Approximately 100 students, faculty, and alumni gathered at the Saint Mary’s College Soda Center on Monday, January 30th, to listen to BlackRock’s perspective on corporate governance and responsible investment. The event, organized and hosted by the Elfenworks Center for the Study of Fiduciary Capitalism, was especially well-attended, as people wanted to learn about how the world’s largest provider of investment, advisory and risk management services (with assets under management of about 3.4 trillion) handles corporate governance.
Moderated by Jim Hawley, Saint Mary’s College School of Economics and Business Administration (SEBA) Professor and Elfenworks Center for Fiduciary Capitalism Director, this event featured three panelists from BlackRock. Michelle Edkins, Global Head of Corporate Governance & Responsible Investment, leads a team of 20 specialists based in five key regions internationally and is responsible for the team’s engagement and proxy voting activities in relation to the companies in which BlackRock invests on behalf of clients. Chad Spitler, Global Chief Operating Office of Corporate Governance & Responsible Investment is responsible for the daily operations of the team worldwide and strategic planning within the Portfolio Management Group. Yumi Narita is vice-president and research analyst in the Americas Corporate Governance group.
BlackRock is the first large, mainstream private asset manager in the U.S. to adopt an activist stance, meaning it will engage with firms in relation to both corporate governance and responsible investment, the latter focusing in particular on a host of social and environmental issues.
The panelists touched on their general roles and responsibilities, and described how BlackRock’s CEO recently wrote to 600 companies where they have large holding of high monetary value, asking those companies to proactively initiate conversations with BlackRock around matters of governance. Ms. Edkins emphasized the point of this exercise is that this is an investment and value protection activity. In the letter, three key points were communicated: (1) if you want to know what shareholders think, talk to your shareholders, not your proxy advisors (they are very important in facilitating process of voting but can be obstacles sometimes); (2) BlackRock does have policies on social, environmental and governance which it will act on through its holdings in thousands of firms worldwide. If the companies have an alternative approach to BlackRock’s and, can justify them in serving long-term shareholder interest, BlackRock is willing to be flexible; (3) trying to encourage, where appropriate, engagement by board members rather than management because there are some issues that should not be discussed with management, such as CEO succession or CEO compensation. In any engagement, they do not try to direct companies or micromanage companies, but their goal is to represent shareholders’ perspective. Boards who understand the range of shareholders views can make better informed decisions.
Mr. Spitler points out that “A board needs one curmudgeon”... one of the things they look for in a board is not a bunch of group-think or yes men/women. They want debate, discussion, outside thinkers on a board. He assesses how well a company is run is through engagement. While one size does not fit all there needs to be someone who is looking at shareholders’ perspectives; someone who is separate from the CEO, for example a chairman of the board or a lead director
Many people asked questions and much discussion ensued. The audience congregated for a networking event after the panel discussion.
“The Elfenworks Center for Fiduciary Capitalism is extremely proud to present this engaging discussion by BlackRock to kick off the year. This was the first time BlackRock’s corporate governance and responsible investment leadership team spoke in a public (or academic) venue about their relatively new engagement and proxy voting activities. I am very pleased their presentation was so well received,” says Professor Hawley.
For photos of the event, click here.