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By Che Odom
April 8 — BlackRock Inc. shareholders may get to vote on a proposal next month designed to pressure other companies to link executive compensation to corporate performance.
The Securities and Exchange Commission staff April 6 declined to allow BlackRock to omit a shareholder resolution calling on the asset manager to evaluate ways in which it can bring its voting practices in line with its stated principle of linking executive pay to performance.
The firm is one of the largest institutional investors in the U.S. and owns significant holdings in most of the S&P 500. In the supporting statement to the resolution, submitted to BlackRock Dec. 14, proponent Stephen M. Silberstein said the firm's voting record is inconsistent with the evidence on corporate long-term performance.
As executive pay packages continue to climb, companies are increasingly being pressured by stockholders to tie pay to performance . Last month, large-investor representatives at a Council of Institutional Investors conference in Washington vowed to continue that pressure.
Some at the conference expressed disappointment with BlackRock, Vanguard Group and other large investors for not taking a firmer stand on the issue.
A recent report by a shareholder advocacy group, As You Sow, said that BlackRock and Vanguard almost always side with corporate boards when it comes to CEO pay . The two voted with directors on executive pay packages 97 percent of the time in 2015.
In its no-action response, the SEC Division of Corporation Finance rejected BlackRock's arguments that Silberstein's resolution was misleading and infringed on ordinary business operations, which would be grounds for omitting it from the proxy.
The asset manager could try to negotiate an agreement with Silberstein to prevent him from presenting the resolution to shareholders, thereby preventing a vote at the firm's May 25 annual meeting in New York.
Attempts to reach the company for comment weren't immediately successful April 8.
According to its website, BlackRock's policy is that companies should “explicitly disclose how incentive plans reflect strategy and incorporate long-term shareholder value drivers,” though compensation committees are in the best position to make compensation decisions.
Ed Sweeney, a spokesman for BlackRock, told Bloomberg in February that the firm follows proxy-voting guidelines that encourage companies to tie pay to strategy and shareholder value.
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