A BlackRock sign hangs above their office building in New York on July 16, 2018.Lucas Jackson/Reuters
BlackRock Inc. is stepping up opposition to U.S. CEOs who sit on more than one corporate board beside their own, arguing that working as a director takes increasingly more time, a report from the world’s largest asset manager showed on Tuesday.
BlackRock cast votes against 94 chief executives running for re-election to corporate boards outside of their own in this year’s proxy season, up from 32 last year, according to the report.
The uptick reflects BlackRock’s concerns about CEOs overextending themselves. It also represents a shift in its actions. Under its previous guidelines, the asset manager had considered two external director positions beyond the CEO’s own board as manageable. This is the first year the company is more strictly enforcing its new policy by voting against CEOs.
“It sounds fine to sit on multiple boards, but what happens when something goes wrong at a company?” BlackRock vice-chairman Barbara Novick said in an interview. “More and more companies are limiting how many outside boards their CEOs can sit on.”
With US$6.8-trillion in assets under management, BlackRock is an influential force in how boards of directors operate, and can swing votes in important corporate elections.
BlackRock also voted this proxy season against directors at 52 companies included in the Russell 1000 index, because their boards had fewer than two women or no other directors of diverse ethnicity, age or certain other personal characteristics, according to the report. The asset manager says that diverse groups make better decisions.
More than 45 people now work on BlackRock’s investment stewardship team around the world that is focused on holding corporate boards accountable to high governance standards, up from 16 a decade ago.