed and updated in consultation with the Governance Committee and the Lead Independent Director. These assessments focus on Board and Committee performance, effectiveness and contributions to BlackRock, as well as meeting agendas, Board composition, Board processes, meeting dynamics and access to resources and senior management.

The Governance Committee reviews each director’s responses to the questionnaires and shares the results of the Committee evaluations with each of the Chairpersons of the Audit, MDCC and Risk Committees. As part of the annual self-evaluation and periodically throughout the year, the Chairman and/or the Lead Independent Director meet with the independent directors on an individual basis to discuss Board, Committee and individual director performance and effectiveness. The Chair of the Governance Committee along with the Chairman of the Board and Lead Independent Director provide the Board with a summary of the questionnaires and additional feedback received from individual directors annually in the fall.

Based on responses from this year’s self-assessment, the Board increased the amount of time allocated to executive sessions and enhanced the processes by which director candidates are evaluated and reviewed by the Board.

Succession Planning

Our Board plays an integral oversight role in talent development by recognizing the importance of succession planning for the CEO and other key executives at BlackRock. The Board, in consultation with the MDCC, dedicates at least one 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 MDCC 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.

 

24    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    Board Committees     

 

Board Committees

Each Committee is governed by a Board-approved Charter.

Board Committee Meetings

The Board has five committees: an Audit Committee, the MDCC, a Governance Committee, a Risk Committee and an Executive Committee. Below is a summary of our current Committee structure and membership information.

 

Member

   Audit    Management
Development &
Compensation
   Nominating &
Governance
   Risk    Executive

INDEPENDENT DIRECTORS

                        

Abdlatif Y. Al-Hamad

             l    l     

Mathis Cabiallavetta

   l         l    l     

Pamela Daley

   l              l    l

Jessica P. Einhorn

                  l     

Fabrizio Freda

             l          

Murry S. Gerber

(Lead Independent Director)

  

 

l

  

 

l

            

 

l

James Grosfeld

        l    l          

Sir Deryck Maughan

   l    l         l    l

Cheryl D. Mills

        l               

Gordon M. Nixon

        l         l     

Ivan G. Seidenberg

   l         l         l

Marco Antonio Slim Domit

   l                    

John S. Varley

   l                    

Susan L. Wagner

            l   

NON-INDEPENDENT DIRECTORS

                        

Laurence D. Fink

                       l

Robert S. Kapito

                        

William S. Demchak

                  l    l

Number of Meetings Held in 2016

   14    8    6    6    0

🌑 Chairperson

The Board met seven times during 2016. In 2016, each nominated director 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 periods served by such director. Directors are encouraged to and do attend the annual meetings of BlackRock shareholders. All 19 directors attended the 2016 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 Board Committees. On March 9, 2017, the Board appointed Ms. Einhorn and Messrs. Seidenberg and Slim to serve as members of the MDCC, and Ms. Mills and Mr. Nixon to serve as members of the Governance Committee, effective May 24, 2017.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    25


Table of Contents
     Corporate Governance    Board Committees     

 

In addition, the Board appointed Mr. Seidenberg to serve as Chair of the MDCC and Mr. Nixon to serve as Chair of the Governance Committee, and in connection with that appointment, appointed Mr. Nixon to serve as a member of the Executive Committee, effective May 25, 2017. At such time, Messrs. Gerber and Seidenberg will conclude their service as Chairs of the MDCC and Governance Committee, respectively.

 

 

Audit Committee

       
   

CHAIR

 

MEMBERS

       

Pamela Daley

 

Mathis Cabiallavetta

Murry S. Gerber

 

Sir Deryck Maughan

Ivan G. Seidenberg

 

Marco Antonio Slim Domit

John S. Varley

   

Role and Responsibilities

The Audit Committee’s primary responsibilities include oversight of: the integrity of BlackRock’s financial statements and public filings; the independent auditor’s qualifications and independence; the performance of BlackRock’s internal audit function and independent auditor; and BlackRock’s compliance with legal and regulatory requirements. It also prepares an Audit Committee Report as required by the SEC rules for inclusion in this Proxy Statement (see page 77).

The Audit Committee:

 

    Receives regular reports on the progress and results of the internal audit program and approves BlackRock’s internal audit plan, as provided by BlackRock’s Head of Internal Audit, who also regularly attends Risk Committee meetings.

 

    Receives regular external audit updates from BlackRock’s independent registered public accounting firm, Deloitte & Touche LLP (“Deloitte”).
  Receives a regular report on litigation, regulatory and material ethics matters from BlackRock’s Chief Legal Officer.  

 

  Receives an annual financial controls report regarding compliance with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), which is prepared by the Head of Sarbanes-Oxley Compliance and presented by management.  
 

 

The Audit Committee is also responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit BlackRock’s financial statements. The Audit Committee exercises sole authority to approve all audit engagement fees and terms associated with the retention of Deloitte.

In addition to ensuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit partner and considers whether, in order to ensure continuing auditor independence, there should be periodic rotation of the independent registered public accounting firm.

The Audit Committee regularly holds separate sessions with BlackRock’s management, internal auditors and Deloitte.

The Board has determined that no member of the Audit Committee has any material relationship with BlackRock and each such member is “independent” as defined in the NYSE listing standards and the applicable SEC rules. Furthermore, the Board has determined that each member of the Audit Committee is “financially literate,” as such qualification is interpreted by the Board based on its business judgment, qualifies as an “audit committee financial expert,” as defined in the applicable SEC rules, and has accounting and related financial management expertise within the meaning of the NYSE listing standards.

 

26    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    Board Committees     

 

 

 

Management Development and Compensation Committee

    
   

CHAIR

  

MEMBERS

       

Murry S. Gerber

  

James Grosfeld

Sir Deryck Maughan

  

Cheryl D. Mills

Gordon M. Nixon

    

Role and Responsibilities

 

    Establishing the compensation of BlackRock’s executive officers;

 

    Providing oversight of BlackRock’s employee benefit and compensation plans; and
  Reviewing, assessing and making reports and recommendations to the Board of Directors on BlackRock’s talent development and the effective management of executive succession.  
 

 

Additional information on the MDCC’s processes and procedures for consideration of NEO compensation is addressed in the MDCC Report on page 46 and “Compensation Discussion and Analysis” beginning on page 47.

 

 

Nominating and Governance Committee

    
   

CHAIR

  

MEMBERS

       

Ivan G. Seidenberg

  

Abdlatif Yousef Al-Hamad

Mathis Cabiallavetta

  

Fabrizio Freda

James Grosfeld

    

Role and Responsibilities

 

    Identifying candidates qualified to become members of the Board;

 

    Recommending to the Board the director nominees for the next annual meeting of shareholders;

 

    Recommending to the Board the Corporate Governance Guidelines applicable to BlackRock;
  Leading the Board in its annual review of the Board’s performance;  

 

  Recommending to the Board director nominees for each Board committee; and  

 

  Overseeing BlackRock’s Related Persons Transaction Policy.  
 

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    27


Table of Contents
     Corporate Governance    Board Committees     

 

 

 

Risk Committee

    
   

CHAIR

  

MEMBERS

       

Sir Deryck Maughan

  

Abdlatif Yousef Al-Hamad

Mathis Cabiallavetta

Pamela Daley

  

William S. Demchak

Jessica P. Einhorn

  

Gordon M. Nixon

Susan L. Wagner

Role and Responsibilities

The Risk Committee assists the Board with its oversight of the Company’s levels of risk, risk assessment risk management and related policies and processes in connection with the following types of risk and related areas:

Enterprise Risks

 

    Market risks from volatility in financial markets;

 

    Credit risk of default by indemnified securities lending counterparties;

 

    Operational risks from failed or inadequate processes relating to (i) operations, (ii) new products and services, (iii) third-party vendor relationships and (iv) model risk;

 

    The impact of firm-wide risk assessments: the quantification and analysis of requirements (liquidity, insurance, capital or other risk mitigation) associated with our key risks;

 

    Risks related to regulatory reform; and

 

    Technology risks relating to information security, business continuity/resiliency and system capacity.  

Fiduciary Risks

 

  Investment risks being taken on behalf of clients in their portfolios or accounts;  

 

  Risks of default by client counterparties; and  

 

  Pricing and valuation risk that BlackRock’s counterparties misprice assets in client portfolios or accounts.  

Other

 

  Any other areas of risk delegated to the Risk Committee by the Board.  
 

 

The Risk Committee also reviewed and discussed with management the Risk Factors included in the 2016 Form 10-K and received reports from members of management responsible for identifying and monitoring these risks.

 

 

Executive Committee

    
   

CHAIR

  

MEMBERS

       

Laurence D. Fink

  

Pamela Daley

William S. Demchak

  

Murry S. Gerber

Sir Deryck Maughan

  

Ivan G. Seidenberg

Role and Responsibilities

The Executive Committee has all the powers of the Board, except as prohibited by applicable law, the PNC Stockholder Agreement and BlackRock’s Amended and Restated Bylaws (“Bylaws”), and except to the extent another Committee has been accorded authority over the matter. The Executive Committee may meet to exercise such powers between meetings of the Board.

The Executive Committee will only meet if a quorum for a full Board meeting cannot be obtained between regular meetings for emergency business.

 

 

28    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    Board Committees     

 

Board and Committee Oversight of Risk Management

 

  

 

FULL BOARD

 

The Board of Directors has ultimate responsibility for oversight of BlackRock’s risk management activities.
The Risk, Audit, MDCC and Governance Committees assist the Board in fulfilling this important role.

 

The Committees report to the full Board at least six 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.

 

   LOGO        LOGO       LOGO        LOGO       LOGO        LOGO       LOGO        LOGO
  

 

LOGO

     

 

LOGO

     

 

LOGO

     

 

LOGO

  

RISK

COMMITTEE

 

Responsible for overseeing designated fiduciary and enterprise risks and other areas of risk determined by the Board.

     

AUDIT

COMMITTEE

 

Oversees the integrity of BlackRock’s financial statements and disclosure matters, the effectiveness of the internal control environment, the internal audit function and the external auditors, and compliance with legal and regulatory requirements.

 

     

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

 

Responsible for overseeing risks associated with the Company’s compensation practices and the effective management of executive succession.

 

     

NOMINATING AND GOVERNANCE COMMITTEE

 

Oversees risks related to Board succession and other corporate governance matters.

Role of the Board Risk Committee

The Risk Committee regularly reviews a detailed risk profile report prepared by the Chief Risk Officer which covers a wide range of topics and potential issues that could impact BlackRock. These issues include, among other matters, investment performance, contractually indemnified risks, investment risks and counterparty risks of its asset management activities, balance sheet risks, business continuity risks, including those related to natural disasters or terrorist attacks, risks related to financial crimes and fraud, and other operational risks.

The Risk Committee engages the Company’s key risk management executives on the framework for risk management within BlackRock and the process for actively identifying adverse events and/or circumstances relevant to BlackRock’s objectives and activities, as well as risk management roles, policies and responsibilities.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    29


Table of Contents
     Corporate Governance    Corporate Governance Practices and Policies     

 

Corporate Governance Practices and Policies

Director Independence

The Board determines annually the independence of directors in accordance with NYSE listing standards. 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 assist it in determining 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

 

  relationships involving a director’s relative unless the relative is an immediate family member of the director.

As part of its determination, the Board also considered the relationships described under “Certain Relationships and Related Transactions.” Following its review, the Board of Directors has determined that Mmes. Daley, Einhorn, Mills and Wagner and Messrs. Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Komansky, Maughan, Nixon, O’Brien, Robbins, Seidenberg, Slim and Varley are “independent” as defined in the NYSE listing standards and that none of the relationships between such directors and BlackRock are material under the NYSE listing standards. Following the 2017 Annual Meeting of Shareholders, assuming 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.

Policy Engagement, Transparency and Protecting Investors

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 regulation that increases financial market transparency, protects investors and facilitates 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 “News & 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 Government Relations and Public Policy team (“Public Policy team”). Members of the Public Policy team work closely with the Company’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.

 

30    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    Corporate Governance Practices and Policies     

 

The head of the Public Policy team is a member of the Company’s Global Executive and Operating Committees and regularly briefs these committees on our public policy priorities and related advocacy efforts. In addition, the head of Public Policy also attends the meetings of the Board’s Risk Committee and keeps directors apprised of, and engaged in, the Company’s legislative and regulatory priorities and advocacy initiatives. The Public Policy team 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.

Trade Associations

As part of the Company’s engagement in the public policy process, BlackRock participates in a number of trade organizations and industry groups. The principal trade association that we belong to is the Investment Company Institute. We also actively participate in the Asset Management Group of the Securities Industry and Financial Markets Association, the European Fund and Asset Management Association and the Investment Association. The Company 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.

Political Participation

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 also voluntarily elected not to spend corporate funds directly on independent expenditures, including electioneering communications. In addition, BlackRock does not engage in state-level lobbying on asset management industry issues. All contributions required to be disclosed under the Lobbying Disclosure Act are publicly available at http://lobbyingdisclosure.house.gov.

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.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    31


Table of Contents
     Corporate Governance    Shareholder Engagement and Outreach     

 

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. 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 practices and improve our disclosures.

Also see “Compensation Discussion and Analysis” beginning on page 47 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 Board Committee or any Chairperson of any such Committee by mail or electronically. To do so, correspondence should be addressed to the Board or any individual director or group or committee of directors by either name or title.

Correspondence may be sent by:

 

 

Mail:

 

BlackRock, Inc.

Attn: Board of Directors

c/o Corporate Communications Department

55 East 52nd Street

New York, New York 10055

 

 

 

Online:

 

Go to the BlackRock website at www.blackrock.com. Under the headings “Our Firm / Investor Relations / Company Overview & Governance / Contact Our Board of Directors”, you will find a link that may be used for writing an electronic message to the Board, the Lead Independent Director, any individual director or any group or committee of directors.

 

BlackRock’s Corporate Communications and Legal and Compliance Departments and the Corporate Secretary will review all communications received for the sole purpose of determining whether the contents represent a message to our directors. 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 by the Audit Committee.

Shareholders are encouraged to visit the “Our Firm / Investor Relations / Company Overview & Governance” 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 MDCC, 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., 55 East 52nd Street, New York, New York 10055.

 

32    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    2016 Director Compensation     

 

2016 Director Compensation

Directors receive compensation, including fees and reimbursements of expenses, for their service and dedication to our Company. We recognize the substantial time and effort required to serve as director of a large global investment firm. The goal of our director compensation program is to 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 and maintain a minimum target number of shares, having a value equivalent to five times their annual board retainer.

The MDCC is responsible for reviewing director compensation and making recommendations to the Board. The MDCC reviews the Board’s compensation levels semi-annually. The MDCC also reviews the Board compensation practices of peer corporations. For more information on these peer groups, please refer to “Role of the Compensation Consultant and Competitive Benchmarking” on page 57.

HOW OUR DIRECTOR COMPENSATION PROGRAM ALIGNS WITH LONG-TERM SHAREHOLDER INTERESTS

 

 

FOCUS ON EQUITY

COMPENSATION

    

 

NO HEDGING OR

PLEDGING

    

 

STOCK/EQUITY

OWNERSHIP

REQUIREMENT

The largest portion of independent director compensation is the annual equity grant, payable in deferred stock units

    

Directors are prohibited from hedging BlackRock common stock or equity grants and may not pledge shares as loan collateral

 

    

All independent directors are required to own and maintain a minimum target number of shares, equivalent to five times the annual board retainer

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    33


Table of Contents
     Corporate Governance    2016 Director Compensation     

 

2016 Elements of Director Compensation

The following table shows the elements of director compensation provided by BlackRock in 2016. For 2016, each independent director received a Board Annual Retainer of $75,000 plus meeting fees of $1,500, paid quarterly in January, April, July, and October, based on service during the prior quarter. At least $25,000 of the annual retainer, or a pro rata portion thereof in the event that a director’s service is less than a full year, is paid in the form of BlackRock common stock. Each director who received compensation had the right to elect to receive BlackRock common stock in lieu of all or a portion of his or her annual Board and Committee retainers in excess of $25,000.

In addition, deferred stock units valued at $150,000 were granted on the last business day of the first quarter of 2016. These deferred stock units vest immediately and are settled in shares of BlackRock common stock on the last day of the month in which the third anniversary of the date of grant occurs. Deferred stock units have no voting rights. Dividend equivalents accrue and are paid in the form of cash. Additional cash compensation was paid for certain committees and other services, as described below.

 

 

Director Compensation Element

   Payment or Value of Equity         

Board Service(1)

          

 

LOGO

 

Annual Retainer(1)

   $      75,000 (at least $25,000 in common stock)     

Annual Equity Grant(2)

   $    150,000 Deferred Stock Units     

Board Meeting Fees(1)

   $        1,500          

Lead Independent Director

   $      40,000          

Committee Service

          

Committee Annual Retainers(1)

  

Chair

  

Member

    

Audit

   $      30,000    $      15,000     

MDCC

   $      20,000    $      10,000     

Nominating and Governance

   $      15,000    $        5,000     

Risk

   $      15,000    $        5,000     

Committee Meeting Fees(1)

   $        1,000    $        1,000       

 

(1) New Board members rotating through committees receive one general committee retainer and committee meeting fees for the meetings they attend. Retainers and meeting fees are paid in January, April, July and October, based on service during the prior quarter. From time to time, the Company also makes available, as an accommodation to all of its directors upon request, basic office space at its existing locations and administrative support, as needed.

 

(2) Annual award granted on the last business day of the first quarter of each year to all directors serving on that date and delivered on the earlier of (i) the third anniversary of the date of grant and (ii) the date such director ceases to be a member of the Board.

 

34    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    2016 Director Compensation     

 

2016 Total Director Compensation

Directors in 2016 who were also employees of BlackRock or designees of PNC are not listed in the table below because they did not receive compensation for serving as directors or committee members. In 2016, directors who were not employees of BlackRock or designees of PNC each received the amounts detailed in the table below and were also reimbursed for reasonable travel and related expenses. Each director who received compensation received at least $25,000 of his or her annual retainer, or a pro rata portion in the event that a director’s service is less than a full year, in the form of BlackRock common stock. In addition, each director who received compensation had the right to elect to receive BlackRock common stock in lieu of all or a portion of his or her annual Board and Committee retainers in excess of $25,000.

2016 Total Director Compensation Table

 

Name

   Fees Earned
or Paid in Cash
($)
(1)
     Stock
Awards ($)
(2)(3)
     Total
($)
 

Abdlatif Y. Al-Hamad

     80,500         175,000         255,500   

Mathis Cabiallavetta

     113,000         175,000         288,000   

Pamela Daley

     106,000         175,000         281,000   

Jessica P. Einhorn

     71,500         175,000         246,500   

Fabrizio Freda

     70,000         175,000         245,000   

Murry S. Gerber

     126,000         175,000         301,000   

James Grosfeld

     89,000         175,000         264,000   

David H. Komansky

     80,000         175,000         255,000   

Sir Deryck Maughan

     119,250         175,000         294,250   

Cheryl D. Mills

     78,500         175,000         253,500   

Gordon M. Nixon

     87,500         175,000         262,500   

Thomas H. O’Brien

     137,000         175,000         312,000   

Ivan G. Seidenberg

     107,500         175,000         282,500   

Marco Antonio Slim Domit

     89,000         175,000         264,000   

John S. Varley

     91,000         175,000         266,000   

Susan L. Wagner

     69,000         175,000         244,000   

 

(1) Includes the shares of common stock granted on March 31, June 30, September 30 and December 30, 2016, respectively, based on closing market prices on such dates of $340.57, $342.53, $362.46 and $380.54, respectively, awarded at the election of the director in lieu of all or a portion of his or her board annual retainer and/or meeting fees in excess of $25,000. Each of the following directors elected to receive common stock in lieu of the following amounts: Mr. Al-Hamad - $80,500; Mr. Cabiallavetta - $20,995; Ms. Daley - $106,000; Mr. Freda - $70,000; Mr. Grosfeld - $89,000; Mr. Maughan - $119,250; Ms. Mills - $78,500; Mr. Nixon - $84,000; Mr. Seidenberg - $107,500; and Mr. Slim - $89,000.

 

(2) Includes the annual RSU grants to each director of 410 RSUs of BlackRock with a grant date fair value of $150,000 pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note 14 to the consolidated financial statements in our 2016 Form 10-K. As of December 31, 2016, each non-employee director had the following outstanding RSUs: 1,326 shares for each of Messrs. Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Komansky, Maughan, O’Brien, Seidenberg, Slim, Varley, Ms. Einhorn, Ms. Daley, Ms. Mills and Ms. Wagner; and 440 shares for Mr. Nixon. The RSUs are fully vested on the grant date and are settled on the earlier of the third anniversary of the grant date or the director’s departure from the Board.

 

(3) Includes the shares of common stock granted on March 31, June 30, September 30 and December 31, 2016, respectively, based on closing market prices on such dates of $340.57, $342.53, $362.46 and $380.54, respectively, awarded in respect of the $25,000 of the annual retainer that is required to be paid in the form of common stock. The entire expense for these awards was recorded on the date of grant.

Changes for 2017

During 2016, based on the MDCC’s recommendation, the full Board voted to:

 

  increase the annual equity grant from $150,000 to $175,000 in 2017 to better align pay with the external market; and

 

  provide separate compensation fees for the roles of the Lead Independent Director and the Governance Committee Chairman of $40,000 and $15,000 ($10,000 Chairperson plus $5,000 Member retainer), respectively. Prior to 2016, these two roles were combined.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    35


Table of Contents
     Corporate Governance    Other Executive Officers     

 

Other Executive Officers

In addition to Messrs. Fink and Kapito, whose biographical information is included on pages 14 and 16 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 or Chief Executive Officer.

 

 

David J. Blumer

age 48

 

 

Senior Managing Director, has been Head of the Europe, Middle East and Africa (“EMEA”) region of BlackRock since 2013. Prior to joining BlackRock, Mr. Blumer worked at Swiss Re Ltd., where he most recently served as the Chief Investment Officer (“CIO”). In addition to his CIO role, Mr. Blumer also held other senior positions at Swiss Re Ltd. after joining in 2008, including Head of Asset Management, Chairman of Admin Re and a member of the Executive Committee.

 

 

Robert W. Fairbairn

age 51

 

 

Senior Managing Director, oversees the Strategic Partner Program, which is responsible for BlackRock’s largest client relationships, and the Strategic Product Management Group, which is responsible for the firm’s overall product strategy and product suite. From 2012 to 2016, Mr. Fairbairn served as global head of the Retail and iShares® businesses. Mr. Fairbairn was Head of the Global Client Group from 2009 to 2012 and Vice Chairman and Chairman of BlackRock’s EMEA Pacific business from 2006 to 2009.

 

 

Robert L. Goldstein

age 43

 

 

Senior Managing Director, has been Chief Operating Officer of BlackRock since 2014 and has led BlackRock Solutions® since 2009. Mr. Goldstein was the Head of BlackRock’s Institutional Client Business from 2012 to 2014. Mr. Goldstein has spent his entire career at BlackRock, beginning in 1994 as an analyst in the Company’s Portfolio Analytics Group.

 

 

J. Richard Kushel

age 50

 

 

Senior Managing Director, has been Global Head of Multi-Asset Strategies since February 2016. From 2014 to 2016, Mr. Kushel was Chief Product Officer and Head of Strategic Product Management of BlackRock, from 2012 to 2014, he was Deputy Chief Operating Officer of BlackRock, from 2010 to 2012, he was the Head of the Portfolio Management Group of BlackRock, and from 2009 to 2010, he was the Chairman of BlackRock’s International platform. Prior to that, Mr. Kushel headed BlackRock’s International Institutional platform and BlackRock’s Alternatives and Wealth Management Groups. Mr. Kushel has been with BlackRock since 1991.

 

 

Mark S. McCombe

age 51

 

 

Senior Managing Director, has been Head of the Americas region and Global Head of BlackRock Alternative Investors since 2017. Mr. McCombe served as the Global Head of BlackRock’s Institutional Client Business from 2014 to 2016, the Global Co-Head of BlackRock Alternative Investors from 2015 to 2017 and as the Chairman of BlackRock Alternative Investors from 2014 to 2017. He was the Chairman of BlackRock’s Asia Pacific region from 2012 to 2014. Before joining BlackRock, Mr. McCombe served as Chief Executive Officer in Hong Kong for The Hong Kong and Shanghai Banking Corporation Limited from 2010 to 2011. He was also a Group General Manager of HSBC plc, Non-Executive Director of Hang Seng Bank Ltd., and Chairman of HSBC Global Asset Management (HK) Ltd.

 

 

Christopher J. Meade

age 48

 

 

Senior Managing Director, has been Chief Legal Officer of BlackRock since 2016 and General Counsel since 2015. Before joining BlackRock in 2015, Mr. Meade was the General Counsel of the U.S. Department of the Treasury. Previously, Mr. Meade was a partner with the law firm of Wilmer Cutler Pickering Hale and Dorr. Earlier in his career, Mr. Meade served as a law clerk to Justice John Paul Stevens on the U.S. Supreme Court and Judge Harry T. Edwards of the U.S. Court of Appeals for the D.C. Circuit.

 

 

36    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Corporate Governance    Other Executive Officers     

 

 

 

Gary S. Shedlin

age 53

 

 

Senior Managing Director, has been Chief Financial Officer of BlackRock since 2013. Prior to joining BlackRock, Mr. Shedlin was Vice Chairman, Investment Banking and a Managing Director in the Financial Institutions Group at Morgan Stanley from 2010 to 2013. Prior to that, Mr. Shedlin worked at Citigroup from 2004 to 2010, where he most recently served as Chairman of the Financial Institutions Group. Previously, Mr. Shedlin worked at Lazard Ltd. from 1990 to 2004, where he served as Managing Director and the Co-Head of the Financial Institutions Group.

 

 

Jeffrey A. Smith, Ph.D.

age 46

 

Senior Managing Director, has been Head of Global Human Resources of BlackRock since 2009. Prior to joining BlackRock in 2009, Dr. Smith was the Global Head of Human Resources of Barclays Global Investors since 2007.

 

 

Ryan D. Stork

age 45

 

Senior Managing Director, has been BlackRock’s Chairman, Asia Pacific since 2014. From 2008 to 2014, Mr. Stork was Global Head of the Aladdin® business within BlackRock Solutions and from 2005 to 2008 he was based out of BlackRock’s London office and responsible for business development and client service across the region. Between 1999 and 2005, Mr. Stork worked within BlackRock’s institutional business. Prior to joining BlackRock, Mr. Stork worked at PennCorp Financial Group and Conning Asset Management.

 

Ownership of BlackRock

Common and Preferred

Stock

Common Stock

The following table includes certain information about the beneficial ownership of BlackRock’s voting securities as of March 31, 2017 by: (i) each person who is known by BlackRock to own beneficially more than 5% of any class of outstanding voting securities of BlackRock; (ii) each of BlackRock’s directors and nominees; (iii) each of the executive officers named in the 2016 Summary Compensation Table; and (iv) all of BlackRock’s executive officers and directors as a group.

Except as otherwise noted, each individual exercises sole voting power or investment power over the shares of voting securities shown. The number of shares of voting securities shown in the following Security Ownership Table as beneficially owned by each director and executive officer is determined under the rules of the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. For purposes of the Security Ownership Table, beneficial ownership includes any shares of voting securities as to which the individual has sole or shared voting power or investment power and also any shares of common stock which the individual has the right to acquire within 60 days of March 31, 2017, through the exercise of any option, warrant or right.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    37


Table of Contents
     Ownership of BlackRock Common and Preferred Stock    Common Stock     

 

As of March 31, 2017, there were 161,798,937 shares of BlackRock’s common stock outstanding.

 

     Amount of beneficial
ownership
of common stock
(1)
     Percent of
common stock
outstanding
 

The PNC Financial Services Group, Inc. and affiliates(2)

     34,582,105        21.37

One PNC Plaza

     

249 Fifth Avenue

     

Pittsburgh, PA 15222

                 

Norges Bank (The Central Bank of Norway)(3)

     8,552,813        5.28

Bankplassen 2

     

PO Box 1179 Sentrum

     

NO 0107 Oslo, Norway

                 
Abdlatif Yousef Al-Hamad      4,767        *  
Mathis Cabiallavetta(4)      5,092        *  
Pamela Daley      1,607        *  
William S. Demchak      1,200        *  
Jessica P. Einhorn      1,452        *  
Laurence D. Fink      1,041,711        *  
Fabrizio Freda      2,442        *  
Murry S. Gerber      38,686        *  
Robert L. Goldstein      29,048        *  
James Grosfeld      513,780        *  
Robert S. Kapito      411,144        *  
David H. Komansky      9,115        *  
J. Richard Kushel(4)      158,700        *  
Sir Deryck Maughan      9,921        *  
Cheryl D. Mills      1,124        *  
Gordon M. Nixon      252        *  
Thomas H. O’Brien(4)      15,072        *  
Charles H. Robbins             *  
Ivan G. Seidenberg      11,330        *  
Gary S. Shedlin      9,123        *  
Marco Antonio Slim Domit      2,538        *  
John S. Varley      1,846        *  
Susan L. Wagner(4)      494,629        *  
All directors and executive officers as a group (28 persons)(4)      3,005,160        1.86

 

* The number of shares of common stock held by such individual is less than 1.0% of the outstanding shares of common stock.

 

(1) Does not include unvested restricted stock (“RS”), unvested/unsettled restricted stock units (“RSUs”) and unvested stock options.

 

(2) Based on the Schedule 13G of The PNC Financial Services Group, Inc. and affiliates filed on February 3, 2017.

 

(3) Based on the Schedule 13G of Norges Bank (The Central Bank of Norway) filed on February 24, 2017.

 

(4) Includes shares of BlackRock common stock held jointly, indirectly and/or in trust (other than shares the beneficial ownership of which has been disclaimed).

 

 

38    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Ownership of BlackRock Common and Preferred Stock    Preferred Stock     

 

Preferred Stock

As of March 31, 2017, there were 823,188 shares of BlackRock’s Series B non-voting convertible participating preferred stock issued and outstanding, which has a liquidation preference of $0.01 per share (the “Series B Preferred Stock”), and 246,522 shares of BlackRock’s Series C non-voting convertible participating preferred stock issued and outstanding, which has a liquidation preference of $40.00 per share (the “Series C Preferred Stock”). As of March 31, 2017, PNC owned all issued and outstanding shares of our Series B Preferred Stock and Series C Preferred Stock.

Section 16(a) Beneficial

Ownership Reporting

Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our directors, Section 16 officers and persons who own more than 10% of a registered class of BlackRock’s equity securities to file reports of holdings of, and transactions in, BlackRock shares with the SEC and the NYSE. To the best of BlackRock’s knowledge, based solely on copies of such reports and representations from these reporting persons, we believe that in 2016, our directors, Section 16 officers and 10% holders met all applicable SEC filing requirements, except for one late Form 4 filing made on behalf of Mr. Shedlin on December 22, 2016, due to an administrative error.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    39


Table of Contents
         

 

Certain Relationships and

Related Transactions

PNC and its Subsidiaries

As of March 31, 2017, PNC beneficially owned approximately 21.2% of BlackRock’s common stock outstanding and 21.7% of BlackRock’s capital stock, which includes outstanding common stock and nonvoting preferred stock.

William S. Demchak, Chairman, President and Chief Executive Officer of PNC, serves as a director of BlackRock. Although PNC has a right to, and reserves the right to do so under the PNC Stockholder Agreement, PNC has elected not to appoint a second director to the Board at this time. In addition, PNC has been permitted to invite a non-voting observer to attend Board meetings. Gregory B. Jordan, General Counsel & Head of Regulatory and Governmental Affairs of PNC, is the PNC observer.

BlackRock provides investment advisory and administration services to certain PNC subsidiaries and separate accounts for a fee based on assets under management. The amount of investment advisory and administration fees earned from PNC and its affiliates in relation to these services in 2016 totaled $3.4 million.

BlackRock provides risk management advisory services to PNC’s corporate and line of business asset/liability management committees, for which it received an annual fee of $6.8 million for 2016. BlackRock also recorded revenue of $2.7 million related to non-discretionary trading services.

BlackRock incurred expenses of $1.9 million to PNC affiliates in 2016 for service fees related to certain retail and institutional clients.

Transactions between BlackRock Funds and Client Accounts and PNC and its Subsidiaries

From time to time in the ordinary course of our business, acting predominantly as agent for its clients, BlackRock effects transactions in securities and other financial assets with PNC and its subsidiaries. The amount of compensation or other value received by PNC in connection with those transactions is dependent on the capacity in which it participates in each of them, as principal or agent for other principals, and the type of security or financial asset involved. PNC may also act as the underwriter of securities purchased by BlackRock-managed funds and accounts. We principally engage in fixed income transactions with PNC. PNC (including its subsidiaries) was among one of BlackRock’s many fixed income trading counterparties in 2016. Fixed income transactions are typically not traded on a commission basis and, accordingly, the amounts earned by PNC and its subsidiaries on such transactions cannot be determined.

PNC may, from time to time in the ordinary course of business, make loans to funds or separately managed accounts or commit to make future loans on substantially the same terms as those prevailing at the time for comparable loans to third parties and may enter into caps, hedges or swaps in connection with these loans. BlackRock may be an investor in or co-investor alongside these funds and accounts. BlackRock products and client accounts also enter into a variety of other arrangements with PNC and its subsidiaries on an arm’s length basis in the ordinary course of business. Such arrangements include, but are not limited to, serving as custodian or transfer agent or providing principal protection warranties as well as book value protection and co-administration, sub-administration, fund accounting, networking, leases of office space to PNC or its subsidiaries, bank account arrangements, derivative transactions, letters of credit, securities lending, loan servicing and other administrative services for BlackRock-managed funds and accounts. In certain instances, the fees that may be incurred by BlackRock funds or other products are capped at a fixed amount. In these cases, BlackRock may be responsible for payment of fees incurred in excess of these caps and amounts would be reflected in the fees for administrative services described above. Additionally, PNC or its subsidiaries or affiliates may invest in BlackRock funds or other products or buy or sell assets to or from BlackRock funds and separate accounts.

 

40    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Certain Relationships and Related Transactions    PNC and its Subsidiaries     

 

Stockholder Agreement with PNC

BlackRock is a party to the PNC Stockholder Agreement, which governs PNC’s ownership interests in and relationship with BlackRock. BlackRock and PNC are also parties to a registration rights agreement. The following table describes certain key provisions of the PNC Stockholder Agreement as amended and restated.

 

 

Share Ownership

  

 

The PNC Stockholder Agreement provides for a limit on the percentage of BlackRock capital stock that may be owned by PNC at any time (which we refer to as the “PNC ownership cap”). Due to the PNC ownership cap, PNC is generally not permitted to acquire any additional capital stock of BlackRock if, after such acquisition, it would hold greater than 49.9% of the total voting power of the capital stock of BlackRock issued and outstanding at such time or 38% of the sum of the total voting securities and participating preferred stock of BlackRock issued and outstanding at such time and issuable upon the exercise of any options or other rights outstanding at that time.

 

In addition, PNC may not acquire any shares of BlackRock from any person other than BlackRock or a person that owns 20% or more of the total voting power of the capital stock of BlackRock (other than itself) if, after such acquisition, it would hold capital stock of BlackRock representing more than 90% of the PNC voting ownership cap.

 

 

Prohibited

Actions

  

 

PNC is prohibited from taking part in, soliciting, negotiating with, providing information to or making any statement or proposal to any person, or making any public announcement, with respect to:

 

    an acquisition which would result in PNC holding more than the PNC ownership cap, or holding any equity securities of any controlled affiliate of BlackRock;

 

    any business combination or extraordinary transaction involving BlackRock or any controlled affiliate of BlackRock, including a merger, tender or exchange offer or sale of any substantial portion of the assets of BlackRock or any controlled affiliate of BlackRock;

 

    any restructuring, recapitalization or similar transaction with respect to BlackRock or any controlled affiliate of BlackRock;

 

    any purchase of the assets of BlackRock or any controlled affiliate of BlackRock, other than in the ordinary course of its business;

 

    being a member of a “group”, as defined in Section 13(d)(3) of the Exchange Act, for the purpose of acquiring, holding or disposing of any shares of capital stock of BlackRock or any controlled affiliate of BlackRock;

 

    selling any BlackRock capital stock in an unsolicited tender offer that is opposed by the BlackRock Board;

 

    any proposal to seek representation on the Board of BlackRock except as contemplated by the PNC Stockholder Agreement;

 

    any proposal to seek to control or influence the management, Board or policies of BlackRock or any controlled affiliate of BlackRock except as contemplated by the PNC Stockholder Agreement; or

 

    any action to encourage or act in concert with any third party to do any of the foregoing.

 

 

Additional Purchase of Voting Securities

  

 

The PNC Stockholder Agreement gives PNC the right, in any issuance of BlackRock voting stock, (1) to purchase an amount of such stock or, at PNC’s option, Series B Preferred Stock, upon such issuance that would result in PNC holding the lesser of (a) the PNC ownership cap or (b) an ownership percentage in BlackRock equal to what it held prior to the issuance, and (2) if as a result of such stock issuance PNC’s beneficial ownership of the total voting power of BlackRock capital stock decreases to less than 38%, to exchange such number of shares of Series B Preferred Stock for shares of common stock on a one-for-one basis such that following the stock issuance, PNC will beneficially own shares of voting securities representing not more than 38% of the total voting power of BlackRock capital stock, unless such issuance constitutes a public offering and would not, together with any stock issuance constituting a public offering since September 29, 2006, after taking into account any share repurchases by BlackRock since September 29, 2006 and transfers by PNC, decrease PNC’s total voting power to 90% or less of the PNC ownership cap.

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    41


Table of Contents
     Certain Relationships and Related Transactions    PNC and its Subsidiaries     

 

 

Share Repurchase

  

 

If BlackRock engages in a share repurchase, BlackRock may require PNC to sell an amount of securities that will cause its beneficial ownership of BlackRock capital stock not to exceed its total ownership cap or voting ownership cap.

 

 

Transfer Restrictions

  

 

PNC may not transfer any capital stock of BlackRock beneficially owned by it, except for transfers to its respective affiliates and transfers in certain other specified categories of transactions that would result in the beneficial ownership, by any person, of more than 10% of the total voting power of issued and outstanding BlackRock capital stock with respect to transfers to persons who would be eligible to report their holdings of BlackRock capital stock on Schedule 13G or of more than 5% of the total voting power of issued and outstanding capital stock with respect to any other persons.

 

 

Right of Last Refusal

  

 

PNC must notify BlackRock if it proposes to sell shares of BlackRock capital stock in a privately negotiated transaction. Upon receipt of such notice, BlackRock will have the right to purchase all of the stock being offered, at the price and terms described in the notice. These notification requirements and purchase rights do not apply in the case of tax-free transfers to charitable organizations or foundations and tax-deferred transfers.

 

 

Corporate Governance

 

 

 

 

 

  

 

Board Designation: The PNC Stockholder Agreement provides that BlackRock will use its best efforts to cause the election at each annual meeting of stockholders such that the Board will consist of no more than 19 directors:

 

    not less than two nor more than four directors who will be members of BlackRock management;

 

    two directors who will be designated by PNC, provided, however, that if for any period greater than 90 consecutive days PNC and its affiliates shall beneficially own less than 10% of the BlackRock capital stock issued and outstanding, PNC shall promptly cause one of such PNC designees to resign and the number of PNC designees permissible shall be reduced to one; and provided further, that, if for any period greater than 90 consecutive days PNC and its affiliates shall beneficially own less than 5% of the BlackRock capital stock issued and outstanding, PNC shall promptly cause a second PNC designee to resign and the number of PNC designees permissible shall be reduced to zero; and

 

    the remaining directors who will be independent for purposes of the rules of the NYSE and will not be designated by or on behalf of PNC or any of its affiliates.

 

Of the current directors, William S. Demchak was designated by PNC. PNC has elected not to appoint a second director to the Board at this time, though it reserves the right to do so. In addition, PNC has been permitted to invite a non-voting observer to attend Board meetings. Gregory B. Jordan, General Counsel & Head of Regulatory and Governmental Affairs of PNC, is the PNC observer.

 

Voting Agreement: PNC has agreed to vote all of its voting shares in accordance with the recommendation of the Board on all matters to the extent consistent with the provisions of the PNC Stockholder Agreement, including the election of directors.

 

Approvals: Under the PNC Stockholder Agreement, the following may not be done without prior approval of all of the independent directors, or at least two-thirds of the directors, then in office:

 

    appointment of a new Chief Executive Officer of BlackRock;

 

    any merger, issuance of shares or similar transaction in which beneficial ownership of a majority of the total voting power of BlackRock capital stock would be held by persons different from those currently holding such majority of the total voting power, or any sale of all or substantially all assets of BlackRock;

 

    any acquisition of any person or business that has a consolidated net income after taxes for its preceding fiscal year that equals or exceeds 20% of BlackRock’s consolidated net income after taxes for its preceding fiscal year if such acquisition involves the current or potential issuance of BlackRock capital stock constituting more than 10% of the total voting power of BlackRock capital stock issued and outstanding immediately after completion of such acquisition;

 

    any acquisition of any person or business constituting a line of business that is materially different from the lines of business BlackRock and its controlled affiliates are engaged in at that time if such acquisition involves consideration in excess of 10% of the total assets of BlackRock on a consolidated basis;

 

 

42    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Certain Relationships and Related Transactions    PNC and its Subsidiaries     

 

    

 

    except for repurchases otherwise permitted under their respective stockholder agreements, any repurchase by BlackRock or any subsidiary of shares of BlackRock capital stock such that, after giving effect to such repurchase, BlackRock and its subsidiaries shall have repurchased more than 10% of the total voting power of BlackRock capital stock within the 12-month period ending on the date of such repurchase;

 

    any amendment to BlackRock’s certificate of incorporation or Bylaws;

 

    any matter requiring stockholder approval pursuant to the rules of the NYSE; or

 

    any amendment, modification or waiver of any restriction or prohibition on any significant stockholder (other than PNC or its affiliates) provided for under its stockholder agreement.

 

Committees: Consistent with applicable laws, rules and regulations, the Audit Committee, the MDCC and the Governance Committee are to be composed solely of independent directors. The Risk Committee and Executive Committee are not subject to any similar laws, rules or regulations, and as such, are composed of a mix of independent and non-independent directors. The PNC Stockholder Agreement provides that the Executive Committee will consist of not less than five members, of which one must be designated by PNC.

 

 

Significant Stockholder Transactions

  

 

The PNC Stockholder Agreement prohibits BlackRock or its affiliates from entering into any transaction with PNC or its affiliates, unless such transaction was in effect as of September 29, 2006, is in the ordinary course of business of BlackRock or has been approved by a majority of the directors of BlackRock, excluding those appointed by the party wishing to enter into the transaction.

 

Termination of the PNC Stockholder Agreement

The PNC Stockholder Agreement will terminate on the first day on which PNC and its affiliates own less than 5% of the capital stock of BlackRock, unless PNC sends a notice indicating its intent to increase its beneficial ownership above such threshold within 10 business days after it has fallen below such threshold, and PNC buys sufficient capital stock of BlackRock within 20 business days after PNC has notice that it has fallen below 5% of BlackRock capital stock such that it continues to own greater than 5% of BlackRock capital stock.

Transactions with BlackRock Directors, Executive Officers and

Other Related Parties

From time to time, certain directors, their family members and related charitable foundations may have investments in various BlackRock investment vehicles or accounts. For certain types of products and services offered by BlackRock’s subsidiaries, BlackRock directors may receive discounts that are available to our employees generally. In addition, certain of the companies or affiliates of the companies that employ BlackRock’s independent directors may have investments in various BlackRock investment vehicles or accounts. These investments are entered into in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with similarly situated customers and eligible employees.

How We Review, Approve or Ratify Transactions with Related Persons

On February 27, 2007, the Board adopted a written policy regarding related person transactions, which governs and establishes procedures for approving and ratifying related person transactions.

 

The policy defines a related person transaction as any transaction or arrangement in which the amount involved exceeds $120,000, where BlackRock or any of its subsidiaries is a participant and a related person has a direct or indirect material interest. For purposes of the policy, a “related person” is any person who is, or was during the last fiscal year, a BlackRock director or executive officer, or a director nominee, or any person who is a beneficial owner of more than 5% of any class of BlackRock’s voting securities, or any immediate family member of any of the foregoing persons.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    43


Table of Contents
     Certain Relationships and Related Transactions    Transactions with BlackRock  Directors, Executive Officers and Other Related Parties     

 

Related person transactions must be approved by a majority of the uninterested members of the Governance Committee or the Board. In the event it is not practicable for BlackRock to wait for approval until the next meeting of the Governance Committee or the Board, the Chairperson of the Governance Committee may approve the transaction. In reviewing any related person transaction, all of the relevant facts and circumstances must be considered, including:

 

  the related person’s relationship to BlackRock and his or her interest in the transaction;

 

  the benefits to BlackRock;

 

  the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer;

 

  the availability of comparable products or services that would avoid the need for a related person transaction; and

 

  the terms of the transaction and the terms available to unrelated third parties or to employees generally.

PNC Approval Process

The policy provides that transactions (other than transactions in the ordinary course of business) with PNC are governed by the special approval procedures detailed in the PNC Stockholder Agreement. Those approval procedures prohibit BlackRock or its affiliates from entering into any transaction (other than any transaction in the ordinary course of business) with PNC or its affiliates unless such transaction was in effect as of September 29, 2006 or has been approved by a majority of the directors of BlackRock, excluding those designated for appointment by the party wishing to enter into the transaction. Of the current directors, William S. Demchak was designated by PNC.

Prior to the adoption of this policy, related person transactions, including certain of the transactions described above under “— PNC and its Subsidiaries” and “— Stockholder Agreement with PNC”, were reviewed with the Board at the time of entering into such transactions.

Management Development

and Compensation

Committee Interlocks and

Insider Participation

The members of the MDCC during 2016 were Ms. Mills and Messrs. Gerber (Chairperson), Komansky, Grosfeld, Maughan and Nixon. No member of the MDCC was, during the fiscal year, an officer or employee, or formerly an officer or employee, involved in any related person transactions requiring disclosure in this Proxy Statement.

No executive officer of BlackRock served (i) as a member of the Compensation Committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of another entity, one of whose executive officers served on the MDCC of BlackRock, (ii) as a director of another entity, one of whose executive officers served on the MDCC of BlackRock, or (iii) as a member of the Compensation Committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of another entity, one of whose executive officers served as a director of BlackRock.

 

44    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
         

 

Item 2

Non-Binding Advisory Vote

on Compensation for Named Executive Officers

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

While this vote is advisory, and not binding on our Company, it will provide information to our Board and the MDCC regarding investor sentiment about our executive compensation philosophy, policies and practices. Our Board and the MDCC 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 MDCC 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 MDCC on page 46, as well as “Compensation Discussion and Analysis” beginning on page 47.

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

 

 

LOGO

 

 

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

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    45


Table of Contents
         

 

Management Development

and Compensation

Committee Report

Management Development and Compensation Committee Report on Executive Compensation for Fiscal Year 2016

The MDCC 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

Murry S. Gerber, Chair

James Grosfeld

David H. Komansky

Sir Deryck Maughan

Cheryl D. Mills

Gordon M. Nixon

 

46    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
         

 

Executive Compensation

Compensation Discussion and Analysis

Introduction

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 2016 financial performance, our disciplined compensation approach and 2016 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”)

 

 

 

J. Richard Kushel

Head of Multi-Asset Strategies Group

 

 

Gary S. Shedlin

Chief Financial Officer (“CFO”)

Table of Contents

 

LOGO   Introduction   
  Shareholder Engagement on Executive Compensation    48
  BlackRock Shareholder Value Framework    48
  BlackRock 2016 Performance    49
  Pay-For-Performance Compensation
Structure for NEOs
   50
  NEO Total Annual Compensation Summary    50
    
LOGO   Our Compensation Program   
  Compensation Program Objectives    51
  Compensation Elements    51
  BlackRock Performance Incentive Plan (“BPIP”)    52
  Our Compensation Framework    54
 

How We Determine Annual Cash Bonus Amounts for our CEO and President

   55
 

How We Determine Other NEO Compensation

   55

 

LOGO

  Compensation Determination Process   
  Compensation Decision Timeline and Process      56  
  Competitive Pay Positioning - Market Data      57  
  Role of the Compensation Consultant and Competitive Benchmarking      57  
  Risk Assessment of Compensation Plans      58  
    

 

LOGO

  2016 NEO Compensation and Performance Summaries   
  Linking Pay and Performance      59  
    

 

LOGO

  Compensation Policies and Practices  
  Summary of Executive Compensation Practices      64  
 

Stock Ownership Guidelines, Clawback Policy, Benefits, Severance, Perquisites and Tax Reimbursements

     65  
 

Tax Deductibility of Compensation

     66  
 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    47


Table of Contents
         

 

LOGO

 

Introduction

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 2016 Annual Meeting of Shareholders, the say-on-pay advisory vote received majority support, with 91% 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 MDCC considered shareholder input when it designed the CEO and President compensation framework as well as

the BlackRock Performance Incentive Plan (“BPIP”) awards and this year’s annual frequency of the say-on-pay advisory vote.

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, at times, 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;

 

  enhance our scale to deliver operating leverage; and

 

  return capital to shareholders on a consistent and predictable basis.

 

LOGO

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

risk management and technology offerings, in turn, driving Organic Revenue growth1.

Scale is an important driver of operating leverage that benefits our operating margin and clients. We take advantage of scale in numerous areas of our business including through our index-based investment strategies, brand spend and technology platform, including our Aladdin business.

BlackRock’s diversified platform, in terms of styles, products, client types and geographies, generates more stable cash flows through market cycles, positioning BlackRock to first invest for future growth, while prudently managing discretionary expenses and then to return capital to our shareholders. For more details, refer to “Business Outlook” on page 32 of our 2016 Form 10-K.

During 2016, we returned $2.7 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 net new business, including net new Aladdin revenue, excluding the subsequent effect of market appreciation/(depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in the current year.

 

48    BLACKROCK, INC. 2017 PROXY STATEMENT

Organic Growth + Operating Leverage + Capital Management = EPS Growth


Table of Contents
     Compensation Discussion and Analysis      1: Introduction    LOGO  

 

BlackRock 2016 Performance1

BlackRock’s 2016 results reflect our continued commitment to optimize the growth of our diverse investment, technology and risk management capabilities in the most efficient manner possible. Full-year results reflected industry-leading organic growth, continued operating margin expansion and consistent capital management. Investment performance results across our active and index strategies as of December 31, 2016 are included in Item 1 of our 2016 Form 10-K.

 

Differentiated Organic Growth

Organic asset growth of 4% in 2016 contributed to positive Organic Revenue growth2:

 

  Long-term net inflows of $181 billion reflected positive net inflows across asset classes and benefitted from significant inflows into iShares;

 

  Flows contributed to long-term annual organic asset growth of 13% in iShares, 2% in Institutional and (2)% in Retail;

 

  BlackRock Solutions achieved 11% revenue growth; and

 

  Total revenue declined 2% from 2015 to $11,155 million driven by a decline in performance fees.

 

 

LOGO

Consistent Capital Return

$2.7 billion was returned to shareholders in 2016:

 

  Annual dividend of $9.16 per share, reflected an increase of 5% from $8.72 in 2015; and

 

  $1.1 billion of outstanding shares were repurchased in 2016, driving a reduction in net share count of 2.5 million shares.

 

 

LOGO

Operating Leverage

Operating income, as adjusted, was flat versus 2015. Continued margin expansion was driven by realizing the benefits of scale and expense discipline:

 

  As adjusted operating income of $4,674 million was flat versus 2015, despite a 2% decline in revenue;

 

  As adjusted compensation and benefits expense-to-revenue ratio was 34.5%, representing a decrease of 40 bps from 2015;

 

  G&A expense of $1.3 billion was 6% below 2015 levels despite the impact of acquisitions, reflecting expense awareness in a volatile market environment; and

 

  Operating Margin, as adjusted, of 43.7% was up 80 bps from 2015.

 

LOGO

Earnings Growth

As adjusted diluted earnings per share (“EPS”) of $19.29 declined 2% versus 2015:

 

  Despite organic growth, operating margin expansion and share repurchases in 2016, EPS declined versus 2015 due to lower non-operating income and a higher tax rate in 2016.

 

 

LOGO

 

 

 

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

 

BLACKROCK, INC. 2017 PROXY STATEMENT    49


Table of Contents
     Compensation Discussion and Analysis    1: Introduction     

 

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 executive compensation is performance based and “at risk.” Compensation mix percentages shown below are based on 2016 year-end compensation decisions for individual NEOs by the MDCC.

 

 

LOGO

 

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 MDCC under the Second Amended and Restated 1999 Stock Award and Incentive Plan (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 2016 long-term incentive BPIP awards and the value of the equity portion of the bonus for 2016 annual incentive awards was converted into RSUs by dividing the award value by $375.22, which represented the average of the high and low prices per share of common stock of BlackRock on January 17, 2017.

 

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 54.

NEO Total Annual Compensation Summary

Following a review of full-year business and individual NEO performance, the MDCC determined 2016 total annual compensation outcomes for each NEO, as outlined in the table below.

 

                2016 Annual Incentive Award                                    
           

Name

    

Base

Salary

       Cash       

Deferred

Equity

      

Long-Term

Incentive Award

(“BPIP”)

      

Total Annual

Compensation

(“TAC”)

      

% change in

TAC vs. 2015

 

Laurence D. Fink

     $ 900,000        $ 8,000,000        $ 4,150,000        $ 12,450,000        $ 25,500,000          -2%  

Robert S. Kapito

     $ 750,000        $ 6,500,000        $ 3,209,000        $ 9,626,000        $ 20,085,000          1%  

Robert L. Goldstein

     $ 500,000        $ 2,850,000        $ 1,900,000        $ 2,100,000        $ 7,350,000          1%  

J. Richard Kushel

     $ 500,000        $ 2,490,000        $ 1,540,000        $ 1,970,000        $ 6,500,000          1%  

Gary S. Shedlin

     $ 500,000        $ 2,350,000        $ 1,400,000        $ 1,850,000        $ 6,100,000          2%  

The amounts listed above as “2016 Annual Incentive Award: Deferred Equity” and “Long-Term Incentive Award (“BPIP”)” were granted in January 2017 in the form of equity and are separate from the cash award amounts listed above as “2016 Annual Incentive Award: Cash.” In conformance with SEC requirements, the 2016 Summary Compensation Table on page 67 reports equity in the year granted, but cash in the year earned.

 

50    BLACKROCK, INC. 2017 PROXY STATEMENT

64-65% of total annual compensation is awarded in equity 96% of total compensation is variable and based on performance 53-54% of total annual compensation is awarded in equity 92-93% of total compensation is variable and based on performance Base Salary (Cash) <4% of pay $900k $750k Base Salary (Cash) 7-8% of pay Annual Incentive (Cash) 31-32% of pay $8.00M 100% of target $6.5M 100% of target Annual Incentive (Cash3) 38-39% of pay Annual Incentive (Deferred Equity1,2) 16% of pay $4.15M $3.21M Annual Incentive (Deferred Equity1,2,3) 23-26% of pay Long-Term Incentive (BPIP) (Performance Based Equity1,2) 48-49% of pay $12.45M 75% of equity is awarded in BPIP $9.63M 75% of equity is awarded in BPIP Long-Term Incentive (BPIP) (Performance Based Equity1,2) 29-30% of pay


Table of Contents
          LOGO

 

LOGO

 

Our Compensation

Program

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 Paid   Purpose   Description

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 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 54.

 

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 at the MDCC’s discretion; 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, which allows the MDCC to use judgment in considering qualitative and quantitative performance. A variety of factors are considered to determine the size of an NEO’s annual incentive award. The MDCC 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 2016 deferred equity, the award value was converted into a number of RSUs by dividing the award value by $375.22, which represented the average of the high and low prices per share of BlackRock common stock on January 17, 2017.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    51


Table of Contents
     Compensation Discussion and Analysis    2: Our Compensation Program     

 

Compensation Elements: Continued

 

Element/How it is Paid   Purpose   Description

LONG-TERM INCENTIVE

AWARD (“BPIP”)

Performance Based Equity

(Performance Based RSUs)

 

Terms:

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

 

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 MDCC 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 2016 long-term incentive BPIP awards, the award value was converted into a number of RSUs by dividing the award value by $375.22, which represented the average of the high and low prices per share of common stock of BlackRock on January 17, 2017.

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 MDCC’s independent compensation consultant, Semler Brossy, the MDCC 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 and January 2016 as part of his or her incentive compensation for their 2014 and 2015 performance, respectively. Similarly, a portion of each NEO’s incentive compensation for 2016 was in the form of a BPIP award granted in January 2017. 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 2017 BPIP grants are described in further detail below.

BlackRock is focused on achieving the right balance of investing in our business to drive growth in Organic Revenue, and the impact those investments have on our expense base and Operating Margin, as adjusted. For purposes of BPIP awards granted prior to 2017, Organic Revenue did not include fees generated from BlackRock’s cash management business. In recognition of the increasing strategic importance of this business in a potential rising interest rate environment, Organic Revenue for purposes of BPIP awards granted in 2017 includes fees generated from cash management.

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.

 

52    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Compensation Discussion and Analysis    2: Our Compensation Program      LOGO

 

 

 

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 net new business, including net new Aladdin revenue, excluding the subsequent effect of market appreciation/(depreciation) and foreign exchange. Organic revenue is not directly correlated with the actual revenue earned in the current 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 2017 BPIP awards have a three-year performance period that commenced on January 1, 2017 and ends on December 31, 2019. 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 all outstanding 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 2017 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 2017 BPIP Awards is set forth below.

JANUARY 2017 BPIP AWARD DETERMINATION MATRIX

 

       3-yr Average Organic Revenue ($M)                   

3-yr Average
Op Margin, as Adjusted

     <=0        200        400        600        >=800       
>=49.0%        100%          116%          133%          149%          165%     
47.0%        83%          105%          122%          138%          154%     
45.0%        67%          92%          111%          127%          143%     
43.0%        50%          75%          100%          116%          133%      Target Level
41.0%        33%          58%          83%          105%          122%     
39.0%        17%          42%          67%          92%          111%     
<=37.0%        0%          25%          50%          75%          100%     

If target level performance is achieved (i.e., during the three-year performance period, BlackRock has average annual Organic Revenue equal to $400 million and average annual Operating Margin, as adjusted, equal to 43.0%), 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, 37.0% or less, the participant will not be entitled to a distribution of any shares under their 2017 BPIP award.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    53


Table of Contents
     Compensation Discussion and Analysis    2: Our Compensation Program     

 

If during the three-year performance period, BlackRock were to deliver average Organic Revenue of $600 million and average Operating Margin, as adjusted, of 43%, then a recipient receiving a BPIP award valued at $2.0 million in January 2017 would receive a distribution of 6,182 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 2017 BPIP GRANT: EXAMPLE

 

BPIP Award Value

For Performance Year 2016 and in anticipation of continued performance and long-term focus over a multi-year period

   $2,000,000

2016 Conversion Price

The average of the high and low prices per share of common stock of BlackRock on January 17, 2017 (the grant date)

   $375.22

Base number of units granted

Determined by dividing the dollar value of the recipient’s award by the conversion price

  

5,330

($2,000,000 / $375.22)

Hypothetical Performance Results    $600M
Jan 1, 2017 to Dec 31, 2019 (3-year) average Organic Revenue    (i.e., above target)
Jan 1, 2017 to Dec 31, 2019 (3-year) average Operating Margin, as adjusted   

43%

(i.e., at target)

Resulting Award Payout (%)

Based on Award Determination Matrix

   116%
Resulting Award Payout (Number of units)    6,182
Base number of units granted x Award Payout (%)    (5,330 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 $800 million and average Operating Margin, as adjusted, equal to or greater than 49%). The maximum number of shares a participant may receive under BPIP is equal to 165% of the base number of units.

Our Compensation Framework

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

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 MDCC used the framework below to assess individual performance. The MDCC created three categories and assigned a weighting factor to each, with 50% of the award opportunity dependent on BlackRock’s financial performance. To assess improvement in our business and organizational strengths, the MDCC uses internal BlackRock performance measures and may also consider peer group comparisons.

The MDCC maintains discretion 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.

 

54    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Compensation Discussion and Analysis    2: Our Compensation Program      LOGO

 

How We Determine Annual Cash Bonus Amounts for our CEO and President

 

Category

       % of Award Opportunity       

Measures Generally Include

(internal BlackRock metrics and/or peer comparisons may be considered)

Financial Performance

   LOGO      Net New Business
        Net New Base Fees
        Operating Income
        Operating Margin, As Adjusted
        EPS
          Total Return and P/E Multiple

Business Strength

  

LOGO

  

  Relative Investment Performance Across Alpha and Beta
Strategies
        Strategic Initiatives
        Client Retention and Client Relationship Strength
        Risk Management
          Operational Performance

Organizational Strength

   LOGO      Employee Engagement
        Leadership Bench Strength and Succession Plans
        Inclusiveness and Diversity Objectives
       
             

In addition to the annual cash incentive awards, the MDCC expects to continue to make annual equity awards to both Mr. Fink and Mr. Kapito, with at least half of such equity awards being long-term and contingent on future financial or other business performance requirements.

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, EPS, operating margin and compensation and profitability margins;

 

  Non-financial factors such as individual NEO performance, overall investment performance, client relationship strength and organizational discipline; 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 MDCC’s total annual compensation decision.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    55


Table of Contents
         

 

LOGO

 

Compensation

Determination Process

Compensation Decision Timeline and Process

The MDCC structures the timing and process for determining individual NEO compensation to ensure 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.

 

 

LOGO

 

* Signifies Board meetings. Board topics include Financial, Business, Market, Talent Reviews and/or Committee updates.

At the beginning of each year, management reviews the annual budget with the MDCC. The MDCC and CEO establish financial and business goals and objectives. These goals and objectives provide the context for an evaluation of performance at year-end.

The MDCC regularly meets with the CFO to review YTD actual and projected financial information and reviews and certifies 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 MDCC also reviews other measures of our financial, investment and operating performance, market intelligence on compensation and information about market conditions. In December, management reports on absolute and/or 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.

 

56    BLACKROCK, INC. 2017 PROXY STATEMENT

Jan* Mar* May* Jul* Sep* Nov* Dec Jan* Set Goals and Objectives Review Budget Set CEO Goals and Objectives Monitor and Evaluate Performance Review Year-to-date (“YTD”) Financials Review YTD Financials Review YTD Financials Review YTD Financials Review YTD Financials Review YTD Financials Review Year-end Financials Assess Preliminary Performance Review Peer Market Data Review Consultant Reports on Compensation Review Preliminary NEO Performance Discuss NEO Pay Assess Final Performance and Determine Compensation Review Final NEO Performance Approve NEO Pay Approve BPIP Award Determination Matrix


Table of Contents
     Compensation Discussion and Analysis    3: Compensation Determination Process      LOGO

 

Our compensation consultant also provides an independent report on publicly disclosed financial information and provides compensation information for certain publicly traded asset management companies to understand performance and trends in compensation among public asset managers (as described in “Role of the Compensation Consultant and Competitive Benchmarking” below).

In December, during an executive session with the MDCC, 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.

In January, the MDCC reviews and certifies year-end financial results and other performance metrics as well as external data for comparison. The MDCC then determines final total annual incentive award amounts for each of our NEOs. The MDCC 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.

The MDCC also determines equity awards made through BPIP, our long-term incentive award. This timing allows the MDCC to consider full-year individual NEO performance assessments along with full-year financial and non-financial results in its final determination of compensation. The MDCC also determines the Award Determination Matrix for the three-year BPIP performance cycle. In setting financial performance requirements for the BPIP, the MDCC 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 51 to 52.

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 (1) evaluate BlackRock’s competitive position overall, as well as by functional business and by title and (2) 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.

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

The MDCC 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 and Competitive Benchmarking

In 2016, the MDCC continued to engage Semler Brossy to provide objective advice on the compensation practices and the competitive landscape for the compensation of BlackRock’s executive officers.

Semler Brossy reports directly to the MDCC and interacts with BlackRock management when necessary and appropriate in carrying out assignments. Semler Brossy provides services only to the MDCC 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 MDCC concluded that no conflict of interest exists that would prevent Semler Brossy from independently advising the MDCC.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    57


Table of Contents
     Compensation Discussion and Analysis    3: Compensation Determination Process     

 

A representative from Semler Brossy met with the MDCC in formal Committee meetings and at key points throughout the year to provide objective advice to the MDCC on existing and emerging compensation practices among financial services companies, as well as companies in the asset management sector. Semler Brossy reviewed publicly disclosed compensation information for certain publicly traded asset management companies to understand trends in compensation among public asset managers, including:

 

Affiliated Managers Group, Inc.

 

AllianceBernstein Holding L.P.

 

Ameriprise Financial, Inc.

 

Bank of New York Mellon Corp.

  

Eaton Vance Corp.

 

Federated Investors, Inc.

 

Franklin Resources, Inc.

 

Invesco Ltd.

 

Legg Mason, Inc.

 

Northern Trust Corp.

 

State Street Corp.

 

T. Rowe Price Group, Inc.

The broader suite of companies in the McLagan analyses, which include publicly traded companies as well as private companies, offers 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 MDCC 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; 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, 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.

 

58    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
          LOGO

 

LOGO

 

2016 NEO Compensation

and Performance Summaries

Linking Pay and Performance

Here we provide 2016 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     

      2016 Compensation                

Responsibilities:

 

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      $8,000       
    Annual Incentive Award -   Equity      $4,150       
    Long-Term Incentive Award      $12,450       
    Total Annual Compensation      $25,500       
                         
 

The MDCC determined Mr. Fink’s total annual compensation based on an assessment of performance in alignment with the compensation structure outlined on pages 51 to 52.

  

Based on BlackRock’s absolute and relative performance in 2016, the MDCC determined to award Mr. Fink $25.5 million in total compensation, modestly down from his 2015 compensation.

 

  

The Committee assessed Mr. Fink’s strategic leadership and partnership with the GEC and took into account the key performance factors outlined below.

 

2016 Key

Accomplishments

  FINANCIAL PERFORMANCE

 

   

Under Mr. Fink’s leadership, supported by his reputation as a thought leader for the broader financial services industry and his relationships with institutions, governments and central banks around the world, BlackRock generated total net inflows of $202 billion in 2016, including long-term net inflows of $181 billion, representing organic growth of 4%.

 

   

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

 

   

Relative to 2015, total revenue decreased 2%, primarily driven by lower performance fees in 2016, and exogenous factors, including divergent beta (with lower-fee domestic exposures outperforming higher-fee international and emerging market exposures), foreign exchange movements and a shift in client preferences to lower-fee passive strategies.

 

   

Despite the revenue decline in 2016, BlackRock generated flat year-over-year operating income and drove operating margin, as adjusted, expansion of 80 basis points from 2015, to 43.7%, enabled by management’s early action in 2016 to streamline operations and reduce expense.

 

   

Diluted Earnings Per Share, as adjusted, declined 2% year-over-year, resulting from a combination of flat operating income, lower non-operating income and a higher tax rate.

 

    BlackRock delivered strong total shareholder return during 2016 of 14.6% including both stock price appreciation and dividend payout, exceeding our peer average. Additionally, BlackRock expanded its price to forward earnings multiple to approximately 17x, a relative premium to industry peers.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    59


Table of Contents
     Compensation Discussion and Analysis    4: 2016 NEO Compensation and Performance Summaries     

 

 

   
     Laurence D. Fink, Continued         
       
   

BUSINESS STRENGTH

 

         

Mr. Fink’s strategic leadership, with the partnership of Mr. Kapito, helped enable BlackRock’s investment platform to achieve strong long-term investment performance in Equity and Fixed Income. (See Mr. Kapito’s Performance Summary for additional discussion.)

 

         

With respect to the firm’s key strategic initiatives, BlackRock continued to drive innovation in financial services technology with the launch of “Aladdin Risk for Wealth Management”, which provides institutional-quality risk analytics and portfolio construction tools to retail distribution partners, and “Provider Aladdin”, which offers custodians straight-through processing (where the entire trade process for capital market and payment transactions are conducted electronically without the need for re-keying or manual intervention).

 

         

BlackRock also realized continued growth during the year in its Factors and Smart Beta business (see Mr. Kushel’s Performance Summary for additional discussion), infrastructure investments, and growth markets such as China, all strategic priority areas of the firm.

 

         

With Mr. Fink’s engagement, BlackRock increased market share with key clients and distributors, maintaining the #1 market share of ETF AUM and net flows globally and sustaining momentum across the Institutional platform by delivering Organic Revenue growth for the third consecutive year.

 

         

The firm also continued to focus on risk management and operating efficiency, including the development of risk analytics and reporting for Fixed Income mutual funds to position BlackRock and our Aladdin clients to readily meet the SEC’s October 2016 liquidity risk management guidance. This continued emphasis on delivering operating efficiency from scale helped BlackRock manage the average cost per executed trade down by 18%.

 

    ORGANIZATIONAL STRENGTH
         

Under Mr. Fink’s leadership, as measured by BlackRock’s 2016 Employee Opinion Survey, employee engagement and enablement remained strong, with over 70% of employees showing positive scores in both areas. Overall employee satisfaction increased to 73%.

 

         

He also drove the firm’s efforts in deepening leadership bench strength and succession planning. As one important example, after evaluating the management and strategic direction of the Fundamental and Scientific Active Equity businesses, BlackRock hired Mark Wiseman, former CEO of Canadian Pension Plan Investment Board, to lead the firm’s unified Active Equity business.

 

         

Mr. Fink encouraged the executive team to continue to develop a diverse pipeline of senior talent through succession and a variety of leadership programs. Examples of these efforts included the expansion of the Women’s Leadership Forum Program and the launch of an inaugural Enterprise Leadership Acceleration (“eLAB”) workshop focused on high potential Directors and Vice Presidents.

 

         

Additionally, he led the firm to increase its focus on inclusion and diversity with a goal of increasing representation of diverse talent throughout the organization. BlackRock achieved five-year inclusion and diversity targets previously set in 2011 and set new targets for 2020.

 

 

60    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Compensation Discussion and Analysis    4: 2016 NEO Compensation and Performance Summaries      LOGO

 

 

 

   Robert S.

   Kapito

 

     President     

      2016 Compensation                

Responsibilities:

 

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      $6,500       
    Annual Incentive Award -  Equity      $3,209       
    Long-Term Incentive Award      $9,626       
    Total Annual Compensation      $20,085       
                           
   

The MDCC determined Mr. Kapito’s total annual compensation in alignment with the compensation structure on pages 51 to 52.

  

The MDCC awarded Mr. Kapito $20.085 million in total compensation for 2016, modestly up from his 2015 compensation.

   The Committee assessed Mr. Kapito’s leadership and took into account the key performance factors outlined below.

 

2016 Key

Accomplishments

 

 

 

FINANCIAL 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 2016 performance section on page 49.

 

    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 $202 billion in 2016, including long-term net inflows of $181 billion, representing organic growth of 4% and driving Organic Revenue growth for the firm.

 

    He provided day-to-day oversight of the business that was instrumental in achieving a 43.7% Operating Margin, as adjusted, expanding 80 bps from 2015.

 

  BUSINESS STRENGTH

 

      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, 78% and 88% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

 

       

For tax-exempt Fixed Income, 63% and 73% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

 

       

For Fundamental Equity, 62% and 65% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

 

       

For Scientific Equity, 80% and 91% of assets were above benchmark or peer median for the 3- and 5-year periods, respectively.

 

      Mr. Kapito also played a pivotal role in managing some of the most significant client and counterparty relationships of the firm. With the help of his leadership of BlackRock’s distribution channels (including Retail, iShares, Institutional, and BlackRock Solutions ), supported by his direct engagement with key clients, BlackRock achieved a number of key platform mandates with important strategic clients of the firm. These wins helped support BlackRock’s outperformance relative to peers in capturing long-term asset flows.

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    61


Table of Contents
     Compensation Discussion and Analysis    4: 2016 NEO Compensation and Performance Summaries     

 

 

     
    Robert S. Kapito, Continued         
          
    

ORGANIZATIONAL STRENGTH

 

          

Together with Mr. Fink, Mr. Kapito drove significant organizational changes with an objective of improving investment performance and distribution results, including:

 

        

Unified the Scientific and Fundamental Active Equity platforms into a single Active Equity business

 

        

Reorganized and globalized BlackRock’s Fixed Income business under the leadership of Tim Webb and the ETFs & Index Investment team under the leadership of Mark Wiedman

 

        

Re-evaluated the strategic direction for the Multi-Asset Strategies business, including naming Mr. Kushel to become Head of Multi-Asset Strategies

 

          

Together with Mr. Goldstein, he also relaunched the firm’s Global Operating Committee to drive alignment among senior leaders. Consistent with his leadership of the firm’s senior executives, investors and relationship managers, he also played a key role in talent decisions across the firm.

 

 

 

   Robert L.

   Goldstein

 

     COO

    2016 Compensation        

Responsibilities:

 

As COO, Mr. Goldstein is responsible for ensuring that the organization’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 risk analytics and capital markets expertise and insights to clients.

 

Along with Mr. Kapito, Mr. Goldstein co-chairs the BlackRock Global Operating Committee. With Mr. Shedlin, he also co-chairs the committee 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      $2,850       
    Annual Incentive Award -  Equity      $1,900       
    Long-Term Incentive Award      $2,100       
    Total Annual Compensation      $7,350       
               

 

 

2016 Key

Accomplishments

  During 2016, Mr. Goldstein continued to coordinate a firm-wide budgeting process aimed at optimizing levels of investment spending, operational efficiency and expense discipline.

 

  He also began implementing a long-term Technology vision for the firm. He showcased the firm’s vision for Aladdin , retail technology, and broader technology integration by launching the Tech 2020 strategy. This included:

 

   

launching Aladdin Risk for Wealth Management to bring Aladdin Risk capabilities to wealth managers;

 

   

continuing to lead progress in Retail Technology with FutureAdvisor and reorganizing the Portfolio Analytics Group; and

 

   

overseeing a record year for the Aladdin business, including $595 million of Aladdin revenue.

 

  During 2016, he continued to lead BlackRock Solutions , which achieved revenue of $714 million in 2016, an increase of 11% from $646 million in 2015.

 

  In addition, he contributed meaningfully to talent planning among Company leaders, particularly as it pertained to technology leadership.

 

62    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Compensation Discussion and Analysis    4: 2016 NEO Compensation and Performance Summaries      LOGO

 

 

 

   J. Richard

   Kushel

 

     Head of Multi-Asset

     Strategies Group

    2016 Compensation        

Responsibilities:

 

Has served as the Global Head of the Multi-Asset Strategies (“MAS”) Group since February 2016. He is responsible for the firm’s multi-asset products, its asset allocation and model-portfolio capabilities, factor strategies, target-date funds and impact investing. He was previously Chief Product Officer and Global Head of Strategic Product Management from 2012 to 2016.

 

As head of MAS, Mr. Kushel oversees management of a variety of balanced funds and bespoke mandates for a diversified client base that leverages broad investment expertise in global equities, bonds, currencies and commodities and BlackRock’s extensive risk management capabilities.

    (Thousands)              
    Base Salary      $500       
    Annual Incentive Award -  Cash      $2,490       
    Annual Incentive Award -  Equity      $1,540       
    Long-Term Incentive Award      $1,970       
    Total Annual Compensation      $6,500       
           

 

2016 Key

Accomplishments

 

  Mr. Kushel was appointed Head of the Multi-Asset Strategies Group in February 2016. In this role, he developed a vision for the MAS business, including an enhanced focus on institutional opportunities and restructuring the LifePath organization and product offerings.

 

  He oversaw factor-based investments, a strategic focus area for BlackRock, which grew at an organic growth rate of nearly 20% in 2016, and the Model Portfolio & Solutions team, a key initiative for the firm.

 

  He also identified talent for significant commercial and investment leadership roles for the MAS business.

 

 

 

   Gary S.

   Shedlin

 

     CFO

    2016 Compensation        

Responsibilities:

 

As CFO, Mr. Shedlin is responsible for managing BlackRock’s overall financial condition, including 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 committee 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      $2,350       
    Annual Incentive Award -  Equity      $1,400       
    Long-Term Incentive Award      $1,850       
    Total Annual Compensation      $6,100       
           

 

2016 Key

Accomplishments

 

  During 2016, Mr. Shedlin continued to develop BlackRock’s outreach with key investors and financing counterparties.

 

  He also oversaw the acquisition of the Bank of America Merrill Lynch cash management business and the sale of BlackRock’s UK Defined Contribution business.

 

  With Mr. Goldstein, Mr. Shedlin led the effort to develop plans for a future new global headquarters in New York’s Hudson Yards development.

 

  Mr. Shedlin continued to optimize BlackRock’s capital management strategy by executing a consistent and predictable dividend and share repurchase policy.

 

  He also continued to guide BlackRock’s priorities and resource deployment to enable disciplined growth, while leveraging the benefits of BlackRock’s scale to achieve a 3.4% expense reduction.

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    63


Table of Contents
         

 

LOGO

 

Compensation Policies

and Practices

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

 

LOGO  Review pay and performance alignment;

 

LOGO  Balance short- and long-term incentives, cash and equity and
fixed and variable pay elements;

 

LOGO  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;

 

LOGO  Apply a one-year minimum vesting requirement to awards granted under our stock incentive plan, subject to limited exceptions;

 

LOGO  Maintain robust stock ownership and retention guidelines;

 

LOGO  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); and

 

 prohibits engaging in any transactions that have the effect of hedging the economic risks and rewards of BlackRock equity awards;

 

LOGO  Limit perquisites;

 

LOGO  Assess and mitigate risk in compensation plans, as described
in “Risk Assessment of Compensation Plans” on page 58;

 

LOGO  Hold an advisory vote on executive compensation on an
annual basis in order to provide shareholders with
a frequent opportunity to give feedback on compensation
programs; and

 

LOGO  Review the independence of the MDCC’s independent compensation consultant on an annual basis.

     

 

What We Don’t Do

 

LOGO    No ongoing employment agreements or guaranteed compensation arrangements
with our NEOs;

 

LOGO    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;

 

LOGO    No dividends or dividend equivalents on unearned RS or RSUs; no dividend equivalents on stock options or stock appreciation rights;

 

LOGO    No repricing of stock options;

 

LOGO    No cash buyouts of underwater stock options;

 

LOGO    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;

 

LOGO    No supplemental retirement benefit arrangements with our NEOs; and

 

LOGO    No supplemental severance benefit arrangements with our NEOs outside of the standard severance benefits under BlackRock’s Severance Pay Plan (the “Severance Plan”).

         

 

64    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Compensation Discussion and Analysis    5: Compensation Policies and Practices      LOGO

 

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 MDCC 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, 2016, all of our NEOs exceeded the stated 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. BlackRock makes contributions to 401(k) accounts of its 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 the NEO’s annual incentive awards pursuant to the BlackRock, Inc. Voluntary Deferred Compensation Plan (the “VDCP”).

Severance

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 NEOs, such as financial planning, investment opportunity and personal use of travel services are considered a reasonable part of the executive compensation program. A financial planning perquisite is offered to 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. 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 2016 for perquisites is described in footnote (3) to the “2016 Summary Compensation Table” on page 67.

Tax Reimbursements

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

 

 

BLACKROCK, INC. 2017 PROXY STATEMENT    65


Table of Contents
     Compensation Discussion and Analysis    5: Compensation Policies and Practices     

 

Tax Deductibility of Compensation

 

Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation to any “covered employee” of a public company to $1.0 million during any fiscal year unless such compensation qualifies as “performance-based.” In general, the Company intends to structure its incentive compensation arrangements in a manner that would comply with these tax rules. However, the MDCC maintains the flexibility to pay non-deductible incentive compensation if it determines it is in the best interest of the Company and its shareholders.

The MDCC establishes 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”), are calculated each year in accordance with the requirements of Section 162(m) of the Internal Revenue Code. Neither the Aggregate 162(m) Cap nor the Individual 162(m) Caps serve as a basis for the MDCC’s compensation decisions for our NEOs; instead, these caps serve to establish a ceiling on the amount of annual incentive awards which the MDCC can award to the NEOs on a tax deductible basis. In determining final awards for each NEO, the MDCC ensures that such awards do not exceed the NEO’s Individual 162(m) Cap.

 

 

66    BLACKROCK, INC. 2017 PROXY STATEMENT


Table of Contents
     Summary of Executive Compensation Tables      LOGO

 

Summary of Executive Compensation Tables

The following 2016 Summary Compensation Table sets forth information concerning compensation provided by BlackRock for the years indicated to the NEOs. Pursuant to SEC rules, the below compensation table 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.

2016 Summary Compensation Table

 

Name and Principal Position

  Year     Salary
($)
    Bonus
($)
(1)
    Stock
Awards
(Fair Value
of Awards)
($)
(2)
    All Other
Compensation
($)
(3)
    Total
($)
 

Laurence D. Fink

    2016     $ 900,000     $ 8,000,000     $ 16,379,581     $ 193,250     $ 25,472,831  

Chairman and

    2015     $ 900,000     $ 8,720,000     $ 15,979,630     $ 193,000     $ 25,792,630  

Chief Executive Officer

    2014     $ 900,000     $ 9,120,000     $ 13,649,708     $ 192,750     $ 23,862,458  

Robert S. Kapito

    2016     $ 750,000     $ 6,500,000     $ 12,149,508     $ 224,425     $ 19,623,933  

President

    2015     $ 750,000     $ 7,085,000     $ 12,279,750     $ 224,175     $ 20,338,925  
      2014     $ 750,000     $ 6,955,000     $ 10,537,135     $ 222,730     $ 18,464,865  

Robert L. Goldstein

    2016     $ 500,000     $ 2,850,000     $ 3,899,900     $ 49,425     $ 7,299,325  

Senior Managing Director and

    2015     $ 500,000     $ 2,850,000     $ 4,024,823     $ 23,723     $ 7,398,546  

Chief Operating Officer

    2014     $ 500,000     $ 2,975,000     $ 3,624,619     $ 17,750     $ 7,117,369  

J. Richard Kushel

    2016     $ 500,000     $ 2,490,000     $ 3,429,662     $ 49,425     $ 6,469,087  

Senior Managing Director and

    2015     $ 500,000     $ 2,490,000     $ 3,429,610     $ 49,175     $ 6,468,785  

Head of Multi-Asset Strategies Group(4)

                                               

Gary S. Shedlin

    2016     $ 500,000     $ 2,350,000     $ 3,149,532     $ 18,250     $ 6,017,782  

Senior Managing Director and

    2015     $ 500,000     $ 2,350,000     $ 3,224,672     $ 18,000     $ 6,092,672  

Chief Financial Officer

    2014     $ 500,000     $ 2,375,000     $ 2,699,839     $ 5,000     $ 5,579,839  

 

(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 2017 (for fiscal year 2016) was based on subjective criteria, as more fully described on pages 54 to 55 of the “Compensation Discussion and Analysis”.

 

  As described on page 50 of the “Compensation Discussion and Analysis”, on January 17, 2017, Messrs. Fink, Kapito, Goldstein, Kushel and Shedlin were awarded RSUs as part of their discretionary annual bonuses for the 2016 fiscal year. In accordance with FASB ASC Topic 718, these awards had grant date values of $4,150,000, $3,209,000, $1,900,000, $1,540,000 and $1,400,000, respectively, based on the average of the high and low prices per share of BlackRock common stock on January 17, 2017, which was calculated to be $375.22. Additionally, Messrs. Fink, Kapito, Goldstein, Kushel 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, $1,970,000 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 17, 2017.

 

(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 2016 Form 10-K. The amount included with respect to the BPIP awards granted in January 2016 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) $20,269,710 for Mr. Fink, (ii) $15,034,901 for Mr. Kapito, (iii) $3,299,961 for Mr. Goldstein, (iv) $3,118,144 for Mr. Kushel, and (v) $2,886,874 for Mr. Shedlin.

 

(3) For each of the NEOs, $18,250 was attributable to contributions made by BlackRock under its tax-qualified defined contribution (401(k)) plan in 2016. For Messrs. Fink, Kapito, Goldstein, Kushel and Shedlin, $0, $31,175, $31,175, $31,175 and $0, respectively, was attributable to financial planning services. In 2016, $175,000 was attributable to personal use by each of Messrs. Fink and Kapito, 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 “– Compensation Discussion and Analysis – Compensation Policies and Practices.” No nonqualified deferred compensation earnings were determined to be above-market. None of the NEOs participate in any BlackRock-sponsored defined benefit pension plans.

 

(4) Mr. Kushel was not an NEO in 2014.

 

BLACKROCK, INC. 2017 PROXY STATEMENT    67


Table of Contents
     Summary of Executive Compensation Tables     

 

2016 Grants of Plan-Based Awards

The following table sets forth information concerning equity incentive plan-based compensation provided by BlackRock in 2016 to our NEOs.

 

                   Estimated Future Payouts Under Equity      
Incentive Plan Awards      
               

Name

   Grant
Date
(1)
     Date of
Committee
Action
     Threshold
(#)
     Target
(#)
     Maximum
(#)
     All Other
Stock Awards:
Number of Shares
or Units
(#)
     Grant Date
Fair Value
of Stock
and Option
Awards
(4)
 

Laurence D. Fink

     1/19/2016        1/13/2016 (2)                13,828      $ 4,094,747  
       1/19/2016        1/13/2016 (3)       0        41,486        68,451               $ 12,284,834  

Robert S. Kapito

     1/19/2016        1/13/2016 (2)                10,257      $ 3,037,303  
       1/19/2016        1/13/2016 (3)       0        30,772        50,773               $ 9,112,205  

Robert L. Goldstein

     1/19/2016        1/13/2016 (2)                6,416      $ 1,899,906  
       1/19/2016        1/13/2016 (3)       0        6,754        11,144               $ 1,999,994  

J. Richard Kushel

     1/19/2016        1/13/2016 (2)                5,200      $ 1,539,824  
       1/19/2016        1/13/2016 (3)       0        6,382        10,530               $ 1,889,838  

Gary S. Shedlin

     1/19/2016        1/13/2016 (2)                4,727      $ 1,399,759  
       1/19/2016        1/13/2016 (3)       0        5,909        9,749               $ 1,749,773  

 

(1) Grant date is the date on which approved award values were converted to a number of RS or RSUs based on the average of the high and low prices