Toggle SGML Header (+)


Section 1: DEF 14A (DEF 14A)

DEF 14A
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

 

2018 PROXY STATEMENT Notice of Annual Meeting May 23, 2018 New York, New York


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 strategically invested to build a broad, diverse investment platform, strong technology and risk management capabilities and a global footprint to meet clients’ needs in all market environments.

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

 

 

Generate

differentiated

organic growth        

 

   

 

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”), and the Board continues to play an active role in overseeing our broader strategy and in measuring our ability to successfully execute it.

BlackRock remains focused on investing for the future. 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 first drive growth and then return “excess” cash flow to shareholders. Our capital return strategy is balanced between dividends, where we target a 40-50% payout ratio, and a consistent share repurchase program.

In 2018, we will continue to invest in BlackRock’s future – to grow our asset management and technology capabilities, to expand our geographic footprint and to further enhance our talent – to ensure we are meeting our daily responsibilities to our clients and delivering financial returns for shareholders.


Table of Contents

 

                 LOGO

 

 

                 LOGO

 

 

LOGO

 

 

BlackRock, Inc.

55 East 52nd Street

New York, New York, 10055

April 13, 2018

To Our Shareholders:

Thank you for your confidence in BlackRock. It is my pleasure to invite you to our 2018 Annual Meeting, to be held on May 23, 2018 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.

As BlackRock celebrates its 30th anniversary this year, I have the opportunity to reflect on the most pressing issues facing investors today and how BlackRock must continue to adapt to serve clients’ needs effectively. It is a great privilege and responsibility to manage the assets entrusted to us, most of which are invested for long-term goals such as retirement. Just as we believe in the importance and benefits of clients investing for the long-term, we also approach BlackRock with that same future perspective. You can find more detail about BlackRock’s purpose and strategy for future growth in my letter to shareholders in this year’s Annual Report.

In 2017, BlackRock continued to deliver on each component of our framework for creating long-term shareholder value, while simultaneously investing in our business. Our diverse asset management platform, industry leading technology and risk management capabilities and thought leadership enabled us to generate $367 billion of net inflows during the year, representing 7% organic asset growth and reflecting the trust we have earned from clients to help solve their most difficult investment challenges. We continued to invest in our business for future growth while simultaneously expanding our operating margin and returned $2.8 billion to shareholders through a combination of dividends and share repurchases.

The execution of our strategy is dependent on a strong corporate governance framework. Whether acting as a fiduciary for clients or shareholders, we believe that good corporate governance is critical to meeting our overall objectives. That includes engaging with you, our shareholders, to better understand and address issues that are important to you. To support our mission of creating better financial futures for clients, we are vocal advocates for the adoption of sound corporate governance policies that include strong Board leadership, prudent management practices and thoughtful strategic deliberations. We believe that BlackRock has implemented such a set of principles, guidelines and practices that support sustainable financial growth and long-term value creation for shareholders and hope that you will agree as you read the Proxy Statement.

It has always been important that BlackRock’s Board of Directors functions as a key strategic and governing body that challenges our leadership team to be better and more innovative. BlackRock’s Board continues to play an integral role in our governance, growth and success.

Thank you again for your commitment to BlackRock. Our Board of Directors and I look forward to seeing you on May 23, 2018 in New York City.

Sincerely,

 

 

LOGO

 

Laurence D. Fink

Chairman and Chief Executive Officer

 

 

Just as we believe in the importance and benefits of clients investing for the long-term, we also approach BlackRock with that same future perspective.


Table of Contents

LOGO

 

Notice of 2018

Annual Meeting

of Shareholders

 

Annual Meeting of Shareholders

 

 

Date:

 

 

 

Wednesday, May 23, 2018

 

 

 

Time:

 

 

 

8:00 AM EDT

 

 

 

Place:

 

 

Lotte New York Palace Hotel

455 Madison Avenue

New York, New York 10022

 

 

 

Record Date:

 

 

 

March 29, 2018

 

 

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

 

  

 

 

 

FOR

 

 

  

 

 

 

44

 

 

 

Item 3 Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan

 

  

 

 

 

FOR

 

 

  

 

 

 

77

 

 

 

Item 4 Ratification of the Appointment of the Independent Registered Public Accounting Firm

 

  

 

 

 

FOR

 

 

  

 

 

 

83

 

 

 

Item 5 Shareholder Proposal – Production of an Annual Report on Certain Trade Association and Lobbying Expenditures

 

  

 

 

 

AGAINST

 

 

  

 

 

 

86

 

 


Table of Contents
       
     

 

How to vote: Your vote is important

 

   
     

 

LOGO

 

 

LOGO

 

 

LOGO

 

 

LOGO

   
       

 

Internet

 

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.

 

 

Mail

 

Complete and sign the proxy card
and return it in the enclosed postage
pre-paid envelope.

 

 

Telephone

 

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.

 

 

 

In Person

 

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, 2018, 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 2018 Annual Meeting of Shareholders of BlackRock, Inc.

By Order of the Board of Directors,

 

 

LOGO

 

R. Andrew Dickson III

Corporate Secretary

April 13, 2018

 

BlackRock, Inc.

40 East 52nd Street,

New York, New York 10022

 

Important Notice Regarding the Availability of Proxy Materials for the 2018 Annual
Meeting of Shareholders to be held on Wednesday, May 23, 2018: our Proxy
Statement and 2017 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  

Our Board Leadership Structure

    22  

Board Evaluation Process

    23  

Board Refreshment

    24  

Board Committees

    25  

Corporate Governance Practices and Policies

    29  

Shareholder Engagement and Outreach

    31  

Communications with the Board

    31  

2017 Director Compensation

    32  

Other Executive Officers

    35  
Ownership of BlackRock Common and Preferred Stock     36  
Section 16(a) Beneficial Ownership Reporting Compliance     38  
Certain Relationships and Related Transactions     39  
Management Development and Compensation Committee Interlocks and Insider Participation     43  
ITEM 2 Approval, in a Non-Binding Advisory Vote, of the Compensation for Named Executive Officers     44  
Management Development and Compensation Committee Report     45  

Executive Compensation

    46  

Compensation Discussion and Analysis

(see separate table of contents)

    46  

Summary of Executive Compensation Tables

    68  
ITEM 3 Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan     77  
ITEM 4 Ratification of the Appointment of the Independent Registered Public Accounting Firm     83  

Fees Incurred by BlackRock for Deloitte LLP

    84  

Audit Committee Pre-Approval Policy

    84  
Audit Committee Report     85  
ITEM 5 Shareholder Proposal – Production of an Annual Report on Certain Trade Association and Lobbying Expenditures     86  

Annual Meeting Information

    89  

Questions and Answers about the Annual Meeting and Voting

    89  

Important Additional Information

    91  

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

    92  

Other Matters

    93  

ANNEX A Non-GAAP Reconciliation

    A-1  
ANNEX B Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan     B-1  
 


Table of Contents
         

 

Proxy Summary

This summary provides 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

 

 

 

Wednesday, May 23, 2018

 

 

Time

 

 

 

8:00 AM EDT

 

 

Location

 

 

Lotte New York Palace Hotel

455 Madison Avenue

New York, New York 10022

 

 

Record Date

 

 

 

March 29, 2018

 

 

 

 

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

 

BlackRock seeks a non-binding advisory vote from its shareholders to approve the compensation of the named executive officers 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. Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan

 

BlackRock is asking shareholders to approve an amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan (“Stock Plan”) to increase the number of shares of common stock authorized for issuance under the Stock Plan. This increase will allow BlackRock to continue to provide equity incentive awards as part of our pay-for-performance compensation program, which the Board believes is essential to maintaining a competitive compensation program aligned with shareholder interests.

 

  

 

 

 

Vote FOR

 

 

 

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

 

The Audit Committee has appointed Deloitte LLP to serve as BlackRock’s independent registered public accounting firm for the 2018 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 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 — 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. 2018 PROXY STATEMENT    1                        


Table of Contents
     Proxy Summary    Board Composition     

 

 

 

   What’s            

   New?

  

This year, we have updated our Proxy Statement to help you better understand BlackRock’s governance and compensation practices. We believe a broader understanding of BlackRock and our perspective on governance will be beneficial to you as you consider this year’s voting matters. This year’s updated items include:

 

  

 

Board refreshment through the election of three new directors

 

  

 

 

Enhanced disclosure on our Board diversity and search process (see “Board Diversity” and “Director Candidate Search” on pages 10 and 11, respectively)

 

  

 

 

Enhanced disclosure on our Board and BlackRock’s culture (see “Our Board and Culture: Engaged and vital to our success” on page 21 and “Director Engagement — BlackRock Corporate Culture and Purpose” on page 24)

 

  

 

 

Updates to our Compensation Disclosure and Analysis

 

  

 

BlackRock’s Mission Statement on Sustainability

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 they reflect the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to BlackRock’s current and future global strategy, business and governance. Over the course of the past year, the Governance Committee identified three new candidates with strong senior executive, international, technology and financial services experience who were elected to the Board in March of this year.

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:

 

 

 

 

5 - 10 Years:

 

 

 

 

10+ Years:

 

 

 

 

7 years: Average tenure of all director nominees

 

 

   7 director nominees

   (39%)

 

 

 

5 director nominees

(28%)

 

 

6 director nominees

(33%)

 

 

5 years: Average tenure of independent director nominees

 

Board Profile

 

LOGO   

Current & Former CEOs

12 of 18

 

   LOGO   

Non-U.S. or

Dual Citizens

6 of 18

 

   LOGO   

Women

5 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. 2018 PROXY STATEMENT

 


Table of Contents
     Proxy Summary    Our Director Nominees      LOGO

 

Our Director Nominees

 

               

 

Committee Memberships

   

Nominee

 

 

Age at
Record
Date

 

 

Primary Occupation

 

 

Director
since

 

 

Audit

 

 

Compensation

 

 

Governance

 

 

Risk

 

 

Executive

 

   

 

Mathis Cabiallavetta

 

 

73

 

 

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

 

 

 

2007

 

 

     

 

 

 

       

 

Pamela Daley

 

 

65

 

 

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

 

 

 

2014

  Chair          

 

 

 

   

 

William S. Demchak

 

 

 

55

 

 

 

Chairman, CEO and President of The PNC Financial Services Group, Inc.

 

 

 

2003

 

             

 

 

 

   

 

Jessica P. Einhorn

 

 

70

 

 

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

 

 

 

2012

 

 

     

 

     

 

       

 

Laurence D. Fink

 

 

 

65

 

 

Chairman and CEO of BlackRock

 

 

 

1999

 

 

                  Chair    

 

William E. Ford

 

 

 

 

56

 

 

CEO of General Atlantic

 

 

2018

                       

 

Fabrizio Freda

 

 

 

60

 

 

President and CEO of The Estée Lauder Companies Inc.

 

 

 

 

2012

         

 

           

 

Murry S. Gerber

Lead Independent Director

 

 

 

 

65

 

 

Former Executive Chairman, Chairman, President and CEO of EQT Corporation

 

 

2000

 

 

 

 

         

 

   

 

Margaret L. Johnson

 

 

56

 

 

Executive Vice President of Business Development of Microsoft Corporation

 

 

 

 

2018

                       

 

Robert S. Kapito

 

 

61

 

 

President of BlackRock

 

 

 

 

2006

                       

 

Sir Deryck Maughan

 

 

70

 

 

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

 

 

 

 

2006

 

 

          Chair  

 

   

 

Cheryl D. Mills

 

 

53

 

 

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

 

 

 

 

2013

     

 

 

 

           

 

Gordon M. Nixon

 

 

61

 

 

Former President, CEO and Director of
Royal Bank of Canada

 

 

 

 

2015

     

 

  Chair  

 

 

 

   

 

Charles H. Robbins

 

 

52

 

 

Chairman and CEO of Cisco Systems, Inc.

 

 

2017

 

 

             

 

       

 

Ivan G. Seidenberg

 

 

71

 

 

Former Chairman and CEO of Verizon
Communications Inc.

 

 

 

 

2011

 

 

  Chair  

 

     

 

   

 

Marco Antonio Slim Domit

 

 

49

 

 

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

 

 

 

 

2011

 

 

 

 

               

 

Susan L. Wagner

 

 

56

 

 

Former Vice Chairman of BlackRock

 

 

 

 

2012

             

 

       

 

Mark Wilson

 

 

 

51

 

 

CEO of Aviva plc

 

 

 

2018

                       

 

 

 

BLACKROCK, INC. 2018 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

 

  Annual review of Committee charters and Corporate Governance Guidelines
 

 

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 Chief Executive Officer (“CEO”);  

 

As of December 31, 2017, 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 and sustainability developments to our Board and its Committees and work with them to both enhance our practices and improve our disclosures.

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:

 

 
LOGO

 

 

 

 

Review pay and performance alignment;

  Balance short and long-term incentives, cash and equity, and fixed and variable pay elements;
  Maintain a clawback policy;
  Require one-year minimum vesting for awards granted under the Stock Plan;
  Maintain robust stock ownership and retention guidelines;
  Prohibit hedging, pledging or short selling BlackRock securities;
  Limit perquisites;
  Assess and mitigate compensation risk;
  Solicit annual advisory vote on executive compensation; and
 

Annually review the independence of the compensation consultant retained by the Management Development & Compensation Committee (the “Compensation Committee”).

 

 
LOGO

 

 

 

 

No ongoing employment agreements or guaranteed compensation arrangements for NEOs;

  No automatic single trigger vesting of equity awards or transaction bonus payments upon change-in-control;
  No dividends or dividend equivalents on unearned restricted stock, restricted stock units, stock options or stock appreciation rights;
  No repricing of stock options;
  No cash buyouts of underwater stock options;
  No tax reimbursements for perquisites;
  No tax gross-ups for excise taxes;
  No supplemental retirement benefits for NEOs; and
 

No supplemental severance benefits for NEOs beyond standard severance benefits under BlackRock’s Severance Pay Plan.

 

 

 

4    BLACKROCK, INC. 2018 PROXY STATEMENT

 

what we do what we don’t do


Table of Contents
     Proxy Summary    2017 Performance Highlights      LOGO

 

2017 Performance Highlights1

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

 

Differentiated Organic Growth

 

Organic Asset growth of 7% in 2017

contributed to strong Organic Revenue

growth2

 

 

 

LOGO

Consistent Capital Return

 

$2.8 billion was returned to shareholders

in 2017 through a combination of dividends

and $1.1 billion of share repurchases

 

 

LOGO

Operating Leverage

 

Operating Margin, as adjusted, of 44.1%

was up 40 bps from 2016

    

 

 

LOGO

Earnings Growth

 

Diluted earnings per share, as adjusted,

of $22.60 increased 17% versus 2016

    

 

 

LOGO

 

 

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

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    5                        

Assets Under Management ($B) Revenue ($M) Operating Income ($M) (as adjusted)2 Operating Margin (as adjusted)2 Cash Dividend Per Share ($)Share Buyback ($M) Net Income ($M) Earnings Per Share (as adjusted)2 ($M)


Table of Contents
     Proxy Summary    How We Determine Annual Incentive Amounts for Our CEO and President     

 

How We Determine Annual Incentive Amounts

for Our CEO and President

 

 

BlackRock Performance

% of Award Opportunity    

 

     

Measures

 

     

BlackRock Performance

 

       

 

2016                             

 

  

 

2017                             

 

  

 

Change                         

 

Financial

Performance

 

LOGO

 

     

 

Net New Business ($bn)

 

     

 

$202

 

  

 

$367

 

  

 

+82%

 

     

 

Net New Base Fee Growth

 

     

 

4%

 

  

 

7%

 

  

 

+300bps

 

     

 

Operating Income, as adjusted1 ($m)

 

     

 

$4,674

 

  

 

$5,287

 

  

 

+13%

 

     

 

Operating Margin, as adjusted1

 

     

 

43.7%

 

  

 

44.1%

 

  

 

+40 bps

 

   

 

Diluted Earnings Per Share, as adjusted1

 

   

 

$19.29

 

  

 

$22.60

 

  

 

+17%

 

     

 

Share Price Data

     

 

BLK

  

 

LC Traditional Peers2            

     

 

NTM P/E Multiple3

 

     

 

20.2x

 

  

 

                 14.3x

 

     

 

Annual appreciation

 

     

 

35%

 

  

 

                 28%

 

Business

Strength

 

LOGO

     

 

Deliver superior client experience through competitive investment performance across global product groups

 

     

 

BlackRock’s alpha-seeking investments platform delivered very strong performance in 2017 and improved performance against peers

 

     

 

Drive organization discipline through execution of our strategic initiatives

     

 

Demonstrated successful execution across multiple complex strategic initiatives that have positioned the Company well for growth

 

     

 

Lead in a changing world

     

 

Elevated the use of technology across the organization and made progress in advancing BlackRock’s technology agenda

 

 

Organizational

Strength

 

LOGO

 

     

 

Drive high performance

     

 

Advanced the high performance goal through execution of key senior talent moves in 2017

 

     

 

Build a more diverse and inclusive culture

     

 

Strong progress in 2017 diverse hiring to meet or exceed company-wide 2020 diversity targets

 

     

 

Develop great managers and leaders

     

 

Continued to focus on manager excellence, succession planning, the depth of our leadership bench, and proactive development of key talent

 

 

 

1. Amounts are shown on an “as adjusted” basis. For a reconciliation with GAAP in the United States, please see Annex A.
2. Large Cap (“LC”) Traditional Peers refers to Alliance Bernstein, Affiliated Managers Group, Inc., Franklin Resources, Inc., Eaton Vance, Invesco, Legg Mason and T. Rowe Price.
3. NTM P/E multiple refers to the Company’s share price as of December 31, 2017 divided by the consensus estimate of the Company’s expected earnings over the next 12 months. Sourced from Factset.

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

 

6    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
     Proxy Summary    NEO Total Annual Compensation Summary      LOGO

 

NEO Total Annual Compensation Summary

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

 

 
            2017 Annual Incentive Award                                
             

Name

 

  

Base
Salary

 

    

Cash

 

    

Deferred
Equity

 

    

Long-Term
Incentive Award
(“BPIP”)

 

    

Total Annual
Compensation
(“TAC”)

 

    

% change in
TAC vs. 2016

 

    

Performance-
Based Stock
Options

 

 

 

Laurence D. Fink

 

   $

 

900,000

 

 

 

   $

 

10,000,000

 

 

 

   $

 

4,600,000

 

 

 

   $

 

12,450,000

 

 

 

   $

 

27,950,000

 

 

 

    

 

10%

 

 

 

    

 

 

 

 

 

Robert S. Kapito

 

   $

 

750,000

 

 

 

   $

 

8,125,000

 

 

 

   $

 

3,514,000

 

 

 

   $

 

9,626,000

 

 

 

   $

 

22,015,000

 

 

 

    

 

10%

 

 

 

    

 

 

 

 

 

Robert L. Goldstein

 

   $

 

500,000

 

 

 

   $

 

3,275,000

 

 

 

   $

 

2,325,000

 

 

 

   $

 

2,100,000

 

 

 

   $

 

8,200,000

 

 

 

    

 

12%

 

 

 

   $

 

10,000,000

 

 

 

 

Mark S. McCombe

 

   $

 

500,000

 

 

 

   $

 

2,725,000

 

 

 

   $

 

1,775,000

 

 

 

   $

 

1,950,000

 

 

 

   $

 

6,950,000

 

 

 

    

 

11%

 

 

 

   $

 

10,000,000

 

 

 

 

Gary S. Shedlin

 

   $

 

500,000

 

 

 

   $

 

2,700,000

 

 

 

   $

 

1,750,000

 

 

 

   $

 

1,850,000

 

 

 

   $

 

6,800,000

 

 

 

    

 

11%

 

 

 

   $

 

7,500,000

 

 

 

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

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

Pay-for-Performance Compensation Structure for NEOs

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

 

 

LOGO

 

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

 

2017 CEO Total Annual Compensation-$27.95M Base Salary (Cash) $900k 97% of total compensation is variable and based on performance Annual Incentive (Cash) $10.00M 125% of target Annual Incentive (Deferred Equity1,2) $4.6M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $12.45M 75% of equity is awarded in BPIP 2017 President Total Annual Compensation- $22.02M Base Salary (Cash) $750k Annual Incentive (Cash) $8.13M 125% of target Annual Incentive (Deferred Equity1,2) $3.51M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $9.63M 75% of equity is awarded in BPIP 60-61% of total annual compensation is awarded in equity 2017 Total Annual Compensation for NEOs (excluding CEO and President) Base Salary (Cash) 7-8% of pay 92-94% of total compensation is variable and based on performance Annual Incentive (Cash3) 39-40% of pay Annual Incentive (Deferred Equity1,2,3) 26-28% of pay Long-Term Incentive (BPIP) (Performance Based Equity1,2) 26-28% of pay 53-54% of total annual compensation is awarded in equity

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    7                        


Table of Contents
         

 

   Item 1:

   Election of

   Directors

 

LOGO

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 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.

If all 18 nominees are elected, our 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.

The PNC Financial Services Group, Inc. (“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 – PNC Stockholder Agreement” on page 40.

 

 

                8    BLACKROCK, INC. 2018 PROXY STATEMENT

It has always been important that BlackRock’s Board of Directors functions as a key strategic and governing body that challenges our leadership team to be better and more innovative. Laurence D. Fink Chairman and Chief Executive Officer


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 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 and Mandatory Retirement Age

Under the Board’s Director Resignation Policy, any incumbent director who fails to receive a majority of votes cast in an uncontested election 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 has established a mandatory retirement age of 75 years for directors, as reflected in BlackRock’s Corporate Governance Guidelines.

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 92.

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, then 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, then 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. 2018 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 director 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, ability to make independent analytical inquiries, understanding of BlackRock’s business environment and a willingness to devote adequate time and effort to the responsibilities of the Board.

Board Diversity

BlackRock and its Board believe diversity in the boardroom is critical to the success of the Company and its ability to create long-term value for our shareholders. The Board has and will continue to make diversity in gender, ethnicity, age, career experience and geographic location – as well as diversity of mind – a priority when considering director candidates. The diverse backgrounds of our individual directors help the Board better evaluate BlackRock’s management and operations and assess risk and opportunities for the Company’s business model. BlackRock’s commitment to diversity enhances Board involvement in our Company’s multi-faceted long-term strategy and inspires deeper engagement with management, employees and clients around the world.

Our Board has nominated 18 directors for election, 15 of whom are independent. The Board includes 5 women, 1 of whom is African American, and 6 directors who are non-U.S. or dual citizens. Several of our nominees live and work overseas in countries and regions that are key areas of growth and investment for BlackRock, including Mexico, Canada, the United Kingdom and Continental Europe.

As BlackRock’s business has evolved, so has its Board. Our Board consists of senior leaders (including 12 current or former company CEOs) with substantial experience in financial services, consumer products, manufacturing, technology, banking and energy, and several directors have held senior policy and government positions. To learn more about our Board, we encourage you to visit our website at http://ir.blackrock.com/board-of-directors. Core qualifications and areas of expertise represented on our Board include:

 

 

LOGO

 

10    BLACKROCK, INC. 2018 PROXY STATEMENT

 


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

 

Board Tenure and Size

To ensure the Board has an appropriate balance of experience, continuity and fresh perspective, the Board considers, among other factors, length of tenure when reviewing nominees. The average tenure of BlackRock’s director nominees is approximately 7 years, while the average tenure for independent director nominees is approximately 5 years.

Six directors, comprising 33% of the Board, have served more than 10 years and bring a wealth of experience and knowledge concerning BlackRock. Five directors, comprising 28% of the Board, have served between 5 and 10 years.

Following the 2018 Annual Meeting of Shareholders, assuming all of the nominated directors are elected, there will be seven directors, comprising 39% of the Board, who have joined the Board within the past 5 years and bring fresh perspective to Board deliberations.

The Board has not adopted a policy that limits or sets a target for Board size and believes the current size and diverse composition of the Board is best suited to evaluate management’s performance and oversee BlackRock’s global strategy and risk management. As described in “Board Evaluation Process” on page 23, the Governance Committee and the Board evaluate Board and Committee performance and effectiveness on at least an annual basis and, as part of that process, ask each director to consider whether the size of the Board and its standing Committees are appropriate.

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 director candidates for the Board and Committees. The Governance Committee also considers a director 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 CEO 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 6 of BlackRock’s current directors will retire within the next 6 years, inclusive of Messrs. Al-Hamad and Grosfeld. In order to maintain a Board with an appropriate mix of experience and qualifications, the Governance Committee, with the help of management and an outside consultant, engages in a year-round process to identify and evaluate new director candidates in conjunction with its recurring review of Board and Committee composition. Consistent with our long-term strategic goals and the qualifications and attributes described above, search criteria include significant experience in financial services, the technology sector and consumer branding, as well as international experience. In March of this year, the Governance Committee selected William E. Ford, Margaret L. Johnson and Mark Wilson as director candidates with significant leadership and experience in asset management, technology and international financial services, respectively, and recommended each to the Board for consideration as director candidates for the Board. Ms. Johnson was recommended for consideration to the Governance Committee by a third-party search firm and Messrs. Ford and Wilson were referrals from our CEO. On March 15, 2018, following a review of the candidates’ qualifications and independence, the Board voted unanimously to elect each director candidate to our Board.

Board Recommendation

For this year’s election, the Board has nominated 18 director candidates. The Board believes these director 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 29, 2018.

 

 

 

LOGO

 

 

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

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    11                        


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

 

Director Nominee Biographies

 

 

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 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 – 2015)

 

 Philip Morris International Inc. (2002 – 2014)

 

 

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 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, and Patheon N.V., until it was acquired by Thermo Fisher, Inc.

 

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 – 2017)

 

 BG Group (2014 – 2016)

 

12    BLACKROCK, INC. 2018 PROXY STATEMENT

 

Age 73 Tenure 10 Years Committees Audit Nominating & Governance Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Company & Financial Reporting Age 65 Tenure 4 Years Committees Audit (Chair) Executive Risk Qualifications Senior Executive & Corporate Governance Global Business Financial Services Public Company & Financial Reporting Public Policy & Government/ Regulatory Affairs


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

 

 

 

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 2014 – present)

 

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)

 

 

Age 55 Tenure 15 Years Committees Executive Risk Qualifications Senior Executive & Corporate Governance Risk Management & Compliance Financial Services Public Company & Financial Reporting Branding & Marketing Age 70 Tenure 5 Years Committees Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/Regulatory Affairs

 

BLACKROCK, INC. 2018 PROXY STATEMENT    13                        


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

 

 

 

 

 

LOGO

 

    

 

Laurence D. Fink

 

Mr. Fink is founder, Chairman and Chief Executive Officer of BlackRock. 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

 

LOGO

 

    

William E. Ford

 

Mr. Ford is the Chief Executive Officer of General Atlantic, a position he has held since 2007. He also serves as Chairman of General Atlantic’s Executive Committee and is a member of the firm’s Investment and Portfolio Committees. Mr. Ford is actively involved with a number of educational and not-for-profit organizations. He is a member of the board of Rockefeller University, where he is Vice Chair, and serves on the board of directors of the National Committee on United States-China Relations, and is a member of The Council on Foreign Relations. He is also a member of the Steering Committee for the CEO Action for Diversity and Inclusion initiative. Mr. Ford has formerly served on the boards of First Republic Bank, NYSE Euronext, E*Trade, Priceline and NYMEX Holdings.

 

Qualifications

Mr. Ford brings to the Board extensive global investment management experience and financial expertise acquired over his 25 years at General Atlantic, one of world’s leading growth equity firms.

 

Other Public Company Directorships (within the past 5 years)

 

 Axel Springer (2016 – present)

 

 IHS Markit Ltd. (2010 – present)

 

14    BLACKROCK, INC. 2018 PROXY STATEMENT

 

Age 65 Tenure 18 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 Age 56 Tenure 0 Years Committees None Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services


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 the Company’s 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 and Chief Executive Officer from 2007 to 2010, and as its Chairman, President and Chief Executive Officer from 1998 to 2007.

 

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)

 

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

 

 

Age 55 Tenure 15 Years Committees Executive Risk Qualifications Senior Executive & Corporate Governance Risk Management & Compliance Financial Services Public Company & Financial Reporting Branding & Marketing Age 70 Tenure 5 Years Committees Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/Regulatory Affairs

 

BLACKROCK, INC. 2018 PROXY STATEMENT    15                        


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

 

 

 

 

 

 

LOGO

    

 

Margaret L. Johnson

 

Ms. Johnson has been an Executive Vice President of Business Development at Microsoft Corporation since September 2014. She is responsible for driving strategic business deals and partnerships across various industries. Ms. Johnson joined Microsoft from Qualcomm Incorporated, where she served in various leadership positions across engineering, sales, marketing and business development. She most recently served as Executive Vice President of Qualcomm Technologies, Inc. and President of Global Market Development. Ms. Johnson is a Director of PATH and a Trustee of The Paley Center for Media.

 

Qualifications

Ms. Johnson brings to the Board substantive experience in the field of technology as well as business and strategic development expertise acquired over her 28 years at Microsoft and Qualcomm.

 

Other Public Company Directorships (within the past 5 years)

 

 Live Nation Entertainment (2013 – present)

 

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. 2018 PROXY STATEMENT

 

Age 56 Tenure 0 Years Committees None Qualifications Senior Executive & Corporate Governance Global Business Public Policy & Government/ Regulatory Affairs Technology Branding & Marketing Age 70 Tenure 11 Years Committees None Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services 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 a 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 served as Vice Chairman of the NYSE from 1996 to 2000. 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 also served as a director of GlaxoSmithKline plc from 2004 to 2016 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.) and Orion Power.

 

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

 

 

Age 53 Tenure 4 Years Committees Management Development & Compensation Nominating & Governance Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Public Policy & Government/ Regulatory Affairs Branding & Marketing

 

BLACKROCK, INC. 2018 PROXY STATEMENT    17                        


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 member of the board of directors 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 Chairman and Chief Executive Officer of Cisco Systems, Inc. (“Cisco”). 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 brings to the Board extensive experience in the fields of technology, global sales and operations acquired over his 19 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. 2018 PROXY STATEMENT

 

Age 61 Tenure 2 Years Committees Executive Nominating & Governance (Chair) Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/ Regulatory Affairs Age 52 Tenure 1 Year Committees Risk Qualifications Senior Executive & Corporate Governance 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 directors 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)

 

 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)

 

 

Age 71 Tenure 7 Years Committees Audit Executive Nominating & Governance Management Development & Compensation (Chair) Qualification Senior Executive & Corporate Governance Public Company & Financial Reporting Public Policy & Government/ Regulatory Affairs Branding & Marketing Technology global business Age 49 Tenure 6 Years Committees Audit Management Development & Compensation Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Company & Financial Reporting

 

BLACKROCK, INC. 2018 PROXY STATEMENT    19                        


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

 

 

 

 

 

 

LOGO

    

 

Susan L. Wagner

 

Ms. Wagner retired as Vice Chairman of BlackRock after serving in that role 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)

 

LOGO

    

Mark Wilson

 

Mr. Wilson is the Chief Executive Officer of Aviva plc (“Aviva”), a multinational insurance company headquartered in the UK. Prior to joining Aviva, Mr. Wilson worked in Asia for 14 years, including as Chief Executive Officer of AIA Group Limited, a leading pan-Asian company. Mr. Wilson is recognized for his leadership on sustainability issues and is a member of the UN Business and Sustainable Development Commission. In addition, he is a member of the Development Board of the Royal Foundation for the Duke and Duchess of Cambridge, Prince Harry and Ms. Meghan Markle.

 

Qualifications

As Chief Executive Officer of Aviva, Mr. Wilson brings to the Board extensive experience in the Europe, Middle East and Africa (“EMEA”) region and his operational and executive expertise in the insurance industry and in international finance provides the Board with an experienced outlook on international business strategy, development and sustainability.

 

Other Public Company Directorships (within the past 5 years)

 

 Aviva plc (2013 – present)

 

20    BLACKROCK, INC. 2018 PROXY STATEMENT

 

Age 53 Tenure 4 Years Committees Management Development & Compensation Nominating & Governance Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Public Policy & Government/ Regulatory Affairs Branding & Marketing Age 61 Tenure 2 Years Committees Executive Nominating & Governance (Chair) Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/ Regulatory Affairs


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 addresses director responsibilities, director access to management, director orientation and continuing education, director retirement and the annual performance evaluations of the Board and Committees. The Corporate Governance Guidelines also directs that the Governance Committee consider the periodic rotation of Committee members and Committee Chairs as a means of introducing fresh perspectives and broadening and diversifying the views and experience represented on Committees.

 

 

Our Board and Culture: Engaged and vital to our success

 

We believe our Board should be deeply engaged, provide informed and honest guidance and feedback, and maintain an open dialogue with management, based on a clear understanding of our strategic plans.

 

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

 

Our directors have full and free access to all BlackRock officers and employees at any time to address questions, comments or concerns. Our directors may arrange these meetings independently and without the presence of senior management. Additionally, the Board and Committees have the power to hire independent legal, financial or other advisors without approval from, or consultation with, BlackRock management.

 

  

Our Board plays an active part in our talent development as well, dedicating at least one meeting per year to talent review, evaluating whether we have the right people in the right places to execute our long-term 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 2017, we incorporated feedback from shareholders to focus on how the Board oversees our Company’s corporate culture.

 

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

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    21             


Table of Contents
     Corporate Governance    Our Board Leadership Structure     

 

Our Board Leadership Structure

Why our Board leadership structure is right for BlackRock

Our Board and Governance Committee regularly review and evaluate the Board’s leadership structure. Mr. Fink serves as both BlackRock’s CEO and Chairman of the Board, which the Board has determined is the most appropriate and effective leadership structure for the Board and the Company at this time. Mr. Fink has served in this capacity since founding BlackRock in 1988 and, as such, brings over 30 years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairman of the Board.

The Board does not have a policy on whether the roles of the Chairman and CEO should be separated but believes the current combination of the two roles provides BlackRock with, among other things, a clear and effective leadership structure to communicate the Company’s business and long-term strategy to its clients, shareholders and the public. The combined Chairman-CEO structure also provides for robust and frequent communication between the Board’s independent directors and the management of the Company.

To further facilitate coordination with the independent directors and to ensure the exercise of independent judgment by the Board, the independent directors annually select one of the independent members to serve as the Lead Independent Director.

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

 

 

 

LOGO

 

Our Lead Independent

 

Director: Murry S. Gerber

 

First Elected in 2017

 

               

 

 

The Role of the Lead Independent Director

 

Our Lead Independent Director has significant authority and responsibilities to provide for an effective and independent Board. In this role, Mr. Gerber:

 

   Sets and approves the agenda for Board meetings and leads executive sessions.

 

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

 

   Serves as liaison between independent directors and the Chairman.

 

   Focuses on Board effectiveness, performance and composition with input from the Governance Committee.

 

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

 

   Serves as the primary Board contact for shareholder engagement.

 

 

Executive Sessions

Executive sessions of non-management directors are held at most regularly scheduled Board meetings, and six executive sessions were held in 2017. Each session is chaired by the Lead Independent Director, who facilitates discussion of the Company’s strategy, key governance issues, succession planning and the performance of senior executives. Any non-management director may request that an additional executive session be scheduled. At least once a year an executive session is held of only those directors determined to be “independent,” within the meaning of the listing standards of the NYSE.

 

The full versions of our Lead Independent Director Guidelines, Corporate Governance Guidelines, 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”.

 

22    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
     Corporate Governance    Board Evaluation Process     

 

Board Evaluation Process

The effectiveness of the Board and its Committees is critical to BlackRock’s success and to the protection of our shareholders’ long-term interests. To ensure their effectiveness, the Board and each Committee conduct comprehensive annual self-evaluations to identify and assess areas for improvements.

The evaluation process includes the following steps:

 

 

LOGO

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    23                        


Table of Contents
     Corporate Governance    Board Refreshment     

 

Board Refreshment

The Governance Committee is responsible for identifying and evaluating potential director candidates, reviewing Board and Committee composition and making recommendations to the full Board. This ongoing process includes:

 

 

LOGO

Director Engagement – BlackRock Corporate Culture and Purpose

Twice a year, our Board and Committee meetings are held outside of New York, including at least one round of meetings outside of the United States. These off-site meetings provide our directors with an opportunity to do a focused review of regional strategies, to meet with employees and management based outside of our New York corporate headquarters and to engage with local clients and government officials. These meetings provide our directors with firsthand exposure to BlackRock’s corporate culture and how employees globally demonstrate BlackRock’s principles and purpose. In 2017, the Board travelled to Toronto, Canada and Copenhagen, Denmark.

In addition to Board and Committee off-site meetings, members of our Board are encouraged to make on-site visits to other BlackRock offices at their convenience. In 2017, the Chair of the Audit Committee visited Budapest, Hungary, London, England and Edinburgh, Scotland to speak with local management and employees, tour our new facilities and personally expand her knowledge of BlackRock’s global operations.

This year, our directors also attended the BlackRock NY TechFest, a showcase of the latest in BlackRock’s technology capabilities and initiatives by and for employees. As a key part of our commitment to technology and innovation, our directors experienced first-hand where our technology is today and where it is leading us tomorrow.

Director Onboarding and Continuing Education

All new directors participate in an orientation program, to be conducted within three months of their election. Orientation includes presentations by senior management to familiarize our new directors with BlackRock’s strategic plans, significant financial, accounting and risk management issues, compliance programs, conflict policies, code of ethics and other controls, our principal officers and internal and independent auditors. All Directors are also encouraged to attend continuing educational programs offered by BlackRock or sponsored by universities, stock exchanges or other organizations related to fulfilling their duties as Board or Committee members.

Management 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 Compensation Committee, 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 Compensation Committee to consider potential successors to the CEO

 

24    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
     Corporate Governance    Board Refreshment     

 

in the event of an emergency or the CEO’s retirement. Our CEO recommends and evaluates potential successors for BlackRock’s top executives, along with a review of any development plans for these individuals.

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

Board Committees

Each Committee is governed by a Board-approved Charter.

Board Committee Meetings and Members

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

 

Member

 

  

Audit             

 

  

 

Management             

Development &             

Compensation             

 

  

Nominating &             

Governance             

 

  

Risk             

 

  

Executive             

 

INDEPENDENT DIRECTORS

 

                        

 

Abdlatif Y. Al-Hamad

 

                       

 

             

 

    

 

Mathis Cabiallavetta

 

             

 

                  

 

             

 

    

 

Pamela Daley

 

             

 

                       

 

             

 

 

Jessica P. Einhorn

 

                  

 

                  

 

    

 

William E. Ford

 

                        

 

Fabrizio Freda

 

                       

 

         

 

Murry S. Gerber

(Lead Independent Director)

 

  

 

          

 

  

 

          

 

            

 

          

 

 

James Grosfeld

 

                  

 

             

 

         

 

Margaret L. Johnson

 

                        

 

Sir Deryck Maughan

 

             

 

                       

 

             

 

 

Cheryl D. Mills

 

                  

 

             

 

         

 

Gordon M. Nixon

 

                  

 

             

 

             

 

             

 

 

Charles H. Robbins

 

                            

 

    

 

Ivan G. Seidenberg

 

             

 

             

 

             

 

                  

 

 

Marco Antonio Slim Domit

 

             

 

             

 

              

 

Susan L. Wagner

 

                            

 

    

 

Mark Wilson

 

              

 

NON-INDEPENDENT DIRECTORS

 

                        

 

Laurence D. Fink

 

                                 

 

 

Robert S. Kapito

 

                        

 

William S. Demchak

 

                            

 

             

 

 

Number of Meetings Held in 2017

 

   14          

 

   10          

 

   6          

 

   6          

 

   0          

 

 

 

Chairperson

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    25                        


Table of Contents
     Corporate Governance    Board Committees     

 

The Board met seven times during 2017. In 2017, 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 period served by such director. Directors are encouraged to and do attend the annual meetings of BlackRock shareholders. Fifteen of the 17 directors who were serving on the Board last year attended the 2017 Annual Meeting of Shareholders. Messrs. Al-Hamad and Grosfeld are retiring from the Board and will not be standing for re-election at the 2018 Annual Meeting of Shareholders.

Board Committee Refreshment

The Governance Committee considers the periodic rotation of Committee members and Committee Chairs to introduce fresh perspectives and to broaden and diversify the views and experience represented on Committees. On January 11, 2018, the Board appointed Mr. Robbins to serve as a member of the Risk Committee. He brings expertise in global business, technology, public policy and government and regulatory affairs. In addition, Messrs. Ford and Wilson and Ms. Johnson, as recent additions to the Board, are rotating through each Committee and, if elected, will be appointed to one or more Committees in 2018 following a review of existing Committee composition.

 

 

 

Audit Committee

   

CHAIR

  MEMBERS      

 

Pamela Daley

 

 

Mathis Cabiallavetta

Murry S. Gerber

 

 

 

Sir Deryck Maughan

Ivan G. Seidenberg

 

 

 

Marco Antonio Slim Domit

 

 

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.

 

The Audit Committee receives reports on:

 

   

    The progress and results of the internal audit program regularly, as provided by BlackRock’s Head of Internal Audit, and approves BlackRock’s internal audit plan;

 

 

    External audit findings regularly, as provided by BlackRock’s independent registered public accounting firm, Deloitte LLP (“Deloitte”);

 

 

    Financial controls regarding compliance with the Sarbanes-Oxley Act of 2002 annually, as prepared by the Head of Financial Controls and presented by management;

   

 

    Financial updates regularly, as provided by the Chief Financial Officer;

 

    Cybersecurity updates, as provided by the Chief Information Security Officer;

 

    Compliance updates, as provided by the Chief Compliance Officer;

 

    Litigation, regulatory and material ethics matters regularly, as provided by BlackRock’s Chief Legal Officer; and

 

    Risk matters regularly, as provided by the Chair of the Risk Committee.

   

 

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 approves 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 selects, reviews and evaluates the lead audit partner and determines whether 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 each member of the Audit Committee is “independent” as defined in the NYSE listing standards and applicable SEC rules, qualifies as an “audit committee financial expert” under applicable SEC rules, and is “financially literate” and has accounting and related financial management expertise within the meaning of the NYSE listing standards.

 

 

 

   

 

26    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
     Corporate Governance    Board Committees     

 

 

 

 

Management Development and Compensation Committee

CHAIR

   MEMBERS      

 

Ivan G. Seidenberg

  

 

Jessica P. Einhorn

Murry S. Gerber

 

  

 

James Grosfeld

Cheryl D. Mills

 

  

 

Gordon M. Nixon

Marco Antonio Slim Domit

 

Role and Responsibilities

 

     

   Reviewing and approving corporate goals and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of those goals and objectives and determining and approving the CEO’s overall compensation levels based on this evaluation;

 

   Reviewing BlackRock’s executive compensation program and establishing the compensation framework of BlackRock’s executive officers;

 

   Reviewing and making recommendations to the Board about director compensation;

   

   Providing oversight of BlackRock’s employee benefit and compensation plans;

 

   Reviewing, assessing and making reports and recommendations to the Board on BlackRock’s talent development and succession planning, with an emphasis on performance and succession at the highest management levels; and

 

   Appointment, compensation and oversight of the work of any compensation consultant, legal counsel or other advisor retained by the Compensation Committee.

The Board has determined that each member of the Compensation Committee is “independent” as defined in the NYSE listing standards and applicable SEC rules, qualifies as a “non-employee director” under applicable SEC rules and is an “outside director” within the meaning of the Internal Revenue Code.

 

Additional information on the Compensation Committee’s processes and procedures for consideration of NEO compensation is addressed in the Compensation Committee Report on page 45 and “Compensation Discussion and Analysis” beginning on page 46.

 

 

 

 

Nominating and Governance Committee

  

CHAIR

   MEMBERS      

 

Gordon M. Nixon

  

 

Abdlatif Y. Al-Hamad

Mathis Cabiallavetta

 

  

 

Fabrizio Freda

James Grosfeld

 

  

 

Cheryl D. Mills

Ivan G. Seidenberg

 

 

Role and Responsibilities

 

     

   Recommending to the Board criteria for the selection of new directors to serve on the Board;

 

   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 director nominees for each Committee;

   

   Leading the Board in its annual review of the Board’s performance;

 

   Evaluating, monitoring and making recommendations to the Board with respect to the corporate governance policies and procedures of the Company;

 

   Recommending to the Board the Corporate Governance Guidelines applicable to BlackRock; and

 

   Overseeing BlackRock’s Related Persons Transaction Policy.

The Board has determined that each member of the Governance Committee is “independent” as defined in the NYSE listing standards and applicable SEC rules, qualifies as a “non-employee director” under applicable SEC rules.

 

 

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    27                        


Table of Contents
     Corporate Governance    Board Committees     

 

 

 

 

Risk Committee

  

CHAIR

   MEMBERS      

 

Sir Deryck Maughan

  

 

Abdlatif Y. Al-Hamad

Mathis Cabiallavetta

Pamela Daley

 

  

 

William S. Demchak

Jessica P. Einhorn

Gordon M. Nixon

 

  

 

Charles H. Robbins

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 operations, new products and services, third-party vendor relationships and model risk;

 

    The impact of firm-wide risk assessments including 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 and cybersecurity 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 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.

 

The Risk Committee also reviewed and discussed with management the Risk Factors included in the 2017 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

 

  

 

Gordon M. Nixon

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. 2018 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, Compensation and Governance Committees assist the Board in fulfilling this important role.

 

The Committees report to the full Board at least 6 times a year with updates on their areas of designated risk oversight responsibilities. These Committees work together and with the full Board to help ensure that the Committees and the Board have received all information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management activities.

 

 

LOGO

 

    

LOGO

 

    

LOGO

 

    

LOGO

 

 

RISK

COMMITTEE

 

Responsible for
assessing and
overseeing BlackRock’s
levels of risk and risk
management and
related policies and
processes in connection
with fiduciary and
enterprise risks and
other areas of risk
determined by the
Board. Reflecting the
increased importance
of information security,
the Risk Committee has
added cybersecurity as
a recurring topic at
each meeting.

 

 

    

AUDIT

COMMITTEE

 

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

    

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

 

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

    

NOMINATING AND GOVERNANCE COMMITTEE

 

Oversees risks related to
Board and Committee
succession and other
corporate governance
policies and practices.            

 

Corporate Governance Practices and Policies

Director Independence

The Board determines annually the independence of directors in accordance with NYSE listing standards and applicable SEC rules. No director is considered independent unless the Board has determined that he or she has no material relationship with BlackRock. The Board has adopted categorical standards to help determine whether certain relationships between the members of the Board and BlackRock or its affiliates and subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with BlackRock) are material relationships for purposes of NYSE listing standards. The categorical standards provide that the following relationships are not material for such purposes:

 

  Relationships arising in the ordinary course of business, such as asset management, acting as trustee, lending, deposit, banking or other financial service relationships or other relationships involving the provision of products or services, so long as the products and services are being provided in the ordinary course of business and on substantially the same terms and conditions, including price, as would be available to similarly situated customers;

 

  Relationships with companies of which a director is a shareholder or partnerships of which a director is a partner, provided the director is not a principal shareholder of the company or a principal partner of the partnership;

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    29                        


Table of Contents
     Corporate Governance    Corporate Governance Practices and Policies     

 

 

  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 has determined that Mses. Daley, Einhorn, Johnson, Mills and Wagner and Messrs. Cabiallavetta, Ford, Freda, Gerber, Maughan, Nixon, Robbins, Seidenberg, Slim and Wilson are “independent” as defined in the NYSE listing standards and that none of the relationships between these directors and BlackRock are material under the NYSE listing standards. The Board had also previously determined that Messrs. Al-Hamad, Grosfeld, Komansky, O’Brien and Varley, who were directors for all or part of 2017 and are not standing for re-election, were “independent.” Following the 2018 Annual Meeting of Shareholders, assuming all of the nominated directors are elected, BlackRock’s Board is expected to consist of 18 directors, 15 of whom, representing approximately 83% of the Board, will be “independent” as defined in the NYSE listing standards.

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 the creation of regulatory regimes that increase financial market transparency, protect investors and facilitate responsible growth of capital markets, while preserving consumer choice and properly balancing benefits versus implementation costs. BlackRock comments on public policy topics through, among other things, our published ViewPoints, which examine public policy issues and assess their implications for investors, and through comment letters and consultation responses that we submit to policy makers. We believe in the value of open dialogue and transparency on these important issues; our position papers and letters are available on the “Insights – Public Policy” section of our website.

Governance of Public Policy Engagement

BlackRock believes that responsible corporate citizenship requires active engagement in legislative and regulatory processes. Our engagement with policy makers and advocacy on public policy issues is coordinated by our Global Public Policy Group. Members of the Global Public Policy Group work closely with 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.

The head of the Global Public Policy Group 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. BlackRock’s Chief Legal Officer and the head of the Global Public Policy Group brief the Board’s Risk Committee and keep directors apprised of, and engaged in, the Company’s legislative and regulatory priorities and advocacy initiatives. The Global Public Policy Group and executive leadership regularly meet with and exchange views on legislation and regulatory priorities with public officials and policy makers, regionally and globally, and provide such individuals with educational materials to help inform their decisions.

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 associations that we belong to are the Investment Company Institute, the Asset Management Group of the Securities Industry and Financial Markets Association, the European Fund and Asset Management Association and the Investment Association. 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.

 

30    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
     Corporate Governance    Corporate Governance Practices and Policies     

 

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 voluntarily elected not to spend corporate funds directly on independent expenditures, including electioneering communications, and does not currently support or oppose ballot initiatives. 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.

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 and sustainability practices and improve our disclosures.

Also see “Compensation Discussion and Analysis” beginning on page 46 for a discussion of our compensation related shareholder engagement initiatives and our historical say-on-pay vote results.

Communications with the Board

Shareholders and other interested parties may contact any member (or all members) of the Board, any Committee or any Chair of any such Committee by mail or electronically.

Correspondence may be sent by:

 

 

Mail:

 

BlackRock, Inc.

Attn: Board of Directors

c/o Corporate Secretary

40 East 52nd Street

New York, New York 10022

 

 

 

Online:

 

Go to the BlackRock website at www.blackrock.com. Under the headings “Our Firm / Investor Relations / Corporate Governance / Governance Overview / 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, INC. 2018 PROXY STATEMENT    31                        


Table of Contents
     Corporate Governance    Communications with the Board     

 

BlackRock’s Corporate Communications, Investor Relations and Legal and Compliance Departments will review all communications received to determine whether the contents represent a message to or matter for our directors’ review. Requests for a meeting with any member of the Board will also be reviewed accordingly and, if appropriate, arranged by Investor Relations and the Corporate Secretary. Concerns relating to accounting, internal controls or auditing matters are brought to the attention of the Chairperson of the Audit Committee and handled in accordance with procedures established for reporting certain matters to the Audit Committee.

Shareholders are encouraged to visit the “Our Firm / Investor Relations / Corporate Governance / Governance Overview” page of the BlackRock website at www.blackrock.com to see the Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Chief Executive and Senior Financial Officers and additional information about BlackRock’s Board and its Committees and corporate governance policies.

The charters for each of the Audit Committee, the Compensation Committee, the Governance Committee, the Risk Committee and the Executive Committee can be found at the same website address. BlackRock intends to satisfy any disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Chief Executive and Senior Financial Officers by posting such information on its corporate website.

BlackRock will provide a copy of these documents without charge to each shareholder upon written request. Requests for copies should be addressed to the Corporate Secretary, BlackRock, Inc., 40 East 52nd Street, New York, New York 10022.

2017 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 retainers within five years of being elected to the Board.

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

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

 

 

FOCUS ON EQUITY COMPENSATION

    

 

STOCK/EQUITY

OWNERSHIP

REQUIREMENT

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

    

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

 

 

32    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
     Corporate Governance    2017 Director Compensation     

 

2017 Elements of Director Compensation

The following table shows the elements of director compensation provided by BlackRock in 2017. For 2017, each independent director received an 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 $175,000 were granted on the last business day of the first quarter of 2017. These deferred stock units are fully vested on the date of grant and are settled in shares of BlackRock common stock on the earlier of the third anniversary of the date of grant and the date the director ceases to be a member of the Board. 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)

 

  

 

$    175,000 deferred stock units

 

 

 

Board Meeting Fees(1)

 

  

 

$        1,500

 

      

 

Lead Independent Director

 

  

 

$      40,000

 

      

 

Committee Service

 

       

 

Committee Annual Retainers(1)

 

  

 

Chair

 

  

 

Member

 

 

 

Audit Committee

 

  

 

$      30,000

 

  

 

$      15,000

 

 

 

Compensation Committee

 

  

 

$      20,000

 

  

 

$      10,000

 

 

 

Governance Committee

 

  

 

$      15,000

 

  

 

$        5,000

 

 

 

Risk Committee

 

  

 

$      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.

Director Compensation – Changes for 2018

The Compensation Committee engaged its independent compensation consulting firm, Semler Brossy, to conduct a competitive market study of its director compensation program for 2018. Based on the study’s findings, and in light of increasing demands and engagement from our Board, the Compensation Committee determined it was appropriate to simplify and modify its director compensation program effective as of the 2018 Annual Meeting of Shareholders. As a result, in early 2018 the Compensation Committee agreed to:

 

  Increasing the Annual Retainer to $85,000, while no longer requiring a portion be received in common stock;

 

  Increasing the Annual Equity Grant of deferred stock units to $240,000;

 

  Increasing the annual fee for service as Lead Independent Director to $100,000;

 

  Eliminating fees paid for attendance at Board and Committee meetings; and

 

  Adjusting the payments awarded for Committee service. The Committee Annual Retainers for 2018 were approved as follows:

 

    $40,000 for Chair and $25,000 for members of the Audit Committee; and

 

    $30,000 for Chairs and $15,000 for members of our other three compensated Committees.

Additionally, during 2017 the Compensation Committee agreed to provide directors an election to defer future compensation into deferred stock units that are fully vested on the date of grant and are settled in shares of BlackRock common stock on the date the director ceases to be a member of the Board.

The modifications to total director compensation preserve our program’s emphasis on deferred equity compensation, which aligns the interests of our directors with the performance of the firm in addition to promoting long-term shareholder interests.

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    33                        


Table of Contents
     Corporate Governance    2017 Director Compensation     

 

2017 Total Director Compensation

Directors in 2017 who were also employees of BlackRock or designees of PNC are not listed in the below table because they did not receive compensation for serving as directors or Committee members. In 2017, directors who were not employees of BlackRock or PNC each received the amounts set forth in the below table and were also reimbursed for reasonable travel and related expenses. Each director who received compensation received at least $25,000 of his or her annual retainer, or a pro rata portion thereof in the event that a director’s service is less than a full year, in the form of BlackRock common stock valued at an equivalent fair market value. In addition, each director who received compensation had the right to elect to receive BlackRock common stock valued at an equivalent fair market value in lieu of all or a portion of his or her annual retainer in excess of $25,000.

2017 Total Director Compensation Table

 

Name

 

  

Fees Earned
or Paid in Cash ($)
(1)

 

    

Stock Awards ($)(2)(3)

 

    

Total ($)

 

 

Abdlatif Y. Al-Hamad

 

    

 

82,500

 

 

 

    

 

200,000

 

 

 

    

 

282,500

 

 

 

Mathis Cabiallavetta

 

    

 

111,500

 

 

 

    

 

200,000

 

 

 

    

 

311,500

 

 

 

Pamela Daley

 

    

 

115,500

 

 

 

    

 

200,000

 

 

 

    

 

315,500

 

 

 

Jessica P. Einhorn

 

    

 

85,000

 

 

 

    

 

200,000

 

 

 

    

 

285,000

 

 

 

Fabrizio Freda

 

    

 

71,500

 

 

 

    

 

200,000

 

 

 

    

 

271,500

 

 

 

Murry S. Gerber

 

    

 

144,500

 

 

 

    

 

200,000

 

 

 

    

 

344,500

 

 

 

James Grosfeld

 

    

 

89,500

 

 

 

    

 

200,000

 

 

 

    

 

289,500

 

 

 

David Komansky(4)

 

    

 

22,500

 

 

 

    

 

200,000

 

 

 

    

 

222,500

 

 

 

Sir Deryck Maughan

 

    

 

125,500

 

 

 

    

 

200,000

 

 

 

    

 

325,500

 

 

 

Cheryl D. Mills

 

    

 

88,250

 

 

 

    

 

200,000

 

 

 

    

 

288,250

 

 

 

Gordon M. Nixon

 

    

 

106,750

 

 

 

    

 

200,000

 

 

 

    

 

306,750

 

 

 

Thomas H. O’Brien(4)

 

    

 

56,000

 

 

 

    

 

200,000

 

 

 

    

 

256,000

 

 

 

Charles H. Robbins(5)

 

    

 

41,250

 

 

 

    

 

25,000

 

 

 

    

 

66,250

 

 

 

Ivan G. Seidenberg

 

    

 

126,500

 

 

 

    

 

200,000

 

 

 

    

 

326,500

 

 

 

Marco Antonio Slim Domit

 

    

 

102,000

 

 

 

    

 

200,000

 

 

 

    

 

302,000

 

 

 

John S. Varley(6)

 

    

 

32,000

 

 

 

    

 

200,000

 

 

 

    

 

232,000

 

 

 

Susan L. Wagner

 

 

    

 

 

71,500

 

 

 

 

 

    

 

 

200,000

 

 

 

 

 

    

 

 

271,500

 

 

 

 

 

 

(1) Includes the shares of common stock granted on March 31, June 30, September 29 and December 29, 2017, respectively, based on closing market prices on such dates of $383.51, $422.41, $447.09 and $513.71, 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 – $82,500; Mr. Cabiallavetta – $20,495; Ms. Daley – $115,500; Mr. Freda – $71,500; Mr. Grosfeld – $89,500; Mr. Maughan – $125,500; Ms. Mills – $88,250; Mr. Nixon – $106,750; Mr. Robbins – $41,250; Mr. Seidenberg – $126,500; and Mr. Slim – $102,000.

 

(2) Includes the annual grants to each director of 456 deferred stock units of BlackRock with a grant date fair value of $175,000 pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note 14 to the consolidated financial statements in our 2017 Form 10-K. As of December 31, 2017, each non-employee director held the following outstanding deferred stock units: 1,306 deferred stock units for each of Messrs. Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Maughan, Seidenberg, Slim, Ms. Einhorn, Ms. Daley, Ms. Mills and Ms. Wagner; and 896 deferred stock units for Mr. Nixon. Messrs. Komansky, O’Brien, and Varley did not have any deferred stock units outstanding as their units were settled upon retirement from the Board. Mr. Robbins was not granted an annual deferred stock unit grant in 2017.

 

(3) Includes the shares of common stock granted on March 31, June 30, September 29 and December 29, 2017, respectively, based on closing market prices on such dates of $383.51, $422.41, $447.09 and $513.71, 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.

 

(4) Mr. Komansky and Mr. O’Brien retired from the Board effective May 25, 2017.

 

(5) Mr. Robbins joined the Board effective May 25, 2017.

 

(6) Mr. Varley retired from the Board effective June 20, 2017

 

34    BLACKROCK, INC. 2018 PROXY STATEMENT

 


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 and CEO.

 

   

Robert L. Goldstein

age 44

  

Senior Managing Director, has been Chief Operating Officer of BlackRock since 2014 and has been the Head of BlackRock Solutions, which leverages the firm’s unique risk analytics capabilities and capital markets insights to deliver unbiased advice and expertise to other institutions, since 2009. Mr. Goldstein led 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 51

  

Senior Managing Director, has been Global Head of Multi-Asset Strategies and Global Fixed Income since 2018. Mr. Kushel was the Head of Multi-Asset Strategies from 2016 to 2018, the Chief Product Officer and Head of Strategic Product Management of BlackRock from 2014 to 2016, the Deputy Chief Operating Officer of BlackRock from 2012 to 2014, the Head of the Portfolio Management Group of BlackRock from 2010 to 2012, and the Chairman of BlackRock’s International platform from 2009 to 2010. Mr. Kushel has been with BlackRock since 1991.

 

Rachel Lord

age 52

  

Senior Managing Director, has been Head of EMEA since 2017. Ms. Lord also chairs the EMEA Executive Committee and is the Global Executive Sponsor of the Women’s Initiative Network. From 2013 to 2017, she was EMEA Head of iShares and Head of Global Clients, ETF and Index Investments. Ms. Lord joined BlackRock in November 2013 from Citigroup where she was the Global Head of Corporate Equity Derivatives.

 

Mark S. McCombe

age 52

  

Senior Managing Director, has been Head of Americas since 2017. Previously, he served as Global Head of BlackRock Alternative Investors. Mr. McCombe served as the Global Head of BlackRock’s Institutional Client Business from 2014 to 2016 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 HSBC from 2010 to 2012.

 

Christopher J. Meade

age 49

  

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, he 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.

 

Gary S. Shedlin

age 54

  

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 served as the Co-Head of the Financial Institutions Group at Lazard Ltd.

 

Jeffrey A. Smith, Ph.D.

age 47

  

Senior Managing Director, has been Global Head of Human Resources of BlackRock since 2009. In this capacity, Mr. Smith supports and advises the business, and the Board, on all aspects of its investment in people and culture and the management of organizational change. Mr. Smith’s service with the firm dates back to 2006, including his years with Barclays Global Investors (“BGI”), which merged with BlackRock in 2009. At BGI, Mr. Smith was Global Head of Human Resources.

 

Ryan D. Stork

age 46

  

Senior Managing Director, has been BlackRock’s Chairman and Head of 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.

 

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    35                        


Table of Contents
         

 

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, 2018 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 2017 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, 2018, through the exercise of any option, warrant or right.

 

36    BLACKROCK, INC. 2018 PROXY STATEMENT

 


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

 

As of March 31, 2018, there were 160,308,362 shares of BlackRock’s common stock outstanding.

 

    

 

Amount of beneficial
ownership
of common stock
(1)

 

    

 

Percent of
common stock
outstanding

 

   

 

 

Deferred/
Restricted Stock

Units(2)

 

    

Total

 

 

 

The PNC Financial Services Group, Inc. and affiliates(3)

  

 

 

 

34,438,549

 

 

  

 

 

 

21.48

 

 

 

 

 

 

 

  

 

 

 

34,438,549

 

 

One PNC Plaza

          

249 Fifth Avenue

          

Pittsburgh, PA 15222

                                  

 

The Vanguard Group, Inc.(4)

  

 

 

 

8,576,055

 

 

  

 

 

 

5.34

 

 

 

 

 

 

 

  

 

 

 

8,576,055

 

 

100 Vanguard Blvd.

          

Malvern, PA 19355

                                  

 

Abdlatif Y. Al-Hamad

  

 

 

 

5,177

 

 

  

 

 

 

*

 

 

 

 

 

 

1,260

 

 

  

 

 

 

6,437

 

 

 

Mathis Cabiallavetta(5)

  

 

 

 

5,922

 

 

  

 

 

 

*

 

 

 

 

 

 

1,219

 

 

  

 

 

 

7,141

 

 

 

Pamela Daley

  

 

 

 

2,242

 

 

  

 

 

 

*

 

 

 

 

 

 

1,287

 

 

  

 

 

 

3,529

 

 

 

William S. Demchak

  

 

 

 

1,200

 

 

  

 

 

 

*

 

 

 

 

 

 

0

 

 

  

 

 

 

1,200

 

 

 

Jessica P. Einhorn

  

 

 

 

1,914

 

 

  

 

 

 

*

 

 

 

 

 

 

1,219

 

 

  

 

 

 

3,133

 

 

 

Laurence D. Fink

  

 

 

 

1,086,024

 

 

  

 

 

 

*

 

 

 

 

 

 

20,105

 

 

  

 

 

 

1,106,129

 

 

 

William E. Ford

  

 

 

 

2,000

 

 

  

 

 

 

*

 

 

 

 

 

 

360

 

 

  

 

 

 

2,360

 

 

 

Fabrizio Freda

  

 

 

 

3,053

 

 

  

 

 

 

*

 

 

 

 

 

 

1,219

 

 

  

 

 

 

4,272

 

 

 

Murry S. Gerber

  

 

 

 

39,136

 

 

  

 

 

 

*

 

 

 

 

 

 

1,231

 

 

  

 

 

 

40,367

 

 

 

Robert L. Goldstein

  

 

 

 

33,773

 

 

  

 

 

 

*

 

 

 

 

 

 

9,620

 

 

  

 

 

 

43,393

 

 

 

James Grosfeld

  

 

 

 

506,371

 

 

  

 

 

 

*

 

 

 

 

 

 

1,275

 

 

  

 

 

 

507,646

 

 

 

Margaret L. Johnson

  

 

 

 

11

 

 

  

 

 

 

*

 

 

 

 

 

 

323

 

 

  

 

 

 

334

 

 

 

Robert S. Kapito(5)

  

 

 

 

392,891

 

 

  

 

 

 

*

 

 

 

 

 

 

15,325

 

 

  

 

 

 

408,216

 

 

 

Sir Deryck Maughan

  

 

 

 

14,504

 

 

  

 

 

 

*

 

 

 

 

 

 

1,219

 

 

  

 

 

 

15,723

 

 

 

Mark S. McCombe

  

 

 

 

18,997

 

 

  

 

 

 

*

 

 

 

 

 

 

7,270

 

 

  

 

 

 

26,267

 

 

 

Cheryl D. Mills

  

 

 

 

1,729

 

 

  

 

 

 

*

 

 

 

 

 

 

1,219

 

 

  

 

 

 

2,948

 

 

 

Gordon M. Nixon

  

 

 

 

362

 

 

  

 

 

 

*

 

 

 

 

 

 

1,262

 

 

  

 

 

 

1,624

 

 

 

Charles H. Robbins

  

 

 

 

193

 

 

  

 

 

 

*

 

 

 

 

 

 

323

 

 

  

 

 

 

516

 

 

 

Ivan G. Seidenberg

  

 

 

 

11,991

 

 

  

 

 

 

*

 

 

 

 

 

 

1,295

 

 

  

 

 

 

13,286

 

 

 

Gary S. Shedlin

  

 

 

 

18,318

 

 

  

 

 

 

*

 

 

 

 

 

 

7,153

 

 

  

 

 

 

25,471

 

 

 

Marco Antonio Slim Domit

  

 

 

 

2,979

 

 

  

 

 

 

*

 

 

 

 

 

 

1,266

 

 

  

 

 

 

4,245

 

 

 

Susan L. Wagner

  

 

 

 

477,341

 

 

  

 

 

 

*

 

 

 

 

 

 

1,219

 

 

  

 

 

 

478,560

 

 

 

Mark Wilson

  

 

 

 

7

 

 

  

 

 

 

*

 

 

 

 

 

 

323

 

 

  

 

 

 

330

 

 

 

All directors and executive officers as a group (29 persons)(5)

  

 

 

 

2,811,542

 

 

  

 

 

 

1.75

 

 

 

 

 

105,004

 

 

  

 

 

 

2,916,546

 

 

 

*  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 RSUs and unvested stock options.

 

(2)  Does not include BPIP awards.

 

(3)  Based on the Schedule 13G of The PNC Financial Services Group, Inc. and affiliates filed on February 2, 2018.

 

(4)  Based on the Schedule 13G of The Vanguard Group, Inc. filed on February 14, 2018.

 

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

Preferred Stock

As of March 31, 2018, 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 143,458 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, 2018, PNC owned all issued and outstanding shares of our Series B Preferred Stock and Series C Preferred Stock.

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    37                        


Table of Contents
         

 

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 on copies of such reports and representations from these reporting persons, we believe that in 2017, our directors, Section 16 officers and 10% holders met all applicable SEC filing requirements.

 

38    BLACKROCK, INC. 2018 PROXY STATEMENT

 


Table of Contents
         

 

Certain Relationships and

Related Transactions

PNC and its Subsidiaries

As of March 31, 2018, 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 non-voting 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 2017 totaled $3.2 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 $6.9 million for 2017. BlackRock also recorded revenue of $2.7 million related to non-discretionary trading services.

BlackRock incurred expenses of $1.2 million to PNC affiliates in 2017 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 2017. 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.

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    39             


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

 

PNC Stockholder Agreement

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.

 

 

40    BLACKROCK, INC. 2018 PROXY STATEMENT

 


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 shareholders 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 the 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;

 

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    41                        


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 shareholder approval pursuant to the rules of the NYSE; or

 

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

 

Committees: Consistent with applicable laws, rules and regulations, the Audit Committee, the Compensation Committee 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 or may receive advisory, technology and risk management services. These investments and services 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.

 

42    BLACKROCK, INC. 2018 PROXY STATEMENT

 


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 “— PNC Stockholder Agreement”, 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 Compensation Committee during 2017 were Mses. Einhorn and Mills and Messrs. Gerber, Grosfeld, Komansky, Maughan, Nixon, Seidenberg (Chairperson) and Slim. No member of the Compensation Committee 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 Compensation Committee of BlackRock, (ii) as a director of another entity, one of whose executive officers served on the Compensation Committee 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.

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    43                        


Table of Contents
         

 

Item 2

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

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

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

 

Before You Vote

 

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

Our pay-for-performance compensation philosophy is structured to align management’s interests with our shareholders’ interests. A significant portion of

total compensation for executives is closely linked to BlackRock’s financial and operational performance as well as BlackRock’s common stock price performance. BlackRock has adopted strong governance practices for its employment and compensation
programs. Compensation programs are reviewed annually to ensure that they do not promote excessive risk taking.

 

 

Board Recommendation

 

 

    LOGO

 

 

 

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

 

 

                        44     BLACKROCK, INC. 2018 PROXY STATEMENT


Table of Contents
         

 

 

Management Development

and Compensation Committee Report

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

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

MEMBERS OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

Ivan G. Seidenberg, Chair

Jessica P. Einhorn

Murry S. Gerber

James Grosfeld

Cheryl D. Mills

Gordon M. Nixon

Marco Antonio Slim Domit

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    45                        


Table of Contents
         

 

Executive Compensation

Compensation Discussion and Analysis

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

 

 

         Laurence D. Fink

          Chairman and Chief

          Executive Officer

          (“CEO”)

 

  

 

Robert S. Kapito

President

 

 

Robert L. Goldstein

Chief Operating Officer

(“COO”)

  

 

Mark S. McCombe

Head of Americas

    

 

Gary S. Shedlin    

Chief Financial Officer    

(“CFO”)    

Table of Contents

 

 

LOGO

  Introduction   
Shareholder Engagement on Executive Compensation    47
BlackRock Shareholder Value Framework    47
BlackRock 2017 Performance    48
Our Compensation Framework   

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

   49

How We Determine Other NEO Compensation

   50
NEO Total Annual Compensation Summary    50
Pay-For-Performance Compensation Structure for NEOs    51
    
LOGO  

Our Compensation

Program

  
Compensation Program Objectives    52
Compensation Elements    52
BlackRock Performance Incentive Plan (BPIP)    53
Performance-Based Stock Options    55
LOGO  

Compensation

Determination Process

  
Competitive Pay Positioning – Market Data      57  
Role of the Compensation Consultant      57  
Risk Assessment of Compensation Plans      58  
    

LOGO

 

2017 NEO Compensation and

Performance Summaries

  
Linking Pay and Performance      59  
    

LOGO

 

Compensation Policies

and Practices

  
Summary of Executive Compensation Practices      65  

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

     66  

Tax Reimbursements and Tax Deductibility of Compensation

     67  
Summary of Executive Compensation Tables      68  

CEO Pay Ratio for 2017

 

     75  
 
 

 

                        46     BLACKROCK, INC. 2018 PROXY STATEMENT


Table of Contents
          LOGO

 

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

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

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

BlackRock Shareholder Value Framework

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

 

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

 

  Generate differentiated organic growth;

 

  Use our scale to deliver operating leverage; and

 

  Return capital to shareholders on a consistent and predictable basis.

 

 

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, risk management and technology solutions to help meet their objectives, we are able to build our business by adding new

assets under management (“AUM”) and growing risk management and technology offerings, resulting in Organic Revenue growth.1

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

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

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

 

 

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

 

BLACKROCK, INC. 2018 PROXY STATEMENT    47                        


Table of Contents
     Compensation Discussion and Analysis    1: Introduction     

 

BlackRock 2017 Performance1

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

 

Differentiated Organic Growth

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

 

  Total net inflows of $367 billion were a record and were positive across client type, asset class, region and investment style;

 

  Long-term net inflows of $330 billion reflected 7% organic asset growth;

 

  Technology and risk management revenue grew 14% year-over-year led by continued momentum in Aladdin; and

 

  Total revenue increased 12% from 2016 to $12,491 million.

Operating Leverage

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

 

  Operating income, as adjusted, of $5,287 million was up 13% versus 2016, reflecting continued margin expansion and investment into the business; and

 

  Compensation and benefits expense, as adjusted, as a percent of total revenue was 33.9%, representing a decrease of 60 bps from 2016, while G&A expense increased 12% year-over-year, reflecting higher technology and data spend.
 

 

LOGO

LOGO

 

 

Consistent Capital Return

$2.8 billion was returned to shareholders in 2017

 

  Annual dividend of $10.00 per share, reflected an increase of 9% from $9.16 in 2016; and

 

  $1.1 billion of outstanding shares were repurchased in 2017, driving a reduction in net share count of 2.6 million shares.

Earnings Growth

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

 

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

 

LOGO

LOGO

 

 

1 Amounts in this section, where noted, are shown on an “as adjusted” basis. For a reconciliation with GAAP in the United States, please see Annex A.

 

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

 

                        48     BLACKROCK, INC. 2018 PROXY STATEMENT

Assets Under Management ($B) Revenue ($M) Operating Income ($M) (as adjusted)2 Operating Margin (as adjusted)2 Cash Dividend Per Share ($)Share Buyback ($M) Net Income ($M) Earnings Per Share (as adjusted)2 ($M)


Table of Contents
     Compensation Discussion and Analysis    1: Introduction      LOGO

 

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.

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

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

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

 

 

Category

 

  

 

BlackRock Performance

          % of Award  Opportunity          

 

  

Measures Include

(internal BlackRock metrics and/or peer comparisons are considered)

 

 

Financial Performance

  

 

LOGO

 

  

 

 

 

 

 

 

Net New Business

     

 

 

 

 

 

 

Net New Base Fees

     

 

 

 

 

 

 

Organic Revenue Growth

     

 

 

 

 

 

 

Operating Income, as adjusted1

     

 

 

 

 

 

 

Operating Margin, as adjusted1

     

 

 

 

 

 

 

Diluted EPS, as adjusted1

       

 

 

 

 

 

 

 

 

 

Total Shareholder Return and P/E Multiple

 

 

Business Strength

  

 

LOGO

  

 

 

 

 

 

 

Deliver Superior Client Experience

     

 

 

 

 

 

 

Drive Organization Discipline

     

 

 

 

 

 

 

Lead in a Changing World

       
       
                   

 

Organizational Strength                

  

 

 

LOGO

 

 

  

 

 

 

 

 

 

Drive High Performance

     

 

 

 

 

 

 

Build a more Diverse and Inclusive Culture

     

 

 

 

 

 

 

Develop Great Managers and Leaders

       
                 

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

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

 

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

 

BLACKROCK, INC. 2018 PROXY STATEMENT    49                        


Table of Contents
     Compensation Discussion and Analysis    1: Introduction     

 

How We Determine Other NEO Compensation

 

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

 

  An assessment of the individual NEO’s contributions to overall Company results and individual business results throughout the year; and

 

  Each NEO’s influence on setting long-term strategy and in executing long-term objectives.

INPUTS TO INDIVIDUAL NEO TOTAL ANNUAL COMPENSATION DECISIONS INCLUDE:

 

  Financial factors, such as revenue, Operating Income, Diluted EPS and Operating Margin, in each case, as adjusted1;

 

  Non-financial factors such as individual NEO performance in running their respective businesses, overall investment performance, client relationship strength, organizational discipline and inclusion and diversity commitment; and

 

  Other considerations such as external market conditions and market intelligence on competitive compensation. See “Competitive Pay Positioning – Market Data” on page 57.
 

 

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

NEO Total Annual Compensation Summary

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

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

 

           

2017 Annual Incentive Award       

 

                             
             

Name

 

  

Base
Salary

 

    

Cash

 

    

Deferred
Equity

 

    

Long-Term
Incentive Award
(BPIP)

 

    

Total Annual
Compensation
(“TAC”)

 

    

% change in
TAC vs. 2016

 

    

Performance-
Based Stock
Options

 

 

Laurence D. Fink

 

   $

 

900,000

 

 

 

   $

 

10,000,000

 

 

 

   $

 

4,600,000

 

 

 

   $

 

12,450,000

 

 

 

   $

 

27,950,000

 

 

 

    

 

10%

 

 

 

    

 

 

 

 

Robert S. Kapito

 

   $

 

750,000

 

 

 

   $

 

8,125,000

 

 

 

   $

 

3,514,000

 

 

 

   $

 

9,626,000

 

 

 

   $

 

22,015,000

 

 

 

    

 

10%

 

 

 

    

 

 

 

 

Robert L. Goldstein

 

   $

 

500,000

 

 

 

   $

 

3,275,000

 

 

 

   $

 

2,325,000

 

 

 

   $

 

2,100,000

 

 

 

   $

 

8,200,000

 

 

 

    

 

12%

 

 

 

   $

 

10,000,000

 

 

 

Mark S. McCombe

 

   $

 

500,000

 

 

 

   $

 

2,725,000

 

 

 

   $

 

1,775,000

 

 

 

   $

 

1,950,000

 

 

 

   $

 

6,950,000

 

 

 

    

 

11%

 

 

 

   $

 

10,000,000

 

 

 

Gary S. Shedlin

 

   $

 

500,000

 

 

 

   $

 

2,700,000

 

 

 

   $

 

1,750,000

 

 

 

   $

 

1,850,000

 

 

 

   $

 

6,800,000

 

 

 

    

 

11%

 

 

 

   $

 

7,500,000

 

 

 

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

 

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

 

                        50     BLACKROCK, INC. 2018 PROXY STATEMENT


Table of Contents
     Compensation Discussion and Analysis    1: Introduction      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 regular annual executive compensation is performance based and “at risk.” Compensation mix percentages shown below are based on 2017 year-end compensation decisions for individual NEOs by the Compensation Committee.

 

 

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 Compensation Committee under the Stock Plan, which has been previously approved by shareholders. The Stock Plan allows multiple types of awards to be granted.

 

2 The value of the 2017 long-term incentive BPIP Awards and the value of the equity portion of the bonus for 2017 annual incentive awards was converted into RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018.

 

3 For NEOs other than the CEO and President, higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy, as detailed on page 50.

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    51                        

2017 CEO Total Annual Compensation-$27.95M Base Salary (Cash) $900k 97% of total compensation is variable and based on performance Annual Incentive (Cash) $10.00M 125% of target Annual Incentive (Deferred Equity1,2) $4.6M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $12.45M 75% of equity is awarded in BPIP 2017 President Total Annual Compensation- $22.02M Base Salary (Cash) $750k Annual Incentive (Cash) $8.13M 125% of target Annual Incentive (Deferred Equity1,2) $3.51M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $9.63M 75% of equity is awarded in BPIP 60-61% of total annual compensation is awarded in equity 2017 Total Annual Compensation for NEOs (excluding CEO and President) Base Salary (Cash) 7-8% of pay 92-94% of total compensation is variable and based on performance Annual Incentive (Cash3) 39-40% of pay Annual Incentive (Deferred Equity1,2,3) 26-28% of pay Long-Term Incentive (BPIP) (Performance Based Equity1,2) 26-28% of pay 53-54% of total annual compensation is awarded in equity


Table of Contents
         

 

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 fixed number of RSUs using a conversion price.(1)

 

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

 

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

 

Expense is recognized over the vesting period.

 

To reward achievement of goals and objectives.

 

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

 

Deferred equity component aligns compensation with multi-year shareholder outcomes.

 

For CEO and President

 

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

 

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

 

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

 

For Other NEOs

 

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

 

Higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy. Deferral amounts follow a step-function approach, starting at 15% of award and increasing to 50% of award for the portion of the bonus in excess of $3.0 million.

 

 

 

(1)   For 2017 deferred equity, the award value was converted into a number of RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of BlackRock common stock on January 16, 2018.

 

52    BLACKROCK, INC. 2018 PROXY STATEMENT

 


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

 

 

 

    Element/How it is Paid

 

 

 

Purpose

 

 

 

Description

 

 

LONG-TERM INCENTIVE

AWARD

 

BlackRock Performance Incentive Plan (BPIP)

 

(Performance-Based RSUs)

 

Terms:

 

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

 

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

 

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

 

Expense, based on the expected number of awards to be delivered, is recognized over the vesting period.

 

 

 

To recognize the scope of an individual employee’s role, business expertise and leadership skills.

 

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

 

Aligns the interests of senior-level employees with those of shareholders by aligning compensation with long-term drivers of shareholder value.

 

 

While no specific formulas or weights are used to determine the size of long-term incentive awards, the Compensation Committee considers the role and influence of the NEO on setting long-term strategy and in executing long-term objectives in determining individual award amounts. See “Compensation Determination Process” beginning on page 56.

 

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

 

The maximum number of shares that may be earned under the program is equal to 165% of the base number of RSUs granted. No shares will be earned in the event of negative Organic Revenue and Operating Margin, as adjusted, below a threshold level of performance over a three-year performance period.

 

(1)   For 2017 long-term incentive BPIP Awards, the award value was converted into a number of RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018.

BlackRock Performance Incentive Plan (BPIP)

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

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

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

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

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

 

 

 

BLACKROCK, INC. 2018 PROXY STATEMENT    53                        


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

 

 

 

 

BPIP FINANCIAL METRICS

 

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

 

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

 

   Operating Margin, as adjusted, is a measure of BlackRock’s ability to efficiently manage our expense base in the context of the revenue we generate.

 

 

 

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

BPIP Award Determination

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

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

2018 BPIP AWARD DETERMINATION MATRIX

 

      

 

3-yr Average Organic Revenue ($M)            

 

      

3-yr Average  

           Op Margin, as Adjusted  

     <=0        300        500        700        >=900       

 

>=50.5%  

    

 

 

 

100%

 

 

    

 

 

 

120%

 

 

    

 

 

 

133%

 

 

    

 

 

 

149%

 

 

    

 

 

 

165%

 

 

  

 

48.5%  

    

 

 

 

83%

 

 

    

 

 

 

109%

 

 

    

 

 

 

122%

 

 

    

 

 

 

138%

 

 

    

 

 

 

154%

 

 

  

 

46.5%  

    

 

 

 

67%

 

 

    

 

 

 

97%

 

 

    

 

 

 

111%

 

 

    

 

 

 

127%

 

 

    

 

 

 

143%

 

 

  

 

44.5%  

    

 

 

 

50%

 

 

    

 

 

 

80%

 

 

    

 

 

 

100%

 

 

    

 

 

 

116%

 

 

    

 

 

 

133%

 

 

  

 

Target Level

 

42.5%  

    

 

 

 

33%

 

 

    

 

 

 

63%

 

 

    

 

 

 

83%

 

 

    

 

 

 

105%

 

 

    

 

 

 

122%

 

 

  

 

40.5%  

    

 

 

 

17%

 

 

    

 

 

 

47%

 

 

    

 

 

 

67%

 

 

    

 

 

 

92%

 

 

    

 

 

 

111%

 

 

  

 

<=38.5%  

    

 

 

 

0%

 

 

    

 

 

 

30%

 

 

    

 

 

 

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 $500 million and average annual Operating Margin, as adjusted, equal to 44.5%), then a participant will receive a number of shares equal to 100% of the base number of units granted to the participant.

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

 

 

                        54     BLACKROCK, INC. 2018 PROXY STATEMENT


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

 

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

JANUARY 2018 BPIP GRANT: EXAMPLE

 

   

 BPIP Award Value

 For Performance Year 2017 and in anticipation of continued performance and long-term focus over a

 multi-year period

 

   $2,000,000  

 Conversion Price

 The average of the high and low prices per share of common stock of BlackRock on January 16, 2018

 (the grant date)

 

   $566.44  

 Base number of units granted

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

 

  

3,531  

($2,000,000 / $566.44)  

 Hypothetical Performance Results    $700M  
 Jan 1, 2018 to Dec 31, 2020 (3-year) average Organic Revenue    (i.e., above target)  
 Jan 1, 2018 to Dec 31, 2020 (3-year) average Operating Margin, as adjusted   

44.5%  

(i.e., at target)  

 

 Resulting Award Payout (%)

 Based on Award Determination Matrix

 

   116%  
 Resulting Award Payout (Number of units)    4,096  

 Base number of units granted x Award Payout (%)

 

  

(3,531 x 116%)  

 

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

Performance-Based Stock Options

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

The Compensation Committee approved these grants in December 2017 in consultation with Semler Brossy, and following a comprehensive review of leadership and development plans, potential value outcomes, shareholder input and market trends. One-third of these performance-based stock options will vest on each of the fifth, sixth and seventh anniversaries of the date of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on the date of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth duri