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 x
Filed by a Party other than the Registrant ¨
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¨ Preliminary Proxy Statement | ¨ | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x Definitive Proxy Statement
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¨ Definitive Additional Materials
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¨ Soliciting Material Pursuant to §240.14a-12 |
BlackRock, Inc.
(Name of Registrant as Specified in itsIts Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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April 15, 20142016
DearFellow Stockholder:
It is my pleasure to invite you to BlackRock, Inc.’s 20142016 Annual Meeting of Stockholders.
We will hold the meeting on Thursday,Wednesday, May 29, 2014,25, 2016, beginning at 8:00 a.m., local time, at the New York Palace Hotel, 455 Madison Avenue, New York, New York 10022.
The attached Notice of Annual Meeting and the Proxy Statement describe the business that we will conduct at the meeting and provide information about BlackRock.
As both a fiduciary and a public company, we believe that good corporate governance is critical to achieving sustainable returns over the long term. We are vocal advocates for the adoption of sound corporate governance policies that include strong board leadership, prudent management practices and transparency.
We believe that we have implemented such a corporate governance framework at BlackRock, including the “proxy access” proposal that we are submitting for your approval, and hope that you will find that reflected in the attached Proxy Statement. We also encourage you to review the attached materials and submit your proxy, whether you plan to attend the meeting or not. Your vote is important.
If you plan to attend the meeting in person, you will need to request an admission ticket in advance. You can request a ticket by following the instructions set forth on page 2 of the Proxy Statement. Whether you plan to attend the meeting or not, please review the attached material and submit your proxy promptly by telephone or via the Internet in accordance with the instructions in the Notice of Internet Availability of Proxy Materials or on the attached proxy card, or by completing, signing, dating and returning the attached proxy card. Doing so will help ensure that the matters coming before the meeting can be acted upon. Returning the proxy card or otherwise submitting your proxy does not deprive you of your right to attend the meeting and vote in person.
We look forward to seeing you at the meeting.
Sincerely,
Laurence D. Fink
Chairman and Chief Executive Officer
BlackRock, Inc.
55 East 52nd Street, New York, New York 10055
April 15, 20142016
NOTICE OF 20142016 ANNUAL MEETING OF STOCKHOLDERS
To theour Stockholders:
We will hold the Annual Meeting of Stockholders of BlackRock, Inc. at the New York Palace Hotel, 455 Madison Avenue, New York, New York 10022, on Thursday,Wednesday, May 29, 2014,25, 2016, beginning at 8:00 a.m., local time. At our Annual Meeting, we will ask you to:
(1) | elect |
(2) |
approve, by non-binding advisory vote, the compensation of the named executive officers (the “NEOs”) as disclosed and discussed in the Proxy Statement; |
ratify the appointment of Deloitte & Touche LLP as BlackRock’s independent registered public accounting firm for the year |
(4) | consider and approve a management proposal to amend the bylaws to implement “proxy access”; |
(5) | consider and vote on a stockholder proposal, if properly presented at the Annual Meeting; and |
(6) | consider any other business that is properly presented at the Annual Meeting. |
You may vote at the Annual Meeting if you were a BlackRock stockholder at the close of business on April 3, 2014.March 30, 2016, the record date for the Annual Meeting.
Please note that we are furnishing proxy materials and access to a virtual interactive proxy statement to our stockholders via the Internet, instead of mailing printed copies of those materials to each stockholder. By doing so, we save costs and reduce our impact on the environment. A
Beginning on April 15, 2016, we will mail or otherwise make available to each of our stockholders a Notice of Internet Availability of Proxy Materials, which contains instructions about how to access our proxy materials and vote online or vote by telephone, was mailed to our stockholders beginning on April 15, 2014.online. If you attend the Annual Meeting, you may withdraw your proxy and vote in person, if you so choose.
If you would like to receive a paper copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you previously chose to receive our proxy materials electronically, you will continue to receive access to these materials via e-mail unless you elect otherwise.
Your vote is important and we encourage you to vote promptly whether or not you plan to attend the 2016 Annual Meeting of Stockholders of BlackRock, Inc.
By Order of the Board of Directors,
J. Russell McGranahan
R. Andrew Dickson III
Corporate Secretary
BlackRock, Inc.
55 East 52nd Street, New York, New York 10055
Important Notice Regarding the Availability of Proxy Materials for the 20142016 Annual Meeting of Stockholders to be held on Thursday,Wednesday, May 29, 2014:25, 2016: Our Proxy Statement and 20132015 Annual Report are available free of charge on our website atwww.blackrock.comwww.blackrock.com/corporate/en-us/investor-relations.
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April 15, 20142016
The proxy materials are delivered in connection with the solicitation by the Board of Directors (the “Board”) of BlackRock, Inc. (“BlackRock” or the “Company”) of proxies to be voted at BlackRock’s 20142016 Annual Meeting of Stockholders and at any adjournment or postponement thereof.
You are invited to attend our 20142016 Annual Meeting of Stockholders on Thursday,Wednesday, May 29, 2014,25, 2016, beginning at 8:00 a.m., local time. The Annual Meeting will be held at the New York Palace Hotel, 455 Madison Avenue, New York, New York 10022. Directions are available through the Annual Meeting link accessible via the “Investor Relations” homepage on:www.blackrock.com.
A Notice of Internet Availability of Proxy Materials waswill be mailed to our stockholders beginning on April 15, 2014.2016.
Items
Stockholders will be asked to be Votedvote on the following matters at the Annual Meeting
We will vote on the election of 13 directors.
We will vote on an amendment to the Stock Plan in the form of Annex A and on the re-approval of the performance goals set forth in the Stock Plan.
We will vote on the re-approval of the performance goals set forth in the Performance Plan.
We will hold a non-binding advisory vote on the compensation of the NEOs as disclosed and discussed in the Proxy Statement.
We will vote on the ratification of Deloitte & Touche LLP as BlackRock’s independent registered public accounting firm for the year 2014.
We will also consider other business that properly comes before the Annual Meeting.
Board Recommendation
Our Board of Directors recommends that you vote your shares:Meeting:
Board Recommendation | ||
ITEM 1. Election of Directors The Board believes that the director nominees, all of whom are current members of the Board, have the knowledge, experience, skills and backgrounds necessary to contribute to an effective and well-functioning Board. | VoteFOR each director nominee | |
ITEM 2. Non-Binding Advisory Vote on Executive Compensation for Named Executive Officers The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of the named executive officers (“NEOs”) as disclosed and discussed in this Proxy Statement. The Board values the opinions of our stockholders and will take into account the outcome of the advisory vote when considering future executive compensation decisions. | VoteFOR | |
ITEM 3. Ratification of Appointment of Independent Registered Public Accounting Firm The Audit Committee has appointed Deloitte & Touche LLP to serve as BlackRock’s independent registered public accounting firm for the 2016 fiscal year and this appointment is being submitted to our stockholders for ratification. The Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP to serve as BlackRock’s independent auditors is in the best interests of the Company and its stockholders. | VoteFOR | |
ITEM 4. Management Proposal – Amendment to Bylaws to Implement Proxy Access The Board is recommending that stockholders approve an amendment to our Amended and Restated Bylaws to implement “proxy access”, which will allow eligible stockholders to include their own nominees for director in the Company’s proxy materials, along with Board nominees. The Board’s decision to seek stockholder approval of the bylaw amendment reflects BlackRock’s commitment to strong corporate governance and stockholder engagement. | VoteFOR | |
ITEM 5. Stockholder Proposal – Proxy Voting Practices Regarding Executive Compensation The Board believes that the actions requested by the proponent are unnecessary and not in the best interest of our stockholders. | VoteAGAINST |
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Stockholders EntitledWho is entitled to Votevote?
Holders of record of BlackRock common stock at the close of business on April 3, 2014March 30, 2016 are entitled to receive this notice and to vote their shares of BlackRock common stock at the 2016 Annual Meeting.Meeting of Stockholders. As of April 3, 2014, 167,006,561March 30, 2016, 163,580,579 shares of BlackRock’s common stock, par value $0.01 per share, were outstanding. Holders are entitled to one vote per share.
A list of stockholders entitled to vote at the Annual Meeting will be available at the Annual Meeting and can be made available beginning 10 days prior to the Annual Meeting, between the hours of 8:45 a.m. and 4:30 p.m., Eastern Time, at our principal executive offices at 55 East 52nd Street, New York, New York 10055, by writing to the Corporate Secretary of BlackRock at: c/o Corporate Secretary, BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.
How to Votedo I vote and what are the voting deadlines?
You may submit a proxy by telephone, via the Internet or by mail.
Submitting a Proxy by Telephone: You can submit a proxy for your shares by telephone until 11:59 p.m. Eastern Time on May 28, 201424, 2016 by calling the toll-free telephone number on the attached proxy card, 1-800-690-6903. Telephone proxy submission is available 24 hours a day. Easy-to-follow voice prompts allow you to submit a proxy for your shares and confirm that your instructions have been properly recorded. Our telephone proxy submission procedures are designed to authenticate stockholders by using individual control numbers.
Submitting a Proxy via the Internet: You can submit a proxy via the Internetinternet until 11:59 p.m. Eastern Time on May 28, 201424, 2016 by accessing the website listed on the Notice of Internet Availability of Proxy Materials and your proxy card,www.proxyvote.com, and by following the instructions on the website. Internet proxy submission is available 24 hours a day. As with the telephone proxy submission, you will be given the opportunity to confirm that your instructions have been properly recorded.
Submitting a Proxy by Mail: Mark your proxy card, date, sign and return it to Broadridge Financial Solutions in the postage-paid envelope provided (if you received your proxy materials by mail) or return it to BlackRock, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. Proxy cards returned by mail must be received no later than the close of business on May 24, 2016.
By casting your vote in any of the three ways listed above, you are authorizing the individuals listed on the proxy to vote your shares in accordance with your instructions.
Attending and Voting atWhat is required to attend the Annual MeetingMeeting?
You are entitled to attend the Annual Meeting only if you were, or you hold a valid legal proxy naming you to act as a representative for, a holder of BlackRock common stock at the close of business on April 3, 2014.March 30, 2016. Stockholders, or their valid legal proxies, planning to attend the Annual Meeting in person mustrequest an admission ticket in advance of the Annual Meeting by visitingwww.proxyvote.com and following the instructions provided (you will need the 16-digit “control” number included on your proxy card, voter instruction or form of notice). Tickets will be issued to registered and beneficial owners. Requests for admission tickets will be processed in the order they are received and must be requested no later than May 24, 2016. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. In addition to your admission ticket, please bring a form of government-issued photo identification, such as a driver’s license, state-issued identification card or passport, to gain entry to the Annual Meeting. In addition, ifIf you were the beneficial owner of shares held in the name of a bank, broker or other holder of record, you or your representative must also bring proof of your stock ownership as of the close of business on April 3, 2014,March 30, 2016, such as an account statement or similar evidence of ownership. The use of mobile phones, pagers, recording or photographic equipment, tablets and/or computers is not permitted in the meeting rooms at the Annual Meeting. If you are unable to provide valid photo identification or if we are unable to validate that you were a stockholder (or that you are authorized to act
as a legal proxy for a stockholder) or you cannot comply with the other procedures outlined above for attending the Annual Meeting in person, we will not be able to admit you to the Annual Meeting.
In the event you submit your proxy and you attend the Annual Meeting, you may revoke your proxy and cast your vote personally at the Annual Meeting. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record, to be able to vote at the Annual Meeting.
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All shares that have been properly voted and not revoked will be voted at the Annual Meeting. If you sign and return your proxy card but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board of Directors.
VotingHow will voting on Other Mattersany other business be conducted?
If any other matters arebusiness is properly presented at the Annual Meeting for consideration, the persons named in the proxy will have the discretion to vote on those matters for you. At the date this Proxy Statement went to press, we did not know of any other matterbusiness to be raised at the Annual Meeting.
Revocation of ProxiesMay I revoke my vote?
Proxies may be revoked at any time before they are exercised by:
Required VoteWhat is a quorum?
A quorum is necessary to hold a valid meeting. The presence, in person or by proxy, of the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote at the Annual Meeting is necessary to constitute a quorum.
What is the effect of a broker non-vote or abstention?
Abstentions and broker “non-votes,”“non-votes”, if any, are counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If a nominee has not received instructions from the beneficial owner, the nominee may vote these shares only on matters deemed “routine” by the New York Stock Exchange (“NYSE”). The election of directors, the approval of the amendment to the Stock Plan and re-approval of the performance goals under the Stock Plan, the re-approval of performance goals under the Performance Plan and the approval of NEO compensation, the bylaw amendment to implement proxy access and the stockholder proposal are not deemed “routine” by the NYSE and nominees have no discretionary voting power for these matters. The ratification of auditorsthe appointment of an independent registered accounting firm is deemed a “routine” matter on which nominees have discretionary voting power.
What vote is required in order to approve each of the proposals?
Each share of our common stock outstanding on the record date will be entitled to one vote on each of the 1319 director nominees and one vote on each other matter. Directors receiving a majority of votes cast (number of shares voted “for” a director must exceed the number of shares voted “against” that director) with respect to Item 1 will be elected as a director. Abstentions and broker “non-votes” will be disregarded and have no effect on the outcome of the vote to elect directors. A majority of the votes of shares of common stock represented and entitled to vote at the Annual Meeting is required for Item 2, the approval of the amendment to the Stock Plan and the re-approval of performance goals under the Stock Plan,NEO compensation, Item 3, the re-approval of performance goals under the Performance Plan, Item 4, the approval of NEO compensation, and Item 5, the ratification of Deloitte & Touche
LLP as BlackRock’s independent registered public accounting firm for the 2016 fiscal year 2014.and Item 5, the approval of the stockholder proposal. A majority of the votes of shares of common stock outstanding is required for Item 4, the approval of the management proposal to amend the bylaws to implement proxy access. In the vote for Items 2, 3,Item 4, abstentions and 5, abstentionsbroker “non-votes” have the same effect as a vote cast against the proposal. In the vote for Items 2, 3 and 4,5, abstentions have the same effect as a vote cast against the proposal and broker “non-votes” will be disregarded and have no effect. With respect to Items 2
Who will count the votes and 3, however, broker non-votes could havehow can I find the same effect as votes cast “against” the proposals if they cause the total votes cast on the item to be 50% or lessresults of the totalAnnual Meeting?
Broadridge Financial Solutions, our independent tabulating agent, will count the votes. We will publish the voting power entitled to vote onresults in a Form 8-K filed within four business days of the item.
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Cost of Proxy Solicitation
We will pay the expenses of soliciting proxies. Proxies may be solicited in person or by mail, telephone electronic transmission and facsimileelectronic transmission on our behalf by directors, officers or employees of BlackRock or its subsidiaries, without additional compensation. We will reimburse brokerage houses and other custodians, nominees and fiduciaries that are requested to forward soliciting materials to the beneficial owners of the stock held of record by such persons.
List of Stockholders
A list of stockholders entitled to vote at the Annual Meeting will be available at the Annual Meeting and for 10 days prior to the Annual Meeting, between the hours of 8:45 a.m. and 4:30 p.m., local time, at our principal executive offices at 55 East 52nd Street, New York, New York 10055, by contacting the Corporate Secretary of BlackRock.
Multiple Stockholders Sharing the Same Mailing Address
In order to reduce printing and postage costs, we have undertaken an effort to deliver only one Notice of Internet Availability of Proxy Materials or, if applicable, one Annual Report and one Proxy Statement to multiple stockholders sharing ana mailing address. This delivery method, called “householding,”“householding”, will not be used if we receive contrary instructions from one or more of the stockholders sharing ana mailing address. If your household has received only one such copy, we will deliver promptly a separate copy of the Notice of Internet Availability of Proxy Materials or, if applicable, the Annual Report and the Proxy Statement to any stockholder who sends a written request to:
BlackRock, Inc.
Attn: Corporate Secretary
55 East 52nd Street
New York, New York 10055
You may also contact ourto the Corporate Secretary at (212) 810-5300. the address provided on page 2 of this Proxy Statement.
You may also notify us that you would like to receive separate copies of the Notice of Internet Availability of Proxy Materials or, if applicable, BlackRock’s Annual Report and Proxy Statement in the future by writing to ourthe Corporate Secretary. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. If you are submitting a proxy by mail, each proxy card should be marked, signed, dated and returned in the enclosed self-addressed envelope.
If your household has received multiple copies of BlackRock’s Annual Report and Proxy Statement, you can request the delivery of single copies in the future by marking the designated box on the attached proxy card.
If you own shares of common stock through a bank, broker or other nominee and receive more than one Annual Report and Proxy Statement, contact the holder of record to eliminate duplicate mailings.
Voting Results
Broadridge Financial Solutions, our independent tabulating agent, will count the votes. We will publish the voting results in a Form 8-K filed within four business days of the Annual Meeting.
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Confidentiality of Voting
BlackRock keeps all proxies, ballots and voting tabulations confidential as a matter of practice. BlackRock allows only Broadridge Financial Solutions to examine these documents. Occasionally, stockholders provide written comments on their proxy cards, which are then forwarded to BlackRock management by Broadridge Financial Solutions.
Available Information
BlackRock makes available free of charge through its website atwww.blackrock.com, under the heading “Investor Relations/“Our Firm / Investor Relations / SEC Filings,”Filings”, its Annual Reports to Stockholders, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, this Proxy StatementStatements and form of proxy and all amendments to these reports no later than the day on which such materials are first sent to security holders or made public. Further, BlackRock will provide, without charge to each stockholder upon written request, a copy of BlackRock’s Annual Reports to Stockholders, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, this Proxy StatementStatements and form of proxy and all amendments to those reports. Written requests for copies should be addressed to:
BlackRock, Inc.
Attn: Investor Relations
55 East 52nd Street
New York, New York 10055
to the Corporate Secretary at the address provided on page 2 of this Proxy Statement. Requests may also be directed to (212) 810-5300 or via e-mail toinvrel@blackrock.com.invrel@blackrock.com. Copies may also be accessed electronically by means of the U.S. Securities and Exchange Commission’s (“SEC”) home pagehomepage on the Internet atwww.sec.gov.www.sec.gov. The Annual Report onForm 10-K for the year ended December 31, 20132015 (the “2013“2015 Form 10-K”) is not part of the proxy solicitation materials.
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ELECTION OF DIRECTORS
Information ConcerningDirector Nominees
Our Board has nominated 19 directors for election at this year’s Annual Meeting on the Nomineesrecommendation of our Nominating and DirectorsGovernance Committee (the “Governance Committee”). If elected, each such director will serve until the annual meeting of stockholders in 2017, or, in each case, until succeeded by another qualified director who has been elected or until his or her death, resignation or retirement.
All of the nominees are currently directors of the Board and have agreed to be named in this Proxy Statement and to serve if elected. If all 19 nominees are elected, BlackRock’s Board of Directors currently consists of 20 directors, which number of directors may be increased or decreased by the Board of Directors. Following the 2014 Annual Meeting, assuming the Directors nominated are re-elected, BlackRock’s Board of Directors is expected towill consist of 18 Directors, 1419 directors, 16 of whom, representing over 75%approximately 85% of the Board, will be “independent” as defined in the NYSE listing standards.
BlackRock’s Board of Directors was declassified as of the 2013 Annual MeetingImplementation and directors are elected annually for one-year terms, except that directors elected to a class prior to the 2013 Annual Meeting will continue to serve the balance of their existing three-year terms.Stockholder Agreement with The PNC Financial Services Group, Inc.
BlackRock’s implementation and stockholder agreement with The PNC Financial Services Group, Inc. (“PNC”) (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 stockholders such that the Board of Directors will consist of no more than 19 directors, not less than two nor more than four directors who will be members of BlackRock management, two directors who will be designated by PNC and the remaining directors being independent for purposes of the rules of the NYSE and not designated by or on behalf of PNC or any of its affiliates. PNC’s designees onPNC has designated one member of the Board of Directors, are currently James E. Rohr and William S. Demchak. Mr. Rohr notified BlackRock that he will not seek or accept re-election to the BoardDemchak, Chairman, President and Chief Executive Officer of Directors at the 2014 Annual Meeting.PNC. PNC has notified BlackRock that for the time being it will not designate a second director to replace Mr. Rohr on the Board of Directors, although it retains the right to do so anytimeat any time in accordance with the implementation and stockholder agreement between BlackRock and PNC.PNC Stockholder Agreement. PNC has additionally been permitted to invite an observer to attend meetings of the Board of Directors as a non-voting guest. Following Mr. Rohr’s retirement at the 2014 Annual Meeting, thisThe PNC observer is expected to be Gregory B. Jordan, the General Counsel and Head of Regulatory and Governmental Affairs of PNC. Laurence D. Fink and Robert S. Kapito are directors and members of BlackRock management.
The termsBlackRock’s management team and are currently members of office for Abdlatif Yousef Al-Hamad, Mathis Cabiallavetta, Pamela Daley, Jessica P. Einhorn, Fabrizio Freda, Murray S. Gerber, James Grosfeld, David H. Komansky, Sir Deryck Maughan, Cheryl D. Mills, Marco Antonio Slim Domit, John S. Varleythe Board. For additional detail on the PNC Stockholder Agreement, please see “—Certain Relationships and Susan L. Wagner expire at this Annual Meeting, and the Board of Directors has selected each for re-election. Thomas K. Montag is not eligible to be re-nominated due to regulatory restrictions. If elected, each such director will serve until the annual meeting of stockholders in 2015, or, in each case, until succeeded by another qualified director who has been elected or until his or her death, resignation or retirement.Related Transactions – Stockholder Agreement with PNC” on page 61.
Majority Vote Standard for Election of Directors
BlackRock’s amendedAmended and restated bylawsRestated Bylaws require directors to be elected by a majority of the votes cast with respect to each director 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 standards for election of directors would be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. Whether an election is contested or not is determined as of a date that is seven days in advance of when we file our definitive Proxy Statement with the SEC.
Director Resignation Policy
Under our Director Resignation Policy, any incumbent director who fails to be electedreceive a majority of votes cast must tender his or her resignation to the Board of Directors.Board. In that situation, the Nominating and Governance Committee would make a recommendation to the Board of Directors about whether to accept or reject the resignation or whether to take other action. The Board of Directors will act on the Nominating and Governance Committee’s recommendation and publicly
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disclose its decision and the rationale behind it 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 of Directors’ decision.
The Governance Committee of the Board oversees the director nomination process. As specified in its charter, the Governance Committee leads the Board’s annual review of Board performance, reviews and recommends to the Board
the Company’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 stockholders. The Governance Committee may also recommend that the Board elect new members to the Board who will serve until the next annual meeting of stockholders.
RecommendationIdentifying and Evaluating Candidates for Director
The Governance Committee seeks advice and names of potential director candidates from current directors and executive officers when identifying and evaluating new candidates for director. The Governance Committee also may engage third-party firms that specialize in identifying director candidates to assist in a search. Stockholders who wish to recommend a candidate for election to the Board may submit director recommendations to the Governance Committee or to stockholders at the annual meeting. For information on the requirements governing stockholder nominations for the election of directors, please see “Deadlines for Submission of Proxy Proposals, Nomination of Directors and Other Business of Stockholders” on page 74.
Once a person has been identified by the Governance Committee as a potential director candidate, the Governance Committee collects and reviews publicly available information regarding the candidate to assess whether the candidate should be considered further. If the Governance Committee determines that the candidate warrants further consideration, the Chairperson or a person designated by the Governance Committee will contact the candidate. If the candidate expresses a willingness to be considered and to serve on the Board of Directors, the Governance Committee typically requests information from the candidate and reviews the candidate’s accomplishments and qualifications against the criteria set forth below. The Governance Committee’s evaluation process does not vary based on whether a candidate is recommended by a stockholder, although the Committee may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
Director Qualifications and Attributes
The Governance Committee and the Board of Directors take into consideration a number of factors and criteria in reviewing candidates for nomination to the Board. As indicated in BlackRock’s Corporate Governance Guidelines, the Board of Directors believes that at a minimum a person must demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of BlackRock and that a person has an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities.
In addition, nominees for director are selected on the basis of, among other things, experience, diversity, knowledge, skills, expertise, an ability to make independent analytical inquiries, understanding of BlackRock’s business environment and willingness to devote adequate time and effort to the responsibilities of the Board of DirectorsDirectors.
Consideration of Diversity and Experience
Although the Board of Directors has not set specific goals with respect to diversity, it believes a diverse mix of knowledge, experience, skills, backgrounds and viewpoints enhances the Board’s capabilities. In reviewing candidates, the Governance Committee takes into consideration a candidate’s professional background, gender, race, national origin and age. The Board addresses whether it has achieved an appropriate level of diversity as part of its consideration of the Board’s composition in its annual self-evaluation process and the Governance Committee periodically reviews the overall composition of the Board and its Committees to assess whether it reflects the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to the Company’s current and future global strategy, business and governance.
In addition to the personal qualities and attributes described above, the Board looks for individuals who have demonstrated expertise and have global experience in the following disciplines: financial services, capital markets, public company governance, business operations, government regulation, public policy, and risk management. The Board also seeks candidates who have significant leadership experience, including current and former chief executive officers, who can share their perspective and practical experience on developing and implementing business strategies, setting appropriate executive compensation, and managing talent.
Consideration of Board Tenure
To ensure the Board of Directors has an appropriate balance of experience, continuity and fresh perspective, the Board takes into consideration tenure diversity when reviewing nominees. As of March 1, 2016, the average tenure of BlackRock’s directors was approximately 8.2 years (the average tenure for independent directors was 6.1 years). The Board believes that the current Board represents an effective mix of long-, medium- and short-tenured directors. Three non-management directors have served 15 years or more and bring a wealth of experience and knowledge concerning BlackRock, while six directors were added to the Board over the past four years and bring fresh perspectives to Board deliberations. The Board of Directors recommends stockholders vote “FOR”believes the electioncurrent mix of eachtenures provides for a highly effective and well-functioning Board.
Compliance with Regulatory and Independence Requirements
In addition to the criteria described above, the Governance Committee takes into consideration regulatory requirements, including competitive restrictions and financial institution interlocks, and independence requirements under the NYSE listing standards and our Corporate Governance Guidelines in its review of candidates for the Board and Board Committees. The Governance Committee also considers a candidate’s current and past positions held, including past and present board and committee membership, as part of its evaluation.
Service on Other Public Company Boards
Each of BlackRock’s 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 13 nominees.Company’s stockholders. BlackRock’s Chief Executive Officer does not serve on the board of directors of any other public company, and none of our current directors serve on more than three public company boards, including BlackRock’s Board.
Board of Directors Recommendation
For this year’s election, the Board has nominated 19 candidates, all of whom are current directors of the Board, that it believes provide the Company with the combined depth and breadth of skills, experience and qualities needed 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 BlackRock’s global strategy, business and governance.
The following biographical information regarding each director nominee highlights the particular experience, qualifications, attributes or skills possessed by each director nominee that led the Board of Directors to determine that such person should serve as director. We expect each nominee for election as a director to be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board of Directors chooses to reduce the number of directors serving on the Board of Directors.
The followingAll director nominee biographical information regarding each director nominee andis as of March 1, 2016.
The Board of Directors recommends stockholders vote “FOR” the election of each of the five continuing directors highlights the particular experience, qualifications, attributes or skills possessed by eachfollowing 19 director nominee and each continuing director that led the Board of Directors to determine that such person should serve as director. The information that follows is as of January 31, 2014.nominees.
Nominees for Director Whose Terms Will Expire in 2015Nominee Biographies
Abdlatif Yousef Al-Hamad | Director Since 2009, Age 78 |
Director Since 2009
Age 76
BlackRock Board Committee Memberships
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Al-Hamad has served as Director General and Chairman of the Board of Directors of the Arab Fund for Economic and Social Development since 1985. He was the Minister of Finance and Planning of Kuwait from 1981 to 1983 and prior to that served for eighteen18 years as the Director General of the Kuwait Fund for Arab Economic Development. He is also a member of the Board of the Kuwait Investment Authority. Mr. Al-Hamad chaired the Development Committee Task Force on Multilateral Development Banks and has served on the International Advisory Boards of Morgan Stanley, Marsh & McLennan Companies, Inc., American International Group, Inc. and the National Bank of Kuwait.
Mr. Al-Hamad’s extensive experience in the strategically important Middle East region and his expertise in international finance, economic policy and government relations provide the Board with an experienced outlook on international business policystrategy and global capital markets.
Mathis Cabiallavetta | Director Since 2007, Age 71 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
None
7
Mathis Cabiallavetta
Director Since 2007
Age 69Philip Morris International Inc. (2002 – 2014)
Experience and Qualifications
Mr. Cabiallavetta has served as a member of the Board of Directors of Swiss Re Ltd. since 2008 and as the Vice Chairman of theits Board since 2009.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.).
As a former leader of Swiss Re Ltd. and a former leader of Marsh & McLennan Companies, Inc. andas well as Union Bank of Switzerland (UBS A.G.), Mr. Cabiallavetta brings executive experience from these large and complex multinational businesses and provides substantial expertise in international financialglobal capital markets to the Board of Directors and a unique insight and perspective to its oversight of the Company’s global business.operations and risk management.
Pamela Daley | Director Since 2014, Age 63 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
Swiss Re Ltd. (2008BG Group (2014 – present; Vice Chairman since 2009)
Philip Morris International Inc. (2008 – present)
Pamela Daley
Director Since 2014
Age 61February 2016)
Experience and Qualifications
Ms. Daley retired from General Electric Company (“GE”) in January 2014 and served as a Senior Advisor to theits 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 servesserved on the board of BG Group, an international gas and oil company traded on the London Stock Exchange.Exchange until February 15, 2016, when BG Group was acquired by Royal Dutch Shell.
With over 3035 years of transactional experience and more than 20 years as an executive with 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.
William S. Demchak | Director Since 2003, Age 53 |
BlackRock Board Committee Memberships
NoneExecutive Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
BG Group (2014PNC (2013 – present) (Chairman from April 2014 – present)
Experience and Qualifications
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.
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 implementation and stockholder agreement between PNC and BlackRock.
Jessica P. Einhorn | Director Since 2012, Age 68 |
8
Jessica P. Einhorn
BlackRock Board Committee Memberships
Director Since 2012Risk Committee
Age 66Other Public Company Directorships (within the past 5 years)
Time Warner, Inc. (2005 – present)
Experience and Qualifications
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. She spent nearly twenty20 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. SheMs. Einhorn currently serves as a directorDirector of both the Peterson Institute for International Economics and the National Bureau of Economic Research. As of July 2012, sheMs. Einhorn is resident at The Rock Creek Group in Washington, DC,D.C., where she is a longstanding member of theThe Rock Creek Group Advisory Board.
Ms. Einhorn’s leadership experience in academia and at the World Bank, and experience in the U.S. government and at the International Monetary Fund, provides the Board of Directors with a unique perspective and in-depth understanding on issues concerning international finance, economics and public policy. Through her service onwith other public company boards,companies, Ms. Einhorn also has developed expertise in corporate governance.governance and risk oversight.
Laurence D. Fink | Director Since 1998, Age 63 |
BlackRock Board Committee Memberships
RiskExecutive Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Fink has been Chairman and Chief Executive Officer of BlackRock since 1988. Mr. Fink also leads BlackRock’s Global Executive Committee and is a trustee of one of BlackRock’s open-end fund complexes.
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 the Company and its business enables 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.
Fabrizio Freda | Director Since 2012, Age 58 |
BlackRock Board Committee Memberships
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Time Warner,The Estée Lauder Companies Inc. (2005(2009 – present)
Fabrizio Freda
Director Since 2012
Age 56
Experience and Qualifications
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 prestige beauty with more than 3025 brands and 32,000over 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.
Mr. Freda’s extensive experience in product strategy, innovation and global branding bringbrings valuable insights to the Board. His chief executiveChief Executive experience at Estée Lauder, an established multinational manufacturer and marketer of prestige brands, provides the Company with unique perspectives on its own marketing, strategy and innovation initiatives.
Murry S. Gerber | Director Since 2000, Age 63 |
BlackRock Board Committee Memberships
NominatingAudit Committee (Chairperson)
Executive Committee
Management Development and GovernanceCompensation Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
The Estée Lauder Companies Inc. (2009U.S. Steel Corporation (2012 – present)
Halliburton Company (2012 – present)
9
Murry S. Gerber
Director SinceEQT Corporation (1998 – 2012) (Chairman from 2000
Age 60 – 2010 and Executive Chairman from 2010 – 2011)
Experience and Qualifications
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 Chairman and Chief Executive Officer of EQT Corporation from 2007 to 2010, as Chairman, Chief Executive Officer and President of EQT Corporation from 2000 to 2007 and as Chief Executive Officer and President of EQT Corporation from 1998 to 2000.
As a former leader of a large, publicly-tradedpublicly traded energy production company and as a current or former member of the board of directors of three large, publicly-tradedpublicly traded companies, Mr. Gerber brings to the Board of Directors significant financialextensive expertise and insight into corporate operations, management and governance matters, as well as expert knowledge of the energy sector.
James Grosfeld | Director Since 1999, Age 78 |
BlackRock Board Committee Memberships
Audit Committee (Chairperson)
Executive Committee
Management Development and Compensation Committee
RiskNominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
U.S. Steel Corporation (2012Lexington Realty Trust (2003 – present)December 2015)
Halliburton Company (2012PulteGroup, Inc. (2015 – present)
EQT Corporation (1998 – 2012, Chairman from 2000 – 2010 and Executive Chairman from 2010 – 2011)
James Grosfeld
Director Since 1999
Age 76
Experience and Qualifications
Mr. Grosfeld was formerly Chairman of the Board and Chief Executive Officer of Pulte Homes, Inc. (renamed PulteGroup, Inc. in 2010), a home builder and mortgage banking and financing company, from 1974 to 1990.1990 and rejoined the Board of the company in 2015 as an independent director. Mr. Grosfeld has served as a trustee of Lexington Realty Trust since 2003.from 2003 to 2015.
As the former Chairman and Chief Executive Officer of Pulte Homes, Inc., the nation’s largest homebuilder, Mr. Grosfeld provides the Board of Directors with practical management and leadership expertiseinsight on public company governance as well as expertise in financial services and real estate matters.
Robert S. Kapito | Director Since 2006, Age 59 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Nominating and Governance CommitteeNone
Other Public Company Directorships (within the past 5 years)
Lexington Realty TrustNone
Experience and Qualifications
Mr. Kapito has been President of BlackRock since 2007. Mr. Kapito is also a member of the Global Executive Committee of BlackRock. Prior to 2007, Mr. Kapito served as Vice Chairman of BlackRock and Head of its Portfolio Management Group since 1988.
As one of the founding principals of the Company, Mr. Kapito has served as an executive leader of BlackRock since 1988. He brings to the Board of Directors 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 the Company’s day-to-day operations.
David H. Komansky | Director Since 2003, Age 76 |
10
David H. Komansky
BlackRock Board Committee Memberships
Director Since 2003Executive Committee
Age 75Management Development and Compensation Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Komansky retired as Chairman of the Board of Merrill Lynch in 2003. Mr. Komansky became Chairman of the Board of Merrill Lynch in 1997, served as a director and Chief Executive Officer of Merrill Lynch from 1996 to 2002 and as a director, President and Chief Operating Officer of Merrill Lynch from 1995 to 1996. Previously, Mr. Komansky served as a director of WPP Group plc from 2003 to 2009.
Mr. Komansky’s chief executive experience at Merrill Lynch and his financial and management expertise provides the Board of Directors with a valuable perspective and leadership insights on a wide range of corporate governance and management matters unique to complex financial organizations.
Sir Deryck Maughan | Director Since 2006, Age 68 |
BlackRock Board Committee Memberships
Executive Committee
Management Development and Compensation Committee
Risk Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Sir Deryck MaughanGlaxoSmithKline plc (2004 – present)
Director Since 2006
Age 66Thomson Reuters (2008 – 2014)
Experience and Qualifications
Sir Deryck has beenserved as a Senior Advisor of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) sincefrom January 2013.2013 until December 2014. Previously, he was a Partner and Head of the Financial Institutions Group of KKR since 2009 and Managing Director since 2005. He was Chairman of KKR Asia from 2005 to 2009. Prior to joining KKR, Sir Deryck served as Vice Chairman of Citigroup from 1998 to 2004, as Chairman and Chief Executive Officer of Salomon Brothers from 1992 to 1997 and as Chairman and Chief Executive Officer of Salomon Brothers Asia from 1986 to 1991. He also was Vice Chairman of the U.S.-Japan Business Council from 2002 to 2004. Prior to joining Salomon Brothers in 1983, Sir Deryck worked at Goldman Sachs. He served in H.M. Treasury (UK Economics and Finance Ministry) from 1969 to 1979. He has also served as a directorDirector of GlaxoSmithKline plc since 2004 and Thomson Reuters since 2008.from 2008 to 2014.
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 of Directors with a valuable perspective on international finance and global capital markets.markets and extensive experience in assessing value, strategy and risks related to various business models.
Cheryl D. Mills | Director Since 2013, Age 51 |
BlackRock Board Committee Memberships
Executive Committee
Management Development and Compensation Committee
Risk Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
Thomson Reuters (2008 – present)
GlaxoSmithKline plc (2004 – present)
11
Cheryl D. Mills
Director Since 2013
Age 48None
Experience and Qualifications
Ms. Mills formerlyis Founder and Chief Executive Officer of the BlackIvy Group, an investment company that grows and builds businesses in Sub-Saharan Africa. Formerly, 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. Previously, Ms. Mills was with New York University from 2002 to 2009, where she served as Senior Vice President for Administration and Operations and as General Counsel. She also served as Secretary of the University’s Board of Trustees. From 1999 to 2001, Ms. Mills was Senior Vice President for Corporate Policy and Public Programming at Oxygen Media. Prior to joining Oxygen Media, Ms. Mills served as Deputy Counsel to President Clinton and as the White House Associate Counsel. She began her career as an Associate at the Washington, D.C. law firm of Hogan & Hartson. Ms. Mills previously served on the boards of Cendant Corporation (now Avis Budget Group, Inc.), a consumer real estate and travel conglomerate, and Orion Power, an independent electric power generating company.
Ms. Mills brings to the Board of Directors 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.
Gordon M. Nixon, C.M., O.Ont. | Director Since 2015, Age 59 |
BlackRock Board Committee Memberships
NoneManagement Development and Compensation Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
NoneBCE Inc. (2014 – present)
George Weston Limited (2014 – present)
Experience and Qualifications
Mr. Nixon was President, Chief Executive Officer and a Director of Royal Bank of Canada from 2001 to 2014. He first joined RBC Dominion Securities Inc. in 1979, where he held a number of operating positions and served as Chief Executive Officer from December 1999 to April 2001. He currently serves as a Director of BCE, Inc. and will be nominated as Chairman upon his re-election to the Board in April 2016. He is also a Director of George Weston Limited and is on the advisory board of Kingsett Capital.
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 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.
Thomas H. O’Brien* | Director Since 1999, Age 79 |
Marco Antonio Slim Domit
BlackRock Board Committee Memberships
Audit Committee
Executive Committee
Nominating and Governance Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (1987 – 2011)
Experience and Qualifications
Mr. O’Brien retired as Chief Executive Officer of PNC in 2000, after 15 years in that position, and retired as Chairman of PNC in 2001, after 13 years in that position. Mr. O’Brien previously served as a Director of Verizon Communications, Inc. from 1987 to 2011.
As a former leader of PNC, one of the largest diversified financial services companies in the United States, Mr. O’Brien has valuable insights on corporate governance and the U.S. financial and banking sectors to share with the Board of Directors and the Company, particularly in his role as lead independent director.
*The Board of Directors has selected Mr. O’Brien to serve as the lead independent director.
Ivan G. Seidenberg | Director Since 2011, Age 69 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (2002 – 2011) (Chairman from 2004 – 2011)
Boston Properties, Inc. (2014 – present)
Experience and Qualifications
Mr. Seidenberg retired as the Chairman of the Board of Verizon Communications, Inc. in December 2011 and previously served as its Chief Executive Officer from 2002 to 2011. Prior to the creation of Verizon Communications, Inc., Mr. Seidenberg was the Chairman and Chief Executive Officer of Bell Atlantic and NYNEX Corp. Mr. Seidenberg has been an Advisory Partner of Perella Weinberg Partners, a global independent advisory and asset management firm, since June 2012 and a member of the Board of Directors of Boston Properties, Inc. since May 2014. Mr. Seidenberg also previously served on the boards of Honeywell International Inc. and Wyeth, LLC.
Age 45Mr. 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.
Marco Antonio Slim Domit | Director Since 2011, Age 47 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
Grupo Financiero Inbursa (Chairman from 1997 – present)
Impulsora del Desarrollo y el Empleo en América Latina (2012 – present) (Chairman from 2012 – present)
Teléfonos de México, S.A.B. de C.V (1995 – 2014)
Experience and Qualifications
Mr. Slim has been Chairman of the Board of Directors of Grupo Financiero Inbursa since 1997 and previously served as Chief Executive Officer of Grupo Financiero Inbursa from 1997 until April 2012. Mr. Slim is also PresidentChairman of The Carlos Slim Health Institute Vice-Chairman of the Boardand of Impulsora del Desarrollo y el Empleo en América Latina (IDEAL), an infrastructure company, and alsocompany. Mr. Slim was a board member of the Board of Directors of Teléfonos de México, and Grupo Carso, among others.S.A.B. de C.V. from 1995 until April 2014.
Mr. Slim’s experience at Grupo Financiero Inbursa provides the Board with knowledge and expertise in the financial sectorinternational 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 globaldeveloping new businesses in international markets, stockholder rights and international financebusiness strategy and integration to the Board of Directors.
John S. Varley | Director Since 2009, Age 59 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
Grupo Financiero Inbursa (Chairman from 1997 – present)
Impulsora del Desarrollo y el Empleo en América LatinaRio Tinto PLC (2011 – present)
Grupo Carso (2008AstraZeneca PLC (2006 – present)
12
John S. Varley
Director Since 2009
Age 58Barclays PLC and Barclays Bank PLC (1998 – 2011)
Experience and Qualifications
Mr. Varley has served as a member of the Boards of Directors of Rio Tinto since 2011 and AstraZeneca PLC since 2006. Mr. Varley was Chief Executive of Barclays PLC and Barclays Bank PLC (“Barclays”) from 2004 to 2010. Previously, he served as the Finance Director of Barclays from 2000 until the end of 2003. Mr. Varley joined the Barclays Executive Committee in 1996 and was appointed to the Boards of Directors of Barclays PLC and Barclays Bank PLC in 1998, positions he held until retiring in December 2010. From 1998 to 2000, Mr. Varley was the Chief Executive of Barclays’ Retail Financial Services and from 1995 to 1998 was the Chairman of its Asset Management Division. Mr. Varley has served as a member of the Board of Directors of Rio Tinto PLC since 2011. Mr. Varley also joined the Board of AstraZeneca PLC in 2006 as a Non-Executive Director, then served as the Senior Independent Director from 2012 until April 2015.
Mr. Varley brings to the Board of Directors valuable insights on asset management, risk management and international finance acquired through his leadership of Barclays, a large, complex, heavily-regulated financial services organization with global operations. Mr. Varley’s service on the board of directors and committees of several other companies gives him additional perspective on global management and corporate governance that he shares with the Board.
Susan L. Wagner | Director Since 2012, Age 54 |
BlackRock Board Committee Memberships
AuditRisk Committee
Other Public Company Directorships (within the past 5 years)
Rio Tinto (2011Apple Inc. (2014 – present)
AstraZeneca PLC (2006Swiss Re Ltd. (2014 – present)
Barclays PLC and Barclays Bank PLC (1998 – 2011)
Susan L. Wagner
Director Since 2012
Age 52
Experience and Qualifications
Ms. Wagner retired as a Vice Chairman of BlackRock in July 2012. In addition to serving as Vice Chairman from 2006 to 2012, Ms. Wagner also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee. Ms. Wagner previously served as BlackRock’s Chief Operating Officer and as Head of Corporate Strategy.
As one of the founding principals of BlackRock, Ms. Wagner has over 2425 years of experience in various positions at the Company. Accordingly, she is able to provide the Board with valuable insight and perspective on aspects of the business, including risk management, operations and strategy, as well as a broad and deep understanding of the asset management industry.
BlackRock Board Committee Memberships
Risk Committee
Other Public Company Directorships (within the past 5 years)
None
13
Continuing Directors Whose Terms Will Expire in 2015CORPORATE GOVERNANCE
William S. DemchakGovernance Practices and Guidelines
Director Since 2003
Age 52
Experience and Qualifications
Mr. Demchak has been President and Chief Executive OfficerWe believe good corporate governance is essential to ensuring that the long-term interests of PNC since April 2013 and is also a member of its Board of Directors. Prior to that, Mr. Demchak has held a number of supervisory positions at PNC, including President and Senior Vice Chairman. Before joining PNC in 2002, Mr. Demchak served as the Global Head of Structured Finance and Credit Portfolio for J.P. Morgan Chase & Co. from 1997 to 2002. PNC is a large, national diversified financial services company providing traditional banking and asset management services.
Mr. Demchak’s substantial leadership experience with PNC and extensive knowledge of the U.S. financial and banking sectors provides thestockholders are best served. Our Board of Directors with a valuable perspective and outlook foris committed to maintaining the oversight and managementhighest standards of the Company’s business.
BlackRock Board Committee Memberships
Risk Committee
Other Public Company Directorships (within the past 5 years)
PNC (2013 – present)
Laurence D. Fink
Director Since 1998
Age 61
Experience and Qualifications
Mr. Fink has been Chairman and Chief Executive Officer of BlackRock since its formation in 1998 and of BlackRock’s predecessor entities since 1988. Mr. Fink also leads BlackRock’s Global Executive Committee and is a trustee of one of BlackRock’s open-end fund complexes.
As one of the founding principals and Chief Executive Officer of BlackRock and its predecessor entities 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 the Company and its business enables 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.
BlackRock Board Committee Memberships
Executive Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
14
Robert S. Kapito
Director Since 2006
Age 56
Experience and Qualifications
Mr. Kapito has been President of BlackRock since 2007. Mr. Kapito is also a member of the Global Executive Committee ofcorporate governance at BlackRock. Prior to 2007, Mr. Kapito served as Vice Chairman of BlackRock and Head of its Portfolio Management Group since its formation in 1998 and BlackRock’s predecessor entities since 1988.
As one of the founding principals of the Company, Mr. Kapito has served as an executive leader of BlackRock and its predecessor entities since 1988. He brings to theBecause corporate governance practices evolve over time, our Board of Directors industryreviews and business acumenapproves our Corporate Governance Guidelines, committee charters and other governance policies on an annual basis, if not more frequently, and updates them as necessary and appropriate.
In performing its role, our Board is guided by our Corporate Governance Guidelines in additionparticular, which, among other things, address director responsibilities, director access to in-depth knowledge about BlackRock’s businesses, investment strategiesmanagement, director orientation and risk management as well as extensive experience overseeing the Company’s day-to-day operations.
BlackRock Board Committee Memberships
None
Other Public Company Directorships (within the past 5 years)
None
Thomas H. O’Brien
Director Since 1999
Age 77
Experience and Qualifications
Mr. O’Brien retired as Chief Executive Officer of PNC in 2000, after 15 years in that position, and retired as Chairman of PNC in 2001, after 13 years in that position. Mr. O’Brien previously served as acontinuing education, director of Verizon Communications, Inc. from 1987 to 2011.
As a former leader of PNC, Mr. O’Brien has valuable insights on corporate governanceretirement and the U.S. financial and banking sectors to draw upon to serveannual performance evaluations of the Board of Directors and Board Committees. The Board recently amended the Company, particularly in his rolesCorporate Governance Guidelines to have the Governance Committee consider the periodic rotation of Committee members and Committee chairpersons as lead independent directora means of introducing fresh perspectives and chairbroadening and diversifying the views and experience represented on the Board’s Committees. The full text of the Nominating andour Corporate Governance Committee.
BlackRockGuidelines, Board Committee MembershipsCharters, Code of Business Conduct and Ethics and other corporate governance policies are available on our website atwww.blackrock.com under the headings “Our Firm / Investor Relations / Company Overview and Governance”.
Audit CommitteeBoard Leadership
Combined Principal Executive CommitteeOfficer and Board Chairperson Positions
NominatingThe Board regularly reviews and Governance Committee (Chairperson)
Other Public Company Directorships (withinevaluates the past 5 years)
Verizon Communications, Inc. (1987-2011)
15
Ivan G. Seidenberg
Director Since 2011
Age 67
ExperienceCompany’s governance structure. Mr. Fink serves as both BlackRock’s Chief Executive Officer and Qualifications
Mr. Seidenberg has served as an Advisory Partner of Perella Weinberg Partners since June 2012. Mr. Seidenberg retired as the Chairman of the Board of Verizon Communications in December 2011 and previously served as its Chief Executive Officer from 2002 to 2011. Prior to the creation of Verizon, Mr. Seidenberg was the Chairman and Chief Executive Officer of Bell Atlantic and NYNEX Corp.
Mr. Seidenberg brings extensive executive leadership experience to the Board from his tenure at Verizon Communications, one of the world’s leading providers of communications services, and through his extensive experience on the boards of public companies he has developed an in-depth understanding of business and corporate governance.
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (Chairman from 2004 – 2011)
Wyeth, LLC (1996 – 2008)
Honeywell International Inc. (1995 – 2008)
In addition to Messrs. Fink and Kapito, whose information is set forth above, 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 Global Executive Committee. All of BlackRock’s executive officers are elected annually by the Board and serve at the discretion of the Board or Chief Executive Officer.
David J. Blumer (age 45), Senior Managing Director, has been Head of the Europe, Middle East and Africa (“EMEA”) region of BlackRock since 2013. Prior to joining BlackRock, Mr. Blumer worked at Swiss Re Ltd., where he most recently served as the Chief Investment Officer (“CIO”). In addition to his CIO role, Mr. Blumer also held other senior positions at Swiss Re Ltd. after joining in 2008, including Head of Asset Management, Chairman of Admin Re and a member of the Executive Committee.
Robert W. Fairbairn (age 48), Senior Managing Director, has overseen BlackRock’s Global Retail andiShares businesses since 2012. Mr. Fairbairn was Head of the Global Client Group from 2009 to 2012 and Vice Chairman and Chairman of BlackRock’s EMEA Pacific business from 2006 to 2009.
Robert L. Goldstein (age 40), Senior Managing Director, has been Head of BlackRock’s Institutional Client Business since 2012 andBlackRock Solutions since 2009. Effective June 1, 2014, Mr. Goldstein will become BlackRock’s Chief Operating Officer while continuing to leadBlackRock Solutions®. Mr. Goldstein has spent his entire career at BlackRock, beginning in 1994 as an analyst in the firm’s Portfolio Analytics Group.
Charles S. Hallac (age 49), Senior Managing Director, has been Chief Operating Officer of BlackRock since 2010. Effective June 1, 2014, Mr. Hallac will assume a new position as Co-President of BlackRock. Previously, Mr. Hallac was a Managing Director and Head ofBlackRock Solutions. Mr. Hallac has been with BlackRock or its predecessor entities since 1988.
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J. Richard Kushel (age 47), Senior Managing Director, has been Deputy Chief Operating Officer of BlackRock since 2012. Effective June 1, 2014, Mr. Kushel will become BlackRock’s Chief Product Officer. Previously, Mr. Kushel was Head of the Portfolio Management Group of BlackRock from 2010 to 2012 and Chairman of BlackRock’s International platform from 2009 to 2010. Prior to that, Mr. Kushel headed BlackRock’s International Institutional platform and BlackRock’s Alternatives and Wealth Management Groups. Mr. Kushel has been with BlackRock or its predecessor entities since 1991.
Matthew J. Mallow (age 70), Senior Managing Director, has been General Counsel of BlackRock since 2012. Prior to being named General Counsel, Mr. Mallow served as a senior advisor to BlackRock’s Legal and Compliance Department since June 2010. Previously, Mr. Mallow was a partner at Skadden, Arps, Slate, Meagher & Flom LLP from 1982 to 2010, where he served as head of the Corporate Finance Department.
Mark McCombe (age 47), Senior Managing Director, has been Chairman of the Asia Pacific region of BlackRock since 2012. Effective June 1, 2014, Mr. McCombe will become the Global Head of BlackRock’s Institutional Client Business, as well as Chairman of BlackRock Alternative Investors. Before joining BlackRock, Mr. McCombe served as Chief Executive Officer in Hong Kong for The Hong Kong and Shanghai Banking Corporation Limited from 2010 to 2011. He was also a Group General Manager of HSBC plc, Non-Executive Director of Hang Seng Bank Ltd., and Chairman of HSBC Global Asset Management (HK) Ltd. Prior to 2010, Mr. McCombe was Chief Executive of HSBC Global Asset Management from 2007 to 2010.
Gary S. Shedlin (age 50), Senior Managing Director, became Chief Financial Officer of BlackRock on May 9, 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.
Jeffrey A. Smith, Ph.D. (age 43), Senior Managing Director, has been Head of Global Human Resources of BlackRock since 2009. Prior to joining BlackRock in 2009, Dr. Smith was the Global Head of Human Resources of Barclays Global Investors since 2007.
The Board of Directors, annually determines the independence of directors in accordance with the listing standards of the NYSE. No director is considered independent unlesswhich the Board of Directors has determined that he or sheis the most appropriate and effective governance structure for the Company. Mr. Fink has no material relationshipserved in this capacity since founding BlackRock in 1988 and, as such, brings over 25 years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairman of the Board.
The combined Chairman and Chief Executive Officer structure allows for robust and frequent communication between the Board and management of the Company. To further facilitate coordination with BlackRock. the independent directors and to ensure the exercise of independent judgment by the Board of Directors, the Board selects one of its members to serve as the lead independent director.
Lead Independent Director
The Board of Directors has adopted categorical standardsappointed Thomas O’Brien to assist it in determining whether or not certain relationshipsserve as the lead independent director. Mr. O’Brien is a senior member of the Board. His duties as the lead independent director include:
The lead independent director also has the authority to call additional meetings of the independent directors and is available for consultation or direct communication with major stockholders. Each of these responsibilities is set out in BlackRock’s Corporate Governance Guidelines.
Executive Sessions
Executive sessions of non-management directors are held at least quarterly. “Non-management directors” include all directors who are not BlackRock officers. Currently, Messrs. Fink and Kapito are the only BlackRock officers serving on the Board of Directors. Each session is chaired by Mr. O’Brien who has been appointed by the Board of Directors and BlackRock or its affiliates and subsidiaries (either directly or as the lead independent director. Any non-management director may request that an additional executive session be scheduled. At least once a partner, stockholder or officeryear an executive session of an organization that has a relationship with BlackRock) are material relationships for purposesonly those directors determined to be “independent” within the meaning of the listing standards of the NYSE. The categorical standards provide that the following relationships are not material for such purposes:
held.
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 (a) within the preceding three years, the aggregate amount of such contributions during any single fiscal year
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As part of its determination, the Board of Directors also considered the relationships described under “Certain Relationships and Related Transactions.” Following its review, the Board of Directors has determined that Ms. Daley, Ms. Einhorn and Ms. Mills and Messrs. Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Komansky, Maughan, O’Brien, Seidenberg, Slim and Varley are “independent” as defined in the NYSE listing standards and that none of the relationships between such directors and BlackRock are material under the NYSE listing standards. Following the 2014 Annual Meeting, assuming the nominated Directors are re-elected, BlackRock’s Board of Directors is expected to consist of 18 Directors, 14 of whom, representing over 75% of the Board, will be “independent” as defined in the NYSE listing standards.
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The Board of Directors has five committees: an Audit Committee, a Management Development and Compensation Committee (“MDCC”), a Nominating and Governance Committee (the “Governance Committee”), a Risk Committee and an Executive Committee. Below is a summary of our committeecurrent Committee structure and membership information.
Chairperson | Member | Financial Expert |
Committee Member | Audit Committee | Management Development and Compensation Committee | Nominating and Governance Committee | Risk Committee | Executive Committee | Audit Committee | Management Development and Compensation Committee | Nominating and Governance Committee | Risk Committee | Executive Committee | |||||||||||||||||||||||||||||||||||
Independent Directors | Independent Directors |
| |||||||||||||||||||||||||||||||||||||||||||
Abdlatif Y. Al-Hamad | |||||||||||||||||||||||||||||||||||||||||||||
Mathis Cabiallavetta | |||||||||||||||||||||||||||||||||||||||||||||
Pamela Daley* | |||||||||||||||||||||||||||||||||||||||||||||
Pamela Daley | |||||||||||||||||||||||||||||||||||||||||||||
Jessica Einhorn | |||||||||||||||||||||||||||||||||||||||||||||
Jessica P. Einhorn | |||||||||||||||||||||||||||||||||||||||||||||
Fabrizio Freda | |||||||||||||||||||||||||||||||||||||||||||||
Murry S. Gerber | |||||||||||||||||||||||||||||||||||||||||||||
James Grosfeld | |||||||||||||||||||||||||||||||||||||||||||||
David H. Komansky | |||||||||||||||||||||||||||||||||||||||||||||
Sir Deryck Maughan | |||||||||||||||||||||||||||||||||||||||||||||
Cheryl D. Mills* | |||||||||||||||||||||||||||||||||||||||||||||
Cheryl D. Mills | |||||||||||||||||||||||||||||||||||||||||||||
Thomas H. O’Brien | |||||||||||||||||||||||||||||||||||||||||||||
Gordon M. Nixon | |||||||||||||||||||||||||||||||||||||||||||||
Thomas H. O’Brien (Lead Independent Director) | |||||||||||||||||||||||||||||||||||||||||||||
Ivan G. Seidenberg | |||||||||||||||||||||||||||||||||||||||||||||
Marco Antonio Slim Domit | |||||||||||||||||||||||||||||||||||||||||||||
John S. Varley | |||||||||||||||||||||||||||||||||||||||||||||
Susan L. Wagner | |||||||||||||||||||||||||||||||||||||||||||||
Non-Independent Directors | Non-Independent Directors |
| Non-Independent Directors |
| |||||||||||||||||||||||||||||||||||||||||
Laurence D. Fink | |||||||||||||||||||||||||||||||||||||||||||||
Robert S. Kapito | |||||||||||||||||||||||||||||||||||||||||||||
William S. Demchak** | |||||||||||||||||||||||||||||||||||||||||||||
Thomas K. Montag*** | |||||||||||||||||||||||||||||||||||||||||||||
James E. Rohr*** | |||||||||||||||||||||||||||||||||||||||||||||
Susan L. Wagner | |||||||||||||||||||||||||||||||||||||||||||||
Number of Meetings held in 2013 | 14 | 9 | 6 | 6 | 0 | ||||||||||||||||||||||||||||||||||||||||
William S. Demchak | |||||||||||||||||||||||||||||||||||||||||||||
Number of Meetings held in 2015 | 14 | 9 | 6 | 6 | 0 |
(1) |
(2) | On March 10, 2016, the Board appointed Sir Deryck to serve as a member of the Audit Committee and Ms. Daley to serve as a member of the Risk Committee effective as of May 24, 2016. At such time, Mr. |
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The Board of Directors met eightseven times during 2013.2015. In 2013,2015, each continuing and nominated director attended at least 75%80% of the aggregate of: (i) the total number of meetings of the Board of Directors held during the period for which such director was a member of the Board of Directors and (ii) the total number of meetings held by all committeesCommittees of the Board of Directors on which such director served, if any, during the periods served by such director.director exceptMr. Al-Hamad. In 2015, Mr. Al-Hamad attended 68% of the total number of meetings of the Board and Committees on which he served. Directors are encouraged to and do attend the annual meetings of BlackRock stockholders. Fifteen17 of the then 18 directors attended the 2013 meeting2015 Annual Meeting of stockholders.Stockholders.
The Audit Committee
The Audit Committee’s primary purposes are to assist Board oversight of the integrity of BlackRock’s financial statements, 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 is also responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee exercises sole authority to approve all audit engagement fees and terms associated with the retention of Deloitte & Touche LLP. In addition to ensuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit partner and considers whether, in order to ensure continuing auditor independence, there should be regular rotation of the independent registered public accounting firm. In addition, the Audit Committee is responsible for preparing the Audit Committee report as required by the SEC’s rules for inclusion in BlackRock’s annual Proxy Statement. The Audit Committee’s procedures for the pre-approval of audit and permitted non-audit services are described in “Item 5—Ratification of Appointment of Independent Registered Public Accounting Firm – Audit Committee Pre-Approval Policy.”
The Audit Committee regularly holds separate sessions with BlackRock’s management, internal auditors and independent registered public accounting firm. The Report of the Audit Committee is included on page 28.
The Board of Directors has determined that no member of the Audit Committee has any material relationship with BlackRock (either directly, or as a partner, stockholder or officer of an organization that has a relationship with BlackRock) and each such member is “independent” as defined in the NYSE listing standards and the applicable SEC rules. Furthermore, the Board of Directors has determined that each member of the Audit Committee is “financially literate,” as such qualification is interpreted by the Board of Directors based on its business judgment, qualifies as an “audit committee financial expert,” as defined in the applicable SEC rules, and has accounting and related financial management expertise within the meaning of the NYSE listing standards. The Audit Committee satisfies the requirements of SEC Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Rule 10A-3 establishes standards relating to audit committees in the following areas: the independence of audit committee members; the Audit Committee’s responsibility to select and oversee BlackRock’s independent auditor; procedures for handling complaints regarding BlackRock’s accounting practices; the authority of the Audit Committee to engage advisors; and funding for the independent auditor and any outside advisors engaged by the Audit Committee.
The Management Development and Compensation Committee
The MDCC is responsible for establishing the compensation of BlackRock’s executive officers, providing oversight of BlackRock’s employee benefit and compensation plans and reviewing, assessing and making reports and recommendations to the Board of Directors, as appropriate, on BlackRock’s talent development and succession planning. The Board of Directors has determined that all of the members of the MDCC are “independent” within the meaning of the listing standards of the
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NYSE. Each of the committee members is also a “non-employee director” as defined in the SEC rules under Section 16 of the Exchange Act, and is an “outside director,” as defined by Section 162(m) of the Internal Revenue Code.
Additional information on the MDCC’s processes and procedures for consideration of NEO compensation is addressed in the Compensation Discussion and Analysis below. The report of the MDCC is included following the Compensation Discussion and Analysis on page 47.
The Nominating and Governance Committee
The Nominating and Governance Committee is responsible for assisting the Board of Directors by: identifying individuals qualified to become members of the Board of Directors; recommending to the Board of Directors the director nominees for the next annual meeting of stockholders; recommending to the Board of Directors the Corporate Governance Guidelines applicable to BlackRock; leading the Board of Directors in its annual review of the Board of Directors’ and management’s performance; recommending to the Board of Directors director nominees for each Board committee; and overseeing BlackRock’s Related Persons Transaction Policy. The Board of Directors has determined that all of the members of the Nominating and Governance Committee are “independent” within the meaning of the listing standards of the NYSE.
The Risk Committee
The Risk Committee is responsible for assisting the Board of Directors with its oversight of BlackRock’s risk management activities, with particular responsibility for overseeing designated areas of risk, including, among others, fiduciary risks, corporate risks and capital structure, that are not the primary responsibility of another committee of the Board or retained for the Board’s direct oversight. The Risk Committee also coordinates with other committees to assist with such other committees’ designated oversight responsibilities.
The Executive Committee
The Executive Committee has all the powers of the Board of Directors, except as prohibited by applicable law, the implementation and stockholder agreement between BlackRock and PNC and BlackRock’s amended and restated bylaws, and except to the extent another committee has been accorded authority over the matter. The Executive Committee exercises such powers between meetings of the Board of Directors.
Role of the Board of Directors in the Oversight of Risk Management
The Board of Directors has oversight over BlackRock’s risk management activities, and the Risk, Audit, MDCC and Nominating and Governance Committees assist the Board in this role. In November 2012, the Board of Directors established the Risk Committee, which has responsibility for overseeing designated areas of risks, including, among other things, fiduciary risks, corporate risks and capital structure. The Audit Committee is focused on overseeing the integrity of BlackRock’s financial statements, the effectiveness of the internal control environment, the internal audit function and the external auditors. The Risk and Audit Committees work together to help ensure that both committees have received all information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management activities. The Risk Committee also coordinates with the MDCC and the Nominating and Governance Committee in relation to the activities of those committees that relate to the oversight of the management of risks.
A detailed risk profile report that is prepared by BlackRock’s Chief Risk Officer and reviewed with BlackRock’s Corporate Risk Management Committee is regularly presented to the Risk Committee. This report covers a wide range of topics and potential issues that could impact BlackRock, including matters such as investment performance, investment risks and counterparty risks of its asset
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management activities, revenue, balance sheet, operational and integration risks and insurance coverage. The Risk Committee engages the Company’s key risk management executives on the framework for risk management within BlackRock and the process for proactively identifying adverse events and/or circumstances relevant to BlackRock’s objectives and activities as well as risk management roles, policies and responsibilities. The Risk Committee also reviews and discusses with management the Risk Factors included in the 2013 Form 10-K. At least quarterly, the Audit Committee receives an internal audit report, an external audit update and a report on litigation, regulatory and ethics matters. The Audit Committee receives an annual report regarding compliance with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). The internal audit plan for BlackRock is approved by the Audit Committee and regular reports on the progress and results of the internal audit program are provided to the Audit Committee by BlackRock’s Head of Internal Audit. The Head of Internal Audit also regularly attends Risk Committee meetings. The financial controls report is prepared by the Head of Sarbanes-Oxley Compliance and presented by management. BlackRock’s independent external auditor provides the regular audit update and its General Counsel provides the regular report on litigation, regulatory and ethics matters. Aspects of these reports are presented to the full Board at least quarterly by the Chairperson of the Risk Committee, the Chairperson of the Audit Committee or the member of management responsible for the given subject area.
Consideration of Director Candidates
The policy of the Nominating and Governance Committee is to consider properly submitted stockholder recommendations for candidates for membership on the Board of Directors as described below under “—Identifying and Evaluating Candidates for Director.” In evaluating such recommendations, the Nominating andDirector
The Governance Committee seeks advice and names of potential director candidates from current directors and executive officers when identifying and evaluating new candidates for director. The Governance Committee also may engage third-party firms that specialize in identifying director candidates to achieveassist in a balance of knowledge, experience and capability onsearch. Stockholders who wish to recommend a candidate for election to the Board of Directors andmay submit director recommendations to address the membership criteria set forth below under “—Director Qualifications.” Any stockholder recommendations for consideration by the Nominating and Governance Committee should includeor to stockholders at the nominee’s name and qualifications for membership on the Board of Directors. The recommending stockholder should also submit evidence of the stockholder’s ownership of shares of BlackRock, including the number of shares owned and the length of time of ownership. The recommendation should be addressed to:
BlackRock, Inc.
Attn: Corporate Secretary
55 East 52nd Street
New York, New York 10055
In addition, the amended and restated bylaws of BlackRock permit stockholders to nominate directors for consideration at an annual stockholders’ meeting. For information on the requirements governing stockholder nominations for the election of directors, to be made at an annual meeting of stockholders, please see “Requirements, Including Deadlines,“Deadlines for Submission of Proxy Proposals, Nomination of Directors and Other Business of Stockholders.”Stockholders” on page 74.
Once a person has been identified by the Governance Committee as a potential director candidate, the Governance Committee collects and reviews publicly available information regarding the candidate to assess whether the candidate should be considered further. If the Governance Committee determines that the candidate warrants further consideration, the Chairperson or a person designated by the Governance Committee will contact the candidate. If the candidate expresses a willingness to be considered and to serve on the Board of Directors, the Governance Committee typically requests information from the candidate and reviews the candidate’s accomplishments and qualifications against the criteria set forth below. The Governance Committee’s evaluation process does not vary based on whether a candidate is recommended by a stockholder, although the Committee may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
Consideration of Diversity in Identifying Director NomineesQualifications and Attributes
The Governance Committee and the Board of Directors take into consideration a number of factors and criteria in reviewing candidates for nomination to the Board. As indicated in BlackRock’s Corporate Governance Guidelines, the Board of Directors believes that at a diverse mix of knowledge and viewpoints enhances Board capabilities and when considering candidates for director, the Nominating and Governance Committee seeks to achieve a mix of directors that represent a diversity of backgrounds and experience. The current Board of Directors includes a wide range of skills and professional experience such as investment banking, accounting, insurance, international organizations, academia, pharmaceuticals, telecommunications, sovereign entities, real estate, energy, technology, international finance, not-for-profit organizations and geographical diversity, including directors with extensive experience in North America, Latin America, Europe, Asia, Africa and the Middle East. The Board addresses whether it has achieved an appropriate level of diversity as part of its consideration of the Board’s composition in its annual self-evaluation process.
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Director Qualifications
BlackRock’s Corporate Governance Guidelines contain Board of Directors’ membership criteria that apply to candidates recommended by the Nominating and Governance Committee for a position on BlackRock’s Board of Directors. The minimum qualifications for serving as a member of the Board of Directors are that a person must demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of BlackRock and that a person has an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities.
In addition, nominees for director are selected on the basis of, among other things, experience, diversity, knowledge, skills, expertise, diversity,an ability to make independent analytical inquiries, understanding of BlackRock’s business environment and willingness to devote adequate time and effort to the responsibilities of the Board of Directors.
Consideration of Diversity and Experience
Although the Board of Directors has not set specific goals with respect to diversity, it believes a diverse mix of knowledge, experience, skills, backgrounds and viewpoints enhances the Board’s capabilities. In reviewing candidates, the Governance Committee takes into consideration a candidate’s professional background, gender, race, national origin and age. The Board addresses whether it has achieved an appropriate level of diversity as part of its consideration of the Board’s composition in its annual self-evaluation process and the Governance Committee periodically reviews the overall composition of the Board and its Committees to assess whether it reflects the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to the Company’s current and future global strategy, business and governance.
In addition to the personal qualities and attributes described above, the Board looks for individuals who have demonstrated expertise and have global experience in the following disciplines: financial services, capital markets, public company governance, business operations, government regulation, public policy, and risk management. The Board also seeks candidates who have significant leadership experience, including current and former chief executive officers, who can share their perspective and practical experience on developing and implementing business strategies, setting appropriate executive compensation, and managing talent.
Consideration of Board Tenure
To ensure the Board of Directors has an appropriate balance of experience, continuity and fresh perspective, the Board takes into consideration tenure diversity when reviewing nominees. As of March 1, 2016, the average tenure of BlackRock’s directors was approximately 8.2 years (the average tenure for independent directors was 6.1 years). The Board believes that the current Board represents an effective mix of long-, medium- and short-tenured directors. Three non-management directors have served 15 years or more and bring a wealth of experience and knowledge concerning BlackRock, while six directors were added to the Board over the past four years and bring fresh perspectives to Board deliberations. The Board of Directors believes the current mix of tenures provides for a highly effective and well-functioning Board.
Compliance with Regulatory and Independence Requirements
In addition to the criteria described above, the Governance Committee takes into consideration regulatory requirements, including competitive restrictions and financial institution interlocks, and independence requirements under the NYSE listing standards and our Corporate Governance Guidelines in its review of candidates for the Board and Board Committees. The Governance Committee also considers a candidate’s current and past positions held, including past and present board and committee membership, as part of its evaluation.
Service on Other Public Company Boards
Each directorof BlackRock’s directors must representhave 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 stockholders. BlackRock’s Chief Executive Officer does not serve on the board of directors of any other public company, and none of our current directors serve on more than three public company boards, including BlackRock’s Board.
Board of Directors Recommendation
For this year’s election, the Board has nominated 19 candidates, all of whom are current directors of the Board, that it believes provide the Company with the combined depth and breadth of skills, experience and qualities needed 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 BlackRock’s stockholders.global strategy, business and governance.
The following biographical information regarding each director nominee highlights the particular experience, qualifications, attributes or skills possessed by each director nominee that led the Board of Directors to determine that such person should serve as director. We expect each nominee for election as a director to be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board of Directors chooses to reduce the number of directors serving on the Board of Directors.
All director nominee biographical information is as of March 1, 2016.
The Board of Directors recommends stockholders vote “FOR” the election of each of the following 19 director nominees.
Abdlatif Yousef Al-Hamad | Director Since 2009, Age 78 |
BlackRock Board Committee Memberships
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Al-Hamad has served as Director General and Chairman of the Board of Directors of the Arab Fund for Economic and Social Development since 1985. He was the Minister of Finance and Planning of Kuwait from 1981 to 1983 and prior to that served for 18 years as the Director General of the Kuwait Fund for Arab Economic Development. He is also a member of the Board of the Kuwait Investment Authority. Mr. Al-Hamad chaired the Development Committee Task Force on Multilateral Development Banks and has served on the International Advisory Boards of Morgan Stanley, Marsh & McLennan Companies, Inc., American International Group, Inc. and the National Bank of Kuwait.
Mr. Al-Hamad’s extensive experience in the strategically important Middle East region and his expertise in international finance, economic policy and government relations provide the Board with an experienced outlook on international business strategy and global capital markets.
Mathis Cabiallavetta | Director Since 2007, Age 71 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
Swiss Re Ltd. (2008 – present) (Vice Chairman from 2009 – April 2015)
Philip Morris International Inc. (2002 – 2014)
Experience and Qualifications
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.).
As a former leader of Swiss Re Ltd. and Marsh & McLennan Companies, Inc. as well as Union Bank of Switzerland (UBS A.G.), Mr. Cabiallavetta brings executive experience from these large and complex multinational businesses and provides substantial expertise in global capital markets to the Board of Directors and unique insight and perspective to its oversight of the Company’s global operations and risk management.
Pamela Daley | Director Since 2014, Age 63 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
BG Group (2014 – February 2016)
Experience and Qualifications
Ms. Daley retired from General Electric Company (“GE”) in January 2014 and 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 served on the board of BG Group, an international gas and oil company traded on the London Stock Exchange until February 15, 2016, when BG Group was acquired by Royal Dutch Shell.
With over 35 years of transactional experience and more than 20 years as an executive with 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.
William S. Demchak | Director Since 2003, Age 53 |
BlackRock Board Committee Memberships
Executive Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
PNC (2013 – present) (Chairman from April 2014 – present)
Experience and Qualifications
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.
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 implementation and stockholder agreement between PNC and BlackRock.
Jessica P. Einhorn | Director Since 2012, Age 68 |
BlackRock Board Committee Memberships
Risk Committee
Other Public Company Directorships (within the past 5 years)
Time Warner, Inc. (2005 – present)
Experience and Qualifications
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. She 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 longstanding member of The Rock Creek Group Advisory Board.
Ms. Einhorn’s leadership experience in academia and at the World Bank, and experience in the U.S. government and at the International Monetary Fund, provides the Board of Directors with a unique perspective and in-depth understanding on issues concerning 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.
Laurence D. Fink | Director Since 1998, Age 63 |
BlackRock Board Committee Memberships
Executive Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Fink has been Chairman and Chief Executive Officer of BlackRock since 1988. Mr. Fink also leads BlackRock’s Global Executive Committee and is a trustee of one of BlackRock’s open-end fund complexes.
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 the Company and its business enables 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.
Fabrizio Freda | Director Since 2012, Age 58 |
BlackRock Board Committee Memberships
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
The Estée Lauder Companies Inc. (2009 – present)
Experience and Qualifications
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.
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 Company with unique perspectives on its own marketing, strategy and innovation initiatives.
Murry S. Gerber | Director Since 2000, Age 63 |
BlackRock Board Committee Memberships
Audit Committee (Chairperson)
Executive Committee
Management Development and Compensation Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
U.S. Steel Corporation (2012 – present)
Halliburton Company (2012 – present)
EQT Corporation (1998 – 2012) (Chairman from 2000 – 2010 and Executive Chairman from 2010 – 2011)
Experience and Qualifications
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 Chairman and Chief Executive Officer of EQT Corporation from 2007 to 2010, as Chairman, Chief Executive Officer and President of EQT Corporation from 2000 to 2007 and as Chief Executive Officer and President of EQT Corporation from 1998 to 2000.
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 of Directors extensive expertise and insight into corporate operations, management and governance matters, as well as expert knowledge of the energy sector.
James Grosfeld | Director Since 1999, Age 78 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Lexington Realty Trust (2003 – December 2015)
PulteGroup, Inc. (2015 – present)
Experience and Qualifications
Mr. Grosfeld was formerly Chairman of the Board and Chief Executive Officer of Pulte Homes, Inc. (renamed PulteGroup, Inc. in 2010), a home builder and mortgage banking and financing company, from 1974 to 1990 and rejoined the Board of the company in 2015 as an independent director. Mr. Grosfeld served as a trustee of Lexington Realty Trust from 2003 to 2015.
As the former Chairman and Chief Executive Officer of Pulte Homes, Inc., the nation’s largest homebuilder, Mr. Grosfeld provides the Board of Directors with practical management and leadership insight on public company governance as well as expertise in financial services and real estate matters.
Robert S. Kapito | Director Since 2006, Age 59 |
BlackRock Board Committee Memberships
None
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Kapito has been President of BlackRock since 2007. Mr. Kapito is also a member of the Global Executive Committee of BlackRock. Prior to 2007, Mr. Kapito served as Vice Chairman of BlackRock and Head of its Portfolio Management Group since 1988.
As one of the founding principals of the Company, Mr. Kapito has served as an executive leader of BlackRock since 1988. He brings to the Board of Directors 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 the Company’s day-to-day operations.
David H. Komansky | Director Since 2003, Age 76 |
BlackRock Board Committee Memberships
Executive Committee
Management Development and Compensation Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Komansky retired as Chairman of the Board of Merrill Lynch in 2003. Mr. Komansky became Chairman of the Board of Merrill Lynch in 1997, served as a director and Chief Executive Officer of Merrill Lynch from 1996 to 2002 and as a director, President and Chief Operating Officer of Merrill Lynch from 1995 to 1996. Previously, Mr. Komansky served as a director of WPP Group plc from 2003 to 2009.
Mr. Komansky’s chief executive experience at Merrill Lynch and his financial and management expertise provides the Board of Directors with a valuable perspective and leadership insights on a wide range of corporate governance and management matters unique to complex financial organizations.
Sir Deryck Maughan | Director Since 2006, Age 68 |
BlackRock Board Committee Memberships
Executive Committee
Management Development and Compensation Committee
Risk Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
GlaxoSmithKline plc (2004 – present)
Thomson Reuters (2008 – 2014)
Experience and Qualifications
Sir Deryck served as a Senior Advisor of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) from January 2013 until December 2014. Previously, he was a Partner and Head of the Financial Institutions Group of KKR since 2009 and Managing Director since 2005. He was Chairman of KKR Asia from 2005 to 2009. Prior to joining KKR, Sir Deryck served as Vice Chairman of Citigroup from 1998 to 2004, as Chairman and Chief Executive Officer of Salomon Brothers from 1992 to 1997 and as Chairman and Chief Executive Officer of Salomon Brothers Asia from 1986 to 1991. He also was Vice Chairman of the U.S.-Japan Business Council from 2002 to 2004. Prior to joining Salomon Brothers in 1983, Sir Deryck worked at Goldman Sachs. He served in H.M. Treasury (UK Economics and Finance Ministry) from 1969 to 1979. He has also served as a Director of GlaxoSmithKline plc since 2004 and Thomson Reuters from 2008 to 2014.
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 of Directors 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.
Cheryl D. Mills | Director Since 2013, Age 51 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Ms. Mills is Founder and Chief Executive Officer of the BlackIvy Group, an investment company that grows and builds businesses in Sub-Saharan Africa. Formerly, she served as Chief of Staff to Secretary of State Hillary Clinton and Counselor to the U.S. Department of State from 2009 to 2013. Ms. Mills was with New York University from 2002 to 2009, where she served as Senior Vice President for Administration and Operations and as General Counsel. She also served as Secretary of the University’s Board of Trustees. From 1999 to 2001, Ms. Mills was Senior Vice President for Corporate Policy and Public Programming at Oxygen Media. Prior to joining Oxygen Media, Ms. Mills served as Deputy Counsel to President Clinton and as the White House Associate Counsel. She began her career as an Associate at the Washington, D.C. law firm of Hogan & Hartson. Ms. Mills previously served on the boards of Cendant Corporation (now Avis Budget Group, Inc.), a consumer real estate and travel conglomerate, and Orion Power, an independent electric power generating company.
Ms. Mills brings to the Board of Directors 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.
Gordon M. Nixon, C.M., O.Ont. | Director Since 2015, Age 59 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
BCE Inc. (2014 – present)
George Weston Limited (2014 – present)
Experience and Qualifications
Mr. Nixon was President, Chief Executive Officer and a Director of Royal Bank of Canada from 2001 to 2014. He first joined RBC Dominion Securities Inc. in 1979, where he held a number of operating positions and served as Chief Executive Officer from December 1999 to April 2001. He currently serves as a Director of BCE, Inc. and will be nominated as Chairman upon his re-election to the Board in April 2016. He is also a Director of George Weston Limited and is on the advisory board of Kingsett Capital.
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 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.
Thomas H. O’Brien* | Director Since 1999, Age 79 |
BlackRock Board Committee Memberships
Audit Committee
Executive Committee
Nominating and Governance Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (1987 – 2011)
Experience and Qualifications
Mr. O’Brien retired as Chief Executive Officer of PNC in 2000, after 15 years in that position, and retired as Chairman of PNC in 2001, after 13 years in that position. Mr. O’Brien previously served as a Director of Verizon Communications, Inc. from 1987 to 2011.
As a former leader of PNC, one of the largest diversified financial services companies in the United States, Mr. O’Brien has valuable insights on corporate governance and the U.S. financial and banking sectors to share with the Board of Directors and the Company, particularly in his role as lead independent director.
*The Board of Directors has selected Mr. O’Brien to serve as the lead independent director.
Ivan G. Seidenberg | Director Since 2011, Age 69 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (2002 – 2011) (Chairman from 2004 – 2011)
Boston Properties, Inc. (2014 – present)
Experience and Qualifications
Mr. Seidenberg retired as the Chairman of the Board of Verizon Communications, Inc. in December 2011 and previously served as its Chief Executive Officer from 2002 to 2011. Prior to the creation of Verizon Communications, Inc., Mr. Seidenberg was the Chairman and Chief Executive Officer of Bell Atlantic and NYNEX Corp. Mr. Seidenberg has been an Advisory Partner of Perella Weinberg Partners, a global independent advisory and asset management firm, since June 2012 and a member of the Board of Directors of Boston Properties, Inc. since May 2014. Mr. Seidenberg also previously served on the boards of Honeywell International Inc. and Wyeth, LLC.
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.
Marco Antonio Slim Domit | Director Since 2011, Age 47 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
Grupo Financiero Inbursa (Chairman from 1997 – present)
Impulsora del Desarrollo y el Empleo en América Latina (2012 – present) (Chairman from 2012 – present)
Teléfonos de México, S.A.B. de C.V (1995 – 2014)
Experience and Qualifications
Mr. Slim has been Chairman of the Board of Directors of Grupo Financiero Inbursa since 1997 and previously served as Chief Executive Officer of Grupo Financiero Inbursa from 1997 until April 2012. Mr. Slim is also Chairman of The Carlos Slim Health Institute and of Impulsora del Desarrollo y el Empleo en América Latina (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.
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, stockholder rights and business strategy and integration to the Board of Directors.
John S. Varley | Director Since 2009, Age 59 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
Rio Tinto PLC (2011 – present)
AstraZeneca PLC (2006 – 2015)
Barclays PLC and Barclays Bank PLC (1998 – 2011)
Experience and Qualifications
Mr. Varley was Chief Executive of Barclays PLC and Barclays Bank PLC (“Barclays”) from 2004 to 2010. Previously, he served as the Finance Director of Barclays from 2000 until the end of 2003. Mr. Varley joined the Barclays Executive Committee in 1996 and was appointed to the Boards of Directors of Barclays PLC and Barclays Bank PLC in 1998, positions he held until retiring in December 2010. From 1998 to 2000, Mr. Varley was the Chief Executive of Barclays’ Retail Financial Services and from 1995 to 1998 was the Chairman of its Asset Management Division. Mr. Varley has served as a member of the Board of Directors of Rio Tinto PLC since 2011. Mr. Varley also joined the Board of AstraZeneca PLC in 2006 as a Non-Executive Director, then served as the Senior Independent Director from 2012 until April 2015.
Mr. Varley brings to the Board of Directors valuable insights on asset management, risk management and international finance acquired through his leadership of Barclays, a large, complex, heavily-regulated financial services organization with global operations. Mr. Varley’s service on the board of directors and committees of several other companies gives him additional perspective on global management and corporate governance that he shares with the Board.
Susan L. Wagner | Director Since 2012, Age 54 |
BlackRock Board Committee Memberships
Risk Committee
Other Public Company Directorships (within the past 5 years)
Apple Inc. (2014 – present)
Swiss Re Ltd. (2014 – present)
Experience and Qualifications
Ms. Wagner retired as a Vice Chairman of BlackRock in July 2012. In addition to serving as Vice Chairman from 2006 to 2012, Ms. Wagner also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee. Ms. Wagner previously served as BlackRock’s Chief Operating Officer and as Head of Corporate Strategy.
As one of the founding principals of BlackRock, Ms. Wagner has over 25 years of experience in various positions at the Company. Accordingly, she is able to provide the Board with valuable insight and perspective on aspects of the business, including risk management, operations and strategy, as well as a broad and deep understanding of the asset management industry.
Governance Practices and Guidelines
We believe good corporate governance is essential to ensuring that the long-term interests of stockholders are best served. Our Board of Directors is committed to maintaining the highest standards of corporate governance at BlackRock. Because corporate governance practices evolve over time, our Board of Directors reviews and approves our Corporate Governance Guidelines, committee charters and other governance policies on an annual basis, if not more frequently, and updates them as necessary and appropriate.
In performing its role, our Board is guided by our Corporate Governance Guidelines in particular, which, among other things, address director responsibilities, director access to management, director orientation and continuing education, director retirement and the annual performance evaluations of the Board of Directors and Board Committees. The Board recently amended the Corporate Governance Guidelines to have the Governance Committee consider the periodic rotation of Committee members and Committee chairpersons as a means of introducing fresh perspectives and broadening and diversifying the views and experience represented on the Board’s Committees. The full text of our Corporate Governance Guidelines, Board Committee Charters, Code of Business Conduct and Ethics and other corporate governance policies are available on our website atwww.blackrock.com under the headings “Our Firm / Investor Relations / Company Overview and Governance”.
Combined Principal Executive Officer and Board Chairperson Positions
The Board regularly reviews and evaluates the Company’s governance structure. Mr. Fink serves as both BlackRock’s Chief Executive Officer and Chairman of the Board of Directors, which the Board of Directors has determined is the most appropriate and effective governance structure for the Company. Mr. Fink has served in this capacity since founding BlackRock in 1988 and, as such, brings over 25 years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairman of the Board.
The combined Chairman and Chief Executive Officer structure allows for robust and frequent communication between the Board and management of the Company. To further facilitate coordination with the independent directors and to ensure the exercise of independent judgment by the Board of Directors, the Board selects one of its members to serve as the lead independent director.
Lead Independent Director
The Board of Directors has appointed Thomas O’Brien to serve as the lead independent director. Mr. O’Brien is a senior member of the Board. His duties as the lead independent director include:
The lead independent director also has the authority to call additional meetings of the independent directors and is available for consultation or direct communication with major stockholders. Each of these responsibilities is set out in BlackRock’s Corporate Governance Guidelines.
Executive Sessions
Executive sessions of non-management directors are held at least quarterly. “Non-management directors” include all directors who are not BlackRock officers. Currently, Messrs. Fink and Kapito are the only BlackRock officers serving on the Board of Directors. Each session is chaired by Mr. O’Brien who has been appointed by the Board of Directors as the lead independent director. Any non-management director may request that an additional executive session be scheduled. At least once a year an executive session of only those directors determined to be “independent” within the meaning of the listing standards of the NYSE is held.
The Board of Directors has five committees: an Audit Committee, a Management Development and Compensation Committee (“MDCC”), a Nominating and Governance Committee (the “Governance Committee”), a Risk Committee and an Executive Committee. Below is a summary of our current Committee structure and membership information.
Chairperson | Member | Financial Expert |
Committee Member(1)(2) | Audit Committee | Management Development and Compensation Committee | Nominating and Governance Committee | Risk Committee | Executive Committee | ||||||||||||||||||||
Independent Directors |
| ||||||||||||||||||||||||
Abdlatif Y. Al-Hamad | |||||||||||||||||||||||||
Mathis Cabiallavetta | |||||||||||||||||||||||||
Pamela Daley | |||||||||||||||||||||||||
Jessica P. Einhorn | |||||||||||||||||||||||||
Fabrizio Freda | |||||||||||||||||||||||||
Murry S. Gerber | |||||||||||||||||||||||||
James Grosfeld | |||||||||||||||||||||||||
David H. Komansky | |||||||||||||||||||||||||
Sir Deryck Maughan | |||||||||||||||||||||||||
Cheryl D. Mills | |||||||||||||||||||||||||
Gordon M. Nixon | |||||||||||||||||||||||||
Thomas H. O’Brien (Lead Independent Director) | |||||||||||||||||||||||||
Ivan G. Seidenberg | |||||||||||||||||||||||||
Marco Antonio Slim Domit | |||||||||||||||||||||||||
John S. Varley | |||||||||||||||||||||||||
Susan L. Wagner | |||||||||||||||||||||||||
Non-Independent Directors |
| ||||||||||||||||||||||||
Laurence D. Fink | |||||||||||||||||||||||||
Robert S. Kapito | |||||||||||||||||||||||||
William S. Demchak | |||||||||||||||||||||||||
Number of Meetings held in 2015 | 14 | 9 | 6 | 6 | 0 |
(1) | Consistent with the Board’s belief that Committee Chairpersons should be rotated periodically, on March 10, 2016, the Board appointed Ms. Daley to serve as Chairperson of the Audit Committee, Mr. Gerber to serve as Chairperson of the MDCC and Mr. Seidenberg to serve as Chairperson of the Governance Committee effective as of May 24, 2016. At such time, Messrs. Gerber, Komansky and O’Brien will conclude their service as Chairpersons of the Audit Committee, MDCC and Governance Committee, respectively. |
(2) | On March 10, 2016, the Board appointed Sir Deryck to serve as a member of the Audit Committee and Ms. Daley to serve as a member of the Risk Committee effective as of May 24, 2016. At such time, Mr. Gerber will conclude his service as a member of the Risk Committee. As of May 24, 2016, Mr. Seidenberg and Ms. Daley will join the Executive Committee and Mr. Komansky will conclude his service on the Executive Committee. |
The Board of Directors met seven times during 2015. In 2015, each nominated director attended at least 80% of the aggregate of: (i) the total number of meetings of the Board of Directors held during the period for which such director was a member of the Board of Directors and (ii) the total number of meetings held by all Committees of the Board of Directors on which such director served, if any, during the periods served by such director exceptMr. Al-Hamad. In 2015, Mr. Al-Hamad attended 68% of the total number of meetings of the Board and Committees on which he served. Directors are encouraged to and do attend the annual meetings of BlackRock stockholders. 17 of the then 18 directors attended the 2015 Annual Meeting of Stockholders.
Identifying and Evaluating Candidates for Director
The Nominating and Governance Committee identifiesseeks advice and names of potential nominees by askingdirector candidates from current directors and executive officers to notify the Nominatingwhen identifying and Governance Committee if they become aware of persons meeting the criteria described above.evaluating new candidates for director. The Nominating and Governance Committee also may engage third-party firms that specialize in identifying director candidates. In 2013,candidates to assist in a search. Stockholders who wish to recommend a candidate for election to the Company engaged Heidrick & StrugglesBoard may submit director recommendations to help identify potential director candidates. As described above, the Nominating and Governance Committee will also consider candidates recommended by stockholders.or to stockholders at the annual meeting. For information on the requirements governing stockholder nominations for the election of directors, please see “Deadlines for Submission of Proxy Proposals, Nomination of Directors and Other Business of Stockholders” on page 74.
Once a person has been identified by the Nominating and Governance Committee as a potential director candidate, the Nominating and Governance Committee may collectcollects and reviewreviews publicly available information regarding the personcandidate to assess whether the personcandidate should be considered further. If the Nominating and Governance Committee determines that the candidate warrants further consideration, the Chairperson or a person designated by the Nominating and Governance Committee will contact the candidate. If the candidate expresses a willingness to be considered and to serve on the Board of Directors, the Nominating and Governance Committee typically requests information from the candidate and reviews the candidate’s accomplishments and qualifications.qualifications against the criteria set forth below. The Nominating and Governance Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a stockholder, although the Committee may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
Director Qualifications and Attributes
The Governance Committee and the Board of Directors take into consideration a number of factors and criteria in reviewing candidates for nomination to the Board. As indicated in BlackRock’s Corporate Governance Guidelines, the Board of Directors believes that at a minimum a person must demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of BlackRock and that a person has an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities.
In addition, nominees for director are selected on the basis of, among other things, experience, diversity, knowledge, skills, expertise, an ability to make independent analytical inquiries, understanding of BlackRock’s business environment and willingness to devote adequate time and effort to the responsibilities of the Board of Directors.
Consideration of Diversity and Experience
Although the Board of Directors has not set specific goals with respect to diversity, it believes a diverse mix of knowledge, experience, skills, backgrounds and viewpoints enhances the Board’s capabilities. In reviewing candidates, the Governance Committee takes into consideration a candidate’s professional background, gender, race, national origin and age. The Board addresses whether it has achieved an appropriate level of diversity as part of its consideration of the Board’s composition in its annual self-evaluation process and the Governance Committee periodically reviews the overall composition of the Board and its Committees to assess whether it reflects the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to the Company’s current and future global strategy, business and governance.
In addition to the personal qualities and attributes described above, the Board looks for individuals who have demonstrated expertise and have global experience in the following disciplines: financial services, capital markets, public company governance, business operations, government regulation, public policy, and risk management. The Board also seeks candidates who have significant leadership experience, including current and former chief executive officers, who can share their perspective and practical experience on developing and implementing business strategies, setting appropriate executive compensation, and managing talent.
Consideration of Board Tenure
To ensure the Board of Directors has an appropriate balance of experience, continuity and fresh perspective, the Board takes into consideration tenure diversity when reviewing nominees. As of March 1, 2016, the average tenure of BlackRock’s directors was approximately 8.2 years (the average tenure for independent directors was 6.1 years). The Board believes that the current Board represents an effective mix of long-, medium- and short-tenured directors. Three non-management directors have served 15 years or more and bring a wealth of experience and knowledge concerning BlackRock, while six directors were added to the Board over the past four years and bring fresh perspectives to Board deliberations. The Board of Directors believes the current mix of tenures provides for a highly effective and well-functioning Board.
Compliance with Regulatory and Independence Requirements
In addition to the criteria described above, the Governance Committee takes into consideration regulatory requirements, including competitive restrictions and financial institution interlocks, and independence requirements under the NYSE listing standards and our Corporate Governance Guidelines in its review of candidates for the Board and Board Committees. The Governance Committee also considers a candidate’s current and past positions held, including past and present board and committee membership, as part of its evaluation.
Service on Other Public Company Boards
Each of BlackRock’s 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 stockholders. BlackRock’s Chief Executive Officer does not serve on the board of directors of any other public company, and none of our current directors serve on more than three public company boards, including BlackRock’s Board.
Board of Directors Recommendation
For this year’s election, the Board has nominated 19 candidates, all of whom are current directors of the Board, that it believes provide the Company with the combined depth and breadth of skills, experience and qualities needed 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 BlackRock’s global strategy, business and governance.
The following biographical information regarding each director nominee highlights the particular experience, qualifications, attributes or skills possessed by each director nominee that led the Board of Directors to determine that such person should serve as director. We expect each nominee for election as a director to ourbe able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board of Directors this yearchooses to reduce the number of directors serving on the Board of Directors.
All director nominee biographical information is as of March 1, 2016.
The Board of Directors recommends stockholders vote “FOR” the election of each of the following 19 director nominees.
Abdlatif Yousef Al-Hamad | Director Since 2009, Age 78 |
BlackRock Board Committee Memberships
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Al-Hamad has previouslyserved as Director General and Chairman of the Board of Directors of the Arab Fund for Economic and Social Development since 1985. He was the Minister of Finance and Planning of Kuwait from 1981 to 1983 and prior to that served for 18 years as the Director General of the Kuwait Fund for Arab Economic Development. He is also a member of the Board of the Kuwait Investment Authority. Mr. Al-Hamad chaired the Development Committee Task Force on Multilateral Development Banks and has served on the International Advisory Boards of Morgan Stanley, Marsh & McLennan Companies, Inc., American International Group, Inc. and the National Bank of Kuwait.
Mr. Al-Hamad’s extensive experience in the strategically important Middle East region and his expertise in international finance, economic policy and government relations provide the Board with an experienced outlook on international business strategy and global capital markets.
Mathis Cabiallavetta | Director Since 2007, Age 71 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
Swiss Re Ltd. (2008 – present) (Vice Chairman from 2009 – April 2015)
Philip Morris International Inc. (2002 – 2014)
Experience and Qualifications
Mr. Cabiallavetta has served as a BlackRock director.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.).
Ms. Mills was appointedAs a former leader of Swiss Re Ltd. and Marsh & McLennan Companies, Inc. as well as Union Bank of Switzerland (UBS A.G.), Mr. Cabiallavetta brings executive experience from these large and complex multinational businesses and provides substantial expertise in global capital markets to the Board of Directors and unique insight and perspective to its oversight of the Company’s global operations and risk management.
Pamela Daley | Director Since 2014, Age 63 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
BG Group (2014 – February 2016)
Experience and Qualifications
Ms. Daley retired from General Electric Company (“GE”) in NovemberJanuary 2014 and 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 nominatedresponsible 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 served on the board of BG Group, an international gas and oil company traded on the London Stock Exchange until February 15, 2016, when BG Group was acquired by Royal Dutch Shell.
With over 35 years of transactional experience and more than 20 years as an executive with 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.
William S. Demchak | Director Since 2003, Age 53 |
BlackRock Board Committee Memberships
Executive Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
PNC (2013 – present) (Chairman from April 2014 – present)
Experience and Qualifications
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.
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 implementation and stockholder agreement between PNC and BlackRock.
Jessica P. Einhorn | Director Since 2012, Age 68 |
BlackRock Board Committee Memberships
Risk Committee
Other Public Company Directorships (within the past 5 years)
Time Warner, Inc. (2005 – present)
Experience and Qualifications
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. She 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 longstanding member of The Rock Creek Group Advisory Board.
Ms. Einhorn’s leadership experience in academia and at the World Bank, and experience in the U.S. government and at the International Monetary Fund, provides the Board of Directors with a unique perspective and in-depth understanding on issues concerning 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.
Laurence D. Fink | Director Since 1998, Age 63 |
BlackRock Board Committee Memberships
Executive Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Fink has been Chairman and Chief Executive Officer of BlackRock since 1988. Mr. Fink also leads BlackRock’s Global Executive Committee and is a trustee of one of BlackRock’s open-end fund complexes.
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 the Company and its business enables 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.
Fabrizio Freda | Director Since 2012, Age 58 |
BlackRock Board Committee Memberships
Nominating and Governance Committee based
Other Public Company Directorships (within the past 5 years)
The Estée Lauder Companies Inc. (2009 – present)
Experience and Qualifications
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.
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 Company with unique perspectives on its own marketing, strategy and innovation initiatives.
Murry S. Gerber | Director Since 2000, Age 63 |
BlackRock Board Committee Memberships
Audit Committee (Chairperson)
Executive Committee
Management Development and Compensation Committee
Risk Committee
Other Public Company Directorships (within the recommendationpast 5 years)
U.S. Steel Corporation (2012 – present)
Halliburton Company (2012 – present)
EQT Corporation (1998 – 2012) (Chairman from 2000 – 2010 and Executive Chairman from 2010 – 2011)
Experience and Qualifications
Mr. Gerber has served as a member of the Committee’s Chairperson,Boards of Directors of U.S. Steel Corporation since July 2012 and Halliburton Company since January 2012. Previously, Mr. O’Brien.Gerber served as Executive Chairman of EQT Corporation, an integrated energy production company, from 2010 until May 2011, as Chairman and Chief Executive Officer of EQT Corporation from 2007 to 2010, as Chairman, Chief Executive Officer and President of EQT Corporation from 2000 to 2007 and as Chief Executive Officer and President of EQT Corporation from 1998 to 2000.
Ms. Daley was appointedAs 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 of Directors extensive expertise and insight into corporate operations, management and governance matters, as well as expert knowledge of the energy sector.
James Grosfeld | Director Since 1999, Age 78 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Lexington Realty Trust (2003 – December 2015)
PulteGroup, Inc. (2015 – present)
Experience and Qualifications
Mr. Grosfeld was formerly Chairman of the Board and Chief Executive Officer of Pulte Homes, Inc. (renamed PulteGroup, Inc. in 2010), a home builder and mortgage banking and financing company, from 1974 to 1990 and rejoined the Board of the company in 2015 as an independent director. Mr. Grosfeld served as a trustee of Lexington Realty Trust from 2003 to 2015.
As the former Chairman and Chief Executive Officer of Pulte Homes, Inc., the nation’s largest homebuilder, Mr. Grosfeld provides the Board of Directors with practical management and leadership insight on public company governance as well as expertise in financial services and real estate matters.
Robert S. Kapito | Director Since 2006, Age 59 |
BlackRock Board Committee Memberships
None
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Kapito has been President of BlackRock since 2007. Mr. Kapito is also a member of the Global Executive Committee of BlackRock. Prior to 2007, Mr. Kapito served as Vice Chairman of BlackRock and Head of its Portfolio Management Group since 1988.
As one of the founding principals of the Company, Mr. Kapito has served as an executive leader of BlackRock since 1988. He brings to the Board of Directors 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 the Company’s day-to-day operations.
David H. Komansky | Director Since 2003, Age 76 |
BlackRock Board Committee Memberships
Executive Committee
Management Development and Compensation Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Mr. Komansky retired as Chairman of the Board of Merrill Lynch in 2003. Mr. Komansky became Chairman of the Board of Merrill Lynch in 1997, served as a director and Chief Executive Officer of Merrill Lynch from 1996 to 2002 and as a director, President and Chief Operating Officer of Merrill Lynch from 1995 to 1996. Previously, Mr. Komansky served as a director of WPP Group plc from 2003 to 2009.
Mr. Komansky’s chief executive experience at Merrill Lynch and his financial and management expertise provides the Board of Directors with a valuable perspective and leadership insights on a wide range of corporate governance and management matters unique to complex financial organizations.
Sir Deryck Maughan | Director Since 2006, Age 68 |
BlackRock Board Committee Memberships
Executive Committee
Management Development and Compensation Committee
Risk Committee (Chairperson)
Other Public Company Directorships (within the past 5 years)
GlaxoSmithKline plc (2004 – present)
Thomson Reuters (2008 – 2014)
Experience and Qualifications
Sir Deryck served as a Senior Advisor of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) from January 20142013 until December 2014. Previously, he was a Partner and Head of the Financial Institutions Group of KKR since 2009 and Managing Director since 2005. He was Chairman of KKR Asia from 2005 to 2009. Prior to joining KKR, Sir Deryck served as Vice Chairman of Citigroup from 1998 to 2004, as Chairman and Chief Executive Officer of Salomon Brothers from 1992 to 1997 and as Chairman and Chief Executive Officer of Salomon Brothers Asia from 1986 to 1991. He also was Vice Chairman of the U.S.-Japan Business Council from 2002 to 2004. Prior to joining Salomon Brothers in 1983, Sir Deryck worked at Goldman Sachs. He served in H.M. Treasury (UK Economics and Finance Ministry) from 1969 to 1979. He has also served as a Director of GlaxoSmithKline plc since 2004 and Thomson Reuters from 2008 to 2014.
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 of Directors 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.
Cheryl D. Mills | Director Since 2013, Age 51 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Other Public Company Directorships (within the past 5 years)
None
Experience and Qualifications
Ms. Mills is Founder and Chief Executive Officer of the BlackIvy Group, an investment company that grows and builds businesses in Sub-Saharan Africa. Formerly, she served as Chief of Staff to Secretary of State Hillary Clinton and Counselor to the U.S. Department of State from 2009 to 2013. Ms. Mills was with New York University from 2002 to 2009, where she served as Senior Vice President for Administration and Operations and as General Counsel. She also served as Secretary of the University’s Board of Trustees. From 1999 to 2001, Ms. Mills was Senior Vice President for Corporate Policy and Public Programming at Oxygen Media. Prior to joining Oxygen Media, Ms. Mills served as Deputy Counsel to President Clinton and as the White House Associate Counsel. She began her career as an Associate at the Washington, D.C. law firm of Hogan & Hartson. Ms. Mills previously served on the boards of Cendant Corporation (now Avis Budget Group, Inc.), a consumer real estate and travel conglomerate, and Orion Power, an independent electric power generating company.
Ms. Mills brings to the Board of Directors 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.
Gordon M. Nixon, C.M., O.Ont. | Director Since 2015, Age 59 |
BlackRock Board Committee Memberships
Management Development and Compensation Committee
Risk Committee
Other Public Company Directorships (within the past 5 years)
BCE Inc. (2014 – present)
George Weston Limited (2014 – present)
Experience and Qualifications
Mr. Nixon was President, Chief Executive Officer and a Director of Royal Bank of Canada from 2001 to 2014. He first joined RBC Dominion Securities Inc. in 1979, where he held a number of operating positions and served as Chief Executive Officer from December 1999 to April 2001. He currently serves as a Director of BCE, Inc. and will be nominated byas Chairman upon his re-election to the Board in April 2016. He is also a Director of George Weston Limited and is on the advisory board of Kingsett Capital.
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 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.
Thomas H. O’Brien* | Director Since 1999, Age 79 |
BlackRock Board Committee Memberships
Audit Committee
Executive Committee
Nominating and Governance Committee based(Chairperson)
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (1987 – 2011)
Experience and Qualifications
Mr. O’Brien retired as Chief Executive Officer of PNC in 2000, after 15 years in that position, and retired as Chairman of PNC in 2001, after 13 years in that position. Mr. O’Brien previously served as a Director of Verizon Communications, Inc. from 1987 to 2011.
As a former leader of PNC, one of the largest diversified financial services companies in the United States, Mr. O’Brien has valuable insights on corporate governance and the U.S. financial and banking sectors to share with the Board of Directors and the Company, particularly in his role as lead independent director.
*The Board of Directors has selected Mr. O’Brien to serve as the lead independent director.
Ivan G. Seidenberg | Director Since 2011, Age 69 |
BlackRock Board Committee Memberships
Audit Committee
Nominating and Governance Committee
Other Public Company Directorships (within the past 5 years)
Verizon Communications, Inc. (2002 – 2011) (Chairman from 2004 – 2011)
Boston Properties, Inc. (2014 – present)
Experience and Qualifications
Mr. Seidenberg retired as the Chairman of the Board of Verizon Communications, Inc. in December 2011 and previously served as its Chief Executive Officer from 2002 to 2011. Prior to the creation of Verizon Communications, Inc., Mr. Seidenberg was the Chairman and Chief Executive Officer of Bell Atlantic and NYNEX Corp. Mr. Seidenberg has been an Advisory Partner of Perella Weinberg Partners, a global independent advisory and asset management firm, since June 2012 and a member of the Board of Directors of Boston Properties, Inc. since May 2014. Mr. Seidenberg also previously served on the recommendationboards of Honeywell International Inc. and Wyeth, LLC.
Mr. Seidenberg brings extensive executive leadership, technological and operational experience to the Board from his tenure at Verizon Communications, Inc., one of the Committee’s Chairperson, 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.
Marco Antonio Slim Domit | Director Since 2011, Age 47 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
Grupo Financiero Inbursa (Chairman from 1997 – present)
Impulsora del Desarrollo y el Empleo en América Latina (2012 – present) (Chairman from 2012 – present)
Teléfonos de México, S.A.B. de C.V (1995 – 2014)
Experience and Qualifications
Mr. O’Brien.Slim has been Chairman of the Board of Directors of Grupo Financiero Inbursa since 1997 and previously served as Chief Executive Officer of Grupo Financiero Inbursa from 1997 until April 2012. Mr. Slim is also Chairman of The Carlos Slim Health Institute and of Impulsora del Desarrollo y el Empleo en América Latina (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.
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, stockholder rights and business strategy and integration to the Board of Directors.
John S. Varley | Director Since 2009, Age 59 |
BlackRock Board Committee Memberships
Audit Committee
Other Public Company Directorships (within the past 5 years)
Rio Tinto PLC (2011 – present)
AstraZeneca PLC (2006 – 2015)
Barclays PLC and Barclays Bank PLC (1998 – 2011)
Experience and Qualifications
Mr. Varley was Chief Executive of Barclays PLC and Barclays Bank PLC (“Barclays”) from 2004 to 2010. Previously, he served as the Finance Director of Barclays from 2000 until the end of 2003. Mr. Varley joined the Barclays Executive Committee in 1996 and was appointed to the Boards of Directors of Barclays PLC and Barclays Bank PLC in 1998, positions he held until retiring in December 2010. From 1998 to 2000, Mr. Varley was the Chief Executive of Barclays’ Retail Financial Services and from 1995 to 1998 was the Chairman of its Asset Management Division. Mr. Varley has served as a member of the Board of Directors of Rio Tinto PLC since 2011. Mr. Varley also joined the Board of AstraZeneca PLC in 2006 as a Non-Executive Director, then served as the Senior Independent Director from 2012 until April 2015.
Mr. Varley brings to the Board of Directors valuable insights on asset management, risk management and international finance acquired through his leadership of Barclays, a large, complex, heavily-regulated financial services organization with global operations. Mr. Varley’s service on the board of directors and committees of several other companies gives him additional perspective on global management and corporate governance that he shares with the Board.
Susan L. Wagner | Director Since 2012, Age 54 |
BlackRock Board Committee Memberships
Risk Committee
Other Public Company Directorships (within the past 5 years)
Apple Inc. (2014 – present)
Swiss Re Ltd. (2014 – present)
Experience and Qualifications
Ms. Wagner retired as a Vice Chairman of BlackRock in July 2012. In addition to serving as Vice Chairman from 2006 to 2012, Ms. Wagner also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee. Ms. Wagner previously served as BlackRock’s Chief Operating Officer and as Head of Corporate Strategy.
As one of the founding principals of BlackRock, Ms. Wagner has over 25 years of experience in various positions at the Company. Accordingly, she is able to provide the Board with valuable insight and perspective on aspects of the business, including risk management, operations and strategy, as well as a broad and deep understanding of the asset management industry.
Governance Practices and Guidelines
We believe good corporate governance is essential to ensuring that the long-term interests of stockholders are best served. Our Board of Directors is committed to maintaining the highest standards of corporate governance at BlackRock. Because corporate governance practices evolve over time, our Board of Directors reviews and approves our Corporate Governance Guidelines, committee charters and other governance policies on an annual basis, if not more frequently, and updates them as necessary and appropriate.
In performing its role, our Board is guided by our Corporate Governance Guidelines in particular, which, among other things, address director responsibilities, director access to management, director orientation and continuing education, director retirement and the annual performance evaluations of the Board of Directors and Board Committees. The Board recently amended the Corporate Governance Guidelines to have the Governance Committee consider the periodic rotation of Committee members and Committee chairpersons as a means of introducing fresh perspectives and broadening and diversifying the views and experience represented on the Board’s Committees. The full text of our Corporate Governance Guidelines, Board Committee Charters, Code of Business Conduct and Ethics and other corporate governance policies are available on our website atwww.blackrock.com under the headings “Our Firm / Investor Relations / Company Overview and Governance”.
Combined Principal Executive Officer and Board Chairperson Positions
The Board regularly reviews and evaluates the Company’s governance structure. Mr. Fink serves as both BlackRock’s Chief Executive Officer and Chairman of the Board of Directors, which the Board of Directors has determined is the most appropriate and effective governance structure for the Company. Mr. Fink has served in this capacity since founding BlackRock in 1988 and, as such, brings over 25 years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairman of the Board.
The combined Chairman and Chief Executive Officer structure allows for robust and frequent communication between the Board and management of the Company. To further facilitate coordination with the independent directors and to ensure the exercise of independent judgment by the Board of Directors, the Board selects one of its members to serve as the lead independent director.
Lead Independent Director
The Board of Directors has appointed Thomas O’Brien to serve as the lead independent director. Mr. O’Brien is a senior member of the Board. His duties as the lead independent director include:
The lead independent director also has the authority to call additional meetings of the independent directors and is available for consultation or direct communication with major stockholders. Each of these responsibilities is set out in BlackRock’s Corporate Governance Guidelines.
Executive Sessions
Executive sessions of non-management directors are held at least quarterly. “Non-management directors” include all directors who are not BlackRock officers. Currently, Messrs. Fink and Kapito are the only BlackRock officers serving on the Board of Directors. Each session is chaired by Mr. O’Brien who has been appointed by the Board of Directors as the lead independent director. Any non-management director may request that an additional executive session be scheduled. At least once a year an executive session of only those directors determined to be “independent” within the meaning of the listing standards of the NYSE is held.
The Board of Directors has five committees: an Audit Committee, a Management Development and Compensation Committee (“MDCC”), a Nominating and Governance Committee (the “Governance Committee”), a Risk Committee and an Executive Committee. Below is a summary of our current Committee structure and membership information.
Chairperson | Member | Financial Expert |
Committee Member(1)(2) | Audit Committee | Management Development and Compensation Committee | Nominating and Governance Committee | Risk Committee | Executive Committee | ||||||||||||||||||||
Independent Directors |
| ||||||||||||||||||||||||
Abdlatif Y. Al-Hamad | |||||||||||||||||||||||||
Mathis Cabiallavetta | |||||||||||||||||||||||||
Pamela Daley | |||||||||||||||||||||||||
Jessica P. Einhorn | |||||||||||||||||||||||||
Fabrizio Freda | |||||||||||||||||||||||||
Murry S. Gerber | |||||||||||||||||||||||||
James Grosfeld | |||||||||||||||||||||||||
David H. Komansky | |||||||||||||||||||||||||
Sir Deryck Maughan | |||||||||||||||||||||||||
Cheryl D. Mills | |||||||||||||||||||||||||
Gordon M. Nixon | |||||||||||||||||||||||||
Thomas H. O’Brien (Lead Independent Director) | |||||||||||||||||||||||||
Ivan G. Seidenberg | |||||||||||||||||||||||||
Marco Antonio Slim Domit | |||||||||||||||||||||||||
John S. Varley | |||||||||||||||||||||||||
Susan L. Wagner | |||||||||||||||||||||||||
Non-Independent Directors |
| ||||||||||||||||||||||||
Laurence D. Fink | |||||||||||||||||||||||||
Robert S. Kapito | |||||||||||||||||||||||||
William S. Demchak | |||||||||||||||||||||||||
Number of Meetings held in 2015 | 14 | 9 | 6 | 6 | 0 |
23
(1) | Consistent with the Board’s belief that Committee Chairpersons should be rotated periodically, on March 10, 2016, the Board appointed Ms. Daley to serve as Chairperson of the Audit Committee, Mr. Gerber to serve as Chairperson of the MDCC and Mr. Seidenberg to serve as Chairperson of the Governance Committee effective as of May 24, 2016. At such time, Messrs. Gerber, Komansky and O’Brien will conclude their service as Chairpersons of the Audit Committee, MDCC and Governance Committee, respectively. |
(2) | On March 10, 2016, the Board appointed Sir Deryck to serve as a member of the Audit Committee and Ms. Daley to serve as a member of the Risk Committee effective as of May 24, 2016. At such time, Mr. Gerber will conclude his service as a member of the Risk Committee. As of May 24, 2016, Mr. Seidenberg and Ms. Daley will join the Executive Committee and Mr. Komansky will conclude his service on the Executive Committee. |
The Board of Directors met seven times during 2015. In 2015, each nominated director attended at least 80% of the aggregate of: (i) the total number of meetings of the Board of Directors held during the period for which such director was a member of the Board of Directors and (ii) the total number of meetings held by all Committees of the Board of Directors on which such director served, if any, during the periods served by such director exceptMr. Al-Hamad. In 2015, Mr. Al-Hamad attended 68% of the total number of meetings of the Board and Committees on which he served. Directors are encouraged to and do attend the annual meetings of BlackRock stockholders. 17 of the then 18 directors attended the 2015 Annual Meeting of Stockholders.
CommunicationsThe Audit Committee
The Audit Committee’s primary responsibilities are to assist the Board with 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.
In furtherance of the Audit Committee’s duties, it receives an internal audit report, an external audit update and a report on litigation, regulatory and material ethics matters. The internal audit plan for BlackRock is approved by the Audit Committee and regular reports on the progress and results of the internal audit program are provided to the Audit Committee by BlackRock’s Head of Internal Audit. The Head of Internal Audit also regularly attends Risk Committee meetings. BlackRock’s independent registered public accounting firm, Deloitte & Touche LLP, provides the regular audit update and BlackRock’s Chief Legal Officer or General Counsel provides the regular report on litigation, regulatory and material ethics matters. The Audit Committee also receives an annual report regarding compliance with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). This financial controls report is prepared by the Head of Sarbanes-Oxley Compliance and presented by management. Aspects of these reports are presented to the full Board at least six times per year by the Chairperson of the Risk Committee, the Chairperson of the Audit Committee or the member of management responsible for the given subject area.
The Audit Committee is also responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee exercises sole authority to approve all audit engagement fees and terms associated with the retention of Deloitte & Touche LLP. In addition to ensuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit partner and considers whether, in order to ensure continuing auditor independence, there should be periodic rotation of the independent registered public accounting firm. In addition, the Audit Committee is responsible for preparing the Audit Committee report as required by the SEC’s rules for inclusion in BlackRock’s annual Proxy Statement. The Audit Committee’s procedures for the pre-approval of audit and permitted non-audit services are described in “Item 3—Ratification of Appointment of Independent Registered Public Accounting Firm – Audit Committee Pre-Approval Policy.”
The Audit Committee regularly holds separate sessions with BlackRock’s management, internal auditors and independent registered public accounting firm. The Report of the Audit Committee is included on page 30.
The Board of Directors has determined that no member of the Audit Committee has any material relationship with BlackRock (either directly, or as a partner, stockholder or officer of an organization that has a relationship with BlackRock) and each such member is “independent” as defined in the NYSE listing standards and the applicable SEC rules. Furthermore, the Board of Directors has determined that each member of the Audit Committee is “financially literate”, as such qualification is interpreted by the Board of Directors based on its business judgment, qualifies as an
“audit committee financial expert”, as defined in the applicable SEC rules, and has accounting and related financial management expertise within the meaning of the NYSE listing standards. The Audit Committee satisfies the requirements of SEC Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Rule 10A-3 establishes standards relating to audit committees in the following areas: the independence of audit committee members; the Audit Committee’s responsibility to select and oversee BlackRock’s independent auditor; procedures for handling complaints regarding BlackRock’s accounting practices; the authority of the Audit Committee to engage advisors; and funding for the independent auditor and any outside advisors engaged by the Audit Committee.
The Management Development and Compensation Committee
The MDCC is responsible for establishing the compensation of BlackRock’s executive officers, providing oversight of BlackRock’s employee benefit and compensation plans and reviewing, assessing and making reports and recommendations to the Board of Directors, as appropriate, on BlackRock’s talent development and the effective management of executive succession. The Board of Directors has determined that all of the members of the MDCC are “independent” within the meaning of the listing standards of the NYSE. Each of the MDCC’s members is also a “non-employee director”, as defined in the SEC rules under Section 16 of the Exchange Act, and is an “outside director”, as defined by Section 162(m) of the Internal Revenue Code.
Additional information on the MDCC’s processes and procedures for consideration of NEO compensation is addressed in the Compensation Discussion and Analysis beginning on page 33 and the Report of the MDCC on page 51.
The Nominating and Governance Committee
The Nominating and Governance Committee (the “Governance Committee”) is responsible for assisting the Board of Directors by: identifying individuals qualified to become members of the Board of Directors; recommending to the Board of Directors the director nominees for the next annual meeting of stockholders; recommending to the Board of Directors the Corporate Governance Guidelines applicable to BlackRock; leading the Board of Directors in its annual review of the Board of Directors’ performance; recommending to the Board of Directors director nominees for each Board committee; and overseeing BlackRock’s Related Persons Transaction Policy. The Board of Directors has determined that all of the members of the Governance Committee are “independent” within the meaning of the listing standards of the NYSE.
The Risk Committee
The Risk Committee is charged with assisting the Board of Directors with its oversight of the Company’s levels of risk, risk assessment and risk management, including enterprise and fiduciary risk. The Risk Committee has particular responsibility for overseeing designated areas of risk that are not the primary responsibility of another Committee of the Board or retained for the Board’s direct oversight, including the following:
Enterprise Risks
Fiduciary Risks
The Risk Committee, along with BlackRock’s Enterprise Risk Management Committee, also regularly reviews a detailed risk profile report prepared by the Chief Risk Officer which covers a wide range of topics and potential issues that could impact BlackRock. These issues include, among other matters, investment performance, contractually indemnified risks, investment risks and counterparty risks of its asset management activities, balance sheet risks, business continuity risks, including those related to natural disasters or terrorist attacks, risks related to financial crimes, fraud, and other operational risks. The Risk Committee engages the Company’s key risk management executives on the framework for risk management within BlackRock and the process for actively identifying adverse events and/or circumstances relevant to BlackRock’s objectives and activities as well as risk management roles, policies and responsibilities. The Risk Committee also reviewed and discussed with management the Risk Factors included in the 2015 Form 10-K and received reports from members of management responsible for identifying and monitoring these risks.
Role of the Board of Directors in the Oversight of Risk Management
The Board of Directors has established a processultimate responsibility for oversight of BlackRock’s risk management activities. The Risk, Audit, MDCC and Governance Committees assist the Board in fulfilling this important role. The Risk Committee has responsibility for overseeing designated fiduciary and corporate risks and such other areas of risk as may be referred to receive communications from stockholdersit by the Board of Directors. The Audit Committee is focused on overseeing the integrity of BlackRock’s financial statements, the effectiveness of the internal control environment, the internal audit function and the external auditors. The MDCC has responsibility for overseeing risks associated with the Company’s compensation practices and the effective management of executive succession. The Governance Committee is focused on overseeing risks related to Board of Directors succession and other interested parties. Stockholderscorporate governance matters.
The Risk, Audit, MDCC and other interested parties may contact any member (orGovernance Committees report to the full Board at least six times a year with updates on their areas of designated risk oversight responsibilities. These Committees work together and with the full Board to help ensure that the Committees and the Board have received all members)information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management activities.
The Executive Committee
The Executive Committee has all the powers of the Board of Directors, anyexcept as prohibited by applicable law, the PNC Stockholder Agreement and BlackRock’s Amended and Restated Bylaws, and except to the extent another Committee has been accorded authority over the matter. The Executive Committee exercises such powers between meetings of the Board of Directors. It is anticipated that the Executive Committee will only meet if a quorum for a full Board of Directors committee or any chairpersonmeeting cannot be obtained between regular meetings for emergency business.
The Board of any such committee by mail or electronically. To communicateDirectors annually determines the independence of directors in accordance with the listing standards of the NYSE. No director is considered independent unless the Board of Directors any individual directorhas determined that he or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual director or group or committee of directors by either name or title. All such correspondence should be sent to:
BlackRock, Inc.
Attn: Corporate Communications
Department
55 East 52nd Street
New York, New York 10055
To communicateshe has no material relationship with any of our directors electronically, stockholders should go to our corporate website atwww.blackrock.com. Under the headings “Investor Relations / Company Overview & Governance / Contact our Board of Directors,” you will find a link that may be used for writing an electronic message to the Board of Directors, the lead independent director, any individual director or any group or committee of directors.
All communications received as set forth in the preceding paragraph will be reviewed by a member of each of BlackRock’s Corporate Communications and Legal and Compliance Departments for the sole purpose of determining whether the contents represent a message to our directors. In the case of communications to the Board of Directors or any group or committee of directors, sufficient copies of the contents will be made for each director who is a member of the group or committee to which the envelope or e-mail is addressed. Concerns relating to accounting, internal controls or auditing matters are brought to the attention of the Chairperson of the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters.
24
CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS CONDUCT AND ETHICS
BlackRock. The Board of Directors has adopted Corporate Governance Guidelines that addresscategorical standards to assist it in determining whether or not certain relationships between the following key corporate governance subjects, among others: director qualification standards; director responsibilities; director access to management and, as necessary and appropriate, independent advisors; director compensation; director orientation and continuing education; management succession; and an annual performance evaluation of the Board of Directors. The Board of Directors has also adopted a Code of Business Conduct and Ethics for BlackRock’s directors, officers and employees, which addresses these important topics, among others: conflicts of interest; corporate opportunities; confidentiality of information; fair dealing; protection and proper use of BlackRock assets; compliance with laws, rules and regulations (including insider trading laws); and encouraging the reporting of any illegal or unethical behavior.
In addition, BlackRock has adopted a Code of Ethics for Chief Executive and Senior Financial Officers, which addresses the following important topics, among others: conflicts of interest; compliance with laws, rules and regulations; and encouraging the reporting of any illegal or unethical behavior.
Stockholders are encouraged to visit the “Investor Relations / Company Overview & Governance” page of the BlackRock website atwww.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 of Directors and its committees and corporate governance policies. In addition, the charters for each of the Audit Committee, the MDCC, the Nominating and Governance Committee, the Risk Committee and the Executive Committee can be found at the same website. 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. Further, BlackRock will provide a copy of these documents without charge to each stockholder upon written request. Requests for copies should be addressed to:
BlackRock, Inc.
Attn: Corporate Secretary
55 East 52nd Street
New York, New York 10055
Combined Principal Executive Officer and Board Chairperson Positions; Lead Independent Director
Our Board does not have a policy as to whether the roles of Chairman and CEO should be separate or combined. Mr. Fink serves as both BlackRock’s Chief Executive Officer and Chairmanmembers of the Board of Directors and BlackRock or its affiliates and subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a
relationship with BlackRock) are material relationships for purposes of the listing standards of the NYSE. The categorical standards provide that the following relationships are not material for such purposes:
As part of its determination, the Board of Directors also considered the relationships described under “—Certain Relationships and Related Transactions.” Following its review, the Board of Directors has determined isthat Ms. Daley, Ms. Einhorn, Ms. Mills and Ms. Wagner and Messrs. Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Komansky, Maughan, Nixon, O’Brien, Seidenberg, Slim and Varley are “independent” as defined in the most appropriateNYSE listing standards and effective governance structure for the Company. Mr. Fink has served in this capacity since founding BlackRock’s predecessor entities in 1988, and as such brings over 25 years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairmanthat none of the Board.
The combined Chairmanrelationships between such directors and CEO structure allows for robust and frequent communication betweenBlackRock are material under the NYSE listing standards. Following the 2016 Annual Meeting of Stockholders, assuming the nominated Directors are re-elected, BlackRock’s Board of Directors is expected to consist of 19 Directors, 16 of whom, representing approximately 85% of the Board, will be “independent” as defined in the NYSE listing standards.
Our bylaws provide that directors shall receive compensation, including fees and managementreimbursement of the Company. To further facilitate coordination with the independent directors and to ensure the exercise of independent judgment byexpenses, for their services as the Board of Directors may determine from time to time. The objective of BlackRock’s director compensation programs is to enable the Company to attract, motivate and retain directors capable of making significant contributions to the long-term success of the Company, consistent with stockholder interests.
In order to align the interest of directors with the interests of stockholders, our independent directors are required to own and maintain a minimum target number of shares, equivalent to five times the annual board retainer, or $375,000. The MDCC’s charter charges it with responsibility for regular reviews of the non-employee director pay program. The MDCC engages an independent compensation consultant, Semler Brossy Consulting Group LLC (“Semler Brossy”), to periodically assess the pay program to evaluate director compensation practices, trends in the broader marketplace and BlackRock’s competitive position.
The table below sets forth the elements of director compensation provided by BlackRock in 2015.
Board Service(1) | ||||
Board Annual Retainer(1) | $ | 75,000 | ||
Annual RSUs(2) | $ | 150,000 | ||
Board Meeting Fees(1) | $ | 1,500 | ||
Committee Service | ||||
Committee Meeting Fees(1) | $ | 1,000 |
Committee Annual Retainer(1) | Chairperson | Member | ||||||||
Audit | $ | 30,000 | $ | 15,000 | ||||||
MDCC | $ | 20,000 | $ | 10,000 | ||||||
Nominating and Governance | $ | 25,000 | (3) | $ | 5,000 | |||||
Risk | $ | 15,000 | $ | 5,000 |
(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 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 of Directors. |
(3) | Based on the combination of the roles of the lead independent director and the Chairperson of the Governance Committee. |
Directors in 2015 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 2015, directors who were not employees of BlackRock or designees of 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. In addition, each director who received compensation had the right to elect to receive BlackRock common stock in lieu of all or a portion of his or her annual Board has appointed Thomas O’Brien to serve as the lead independent director. Mr. O’Brien is aand Committee retainers in excess of $25,000.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($)(3) | |||||||||
Abdlatif Y. Al-Hamad | 100,500 | 150,000 | 250,500 | |||||||||
Mathis Cabiallavetta | 136,500 | 150,000 | 286,500 | |||||||||
Pamela Daley | 114,500 | 150,000 | 264,500 | |||||||||
Jessica P. Einhorn | 96,500 | 150,000 | 246,500 | |||||||||
Fabrizio Freda | 95,000 | 150,000 | 245,000 | |||||||||
Murry S. Gerber | 158,500 | 150,000 | 308,500 | |||||||||
James Grosfeld | 111,000 | 150,000 | 261,000 | |||||||||
David H. Komansky | 111,000 | 150,000 | 261,000 | |||||||||
Deryck Maughan | 123,500 | 150,000 | 273,500 | |||||||||
Cheryl D. Mills | 104,500 | 150,000 | 254,500 | |||||||||
Gordon M. Nixon | 33,250 | — | 33,250 | |||||||||
Thomas H. O’Brien | 144,500 | 150,000 | 294,500 | |||||||||
Ivan G. Seidenberg | 125,500 | 150,000 | 275,500 | |||||||||
Marco Antonio Slim Domit | 114,500 | 150,000 | 264,500 | |||||||||
John S. Varley | 113,500 | 150,000 | 263,500 | |||||||||
Susan L. Wagner | 96,500 | 150,000 | 246,500 |
25
senior member of the Board and the Chairperson of the Nominating and Governance Committee. His duties as the lead independent director include:
(1) | Ms. Daley and Messrs. Al-Hamad, Freda, Grosfeld, Maughan, Nixon, Seidenberg and Slim elected to receive all of their annual retainers and/or meeting fees in the form of BlackRock common stock. Ms. Einhorn, Mills and Wagner and Messrs. Cabiallavetta, Gerber, Komansky, O’Brien and Varley elected to receive a portion of their annual retainers and/or meeting fees in the form of BlackRock common stock. To the extent each director elected to receive his or her annual retainer and/or meeting fees in the form of BlackRock common stock, a number of shares were awarded to the applicable director on March 31, June 30, September 30 and December 31, 2015, respectively, based on closing market prices on such dates of $365.84, $345.98, $297.47 and $340.52, respectively. The entire expense for these awards was recorded on the date of grant. |
(2) | Includes the annual RSU grants to each director of 410 RSUs of BlackRock with a grant date fair value of $150,000 pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note 14 to the consolidated financial statements in our 2015 Form 10-K. As of December 31, 2015, each non-employee director had the following outstanding RSUs: 886 shares for each of Ms. Daley and Ms. Mills and 1,469 shares for each of Messrs. Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Komansky, Maughan, O’Brien, Seidenberg, Slim, Varley, Ms. Einhorn and Ms. Wagner. The RSUs are fully vested on the grant date and are settled on the earlier of the third anniversary of the grant date or the director’s departure from the Board of Directors. |
(3) | The total amounts in this column may not equal the sum of the amounts reflected in the preceding columns due to amounts being rounded to the nearest whole number. |
The lead independent director also has the authority to call additional meetings of the independent directors and is available for consultation or direct communication with major stockholders. Each of these responsibilities is set out in BlackRock’sOther Corporate Governance Guidelines.Matters
Policy Engagement, Transparency and Protecting Investors
As part of our responsibilities to our stockholders and clients, BlackRock advocates for public policies the Company believes are in our stockholders’ and clients’ long-term best interests. BlackRock supports 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 methods, 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 public policy issues; our position papers and letters are all available to the public on the “News & Insights” page of the BlackRock website atwww.blackrock.com.
Our engagement with policy makers and advocacy on public policy issues is coordinated by our Government Relations and Public Policy (“Public Policy”) team. Members of the Public Policy team work closely with the Company’s business and legal teams to identify legislative and regulatory priorities, both regionally and globally, that will protect investors, increase stockholder value and facilitate responsible economic growth. The head of Public Policy is a member of the Company’s Global Executive and Operating Committees and regularly briefs these committees on BlackRock’s public policy priorities and related advocacy efforts. In addition, the head of Public Policy also attends meetings of the Board’s Risk Committee and keeps Directors apprised of, and engaged in, the Company’s legislative and regulatory priorities and advocacy initiatives.
As part of the Company’s engagement in the public policy process, BlackRock participates in a number of trade organizations and industry groups, such as the Business Roundtable, the Investment Company Institute, the Financial Services Roundtable, the European Fund and Asset Management Association and the Alternative Investment Management 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.
26
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. BlackRock does not contribute corporate funds to candidates, political party committees or political action committees or any political organization exempt from federal income taxes under Section 527 of the Internal Revenue Code. Although permitted under federal law, BlackRock has also voluntarily elected not to spend corporate funds directly on independent expenditures (expenditures for communications that support or oppose a candidate and are not coordinated with a candidate, campaign or political party), including electioneering communications. Employees of the Company are required to submit all proposed political contributions to our Legal and Compliance Department to determine if such contributions are consistent with applicable legal restrictions. BlackRock maintains a federal political action committee that is funded in accordance with applicable federal law on a voluntary basis by U.S.-based employees of the Company. The political action committee makes contributions at the federal level on a bi-partisan basis consistent with the Company’s contribution policies and public policy goals and publicly discloses its contributions to the Federal Election Commission.
Board Evaluations
The effectiveness of the Board and its Committees is critical to the success of the Company and to the protection of stockholders’ long-term interests. To ensure their effectiveness, the Board and each Committee conduct annual self-evaluations to identify and assess areas for improvements. The assessments, conducted through tailored questionnaires, focus on Board and Committee performance, effectiveness and contributions to BlackRock, as well as meeting agendas, Board composition, Board processes, meeting dynamics and access to resources and senior management. The Governance Committee reviews all Director responses to the questionnaires and shares the committee evaluations with the Chairpersons of the Audit, MDCC and Risk Committees. In addition, the lead independent director along with the Chairman meet periodically with Directors on an individual basis to discuss Board and Committee performance, effectiveness and composition. The lead independent director provides the full Board with a summary of the results of the questionnaires and additional feedback received from individual Directors.
Stockholder Engagement and Outreach
We conduct stockholder outreach throughout the year to engage with stockholders on issues that are important to them. We report back to our Board on normal course engagement as well as specific issues that need to be addressed.
Our Investor Relations team, the Corporate Secretary and other members of management engage on a regular basis with stockholders 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 stockholders through a number of other forums, including quarterly earnings presentations, SEC filings, the Annual Report and proxy statement, the annual stockholder meeting, investor conferences and web communications. We share stockholder feedback and trends, and developments regarding corporate governance matters with our Board and its Committees as we seek to enhance our governance practices and transparency of those practices to our stockholders.
In 2015, BlackRock engaged in dialogue with a number of BlackRock’s stockholders on the subject of proxy access to better understand their views. Those discussions helped to inform the management proposal in Item 4 of this Proxy Statement to amend the Company’s bylaws to implement proxy access.
27Also see “—Compensation Discussion & Analysis – Stockholder Alignment” on pages 33 to 34 for a discussion of our compensation related stockholder engagement initiatives and our historical say-on-pay vote results.
The Board of Directors has established a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties may contact any member (or all members) of the Board of Directors, any Board of Directors Committee or any Chairperson of any such Committee by mail or electronically. To communicate with the Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual director or group or committee of directors by either name or title. All such correspondence should be sent to:
BlackRock, Inc. Attn: Board of Directors c/o Corporate Communications Department 55 East 52nd Street New York, New York 10055 |
To communicate with any of our directors electronically, stockholders should go to the BlackRock website atwww.blackrock.com. Under the headings “Our Firm / Investor Relations / Company Overview & Governance / Contact Our Board of Directors”, you will find a link that may be used for writing an electronic message to the Board of Directors, the lead independent director, any individual director or any group or committee of directors.
All communications received as set forth in the preceding paragraph will be reviewed by BlackRock’s Corporate Communications and Legal and Compliance Departments and the Corporate Secretary for the sole purpose of determining whether the contents represent a message to our directors. In the case of communications to the Board of Directors or any group or committee of directors, sufficient copies of the contents will be made for each director who is a member of the group or committee to which the envelope or e-mail is addressed. Concerns relating to accounting, internal controls or auditing matters are brought to the attention of the Chairperson of the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters.
Stockholders are encouraged to visit the “Our Firm / Investor Relations / Company Overview & Governance” page of the BlackRock website atwww.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 of Directors and its Committees and corporate governance policies. In addition, the charters for each of the Audit Committee, the MDCC, the Governance Committee, the Risk Committee and the Executive Committee can be found at the same website address. BlackRock intends to satisfy any disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Chief Executive and Senior Financial Officers by posting such information on its corporate website. Further, BlackRock will provide a copy of these documents without charge to each stockholder upon written request. Requests for copies should be addressed to the Corporate Secretary at the address provided on page 2 of this Proxy Statement.
In addition to Messrs. Fink and Kapito, whose biographical information is set forth above on pages 11 and 13 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 Global Executive Committee (“GEC”). All of BlackRock’s executive officers serve at the discretion of the Board or Chief Executive Officer.
David J. Blumer (age 47), Senior Managing Director, has been Head of the Europe, Middle East and Africa (“EMEA”) region of BlackRock since 2013. Prior to joining BlackRock, Mr. Blumer worked at Swiss Re Ltd., where he most recently served as the Chief Investment Officer (“CIO”). In addition to his CIO role, Mr. Blumer also held other senior
positions at Swiss Re Ltd. after joining in 2008, including Head of Asset Management, Chairman of Admin Re and a member of the Executive Committee.
Robert W. Fairbairn (age 50), Senior Managing Director, has overseen BlackRock’s Global Retail andiShares® businesses since 2012. Mr. Fairbairn was Head of the Global Client Group from 2009 to 2012 and Vice Chairman and Chairman of BlackRock’s EMEA Pacific business from 2006 to 2009.
Robert L. Goldstein (age 42), Senior Managing Director, has been Chief Operating Officer of BlackRock since 2014 and has ledBlackRock Solutions® since 2009. Mr. Goldstein was the Head of BlackRock’s Institutional Client Business from 2012 to 2014. Mr. Goldstein has spent his entire career at BlackRock, beginning in 1994 as an analyst in the Company’s Portfolio Analytics Group.
J. Richard Kushel (age 49), Senior Managing Director, has been Global Head of Multi-Asset Strategies since February 2016. From 2014 to 2016, Mr. Kushel was Chief Product Officer and Head of Strategic Product Management of BlackRock, from 2012 to 2014, he was Deputy Chief Operating Officer of BlackRock, from 2010 to 2012, he was the Head of the Portfolio Management Group of BlackRock, and from 2009 to 2010, he was the Chairman of BlackRock’s International platform. Prior to that, Mr. Kushel headed BlackRock’s International Institutional platform and BlackRock’s Alternatives and Wealth Management Groups. Mr. Kushel has been with BlackRock since 1991.
Matthew J. Mallow (age 72), Senior Managing Director, has been Chief Legal Officer of BlackRock since 2015. Mr. Mallow served as General Counsel of BlackRock from 2012 until 2015 and has been a senior advisor to BlackRock’s Legal and Compliance Department since 2010. Previously, Mr. Mallow was a partner at Skadden, Arps, Slate, Meagher & Flom LLP from 1982 to 2010, where he served as head of the Corporate Finance Department.
Mark S. McCombe (age 49), Senior Managing Director, has been Global Head of BlackRock’s Institutional Client Business as well as Chairman of BlackRock Alternative Investors since 2014. From 2012 to 2014, Mr. McCombe was Chairman of the Asia Pacific region of BlackRock. Before joining BlackRock, Mr. McCombe served as Chief Executive Officer in Hong Kong for The Hong Kong and Shanghai Banking Corporation Limited from 2010 to 2011. He was also a Group General Manager of HSBC plc, Non-Executive Director of Hang Seng Bank Ltd., and Chairman of HSBC Global Asset Management (HK) Ltd. Prior to 2010, Mr. McCombe was Chief Executive of HSBC Global Asset Management from 2007 to 2010.
Gary S. Shedlin (age 52), Senior Managing Director, has been Chief Financial Officer of BlackRock since 2013. Prior to joining BlackRock, Mr. Shedlin was Vice Chairman, Investment Banking and a Managing Director in the Financial Institutions Group at Morgan Stanley from 2010 to 2013. Prior to that, Mr. Shedlin worked at Citigroup from 2004 to 2010, where he most recently served as Chairman of the Financial Institutions Group. Previously, Mr. Shedlin worked at Lazard Ltd. from 1990 to 2004, where he served as Managing Director and the Co-Head of the Financial Institutions Group.
Ryan D. Stork (age 44), Senior Managing Director, has been BlackRock’s Chairman, Asia Pacific since 2014. From 2008 to 2014, Mr. Stork was Global Head of theAladdin® business withinBlackRock 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.
Jeffrey A. Smith, Ph.D. (age 45), Senior Managing Director, has been Head of Global Human Resources of BlackRock since 2009. Prior to joining BlackRock in 2009, Dr. Smith was the Global Head of Human Resources of Barclays Global Investors since 2007.
In accordance with, and to the extent permitted by, the rules of the SEC, the information contained in the following Report of the Audit Committee shall not be incorporated by reference into any of BlackRock’s future filings made under the Exchange Act, or under the Securities Act of 1933, as amended (the “Securities Act”), and shall not be deemed to be soliciting material or to be filed under the Exchange Act or the Securities Act.
The Audit Committee’s job is one of oversight as set forth in its charter. It is not the duty of the Audit Committee to prepare BlackRock’s financial statements, to plan or conduct audits or to determine that BlackRock’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. BlackRock’s management is responsible for preparing BlackRock’s financial statements and for maintaining internal control over financial reporting and disclosure controls and procedures. For a more detailed description of the Audit Committee’s responsibilities, see “Board Committees – The Audit Committee” under “Item 1—Election of Directors.” The independent registered public accounting firm is responsible for auditing the financial statements and expressing an opinion as to whether those audited financial statements fairly present, in all material respects, the financial position, results of operations and cash flows of BlackRock in conformity with generally accepted accounting principles in the United States.
The Audit Committee has reviewed and discussed BlackRock’s audited financial statements with management and with Deloitte & Touche LLP, BlackRock’s independent registered public accounting firm for 2013.2015.
The Audit Committee has discussed with Deloitte & Touche LLP the matters required by the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard 16 – Communications with the Audit Committee.
The Audit Committee has received from Deloitte & Touche LLP the written disclosures and the letter required by PCAOB Ethics and Independence Rule 3526,Communication with Audit Committees Concerning Independence, and has discussed Deloitte & Touche LLP’s independence with Deloitte & Touche LLP, and has considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in BlackRock’s Annual Report on Form 10-K for the year ended December 31, 20132015 for filing with the SEC.
MEMBERS OF THE AUDIT COMMITTEE
Murry S. Gerber, Chairperson
Mathis Cabiallavetta
Pamela Daley
Thomas H. O’Brien
Ivan G. Seidenberg
Marco Antonio Slim Domit
John S. Varley
28
OWNERSHIP OF BLACKROCK COMMON AND PREFERRED STOCK
Common Stock
The following table sets forth certain information with respect to the beneficial ownership of BlackRock’s voting securities as of March 31, 20142016 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; (iii) each of the executive officers, other than Mr. Hallac, named in the 2015 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 and the information is not necessarily indicative of beneficial ownership for any other purpose. For purposes of the following 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, 2014,2016, through the exercise of any option, warrant or right.
As of March 31, 2014,2016, there were 167,003,034163,587,221 shares of BlackRock’s common stock outstanding.
Amount of beneficial ownership of common stock(1) | Percent of common stock outstanding | |||||||
The PNC Financial Services Group, Inc. and affiliates(2) One PNC Plaza 249 Fifth Avenue Pittsburgh, PA 15222 | 35,040,872 | 21.0 | % | |||||
Norges Bank (The Central Bank of Norway)(3) Bankplassen 2 PO Box 1179 Sentrum NO 0107 Oslo, Norway | 11,899,662 | 7.1 | % | |||||
Wellington Management Company, LLP(4) 280 Congress Street Boston, MA 02210 | 9,270,689 | 5.6 | % | |||||
Abdlatif Yousef Al-Hamad | 3,058 | * | ||||||
Mathis Cabiallavetta(5) | 3,996 | * | ||||||
Pamela Daley | 88 | * | ||||||
William S. Demchak | — | — | ||||||
Jessica P. Einhorn | 176 | * | ||||||
Robert W. Fairbairn | 16,740 | * | ||||||
Laurence D. Fink(5)(6) | 1,595,752 | 1.0 | % | |||||
Fabrizio Freda | 555 | * | ||||||
Murry S. Gerber | 36,922 | * | ||||||
James Grosfeld(7) | 525,731 | * | ||||||
Charles S. Hallac(5)(6) | 741,285 | * | ||||||
Robert S. Kapito(5)(6)(8) | 926,839 | * | ||||||
David H. Komansky | 7,351 | * | ||||||
Sir Deryck Maughan | 7,229 | * | ||||||
Cheryl D. Mills | 90 | * | ||||||
Thomas K. Montag(9) | 5,000 | * | ||||||
Thomas H. O’Brien(5) | 15,351 | * | ||||||
Ann Marie Petach | 13,686 | * |
Amount of beneficial ownership of common stock(1) | Percent of common stock outstanding | |||||||
The PNC Financial Services Group, Inc. and affiliates(2) One PNC Plaza 249 Fifth Avenue Pittsburgh, PA 15222 | 34,642,612 | 21.2 | % | |||||
Wellington Management Company, LLP(3) 280 Congress Street Boston, MA 02210 | 9,455,217 | 5.8 | % | |||||
Norges Bank (The Central Bank of Norway)(4) Bankplassen 2 PO Box 1179 Sentrum NO 0107 Oslo, Norway | 9,351,036 | 5.7 | % | |||||
Abdlatif Yousef Al-Hamad | 4,226 | * | ||||||
Mathis Cabiallavetta(5) | 4,938 | * | ||||||
Pamela Daley | 756 | * | ||||||
William S. Demchak | — | — | ||||||
Jessica P. Einhorn | 908 | * | ||||||
Laurence D. Fink(5)(6) | 1,120,207 | * | ||||||
Fabrizio Freda | 1,704 | * | ||||||
Murry S. Gerber | 38,141 | * | ||||||
Robert L. Goldstein | 29,566 | * | ||||||
James Grosfeld(7) | 520,483 | * | ||||||
Robert S. Kapito(5)(6)(8) | 750,541 | * | ||||||
David H. Komansky | 8,571 | * | ||||||
Sir Deryck Maughan | 9,039 | * | ||||||
Cheryl D. Mills | 366 | * | ||||||
Gordon M. Nixon | 88 | * | ||||||
Thomas H. O’Brien(5) | 14,528 | * | ||||||
Ivan G. Seidenberg | 10,485 | * | ||||||
Gary S. Shedlin | 10,980 | * | ||||||
Marco Antonio Slim Domit | 1,986 | * | ||||||
John S. Varley | 1,467 | * | ||||||
Susan L. Wagner(6) | 645,907 | * | ||||||
All directors, director nominees and executive officers as a group (29 persons)(5)(6) | 3,571,045 | 2.2 | % |
29
Amount of beneficial ownership of common stock(1) | Percent of common stock outstanding | |||||||
James E. Rohr(9) | 3,524 | * | ||||||
Ivan G. Seidenberg | 8,672 | * | ||||||
Gary S. Shedlin | 4,886 | * | ||||||
Marco Antonio Slim Domit | 739 | * | ||||||
John S. Varley | 618 | * | ||||||
Susan L. Wagner(6) | 636,261 | * | ||||||
All directors, director nominees and executive officers as a group (31 persons)(5)(6) | 4,771,340 | 2.9 | % |
* | The number of shares of common stock held by such individual is less than 1.0% of the outstanding shares of common stock. |
(1) | Does not include unvested restricted stock (“RS”), unvested/unsettled restricted stock units (“RSUs”) and unvested stock options. |
(2) | Based on the Schedule 13G of The PNC Financial Services Group, Inc. and affiliates filed on February |
(3) | Based on the Schedule 13G of Wellington Management Company, LLP filed on February 16, 2016. |
(4) | Based on the Schedule 13G of Norges Bank (The Central Bank of Norway) filed on February |
(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). |
(6) | Includes shares of BlackRock common stock subject to employee stock options and either exercisable as of March 31, |
(7) | Excludes 175,000 shares of BlackRock common stock held by three entities in which Mr. Grosfeld’s children hold a majority of the economic interest. Mr. Grosfeld has disclaimed beneficial ownership of these shares. |
(8) | Excludes |
Preferred Stock
As of March 31, 2014,2016, 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 1,311,887763,660 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, 2014,2016, PNC owned all issued and outstanding shares of our Series B Preferred Stock and Series C Preferred Stock.
30
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
INTRODUCTION
The Compensation Discussion and Analysis (“CD&A”) provides information about the Company’s 20132015 performance, 20132015 compensation decisions for our NEOs, listed below, and our disciplined compensation approach.
Laurence D. Fink | Chairman and Chief Executive Officer (“CEO”) | |
Robert S. Kapito | President | |
Charles S. Hallac | ||
Robert | ||
J. Richard Kushel | Chief Product Officer (“CPO”) and Global Head of Strategic Product Management(2) | |
Gary S. Shedlin | ||
|
(1) |
(2) | Mr. Kushel was CPO and |
The CD&A is organized as follows:
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Our compensation philosophy was designed to align management incentives with the long-term interests of our stockholders. Our Board recognizes the significanceimportance of executive compensation decisions to our stockholders. The annual say-on-pay advisory vote provides our stockholders with the opportunity to to:
At the 20132015 Annual Meeting of Stockholders, the say-on-pay advisory vote received majority support, with 86%98% of the votes cast approving the advisory vote on executive compensation. The BlackRock Board continues to encourageof Directors encourages an open and constructive dialogue with stockholders on compensation issues, as well asand other governance issues, as a means to ensure BlackRock’s policies remain aligned with stockholders’ interests.
ToStockholder input was considered by the MDCC in instituting the CEO and President compensation framework as well as the BlackRock Performance Incentive Plan (“BPIP”) awards, which are highlighted below and described in further detail in this end, we haveCD&A. We engaged with a number of stockholders in advance of this year’s annual meeting to gain further insight intoincorporate their views onas we continue to enhance our compensation programs and practices. The MDCC considered this feedback as it reviewed the executive compensation process. This feedback informed a new framework adopted by the MDCC for determining compensation for the CEO and President for 2014, as further described in “2014 Compensation Program–2014 Compensation Program Updates” on page 43.
BlackRock is committed to delivering long-term stockholder value. While our financial results can, at times, be affected by global capital market conditions that are beyond our control, management does have the ability to influence key drivers of stockholder value. BlackRock’s framework for long-term value creation is predicated on generating differentiated organic growth, leveraging scale to increase operating margins over time and returning capital to stockholders on a consistent basis, as depicted below. BlackRock’s diversified platform, in terms of style, product, client and geography, enables it to generate more stable cash flows through market cycles, positioning BlackRock to invest for the long-term by striking an appropriate balance between investing for future growth and practical discretionary expense management (refer to “Business Outlook” on page 32 of our 2015 Form 10-K for more details).
BlackRock’s commitment to delivering stockholder value is aligned with the way we manage our business. By putting our clients’ interests first and delivering investment solutions to meet their objectives, we are able to build our business organically, adding new assets under management (“AUM”) and, in turn, driving organic revenue generation. Scale is an important driver of operating leverage that affects our operating margin. We take advantage of scale in numerous areas of our business including through our index-based investment strategies, brand spend and technology platform and the associatedAladdin business. We are committed to a consistent and predictable capital management policy. During 2015, we returned $2.6 billion to our stockholders through share repurchases and dividends.
BlackRock’s 20132015 results demonstrated the strength and stability of our diversified, multi-client platform. Full yearFull-year results reflected organic growth, continued operating leverage and consistent capital management. Investment performance results across our active and index strategies as of December 31, 2015 are set forth in Item 1 of our 2015 Form 10-K.
OrganicLong-term organic asset growth of more than 3%4% in 20132015 helped pace growth in revenue:drive Organic Revenue (as described on page 37) of $489 million:
• | Flows |
• | BlackRock Solutions achieved |
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Operating income growth was aideddriven by continued margin expansionrevenue growth and expense discipline:
Our commitment to consistent capital management drovecontributed to growth in earnings per share (“EPS”)EPS and dividends per share:share. We use our cash first to invest in our business, and then return the balance to shareholders. Our capital repatriation strategy is balanced between dividends, where we target a 40-50% payout ratio, and a consistent share repurchase program:
All amountsAmounts in this section, where noted, are shown on an “as adjusted” basis. For a reconciliation to U.S. Generally Accepted Accounting Principles,with generally accepted accounting principles in the United States, please see our 2013Form 10-K.
We continued to build a robust investment culture, demonstrating performance improvement across our active equities book and continued strength across our active fixed income and passive products. Investment performance across our active and passive products as of December 31, 2013 is set forth in Item 1 of our 20132015 Form 10-K.
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NEO Compensation Decisions2015 COMPENSATION
Central to BlackRock’s compensation philosophy is aligning pay with performance. Following a review of full-year business and individual NEO performance, the MDCC determined 2013 total annual compensation outcomes for each NEO as outlined in the table below. Specific 2013 business and individual NEO performance considerations are further detailed on pages 40-41.
Name | Salary | Annual Incentive Award(1) | Long-Term Incentive Challenge Award | Total Annual Compensation (“TAC”) | % change in TAC vs. 2012 | |||||||||||||||
Laurence D. Fink | $ | 500,000 | $ | 18,750,000 | $ | 4,750,000 | $ | 24,000,000 | 12 | % | ||||||||||
Robert S. Kapito | $ | 400,000 | $ | 14,525,000 | $ | 3,750,000 | $ | 18,675,000 | 15 | % | ||||||||||
Charles S. Hallac | $ | 350,000 | $ | 7,680,000 | $ | 2,750,000 | $ | 10,780,000 | 15 | % | ||||||||||
Robert W. Fairbairn | $ | 350,000 | $ | 4,300,000 | $ | 1,750,000 | $ | 6,400,000 | 12 | % | ||||||||||
Gary S. Shedlin | $ | 400,000 | $ | 3,350,000 | $ | 1,500,000 | $ | 5,250,000 | N/A | (2) | ||||||||||
Ann Marie Petach | $ | 450,000 | $ | 2,025,000 | $ | 1,050,000 | (3) | $ | 3,525,000 | 0 | % |
The table above displays compensation in a format that differs from the required format applicable to the Summary Compensation Table on pages 48-49. The table above shows the MDCC’s compensation decisions relating to individual NEO performance for the 2013 fiscal year; the annual incentive award amounts shown above include the portion of 2013 annual incentive that was awarded as deferred BlackRock equity in January 2014.
The charts below display the mix of compensation for the CEO and other NEOs as a group.(1)(2)
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To further enhance our pay for performance structure and improve transparency to stockholders, the MDCC adopted a new framework for determining CEO and President compensation in 2014. This framework is further described on page 43.
Compensation Program Objectives
Our compensation program is designed to:
NEOEnhancements to CEO and President Compensation Structure
Our compensation program for NEOs continues to include base salary, annual incentive awards (cash and deferred equity) and long-term performance-based incentive awards, as described on pages 39 to 42. In 2014, the MDCC approved an enhanced compensation framework to more closely align pay and performance for the CEO and President, Mr. Fink and Mr. Kapito, respectively.
Under this program, target annual cash incentive awards (“cash bonus”) have been established at $8.0 million and $6.5 million for the CEO and President, respectively. Actual cash bonuses can range from 0% up to a maximum of 125% ($10.0 million and $8.125 million for the CEO and President, respectively) of the target amount. To determine the actual cash bonus amount, the MDCC used the framework below to assess individual performance.
Category | % of Award Opportunity | Measures Generally Include (internal BlackRock metrics and/or peer | ||||
Financial Performance | 50 | % | • Net New Business • Organic Revenue • Total Revenue • Operating Income • Operating Margin, As Adjusted • Net Income • EPS | |||
Business Strength | 30 | % | • Relative Investment Performance Across Alpha and Beta Strategies • Client Retention and Client Relationship Strength • Risk Management • Operational Performance | |||
Organizational Strength | 20 | % | • Employee Engagement • Leadership Bench Strength and Succession Plans • Inclusiveness and Diversity Objectives |
The categories are supported by performance measures detailed on pages 45 and 46. The MDCC maintains discretion in setting the final awards in order to determine the quality of the outcomes and to reflect the executives’ ability to adapt to the evolving business environment throughout the year.
In addition to the annual cash incentive awards, the MDCC expects to continue to make annual equity awards to both Mr. Fink and Mr. Kapito, with at least half of such equity awards being long-term and contingent on future financial or other business performance requirements.
BlackRock Performance Incentive Plan (“BPIP”)
BlackRock believes in aligning the interests of our senior-level employees, including NEOs, with those of stockholders, and in closely aligning compensation with long-term performance.
In January 2015, the MDCC approved a new form of performance-based equity award, referred to as BPIP awards, following a comprehensive review of future performance goals and expectations, potential pay outcomes for employees, stockholder input and market trends with the advice of the MDCC’s independent compensation consultant, Semler Brossy. BPIP was designed to further align compensation with management’s long-term creation of stockholder value.
Each NEO was granted a BPIP award in January 2015 as part of his incentive compensation in respect of 2014 performance. Similarly, a portion of each NEO’s incentive compensation for 2015 was in the form of a BPIP award granted in January 2016. 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 2016 BPIP grants are described in further detail below.
BPIP is tied to two key drivers of stockholder value – Organic Revenue and Operating Margin, as adjusted – that are directly influenced by BlackRock’s senior-level employees across market cycles. Organic Revenue is a measure of the annualized revenue impact of BlackRock’s ability to generate net new business and bring new client relationships ontoAladdin. 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. BlackRock is focused on achieving the right balance of investing in our business to drive growth in Organic Revenue, and the impact those investments have on our expense base and Operating Margin, as adjusted.
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 Organic Revenue and Operating Margin, as adjusted, levels.
The January 2016 BPIP awards have a three-year performance period that commenced on January 1, 2016 and ends on December 31, 2018. Each BPIP award consists of a “base” number of RSUs granted to the recipient (refer to “January 2016 BPIP Grant: Example” on page 39). Distributions will be in the form of common stock. 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 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 is set forth below.(1)
January 2016 BPIP Award Determination Matrix | ||||||||||||||||||||||||||
3-yr Average Organic Revenue ($M) | ||||||||||||||||||||||||||
<=0 | 250 | 450 | 650 | >=850 | ||||||||||||||||||||||
3-yr Average Op Margin, as Adjusted | >=48.0% | 100% | 118% | 133% | 149% | 165% | ||||||||||||||||||||
46.0% | 83% | 107% | 122% | 138% | 154% | |||||||||||||||||||||
44.0% | 67% | 94% | 111% | 127% | 143% | |||||||||||||||||||||
42.0% | 50% | 78% | 100% | 116% | 133% | |||||||||||||||||||||
40.0% | 33% | 61% | 83% | 105% | 122% | |||||||||||||||||||||
38.0% | 17% | 44% | 67% | 92% | 111% | |||||||||||||||||||||
<=36.0% | 0% | 28% | 50% | 75% | 100% |
If target level performance is achieved (i.e., during the performance period, BlackRock has average annual Organic Revenue equal to $450 million and average annual Operating Margin, as adjusted, equal to 42.0%), a participant will receive a number of shares equal to 100% of the base number of units granted to the participant. If during the performance period, BlackRock has zero or negative average Organic Revenue and average Operating Margin, as adjusted, of 36.0% or less, the participant will not be entitled to a distribution of any shares under BPIP. The maximum number of shares a participant may receive under BPIP is equal to 165% of the base number of units. (A participant will receive the maximum number of shares if, during the performance period, BlackRock were to deliver average Organic Revenue equal to or greater than $850 million and average Operating Margin, as adjusted, equal to or greater than 48%).
As shown in the example below, if, during the performance period, BlackRock were to deliver average Organic Revenue of $650 million and average Operating Margin, as adjusted, of 42%, then a recipient receiving a BPIP award valued at $2.0 million in January 2016 would receive a distribution of 7,834 shares, or 116% of the base number of RSUs granted.
(1) | Organic Revenue and Operating Margin, as adjusted, are non-GAAP financial measures. Organic Revenue for a year is equal to the sum of (i) annualized investment advisory and administration fees generated by the Company in such year relating to the sale/redemption of products or the provision of services to new or existing clients in accordance with the Company’s AUM policy (excluding (A) fees from the Company’s cash management and securities lending businesses and (B) fees derived from capital gains and dividend reinvestment) and (ii) annualized recurring revenue generated by the Company in such year from the sale/notified loss ofAladdin products and services to new or existing clients. For a description of how Operating Margin, as adjusted, is calculated, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” on our 2015 Form 10-K. |
January 2016 BPIP Grant: Example | ||
BPIP Award Value For Performance Year 2015 and in anticipation of continued performance and long-term focus over a multi-year period | $2,000,000 | |
2015 Conversion Price The average of the high and low prices per share of common stock of BlackRock on January 19, 2016 | $296.12 | |
Base number of units granted Determined by dividing the dollar value of the recipient’s award by the conversion price | 6,754 ($2,000,000 / $296.12) | |
Hypothetical Performance Results Jan 1, 2016 to Dec 31, 2018 (3-year) average Organic Revenue Jan 1, 2016 to Dec 31, 2018 (3-year) average Operating Margin, as adjusted | $650M (i.e., above target) 42% (i.e., at target) | |
Resulting Award Payout (%) Based on Award Determination Matrix | 116% | |
Resulting Award Payout (Number of units) Base number of units granted x Award Payout % | 7,834 (6,754 x 116%) |
Compensation Structure for NEOs
Our commitment to design an executive compensation program that alignsdesigned to align pay with performance and embodiesembody the other principles set out aboveon page 36 is demonstrated in the total annual compensation structure described below. Compensation mix percentages are based on 2013 year-end compensation decisions for individual NEOs by the MDCC. The percentages exclude Ms. Petach, who transitioned from the role of CFO of BlackRock to the role of Senior Managing Director for the Company’s Client Solutions business on May 9, 2013.
* | Excludes Mr. Hallac, the former Co-President of BlackRock, who passed away on September 9, 2015. |
(1) | All grants of BlackRock equity (including the portion of the annual incentive awards granted in RS or RSUs and the BPIP awards) are approved by the MDCC under the Second Amended and Restated 1999 Stock Award and Incentive Plan, which has been previously approved by stockholders. The Second Amended and Restated 1999 Stock Award and Incentive Plan allows multiple types of award vehicles to be granted. |
(2) | For |
(3) | For |
(4) | 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 42. |
Compensation mix percentages shown above are based on 2015 year-end compensation decisions for individual NEOs (excluding the CEO and President) by the MDCC. For NEOs other than the CEO and President, the annual incentive award is split between cash and deferred equity in accordance with the Company-wide deferral policy.
Following a review of full-year business and individual NEO performance, the MDCC determined 2015 total annual compensation outcomes for each NEO as outlined in the table below. Specific 2015 business and individual NEO performance considerations are further detailed on pages 45 to 47.
Name | Base Salary | Annual Incentive Award | Long-Term Incentive Award (“BPIP”) | Total Annual Compensation (“TAC”) | % change in TAC vs. 2014 | |||||||||||||||||||
Cash | Deferred Equity | |||||||||||||||||||||||
Laurence D. Fink | $900,000 | $8,720,000 | $4,095,000 | $12,285,000 | $26,000,000 | 0 | % | |||||||||||||||||
Robert S. Kapito | $750,000 | $7,085,000 | $3,037,500 | $9,112,500 | $19,985,000 | 0 | % | |||||||||||||||||
Charles S. Hallac(1) | $650,000 | $7,908,750 | $0 | $0 | $8,558,750 | -27 | % | |||||||||||||||||
Robert L. Goldstein | $500,000 | $2,850,000 | $1,900,000 | $2,000,000 | $7,250,000 | -3 | % | |||||||||||||||||
J. Richard Kushel | $500,000 | $2,490,000 | $1,540,000 | $1,890,000 | $6,420,000 | 0 | % | |||||||||||||||||
Gary S. Shedlin | $500,000 | $2,350,000 | $1,400,000 | $1,750,000 | $6,000,000 | -2 | % |
(1) | Mr. Hallac, former Co-President of BlackRock, member of the Company’s GEC and Co-Chair of its Global Operating Committee, passed away on September 9, 2015. |
The table above displays compensation in a format that differs from the required format applicable to the “2015 Summary Compensation Table” on page 52. It also shows the MDCC’s compensation decisions relating to individual NEO performance for the 2015 fiscal year (and, with respect to BPIP awards, in anticipation of continued performance and long-term focus over a multi-year period). The annual incentive award amounts shown above detail the portion of 2015 annual incentive that was awarded as deferred BlackRock equity in January 2016, separate from the 2015 annual incentive that was awarded as cash. In conformance with SEC requirements, the Summary Compensation Table reports equity grants in the year made. Accordingly, the 2015 equity grants (which were made in January 2016), shown in the table above, do not appear in the 2015 Summary Compensation Table but will appear in the 2016 Summary Compensation Table.
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Base Salary | Annual Incentive
| Long-Term Incentive Award
| ||
How it is Paid | ||||
• Cash. | • Cash; and
• Deferred Equity (Time-vested RS or RSUs). | • Performance-Based | ||
Purpose | ||||
• To provide competitive fixed compensation based on knowledge, skills, experience and responsibilities. | • 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 stockholder outcomes. | • To recognize the scope of an individual employee’s role, business expertise and leadership skills.
• To
• Aligns the interests of senior-level employees with those of stockholders by aligning compensation with long-term drivers of stockholder value. | ||
Description | ||||
• Base salary levels are reviewed periodically in light of market practices and changes in responsibilities. | For CEO and President • Annual incentive award • Annual cash incentive awards may range from 0% to 125% of a pre-defined target amount. • The time-based RS component of the annual incentive award is determined separately at the MDCC’s discretion; however, it is expected that up to, but no more than, 50% of total equity compensation value granted with respect to a particular performance year will be time-based with the remainder in the form of performance-based equity. For Other NEOs • Annual incentive award determinations do not rely on a specific formula, which allows the | • While no specific formulas or weights are used to determine the size of long-term incentive awards, the MDCC considers the role and influence of the NEO on setting long-term strategy and in executing long-term objectives in determining individual award amounts. See “Compensation Determination Process” beginning on page 44. • 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 (as set forth in the “January 2016 BPIP Award Determination Matrix” on page 38). • 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 for |
Base Salary | Annual Incentive Award | Long-Term Incentive Award (“BPIP”) | ||
MDCC to use judgment in considering qualitative and quantitative performance. A variety of factors are considered to determine the size of an NEO’s annual incentive award.
• 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 |
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2013 Compensation Elements(1) (continued)
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• Base salary is a relatively small portion of total annual compensation for NEOs and other senior-level employees; this approach allows the Company to effectively manage its fixed expenses. | • The deferred equity portion of the annual incentive award is converted into a number of shares of RS or RSUs using a conversion price.
• 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. | • The
• Dividend equivalents accumulate during the vesting period and are paid
• Expense, based on the number of awards expected to be delivered, is recognized over the vesting period. |
(1) |
(2) | For 2015 deferred equity and long-term incentive BPIP awards, the award value was converted into a number of RS or RSUs by dividing the award value by $296.12, which represented the average of the high and low prices per share of common stock of BlackRock on January 19, 2016. |
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Compensation Policies and Practices
Our commitment to design an executive compensation program that is consistent with responsible financial and risk management is exemplified in the following policies and practices:
What We Do | What We Don’t Do | |
þReview pay and performance alignment;
þ Balance short- and long-term incentives, cash and equity and fixed and variable pay elements;
þ Maintain a clawback policy that allows for the recoupment of annual and long-term performance-based compensation in the event that financial results are restated due to the actions of an employee;
þ Apply a one-year minimum vesting requirement to awards granted under our stock incentive plan, subject to limited exceptions; þMaintain robust stock ownership and retention guidelines;
þ Maintain – prohibits executive officers from selling short – prohibits executive officers from pledging shares as collateral for a loan (among other items); and – prohibits engaging in any transactions that have the effect of hedging the economic risks and rewards of BlackRock equity awards;
þ Limit perquisites;
þ
þ Hold an advisory vote on executive compensation on an annual basis in order to provide stockholders with a frequent opportunity to give feedback on compensation programs; and
þ Review the independence of the MDCC’s independent compensation | x No ongoing employment agreements or guaranteed compensation arrangements with our NEOs;
x No
x No dividends or dividend equivalents on unearned
x No repricing of stock x No cash buyouts of
x No tax reimbursements for perquisites
x No supplemental retirement benefit arrangements with our NEOs; and
x No supplemental severance benefit arrangements with our NEOs outside of the standard severance benefits under BlackRock’s Severance Pay Plan (the “Severance Plan”). |
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Compensation Decision Timeline and Process
The timing and process for determiningthe determination of individual NEO compensation by the MDCC is designed to ensure that compensation is appropriately aligned with the financial performance of BlackRock while also ensuring recognition of individual NEO leadership and operating contributions toward achieving the overall strategic priorities of the Company.
Jan* | Mar* | Apr | May* | Jan* | ||||||||||||||||||||||
Set Goals and Objectives | ||||||||||||||||||||||||||
Review Budget | Set CEO Goals and Objectives | |||||||||||||||||||||||||
Monitor and Evaluate Performance | ||||||||||||||||||||||||||
ReviewYear- (“YTD”) Financials | Review | YTD Financials | Review YTD Financials | Review YTD Financials | Review YTD Financials | Review YTD Financials | Review Year-end Financials | |||||||||||||||||||
Assess Preliminary Performance | ||||||||||||||||||||||||||
Review Peer Market Data | Review Consultant Reports on Compensation | |||||||||||||||||||||||||
Review Preliminary NEO Performance | Discuss NEO Pay | |||||||||||||||||||||||||
Assess Final Performance and Determine Compensation | ||||||||||||||||||||||||||
Review Final NEO Performance | ||||||||||||||||||||||||||
Approve NEO Pay | ||||||||||||||||||||||||||
Approve Award Determination Matrix |
*Signifies Board of Directors meetings. Board topics include Financial, Business, Market, Talent Reviews and/or Committee updates.
* | Signifies Board of Directors meetings. Board topics include Financial, Business, Market, Talent Reviews and/or Committee updates. |
Individual Compensation Decision Factors for CEO and President
Mr. Fink is responsible for developing and guiding BlackRock’s long-term strategic direction to deliver results for stockholders. In alignment with the compensation structure outlined on pages 36 to 37, the MDCC determined Mr. Fink’s total annual compensation based on an assessment of performance in the following three categories: financial performance, business strength, and organizational strength. In 2015, BlackRock accomplished the following under Mr. Fink’s leadership and his partnership with the GEC:
Financial Performance
39Business Strength
• |
• | Enhanced client experience by improving and further leveraging theAladdin platform. |
Organizational Strength
Based on this assessment, the MDCC awarded Mr. Fink $26.0 million in 2015 total annual compensation, representing 0% change compared to 2014.
Mr. Kapito is responsible for executing BlackRock’s strategic plans and overseeing the global business operations of the Company. He ensures connectivity and coordination of operating processes across all groups in the organization, in part through the Global Operating Committee, which he leads. He is also responsible for spearheading initiatives to drive investment performance and the results within each of BlackRock’s businesses. In alignment with
the compensation structure on pages 36 to 37, the MDCC determined Mr. Kapito’s total annual compensation based on an assessment of performance in the following three categories: financial performance, business strength and organizational strength. In 2015, Mr. Kapito:
Financial Performance
Business Strength
• | Continued to execute against strategic initiatives; accelerated growth of the alternatives business through the |
Organizational Strength
Based on this assessment, the MDCC awarded Mr. Kapito $19.985 million in 2015 total annual compensation, representing 0% change compared with 2014.
Individual NEO Compensation Decision Factors for Other NEOs
The determination of each other NEO’s compensation is based on 1)(1) an assessment of the individual NEO’s contributions to overall Company results and individual business results throughout the year, 2)(2) each NEO’s influence on setting long-term strategy and in executing long-term objectives and 3)(3) considerations relating to the year-over-year change in the total bonus pool.
Inputs to individual NEO total annual compensation decisions include:
Financial factors including, but not limited to, revenue, operating income, EPS, operating margin and compensation and profitability margins;
Non-financial factors including, but not limited to, individual NEO performance, overall investment performance, client relationship strength and organizational discipline; and
Other considerations including, but not limited to, external market conditions and competitive market intelligence on competitive compensation. See “Market Data” on pages 41 to 42.page 47.
The deferred equity component of each of our other NEO’s annual incentive award is determined by a Company-wide deferral policy. Higher annual incentive awards are subject to higher deferral percentages. Long-termAll long-term equity-based incentive awards granted under the Challenge Award ProgramBPIP are funded and awarded separately from the total bonus pool and are determined on a subjective basis as part of the MDCC’s total annual compensation decision.(1)
In addition to the 20132015 Company results described in “2013 Performance and Compensation – 2013 Results”“2015 Performance” beginning on page 32,34, the following information provides highlights of specific 20132015 business and individual NEO performance considered by the MDCC in the compensation decisions for our NEOs.
Mr. Fink is responsible for developing and guiding BlackRock’s long-term strategic direction to deliver results for stockholders. Under Mr. Fink’s leadership in 2013, BlackRock:
Mr. Hallac, as Co-President, instilled the collective strengthBlackRock culture and stabilityspirit of innovation throughout the diversified, multi-client platformCompany and inspired the firm to capture long-term net inflowstransform through the use of over $117 billion;
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Mr. KapitoGoldstein andMr. Hallac are responsible for executing BlackRock’s strategic plans and overseeing, as COO, oversaw the day-to-day global business operations of the Company. They ensure connectivity, coordinationHe coordinated a firm-wide budgeting process aimed at optimizing levels of investment spend and communication across all groupsexpense discipline. Mr. Goldstein led business process and technology efficiency programs, resulting in continued streamlining of the organization.operating model in support of Company scale. He continued to leadBlackRock Solutions, which achieved revenue of $646 million in 2015, an increase of 2% from 2014, and he contributed to talent planning among Company leaders and within the technology field.
Mr. KapitoKushelcontinued his leadership role in connecting, as CPO, led Strategic Product Management, BlackRock Investment Stewardship and the BlackRock Investment Institute (“BII”). In 2015, he strengthened the Company’s product positioning and governance of product performance, and focused on improved new product revenue and flows. He led the successful launch of a suite of Impact products, realigned the BII team to expand its influence with keyboth our investment professionals and clients and stockholders and oversightcontinued to expand the influence of the Company’s leadership. He is responsible for spearheading initiatives to drive investment performance and the results within each business, and for overseeing the performance of members of the Global Executive Committee and Global Operations Committee. Mr. Kapito drove changes related to the Fundamental Active Equity teams, which led to material performance improvement, and also led the creation of a centralized global emerging market platform. He also oversaw initiatives geared at delivering outcome-oriented solutions to BlackRock’s Institutional and Retail clients.
Mr. Hallac instills accountability for Company and individual business results with anBlackRock Investment Stewardship through increased focus on enterprise operations and improved client experiences. Mr. Hallac raised the profile of BlackRock’sAladdin platform and continued working with clients to build its risk management and investment analytics functionality.
Mr. Fairbairn is responsible for delivering growth opportunities in BlackRock’s Global Retail andiShares® platform. He played a leading role in executing a strategic growth acceleration plan in Global Retail focused on evolving our product set, enhancing global distribution and delivering company-wide expertise. In 2013, the Global Retail business achieved 10% organic growth andiShares achieved 8% organic growth.quality engagements.
Mr. Shedlin, as CFO, overseesoversaw financial reporting and controls for the Company and leadsalso led the corporate finance function. He iswas also responsible for financial planning and analysis, business finance, treasury, tax, investor relations and investor relations.corporate development. During 2013, Mr. Shedlin improved2015, he continued to develop the Company’s management reporting, enhanced financial disclosuresoutreach with key investors and increasedregulators. He oversaw the Company’s focus on investor relations, which included BlackRock’s inaugural Investor Day.completion of three strategic acquisitions (BlackRock Kelso Capital Advisors, Infraestructura Institucional and FutureAdvisor). In addition, he continued to optimize the Company’s capital management strategy by executing a consistent and predictable dividend and share repurchase policy andpolicy. He also continued to optimizeguide the Company’s priorities and resource allocation across businessesdeployment to driveenable disciplined growth.
Ms. Petach earned a bonus amount in recognition of a partial year as CFO and the remainder as a Senior Managing Director in the Client Solutions business. In consideration of Ms. Petach’s transition from the Global Executive Committee, she was granted a long-term incentive award with a time-based vesting schedule (100% after three years), rather than a Challenge Award.
Management engages McLagan Partners (“McLagan”),(2) a compensation consultant that specializes in conducting proprietary compensation surveys and interpreting compensation trends. Management used McLagan surveys(2) to 1)(1) evaluate BlackRock’s competitive position overall, – as well as by functional business and by title and 2)(2) make comparisons on an individual NEO basis, where
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survey data was available and appropriate. Survey results were analyzed to account for differences in the scale and scope between BlackRock and other survey participants.
The MDCC reviews market data to understand compensation practices and trends in the broader marketplace. Individual NEO compensation decisions are primarily based on assessments of individual NEO and Company performance.
In 2013,2015, the MDCC engaged thecontinued to engage Semler Brossy Consulting Group LLC (“Semler Brossy”), a compensation consultant, to provide objective advice on the compensation practices and the competitive landscape for the compensation of BlackRock’s executive officers.
Semler Brossy reports directly to the MDCC and interacts with Company management when necessary and appropriate in carrying out assignments. Semler Brossy provides services only to the MDCC as an independent consultant and does not have any other consulting engagements with, or provide any other services to, BlackRock. The independence of Semler Brossy has been assessed according to factors stipulated by the Securities and Exchange CommissionSEC and the MDCC concluded that no conflict of interest exists that would prevent Semler Brossy from independently advising the MDCC.
A representative from Semler Brossy met with the MDCC in formal committeeCommittee meetings and at key points throughout the year to provide objective advice to the MDCC on compensation practicesexisting and emerging compensation practices among financial services companies in addition to the companies in the asset management sector. Semler Brossy reviewed
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(2) | Confidentiality obligations to McLagan and to its survey participants prevent BlackRock from disclosing the companies included in the surveys. Survey participants include stand-alone, publicly traded asset management companies as well as privately held or subsidiary asset management organizations for which publicly available compensation data is not available. |
publicly disclosed compensation information for certain publicly traded asset management companies to understand trends in compensation among public asset managers, including:
Affiliated Managers Group, Inc. | Eaton Vance Corp. | Legg Mason, Inc. | ||
AllianceBernstein Holding L.P. | Federated Investors, Inc. | Northern Trust Corp. | ||
Ameriprise Financial, Inc. | Franklin Resources, Inc. | State Street Corp. | ||
Bank of New York Mellon Corp. | Invesco Ltd. | T. Rowe Price Group, Inc. |
Given the diversity and scale of our global platform, we do not believe that the companies listed above represent a comparable peer group; these companies were used primarily to understand compensation trends among public companies in the traditional asset management business.
The broader suite of companies in the McLagan analyses, which include publicly traded companies as well as private companies, offers more suitableadditional comparisons through which BlackRock can understand the competitiveness of its executive compensation programs overall, by functional business and by title/individual. Semler Brossy independently reviewed the results and the companies included in McLagan’sthe McLagan analyses.
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2014 Compensation Program Updates
As described under “2013 Stockholder Engagement” on page 32, the MDCC took stockholder feedback into account as it considered the analysis and determination of executive compensation.
For 2014, the Company has adopted a new annual incentive program for the CEO and President – Mr. Fink and Mr. Kapito. Under this new program, target annual cash incentive awards have been established at $8.0 million and $6.5 million, respectively. Actual cash bonuses can range from 0% up to a maximum of 125% of the target amount. To determine the actual cash bonus amount, the MDCC will use the following framework to assess performance:
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While the categories are supported by objective measures and milestones, the MDCC reserves discretion in setting the final awards in order to adjust for its determination of the quality of the outcomes and the executives’ adaptation to the business environment as it evolves throughout the year.
In addition to the annual cash incentive, the MDCC expects to continue to make annual equity awards to both Mr. Fink and Mr. Kapito with at least half of such equity awards being long-term and contingent on future financial or other business performance requirements. The MDCC intends to continue analyzing the structure of the equity component during the course of the year.
Stock Ownership, Clawback Policy, Benefits, Severance, Perquisites and Tax Reimbursements
Stock Ownership Guidelines
Our stock ownership guidelines require the Company’s Global Executive Committee (“GEC”)GEC members to own and maintain a target number of shares, the dollar amount of which is set out below. These GEC members are required to accumulate a target number of shares (i.e., shares owned outright, not including unvested shares or unexercised stock options). Until these stock ownership
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guidelines are met, they must retain 35% of the net (after-tax) shares delivered from BlackRock equity awards. As of MarchDecember 31, 2014,2015, all of our NEOs except Mr. Shedlin exceeded the stated stock ownership guidelines. Mr. Shedlin, who joined the Company in 2013, is on track to meet the stated stock ownership guidelines.
Clawback Policy
All performance-based compensation (including annual and
Benefits
BlackRock provides medical, dental, life and disability benefits and retirement savings vehicles in which all eligible employees participate. BlackRock makes contributions to 401(k) accounts of its NEOs on a basis consistent with other employees. None of our NEOs participate in any Company-sponsored defined benefit pension program.
Other benefits include voluntary deferrals of all or a portion of the cash element of the NEO’s annual incentive awards pursuant to the BlackRock, Inc. Voluntary Deferred Compensation Plan. Elections to defer must be made no later than June 30 of the year for which the bonus is paid. Deferred amounts are held by BlackRock as unsecured liabilities. Amounts are immediately vested. Accounts are credited with investment returns from among 19 benchmark funds offered to eligible participants.Plan (the “VDCP”).
Severance
NEOs are eligible for standard severance benefits under the Severance Plan in the event of involuntary termination of employment without cause (as defined under the Severance Plan) by BlackRock.
The Severance Plan provides salary continuation of two weeks per year of service with a minimum of 12 weeks and a maximum of 54 weeks to all U.S.-based employees who are involuntarily terminated without cause in conjunction with a reduction in force or position elimination.
Perquisites
Perquisites and other benefits available to NEOs, such as financial planning, investment opportunity and personal use of travel services are considered a reasonable part of the executive compensation program.
A financial planning perquisite is offered to NEOs. InvestmentIn addition, investment offerings may be provided without charging management or performance fees consistent with the terms offered to other employees who meet the same applicable legal requirements.
Messrs. Fink and Kapito are required by the Board to utilize private airplane services for all business and personal travel in the interest of protecting their personal security. NEOs reimburse BlackRock for a portion of the cost of personal airplane services.
Transportation services are provided by BlackRock and/or third-party suppliers and are made available to its NEOs for business and personal use.
The compensation attributed to each of our NEOs for 20132015 for perquisites is described in Footnote 3(3) to the "2015 Summary Compensation TableTable" on page 49.52.
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Tax Reimbursements
BlackRock did not provide tax reimbursements for any perquisites or other compensation paid to our NEOs other than for Mr. Fairbairn in connection with his transition to the United States following his expatriation in 2012 from the United Kingdom. Footnote 3 to the Summary Compensation Table on page 49 describes such tax reimbursement payments.NEOs.
Risk Assessment of Compensation Plans
Our employee compensation program is structured to discourage excessive and unnecessary risk taking. The Board recognizes that potential risks to the Company may be inherent in compensation programs. As such, the Board reviews the Company’s executive compensation program annually to ensure that it is structured so as not to unintentionally promote excessive risk taking. ThisAs a result of this annual review, has resulted in the beliefCompany believes that the Company’s compensation plans are appropriately structured and do not pose risks that could have a materially adverse effect on BlackRock.
The MDCC considers the following when evaluating whether employee compensation plans and policies encourage BlackRock employees to take unreasonable risks:
Essential to the success of BlackRock’s business model is the ability to both understand and manage risk. These fundamentals are inherent in the design of its compensation programs, which reward employees for strong performance in their management of client assets and in managing risk within the risk profiles appropriate to each of BlackRock’s clients. As such, employees are not incented nor rewarded for engaging in high-risk transactions outside of established parameters.
The Company’s compensation practices reinforce the fundamentals of BlackRock’s business model in that they:
The Company’s operating income, on which compensation is based, is not reliant on the Company’s seed or co-investments. While BlackRock may make seed or co-investments in its various funds alongside clients, it isdoes not involvedengage in proprietary trading.
Total Bonus Pool Determination
Purpose
The MDCC approves annually a total bonus pool for BlackRock employees as a group, which includes the NEOs. Accrual of the cash portion of the total bonus pool serves to ensure that the appropriate accounting expense is reflected on BlackRock’s financial statements throughout the year and
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at year-end. The total bonus pool does not serve as a basis for the MDCC’s compensation decisions for the Company’s NEOs, but as indicated, the MDCC may make general comparisons to increases or decreases in the size of the total bonus pool when making individual NEO compensation determinations. In 2013,For 2015, the MDCC approved a total bonus pool of approximately $1.91$2.19 billion (including $152$210 million for long-term incentive awards), which was 13%3% higher than the total bonus pool approved in 2012.2014.(3)
Procedures for Determining Accounting Accrual and Final Determination
The size of the projected bonus pool, including cash and equity awards, is reviewed throughout the year by the MDCC and the final total bonus pool is approved after year-end. As part of this review, the MDCC receives actual and projected financial information over the course of the year as well as final year-end information. The financial information that the MDCC receives and considers includes the current year projected income statement and other financial measures compared with prior year results and the current year budget. The MDCC additionally reviews other metrics of the Company’s financial performance (e.g., net inflows of AUM and investment performance) as well as information regarding market conditions and competitive compensation levels.
The MDCC regularly considers management’s recommendation as to the percentage of pre-incentive operating income that will be accrued and reflected as a compensation expense throughout the year for the cash portion of the total annual bonus pool (the “accrual rate”). The accrual rate of the cash portion of the total annual bonus pool may be modified by the MDCC during the year based on its review of the financial information described above. The MDCC does not apply any particular weighting or formula to the information it considers when determining the size of the total bonus pool or the accruals made for the cash portion of the total bonus pool.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation to any “covered employee” of a public company to $1$1.0 million during any fiscal year unless such compensation qualifies as “performance-based.” In general, the Company intends to structure its incentive compensation arrangements in a manner that would comply with these tax rules. However, the MDCC maintains the flexibility to pay non-deductible incentive compensation if it determines it is in the best interest of the Company and its stockholders.
Separately from determining the total bonus pool, the MDCC establishes the method for calculating the Section 162(m) compliant aggregate cap (the “Aggregate 162(m) Cap”) for annual incentives awardedincentive awards to each of our NEOs pursuant to the shareholder-approvedstockholder-approved Amended and Restated BlackRock, Inc. 1999 Annual Incentive Performance Plan.Plan (the “Performance Plan”). The Aggregate 162(m) Cap, as well as each NEO’s maximum allocable portion of the overall Aggregate 162(m) Cap (the “Individual 162(m) Caps”), are calculated each year in accordance with the requirements of Section 162(m) of the Internal Revenue Code. Neither the Aggregate 162(m) Cap nor the Individual 162(m) Caps serve as a basis for the MDCC’s compensation decisions for our NEOs; instead, these caps serve to establish a ceiling on the amount of annual incentive awards which the MDCC can award to the NEOs on a tax deductible basis. In determining final awards for each NEO, the MDCC ensures that such awards do not exceed the executive officer’s Individual 162(m) Cap.
Amounts determined by the calculation of the Aggregate and Individual 162(m) Caps have been established to meet tax regulations and do not serve as a basis for the MDCC’s compensation decisions for individual NEOs.
The MDCC awarded 2013 incentive compensation amounts for each NEO that, when reviewed against the Aggregate and Individual 162(m) Caps established in January 2013, were amounts less than the Aggregate and Individual 162(m) Caps. All 2013 incentive compensation amounts were therefore determined to be fully tax deductible.
(3) | Includes payments to employees who departed BlackRock during the year. |
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MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the MDCC during 20132015 were Ms. Mills and Messrs. Komansky (Chairperson), Gerber, Grosfeld and Maughan. Mr. Nixon joined the MDCC in March 2016. No member of the MDCC was, during the fiscal year, an officer or employee, or formerly an officer or employee, involved in any related person transactions requiring disclosure in this Proxy Statement. No executive officer of BlackRock served (i) as a member of the Compensation Committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served on the MDCC of BlackRock, (ii) as a director of another entity, one of whose executive officers served on the MDCC of BlackRock, or (iii) as a member of the Compensation Committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served as a director of BlackRock.
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The following is the MDCC report to stockholders. In accordance with the rules of the SEC, this report shall not be incorporated by reference into any of BlackRock’s future filings made under the Exchange Act or under the Securities Act and shall not be deemed to be soliciting material or to be filed under the Exchange Act or the Securities Act.
Management Development and Compensation Committee
Report on Executive Compensation for Fiscal Year 20132015
The MDCC has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
MEMBERS OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
David H. Komansky, Chairperson
Murry S. Gerber
James Grosfeld
Sir Deryck Maughan
Cheryl D. Mills
Gordon M. Nixon
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The following 2015 Summary Compensation Table sets forth information concerning compensation provided by BlackRock for the years indicated to the NEOs.
20132015 Summary Compensation Table
Name and | Year | Salary ($) | Bonus ($)(1) | Stock Awards (Fair Value of Awards) ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
Laurence D. Fink | 2013 | $ | 500,000 | $ | 9,850,000 | $ | 12,399,756 | $ | 192,500 | $ | 22,942,256 | |||||||||||||
Chairman and Chief | 2012 | $ | 500,000 | $ | 8,600,000 | $ | 10,944,051 | $ | 187,350 | $ | 20,231,401 | |||||||||||||
Executive Officer | 2011 | $ | 500,000 | $ | 8,125,000 | $ | 13,060,606 | $ | 192,250 | $ | 21,877,856 | |||||||||||||
Robert S. Kapito | 2013 | $ | 400,000 | $ | 7,737,500 | $ | 9,319,801 | $ | 221,755 | $ | 17,679,056 | |||||||||||||
President | 2012 | $ | 400,000 | $ | 6,520,000 | $ | 8,290,147 | $ | 216,605 | $ | 15,426,752 | |||||||||||||
2011 | $ | 400,000 | $ | 6,225,000 | $ | 10,126,442 | $ | 220,380 | $ | 16,971,822 | ||||||||||||||
Charles S. Hallac | 2013 | $ | 350,000 | $ | 4,315,000 | $ | 5,412,382 | $ | 46,755 | $ | 10,124,137 | |||||||||||||
Senior Managing Director | 2012 | $ | 350,000 | $ | 3,612,000 | $ | 4,786,285 | $ | 39,040 | $ | 8,787,825 | |||||||||||||
and Chief Operating Officer | 2011 | $ | 350,000 | $ | 3,475,000 | $ | 5,611,725 | $ | 17,250 | $ | 9,453,975 | |||||||||||||
Robert W. Fairbairn | 2013 | $ | 350,000 | $ | 2,625,000 | $ | 3,299,947 | $ | 1,051,194 | $ | 7,326,141 | |||||||||||||
Senior Managing Director | 2012 | $ | 350,000 | $ | 2,075,000 | $ | 3,575,110 | $ | 922,718 | $ | 6,922,828 | |||||||||||||
Gary S. Shedlin | 2013 | $ | 400,000 | $ | 2,150,000 | $ | 4,181,319 | $ | 323,872 | $ | 7,055,191 | |||||||||||||
Senior Managing Director and Chief Financial Officer(4) | ||||||||||||||||||||||||
Ann Marie Petach | 2013 | $ | 450,000 | $ | 1,390,000 | $ | 1,849,709 | $ | 46,755 | $ | 3,736,464 | |||||||||||||
Senior Managing Director | 2012 | $ | 450,000 | $ | 1,225,000 | $ | 1,856,562 | $ | 41,605 | $ | 3,573,167 | |||||||||||||
and Former Chief Financial Officer(5) | 2011 | $ | 450,000 | $ | 1,225,000 | $ | 2,126,234 | $ | 45,380 | $ | 3,846,614 |
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards (Fair Value of Awards) ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
Laurence D. Fink | 2015 | $ | 900,000 | $ | 8,720,000 | $ | 15,979,630 | $ | 193,000 | $ | 25,792,630 | |||||||||||||
Chairman and Chief | 2014 | $ | 900,000 | $ | 9,120,000 | $ | 13,649,708 | $ | 192,750 | $ | 23,862,458 | |||||||||||||
Executive Officer | 2013 | $ | 500,000 | $ | 9,850,000 | $ | 12,399,756 | $ | 192,500 | $ | 22,942,256 | |||||||||||||
Robert S. Kapito | 2015 | $ | 750,000 | $ | 7,085,000 | $ | 12,279,750 | $ | 224,175 | $ | 20,338,925 | |||||||||||||
President | 2014 | $ | 750,000 | $ | 6,955,000 | $ | 10,537,135 | $ | 222,730 | $ | 18,464,865 | |||||||||||||
2013 | $ | 400,000 | $ | 7,737,500 | $ | 9,319,801 | $ | 221,755 | $ | 17,679,056 | ||||||||||||||
Charles S. Hallac | 2015 | $ | 460,417 | $ | 0 | $ | 6,824,490 | $ | 7,957,925 | $ | 15,242,832 | |||||||||||||
Co-President(4) | 2014 | $ | 650,000 | $ | 4,275,000 | $ | 6,114,716 | $ | 68,289 | $ | 11,108,005 | |||||||||||||
2013 | $ | 350,000 | $ | 4,315,000 | $ | 5,412,382 | $ | 46,755 | $ | 10,124,137 | ||||||||||||||
Robert L. Goldstein | 2015 | $ | 500,000 | $ | 2,850,000 | $ | 4,024,823 | $ | 23,723 | $ | 7,398,546 | |||||||||||||
Senior Managing Director and | 2014 | $ | 500,000 | $ | 2,975,000 | $ | 3,624,619 | $ | 17,750 | $ | 7,117,369 | |||||||||||||
Chief Operating Officer(5) | ||||||||||||||||||||||||
J. Richard Kushel | 2015 | $ | 500,000 | $ | 2,490,000 | $ | 3,429,610 | $ | 49,175 | $ | 6,468,785 | |||||||||||||
Senior Managing Director, Chief | ||||||||||||||||||||||||
Product Officer and Global Head of Strategic Product Management(6) | ||||||||||||||||||||||||
Gary S. Shedlin | 2015 | $ | 500,000 | $ | 2,350,000 | $ | 3,224,672 | $ | 18,000 | $ | 6,092,672 | |||||||||||||
Senior Managing Director and | 2014 | $ | 500,000 | $ | 2,375,000 | $ | 2,699,839 | $ | 5,000 | $ | 5,579,839 | |||||||||||||
Chief Financial Officer(7) | 2013 | $ | 400,000 | $ | 2,150,000 | $ | 4,181,319 | $ | 323,872 | $ | 7,055,191 |
(1) | These amounts represent the cash portion of discretionary annual bonuses for the respective periods awarded pursuant to the Performance Plan. To secure the deductibility of annual incentive awards (including cash bonuses) awarded to the NEOs, each NEO’s total incentive award is awarded under the Performance Plan, which permits deductibility of compensation paid to the NEOs under Section 162(m) of the Internal Revenue Code. Satisfaction of the performance criteria under the Performance Plan determines only the maximum amount of incentive compensation that may be awarded to NEOs for the fiscal year. The amount of incentive compensation awarded to each NEO in January |
As described |
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(2) | Reflects the grant date fair value of awards made during each calendar year as determined pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note 14 to the consolidated financial statements in our |
(3) | $7,908,750 of the amount shown for Mr. Hallac represents an amount paid to Mr. Hallac’s estate in February 2016 in respect of his services to the Company and has been included here because it was paid following his passing. For |
services. |
(4) | Mr. Hallac, former Co-President of BlackRock, member of the Company’s GEC and Co-Chair of its Global Operating Committee, passed away on September 9, 2015. |
(5) | Mr. Goldstein was not a named executive officer in 2013. |
(6) | Mr. Kushel was not a named executive officer in 2013 or 2014. |
(7) | Mr. Shedlin joined BlackRock on March 11, 2013 and became the Chief Financial Officer of BlackRock on May 9, 2013. |
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20132015 Grants of Plan-Based Awards
The following table sets forth information concerning non-equity and equity incentive plan-based compensation provided by BlackRock in 20132015 to our NEOs.
Name | Grant Date(1) | Date of Committee Action | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares or Units (#) | Grant Date Fair Value of Stock and Option Awards(4) | |||||||||||||||||||||||||||||||||||||
Grant Date(1) | Date of Committee Action | All Other Stock Awards: Number of Shares or Units (#) | Grant Date Fair Value of Stock and Option Awards | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||
Laurence D. Fink | 01/18/2013 | 01/15/2013(2) | 32,884 | $ | 7,649,805 | 1/16/2015 | 1/13/2015 | (2) | 11,618 | $ | 3,994,907 | |||||||||||||||||||||||||||||||
01/18/2013 | 01/15/2013(3) | 37,472 | $ | 4,749,951 | 1/16/2015 | 1/13/2015 | (3) | 0 | 34,854 | 57,509 | $ | 11,984,722 | ||||||||||||||||||||||||||||||
Robert S. Kapito | 01/18/2013 | 01/15/2013(2) | 23,943 | $ | 5,569,860 | 1/16/2015 | 1/13/2015 | (2) | 8,928 | $ | 3,069,937 | |||||||||||||||||||||||||||||||
01/18/2013 | 01/15/2013(3) | 29,583 | $ | 3,749,941 | ||||||||||||||||||||||||||||||||||||||
1/16/2015 | 1/13/2015 | (3) | 0 | 26,784 | 44,193 | $ | 9,209,812 | |||||||||||||||||||||||||||||||||||
Charles S. Hallac | 01/18/2013 | 01/15/2013(2) | 11,445 | $ | 2,662,450 | 1/16/2015 | 1/13/2015 | (2) | 9,669 | $ | 3,324,734 | |||||||||||||||||||||||||||||||
01/18/2013 | 01/15/2013(3) | 21,694 | $ | 2,749,931 | 1/16/2015 | 1/13/2015 | (3) | 0 | 10,178 | 16,793 | $ | 3,499,756 | ||||||||||||||||||||||||||||||
Robert L. Goldstein | 1/16/2015 | 1/13/2015 | (2) | 5,889 | $ | 2,024,962 | ||||||||||||||||||||||||||||||||||||
1/16/2015 | 1/13/2015 | (3) | 0 | 5,816 | 9,596 | $ | 1,999,861 | |||||||||||||||||||||||||||||||||||
Robert W. Fairbairn | 01/18/2013 | 01/15/2013(2) | 4,836 | $ | 1,124,999 | |||||||||||||||||||||||||||||||||||||
01/18/2013 | 01/15/2013(3) | 17,158 | $ | 2,174,948 | ||||||||||||||||||||||||||||||||||||||
J. Richard Kushel | 1/16/2015 | 1/13/2015 | (2) | 4,478 | $ | 1,539,783 | ||||||||||||||||||||||||||||||||||||
1/16/2015 | 1/13/2015 | (3) | 0 | 5,496 | 9,068 | $ | 1,889,827 | |||||||||||||||||||||||||||||||||||
Gary S. Shedlin | 05/29/2013 | 05/29/2013(4) | 16,869 | $ | 4,181,319 | 1/16/2015 | 1/13/2015 | (2) | 4,144 | $ | 1,424,935 | |||||||||||||||||||||||||||||||
1/16/2015 | 1/13/2015 | (3) | 0 | 5,234 | 8,636 | $ | 1,799,737 | |||||||||||||||||||||||||||||||||||
Ann Marie Petach | 01/18/2013 | 01/15/2013(2) | 2,256 | $ | 524,813 | |||||||||||||||||||||||||||||||||||||
01/18/2013 | 01/15/2013(3) | 10,452 | $ | 1,324,896 |
(1) | Grant date is the date on which approved award values were converted to a number of |
(2) | These January |
(3) | These January |
(4) |
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20132015 Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding option awards and unvested stock awards held by our NEOs as of December 31, 2013.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | ||||||||||||||||||||||||||||||||||||
Laurence D. Fink | 01/31/2007 | 364,313 | (2) | $ | 167.76 | 1/31/2017 | — | — | 1/20/2012 | — | — | — | 32,766 | (3) | $ | 11,157,478 | ||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 15,344 | (3) | $ | 4,855,916 | |||||||||||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 18,712 | (4) | $ | 5,921,787 | 1/18/2013 | — | — | — | 10,962 | (2) | $ | 3,732,780 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 26,038 | (3) | $ | 8,240,246 | 1/18/2013 | — | — | — | 37,472 | (3) | $ | 12,759,965 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 32,766 | (5) | $ | 10,369,456 | 1/17/2014 | — | — | — | 18,596 | (2) | $ | 6,332,310 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 32,884 | (3) | $ | 10,406,799 | 1/17/2014 | — | — | — | 24,322 | (3) | $ | 8,282,127 | |||||||||||||||||||||||||||||||||
01/18/2013 | 37,472 | (5) | $ | 11,858,764 | 1/16/2015 | — | — | — | 11,618 | (2) | $ | 3,956,161 | ||||||||||||||||||||||||||||||||||||
1/16/2015 | — | — | — | 39,385 | (4) | $ | 13,411,380 | |||||||||||||||||||||||||||||||||||||||||
Robert S. Kapito | 01/31/2007 | 210,109 | (2) | $ | 167.76 | 1/31/2017 | — | — | 1/20/2012 | — | — | — | 26,213 | (3) | $ | 8,926,051 | ||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 11,743 | (3) | $ | 3,716,307 | 1/18/2013 | — | — | — | 7,981 | (2) | $ | 2,717,690 | |||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 14,969 | (4) | $ | 4,737,239 | 1/18/2013 | — | — | — | 29,583 | (3) | $ | 10,073,603 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 19,142 | (3) | $ | 6,057,869 | 1/17/2014 | — | — | — | 14,182 | (2) | $ | 4,829,255 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 26,213 | (5) | $ | 8,295,628 | 1/17/2014 | — | — | — | 19,201 | (3) | $ | 6,538,325 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 23,943 | (3) | $ | 7,577,241 | 1/16/2015 | — | — | — | 8,928 | (2) | $ | 3,040,163 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 29,583 | (5) | $ | 9,362,132 | 1/16/2015 | — | — | — | 30,265 | (4) | $ | 10,305,838 | |||||||||||||||||||||||||||||||||
Charles S. Hallac | 1/20/2012 | — | — | — | 19,659 | (3) | $ | 6,694,283 | ||||||||||||||||||||||||||||||||||||||||
1/18/2013 | — | — | — | 21,694 | (3) | $ | 7,387,241 | |||||||||||||||||||||||||||||||||||||||||
Charles S. Hallac | 01/31/2007 | 126,087 | (2) | $ | 167.76 | 1/31/2017 | — | — | ||||||||||||||||||||||||||||||||||||||||
1/17/2014 | — | — | — | 14,081 | (3) | $ | 4,794,862 | |||||||||||||||||||||||||||||||||||||||||
1/16/2015 | — | — | — | 11,501 | (4) | $ | 3,916,321 | |||||||||||||||||||||||||||||||||||||||||
Robert L. Goldstein | 1/20/2012 | — | — | — | 17,475 | (3) | $ | 5,950,587 | ||||||||||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 5,531 | (3) | $ | 1,750,396 | 1/18/2013 | — | — | — | 1,988 | (2) | $ | 676,954 | |||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 11,227 | (4) | $ | 3,553,009 | 1/18/2013 | — | — | — | 16,566 | (3) | $ | 5,641,054 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 9,163 | (3) | $ | 2,899,815 | 1/17/2014 | — | — | — | 3,918 | (2) | $ | 1,334,157 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 19,659 | (5) | $ | 6,221,484 | 1/17/2014 | — | — | — | 8,960 | (3) | $ | 3,051,059 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 11,445 | (3) | $ | 3,621,999 | 1/16/2015 | — | — | — | 5,889 | (2) | $ | 2,005,322 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 21,694 | (5) | $ | 6,865,500 | 1/16/2015 | — | — | — | 6,572 | (4) | $ | 2,237,897 | |||||||||||||||||||||||||||||||||
Robert W. Fairbairn | 01/27/2011 | — | — | — | 2,761 | (3) | $ | 873,774 | ||||||||||||||||||||||||||||||||||||||||
J. Richard Kushel | 1/20/2012 | — | — | — | 19,659 | (3) | $ | 6,694,283 | ||||||||||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 13,098 | (4) | $ | 4,145,124 | 1/18/2013 | — | — | — | 1,558 | (2) | $ | 530,530 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 3,856 | (3) | $ | 1,220,308 | 1/18/2013 | — | — | — | 17,750 | (3) | $ | 6,044,230 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 21,844 | (5) | $ | 6,912,971 | 1/17/2014 | — | — | — | 3,108 | (2) | $ | 1,058,336 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 4,836 | (3) | $ | 1,530,449 | 1/17/2014 | — | — | — | 8,832 | (3) | $ | 3,007,473 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 17,158 | (5) | $ | 5,429,992 | 1/16/2015 | — | — | — | 4,478 | (2) | $ | 1,524,849 | |||||||||||||||||||||||||||||||||
1/16/2015 | — | — | — | 6,210 | (4) | $ | 2,114,629 | |||||||||||||||||||||||||||||||||||||||||
Gary S. Shedlin | 05/29/2013 | — | — | — | 12,695 | (6) | $ | 4,017,587 | 5/29/2013 | — | — | — | 2,372 | (5) | $ | 807,713 | ||||||||||||||||||||||||||||||||
1/17/2014 | — | — | — | 2,508 | (2) | $ | 854,024 | |||||||||||||||||||||||||||||||||||||||||
Ann Marie Petach | 01/27/2011 | — | — | — | 1,331 | (3) | $ | 421,222 | ||||||||||||||||||||||||||||||||||||||||
01/27/2011 | — | — | — | 6,549 | (4) | $ | 2,072,562 | 1/17/2014 | — | — | — | 7,680 | (3) | $ | 2,615,194 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 1,905 | (3) | $ | 602,875 | 1/16/2015 | — | — | — | 4,144 | (2) | $ | 1,411,115 | |||||||||||||||||||||||||||||||||
01/20/2012 | — | — | — | 11,577 | (5) | $ | 3,663,773 | 1/16/2015 | — | — | — | 5,914 | (4) | $ | 2,013,835 | |||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 2,256 | (3) | $ | 713,956 | |||||||||||||||||||||||||||||||||||||||||
01/18/2013 | — | — | — | 10,452 | (5) | $ | 3,307,744 |
(1) | Amounts reflect the year-end value of |
(2) |
(3) |
51
These Challenge Award RSUs require that separate 15%, 25% and 35% stock price targets (based on the grant price) be achieved during the six-year term of the awards in order for each respective tranche to be delivered. The stock price targets may be met at any time during the award term, but the delivery of shares may occur only |
These |
of the award assuming actual performance through December 31, 2015 |
(5) | Of these RSUs, 2,372 vested on January 31, 2016. The RSUs were awarded in connection with Mr. Shedlin’s commencement of employment with BlackRock and the resulting forfeiture of deferred compensation awards granted by his former employer. The vesting schedule of the RSUs mirrors the schedule on which the forfeited awards would have vested had Mr. Shedlin remained with his prior employer. |
20132015 Option Exercises and Stock Vested
The following table sets forth information concerning the number of shares acquired and the value realized by our NEOs during the fiscal year ended December 31, 20132015 on the exercise of options or the settlement of restricted stockRS and RSUs.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||||||||||
Laurence D. Fink | — | — | 40,706 | $ | 9,663,604 | 364,313 | $ | 63,383,232 | 33,278 | $ | 11,331,492 | |||||||||||||||||||||
Robert S. Kapito | — | — | 30,549 | $ | 7,252,333 | 210,109 | $ | 33,474,906 | 24,643 | $ | 8,391,188 | |||||||||||||||||||||
Charles S. Hallac | — | — | 13,959 | $ | 3,313,867 | 126,087 | $ | 21,612,648 | 20,515 | $ | 6,183,836 | |||||||||||||||||||||
Robert W. Fairbairn | — | — | 6,631 | $ | 1,574,199 | |||||||||||||||||||||||||||
Robert L. Goldstein | — | — | 6,169 | $ | 2,100,606 | |||||||||||||||||||||||||||
J. Richard Kushel | — | — | 4,995 | $ | 1,700,847 | |||||||||||||||||||||||||||
Gary S. Shedlin | — | — | 4,174 | $ | 1,263,679 | — | — | 5,503 | $ | 1,953,420 | ||||||||||||||||||||||
Ann Marie Petach | — | — | 2,960 | $ | 702,704 |
(1) |
Value realized reflects the closing price per share of BlackRock common stock on the |
Nonqualified Deferred Compensation
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings (Losses) in Last Fiscal Year ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings (Losses) in Last Fiscal Year ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | ||||||||||||||||||||||||||
Laurence D. Fink | — | — | $ | 395,062 | — | $ | 1,601,310 | — | — | $ | 74,768 | — | $ | 1,733,567 | ||||||||||||||||||||||
Robert S. Kapito | — | — | $ | 5,330 | — | $ | 202,621 | — | — | $ | 1,833 | — | $ | 195,471 | ||||||||||||||||||||||
Charles S. Hallac | — | — | $ | 17,033 | — | $ | 155,187 | — | — | $ | 183 | $ | 165,876 | $ | 0 | |||||||||||||||||||||
Robert W. Fairbairn | — | — | — | — | — | |||||||||||||||||||||||||||||||
Robert L. Goldstein | — | — | $ | 704,375 | $ | 114,517 | $ | 10,011,745 | ||||||||||||||||||||||||||||
J. Richard Kushel | — | — | $ | 41,848 | — | $ | 1,158,938 | |||||||||||||||||||||||||||||
Gary S. Shedlin | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Ann Marie Petach | — | — | — | — | — |
(1) | Includes earnings on balances in the |
52
Voluntary Deferred Compensation Plan
Effective January 2002, BlackRock adoptedmaintains the VDCP,Amended and Restated BlackRock, Inc. Voluntary Deferred Compensation Plan (“VDCP”), which allows participants to elect to defer between 1% and 100% of the cash element of their annual incentive compensation that is not mandatorily deferred under another arrangement. Elections to defer must be made no later than June 30 of the year for which the bonus is paid. The participants must specify a deferral period of up to ten years. Deferred amounts are held by BlackRock as unsecured assets10 years and participantsdistributions may from timebe in up to time, elect to have their deferred account credited with future investment returns from among 14 benchmark funds.10 installments. The benchmark investments available for the NEOs are the same as those for all other participants. Deferred amounts and any benchmark returns are vested at the time of deferral or crediting, as applicable, under the VDCP.
Potential Payments Upon Termination or Change in Control
As described previously, the NEOs do not have individual employment, severance or change-in-controlchange in control agreements with BlackRock. If anyIn addition, there are no change in control provisions associated with equity awards held by the NEOs that were outstanding as of December 31, 2015.
Pursuant to the terms of the NEOs experience a terminationapplicable equity award agreements, an NEO experiencing certain terminations of employment with BlackRock, certain of their outstanding RSUs may be subjectentitled to accelerated vesting and payment (or continued eligibility for vesting and payment) with
respect to such NEO’s outstanding options may be subject to specified exercise periods and VDCP balances will be paid out, in each case as described below.
The estimated amounts payable to our NEOs relating to their outstanding RSU awards asawards. In addition, upon a result of a qualifying termination of employment with BlackRock on December 31, 2013 canby the Company without cause, an NEO may be foundeligible to receive severance benefits under the column “Market Value of Shares or Units of Stock That Have Not Vested” in the 2013 Outstanding Equity Awards at Fiscal Year-End Table, in accordance with theSeverance Plan. The applicable terms described below, exceptand estimated payment amounts with respect to the Challenge Awards granted on January 18, 2013foregoing are set forth in the eventtables on pages 56 to 59, in each case assuming a termination of involuntaryemployment of the NEO on December 31, 2015.
Upon a change in control of BlackRock or a termination notof an NEO’s employment for cause, for which no amountsany reason, such NEO’s VDCP balance would have been payablebe paid out. All outstanding VDCP balances were fully vested as of December 31, 2013. 2015. Accordingly, no amounts have been included in the table on page 58 below with respect to VDCP balances. For additional information, please refer to the “Nonqualified Deferred Compensation” tables on page 55.
Treatment of Outstanding Equity Awards Upon Termination of Employment
Type of Award | Voluntary Resignation | Termination For Cause | Involuntary Termination | Qualified | Death | |||||
RSUs Granted as Part of Annual Incentive Awards (“Year-End Awards”)(1) | Unvested awards are forfeited. | Unvested awards are forfeited. | Awards will continue to vest in accordance with their schedule following termination. Any portion of the award that remains unvested on the one-year anniversary of termination will become fully vested on that date. | Awards will continue to vest in accordance with their schedule following termination. Any portion of the award that remains unvested on the one-year anniversary of termination will become fully vested on that date. | Immediate vesting and settlement. |
Type of Award | Voluntary Resignation | Termination For Cause | Involuntary Termination | Qualified | Death | |||||
RSUs Granted as Challenge Awards(2) | Unvested awards are forfeited. | Unvested awards are forfeited. | Any portion of the award that has achieved its stock price target remains eligible for vesting and settlement (subject to attainment of the minimum stock price target on the fourth, fifth or sixth anniversary of the grant date); a pro rata portion of the award that has not attained its stock price target will remain outstanding and eligible to vest; the remainder of the award will be forfeited. | Awards will continue to be eligible to vest and be settled in accordance with their terms, subject to attainment of the applicable stock price targets. | Awards will continue to be eligible to vest and be settled in accordance with their terms, subject to attainment of the applicable stock price targets. | |||||
RSUs Granted as BPIP Awards | Unvested awards are forfeited. | Unvested awards are forfeited. | Awards will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets. | Awards will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets. | Awards will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets. |
(1) | This treatment also applies to the Buyout Award held by Mr. Shedlin (described in further detail in Footnote (5) to the “2015 Outstanding Equity Awards at Fiscal Year-End” table on pages 54 to 55). |
(2) | The Challenge Awards that were granted in January 2012 provide that, upon the NEO’s termination of employment by BlackRock other than for cause, any portion of the award that has not attained its stock price target will be forfeited. The January 2012 Challenge Awards had achieved all of their stock price targets as of December 31, 2015 and became fully vested on February 1, 2016. |
Potential Payments Upon Termination of Employment
The amounts reflected thereinin the table below reflect an assumed termination of employment on December 31, 2015 and are based on the closing price of BlackRock common stock on December 31, 2013 ($316.47)2015, which was $340.52 (except as noted in Footnote (1) below with respect to Mr. Hallac’s Year-End Awards). If theAny amounts were calculated using a different price, the amounts could be significantly different. In addition, in accordance with BlackRock’s standard severance benefits arrangements, Messrs. Fink, Kapito, Hallac, Fairbairn and Shedlin and Ms. Petach would receive approximately $500,000, $400,000, $350,000, $269,231, $92,308 and $121,154, respectively, under BlackRock’s Severance Plan in the event of involuntarypayable upon or due to an NEO’s termination notby BlackRock other than for cause, by BlackRock, assuming such benefits were triggered on December 31, 2013.
Restricted Stock and Restricted Stock Unit Awards Granted as Part of Annual Incentive Awards
There are no change-in-control provisions associated with outstanding restricted stock and RSU awards. The restricted stock and RSU awards granteddue to our NEOs may be subject to accelerated vesting and settlement as follows:
In the event of a qualified retirement, awards will continue to vest and be settled in accordance with their original grant terms for one year following the qualified retirement. At the one-year anniversary of the qualified retirement, all remaining unvested and unsettled awards will vest and be paid; provided, that the NEO has complied with covenants agreed to upon hire and contained in the award agreement. “Qualified retirement” refers to a voluntary termination of
53
|
Restricted Stock Unit Awards Granted as Challenge Awards
There are no change-in-control provisions associated with the RSU awards granted as Challenge Awards.
Furthermore, the RSU awards granted as Challenge Awards are not subject to accelerated vesting and settlement upon termination. Instead, the Challenge Awards are subject to the NEO’s (i) execution of a release of claims against BlackRock and (ii) continued compliance with covenants restricting the NEO’s solicitation of clients or employees of BlackRock for the one-year period following treatment:termination.
Name | Involuntary Termination Without Cause | Death / Disability / Qualified Retirement | Voluntary Resignation / Termination for Cause | |||||||||
Laurence D. Fink | ||||||||||||
Year-End Awards(1) | $ | 14,021,252 | $ | 14,021,252 | $ | 0 | ||||||
Challenge Awards(2) | $ | 23,917,444 | $ | 23,917,444 | $ | 0 | ||||||
BPIP Awards(3) | $ | 13,411,380 | $ | 13,411,380 | $ | 0 | ||||||
Severance(4) | $ | 934,615 | $ | 0 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Total(6) | $ | 52,284,691 | $ | 51,350,075 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Robert S. Kapito | ||||||||||||
Year-End Awards(1) | $ | 10,587,107 | $ | 10,587,107 | $ | 0 | ||||||
Challenge Awards(2) | $ | 18,999,654 | $ | 18,999,654 | $ | 0 | ||||||
BPIP Awards(3) | $ | 10,305,838 | $ | 10,305,838 | $ | 0 | ||||||
Severance(4) | $ | 778,846 | $ | 0 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Total(6) | $ | 40,671,445 | $ | 39,892,599 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Charles S. Hallac(5) | ||||||||||||
Year-End Awards(1) | $ | — | $ | 6,183,836 | $ | — | ||||||
Challenge Awards(2) | $ | — | $ | 14,081,524 | $ | — | ||||||
BPIP Awards(3) | $ | — | $ | 3,916,321 | $ | — | ||||||
|
|
|
|
|
| |||||||
Total(6) | $ | — | $ | 24,181,681 | $ | — | ||||||
|
|
|
|
|
| |||||||
Robert L. Goldstein | ||||||||||||
Year-End Awards(1) | $ | 4,016,433 | $ | 4,016,433 | $ | 0 | ||||||
Challenge Awards(2) | $ | 11,591,641 | $ | 11,591,641 | $ | 0 | ||||||
BPIP Awards(3) | $ | 2,237,897 | $ | 2,237,897 | $ | 0 | ||||||
Severance(4) | $ | 403,846 | $ | 0 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Total(6) | $ | 18,249,818 | $ | 17,845,972 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
J. Richard Kushel | ||||||||||||
Year-End Awards(1) | $ | 3,113,715 | $ | 3,113,715 | $ | 0 | ||||||
Challenge Awards(2) | $ | 12,738,513 | $ | 12,738,513 | $ | 0 | ||||||
BPIP Awards(3) | $ | 2,114,629 | $ | 2,114,629 | $ | 0 | ||||||
Severance(4) | $ | 480,769 | $ | 0 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Total(6) | $ | 18,447,626 | $ | 17,966,857 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Gary S. Shedlin | ||||||||||||
Year-End Awards / Buyout Award(1) | $ | 3,072,852 | $ | 3,072,852 | $ | 0 | ||||||
BPIP Awards(3) | $ | 2,013,835 | $ | 2,013,835 | $ | 0 | ||||||
Severance(4) | $ | 115,385 | $ | 0 | $ | 0 | ||||||
|
|
|
|
|
| |||||||
Total(6) | $ | 5,202,072 | $ | 5,086,688 | $ | 0 | ||||||
|
|
|
|
|
|
Long-Term Incentive Award Options
There are no change-in-control provisions associated with the long-term incentive award options. Such options granted to our NEOs are all fully vested, but are subject to special treatment upon certain terminations of employment, as follows:
54
Notwithstanding the described treatment above, in no case are the options exercisable after their stated expiration dates.
Deferred Compensation
Deferred amounts credited to NEOs under the VDCP are vested at the time of deferral. All balances for the NEOs as of December 31, 2013 are reflected in the Nonqualified Deferred Compensation Table. Upon termination of employment, any VDCP plan balances will be paid to the NEOs.
The table below sets forth the elements of director compensation provided by BlackRock in 2013.
Board Service | ||||
Board Annual Retainer(1) | $ | 75,000 | ||
Annual RSUs(2) | $ | 150,000 | ||
Board Meeting Fees(1) | $ | 1,500 | ||
Committee Service | ||||
Committee Meeting Fees(1) | $ | 1,000 |
Committee Annual Retainer(1) | Chairperson | Member | ||||||||
Audit | $ | 30,000 | $ | 15,000 | ||||||
MDCC | $ | 20,000 | $ | 10,000 | ||||||
Nominating and Governance | $ | 25,000 | (3) | $ | 5,000 | |||||
Risk | $ | 15,000 | $ | 5,000 |
(1) |
(2) |
(3) |
55
Directors in 2013 who were also employees of BlackRock or designees of Bank of America/Merrill Lynch or PNC are not listed in the below table because they did not receive compensation for serving as directors or committee members. In 2013, directors who were not employees of BlackRock or designees of Bank of America/Merrill Lynch 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 retainers in excess of $25,000. As indicated below, nine of the directors elected to receive all of their annual retainers in the form of BlackRock common stock.
Name | Fees Earned or Paid in Cash ($) | Fees Awarded in Stock ($)(1)(2) | Total ($) | |||||||||
Abdlatif Y. Al-Hamad | $ | 0 | $ | 255,542 | $ | 255,542 | ||||||
Mathis Cabiallavetta | $ | 89,671 | $ | 194,670 | $ | 284,342 | ||||||
Pamela Daley(3) | $ | 0 | $ | 0 | $ | 0 | ||||||
Dennis D. Dammerman(4) | $ | 0 | $ | 84,490 | $ | 84,490 | ||||||
Jessica P. Einhorn | $ | 73,003 | $ | 174,883 | $ | 247,886 | ||||||
Fabrizio Freda | $ | 0 | $ | 244,942 | $ | 244,942 | ||||||
Murry S. Gerber | $ | 134,003 | $ | 175,140 | $ | 309,143 | ||||||
James Grosfeld | $ | 0 | $ | 265,440 | $ | 265,440 | ||||||
David H. Komansky | $ | 88,503 | $ | 175,140 | $ | 263,643 | ||||||
Deryck Maughan | $ | 0 | $ | 273,549 | $ | 273,549 | ||||||
Cheryl D. Mills(5) | $ | 0 | $ | 24,368 | $ | 24,368 | ||||||
Thomas H. O’Brien | $ | 122,003 | $ | 174,837 | $ | 296,840 | ||||||
Ivan G. Seidenberg | $ | 0 | $ | 275,966 | $ | 275,966 | ||||||
Marco Antonio Slim Domit | $ | 0 | $ | 246,781 | $ | 246,781 | ||||||
John S. Varley | $ | 90,003 | $ | 174,824 | $ | 264,826 | ||||||
Susan L. Wagner | $ | 62,003 | $ | 174,883 | $ | 236,886 |
(4) |
(5) |
(6) | Values for Year-End Awards, Challenge Awards, BPIP Awards and Severance are rounded to the |
56
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information, as of December 31, 2013,2015, relating to BlackRock equity compensation plans pursuant to which grants of options, restricted stock,RS, RSUs or other rights to acquire shares of BlackRock common stock may be granted from time to time.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities available for issuance under equity compensation plans (excluding securities reflected in first column) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities available for issuance under equity compensation plans (excluding securities reflected in first column) | ||||||||||||||||||
Approved | ||||||||||||||||||||||||
BlackRock, Inc. 1999 Stock Award and Incentive Plan | 6,676,684 | (1) | $ | 167.76 | (2) | 3,304,834 | ||||||||||||||||||
Amended and Restated BlackRock, Inc. Employee Stock Purchase Plan | — | N/A | 655,420 | (3) | ||||||||||||||||||||
BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan | 4,855,876 | (1) | 167.76 | (2) | 7,621,046 | |||||||||||||||||||
Second Amended and Restated BlackRock, Inc. Employee Stock Purchase Plan | — | N/A | 594,404 | |||||||||||||||||||||
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Total Approved by Stockholders | 6,676,684 | 3,960,254 | 4,855,876 | 8,215,450 | ||||||||||||||||||||
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Not Approved | ||||||||||||||||||||||||
None | — | N/A | — | — | N/A | — | ||||||||||||||||||
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Total Not Approved by Stockholders | — | N/A | — | |||||||||||||||||||||
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Total | 6,676,684 | 3,960,254 | 4,855,876 | 8,215,450 | ||||||||||||||||||||
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(1) | Includes |
(2) | Represents weighted average exercise price on options only. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, Section 16 officers and persons who own more than 10% of a registered class of BlackRock’s equity securities to file reports of holdings of, and transactions in, BlackRock shares with the SEC and the NYSE. To the best of BlackRock’s knowledge, based solely on copies of such reports and representations from these reporting persons, we believe that in 2013,2015, our directors, Section 16 officers and 10% holders met all applicable SEC filing requirements except forwith the exception of Ms. Wagner, who made one late Form 4 filing made on behalf of Mr. Shedlin on July 8, 2013.concerning a gift.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bank of America and its Subsidiaries
On September 29, 2006, Merrill Lynch contributed the entities and assets that constituted its investment management business, MLIM, to BlackRock (the “MLIM Transaction”) in exchange for common and non-voting preferred stock such that, immediately after the closing of the MLIM Transaction, Merrill Lynch held approximately 45.0% of BlackRock’s common stock outstanding and an economic ownership of approximately 49.3% on a fully diluted basis. On January 1, 2009, Bank of America acquired Merrill Lynch. Through a series of transactions concluding in June 2011, Merrill
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Lynch and its affiliates disposed of their equity interests in BlackRock and, to our knowledge, no longer beneficially own any material amount of BlackRock’s voting common stock or outstanding capital stock.
Thomas K. Montag, Co-Chief Operating Officer of Bank of America, continues to serve as a director of BlackRock, but will not be re-nominated for election at the 2014 Annual Meeting.
Global Distribution Agreement with Merrill Lynch
On September 29, 2006, BlackRock entered into a global distribution agreement with Merrill Lynch. This agreement was amended and restated on July 16, 2008 and again on November 15, 2010 and all descriptions of the agreement in this Proxy Statement reflect the agreement as amended and restated. The global distribution agreement provides a framework under which Merrill Lynch distributes BlackRock’s investment advisory products (including those of the former MLIM business). The total amount expensed by BlackRock during 2013 relating to Merrill Lynch distribution and servicing of products covered by the global distribution agreement, including mutual funds, separate accounts, liquidity funds, alternative investments and insurance products, was approximately $181.2 million. In addition, BlackRock recorded other revenue of $570,000 related to fees for certain Merrill Lynch products pursuant to the global distribution agreement.
Pursuant to the global distribution agreement, Merrill Lynch has agreed to cause each of its distributors to continue distributing BlackRock covered products and covered products of the former MLIM business that it distributed as of the date of the global distribution agreement on the same economic terms as were in effect on the date of the global distribution agreement or as the parties otherwise agree. For new covered products introduced by BlackRock to Merrill Lynch for distribution that do not fall within an existing category, type or platform of covered products distributed by Merrill Lynch, the Merrill Lynch distributors must be offered the most favorable economic terms offered by BlackRock to other distributors of the same product. If a covered product that does not fall within an existing category, type or platform of covered products distributed by Merrill Lynch becomes part of a group or program of similar products distributed by the Merrill Lynch distributors, some of which are sponsored by managers other than BlackRock, the economic terms offered by Merrill Lynch distributors to BlackRock for the distribution of such covered products must be at least as favorable as the most favorable economic terms to which any such product is entitled. The term of the global distribution agreement expired on January 1, 2014 and the agreement was automatically renewed for an additional three-year term. The term of the agreement will automatically renew, subject to certain conditions and for such annual or other periods as the parties may agree.
Sales Incentive Restrictions
Merrill Lynch may not, and must cause its distributors not to, provide its sales force with economic incentives for the sale of products that compete with covered products of BlackRock that are any greater than the sales incentives provided to the BlackRock covered products. However, no Merrill Lynch distributor is prohibited from selling products that provide for different rates of sales load, or placement, Rule 12b-1 of the Investment Company Act of 1940, or other related fees.
Product Availability
During the term of the global distribution agreement, BlackRock must permit each Merrill Lynch distributor to distribute covered products of the former MLIM business, on a basis not less favorable than they were distributed by such Merrill Lynch distributor prior to BlackRock’s acquisition of MLIM or as the parties otherwise agree. For any other covered product in which a Merrill Lynch distributor expresses an interest to BlackRock, upon request of such distributor, BlackRock must use all commercially reasonable efforts to cause each such Merrill Lynch distributor to have the right to distribute such products on a basis not less favorable than that on which any Merrill Lynch distributor distributed comparable covered products of the former MLIM business in the channel in question or other products that would generally be viewed as competitive with such covered products.
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New Products
During the term of the global distribution agreement, Merrill Lynch must, upon notice from BlackRock, subject to applicable law, standards and practices, use all commercially reasonable efforts to provide distribution services and access to Merrill Lynch distributors for any new covered product on terms in accordance with the global distribution agreement. However, neither Merrill Lynch nor any Merrill Lynch distributor may require BlackRock to offer any new covered products or limit BlackRock from developing or launching any new covered products.
Transition Services Agreement with Merrill Lynch
On September 29, 2006, BlackRock entered into a transition services agreement with Merrill Lynch and its controlled affiliates to allow BlackRock to transition from relying on Merrill Lynch for various functions for the former MLIM business to using BlackRock’s own systems and to allow Merrill Lynch to transition from relying on the former MLIM business for various functions to using Merrill Lynch’s own systems. The services provided in the 12 months prior to September 29, 2006 continue to be provided at the same general standard of service as they were provided prior to September 29, 2006, until such time as the service recipient is able to provide such services (or a substitute) on its own. The pricing for such services is required to be consistent with historical practices. The total amount expensed by BlackRock for transition services payable to Merrill Lynch in 2013 was $2.5 million.
Other Transactions with Bank of America and its Subsidiaries
In addition to the arrangements set forth pursuant to the global distribution agreement and transition services agreement, BlackRock provides investment advisory and administration services to Merrill Lynch and certain other Bank of America subsidiaries and separate accounts for a fee based on AUM. The amount of investment advisory and administration fees earned from Merrill Lynch and other Bank of America subsidiaries in relation to these services in 2013 totaled $51.4 million.
On March 10, 2011, BlackRock and certain of its subsidiaries entered into a five-year $3.5 billion unsecured revolving credit facility (the “Credit Facility”), including a $1.0 billion letter of credit sub-facility and a $250 million swingline sub-facility, for which Merrill Lynch, Pierce, Fenner & Smith Incorporated and several other financial institutions serve as joint lead arrangers and joint bookrunners and for which Bank of America and several other financial institutions serve as documentation agents. BlackRock’s obligations under the Credit Facility are unsecured and are not guaranteed by any of its subsidiaries. All obligations of any subsidiary borrower under the Credit Facility are guaranteed by BlackRock. The Credit Facility was amended in March 2012, April 2012 and March 2013 to extend the maturity and/or increase the aggregate commitment amount. On March 28, 2014, the Credit Facility was further amended to extend the maturity date by one year to March 2019, provide new reduced pricing terms and adjust the letter of credit fronting exposure amongst certain lenders. Bank of America is a lender under the Credit Facility, with a commitment of $255 million as of December 31, 2013. Bank of America and its affiliates received approximately $214,000 in fees in connection with the Credit Facility in 2013. BlackRock had no amounts outstanding under the Credit Facility as of December 31, 2013.
On October 14, 2009, BlackRock entered into a commercial paper program (the “Commercial Paper Program”) under which BlackRock may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3 billion. Banc of America Securities LLC and three other financial institutions are dealers under the Commercial Paper Program and may, pursuant to their respective commercial paper dealer agreements with BlackRock, either purchase from BlackRock or arrange for the sale by BlackRock of notes pursuant to an exemption from federal and state securities laws. In May 2011 and May 2012, BlackRock increased the maximum aggregate amount that could be borrowed under the Commercial Paper Program. On April 30, 2013, BlackRock further increased the maximum aggregate amount that may be borrowed under the Commercial Paper Program to $3.99 billion.
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In connection with the MLIM Transaction, Merrill Lynch agreed to provide reimbursement to BlackRock for employee incentive awards issued to former MLIM employees who became BlackRock employees. Reimbursements will amount to 50% of the total amount of awards to former MLIM employees between $100 million and $200 million. BlackRock has issued total eligible incentive compensation to qualified employees in excess of $200 million pursuant to this agreement.
BlackRock provides risk management analytic advisory services to Merrill Lynch, for which it received an annual fee of $1.0 million.
BlackRock incurred expenses of $9.6 million for launch costs to Merrill Lynch for new closed-end funds in 2013.
In 2013, BlackRock paid $30.0 million to Merrill Lynch and affiliates related to sales commissions for certain distribution financing arrangements to receive certain cash flows from sponsored open-end mutual funds sold without a front-end sales charge. Such sales commissions are generally capitalized by BlackRock at the time of payment and are subsequently amortized over periods ranging from one to six years.
In addition, BlackRock incurred expenses of $3.8 million for service fees related to certain institutional clients in 2013. BlackRock also incurred expenses for marketing and promotional activities with Merrill Lynch, primarily joint training sessions, of $3.3 million in 2013.
BlackRock has retrocession contracts with Bank of America/Merrill Lynch for various mutual fund distribution services to be performed on behalf of certain non-U.S. based funds managed by BlackRock. BlackRock paid approximately $68.4 million to Bank of America/Merrill Lynch for such arrangements in 2013.
An affiliate of Bank of America acts as administrator for BlackRock’s retirement savings and deferred compensation plans, for which BlackRock paid Bank of America approximately $553,000 in 2013.
In the ordinary course of business, Bank of America and its subsidiaries provide additional distribution and marketing support services to BlackRock in order to promote the sale of its funds.
Transactions between BlackRock Funds and Client Accounts and Bank of America 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 Bank of America and its subsidiaries. The amount of compensation or other value received by Bank of America 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. Bank of America or its subsidiaries may also act as the underwriter of securities purchased by BlackRock managed funds and accounts. For transactions in equity securities in which Bank of America or its subsidiaries acts as a broker for BlackRock, a transaction commission is normally charged. The estimated amount of net commissions generated in favor of Bank of America in 2013 was approximately $54 million. Bank of America (including its subsidiaries) was among one of BlackRock’s many fixed income trading counterparties in 2013. Fixed income and certain other securities and financial assets are typically not traded on a commission basis and, accordingly, the amounts earned by Bank of America and its subsidiaries on such transactions cannot be determined.
Bank of America and its affiliates also act from time to time in the ordinary course of business as the prime clearing broker for certain of BlackRock’s hedge funds and funds of funds. Additionally, Bank of America or its subsidiaries may from time to time in the ordinary course of business make loans to
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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 such loans. BlackRock may be an investor in or co-investor alongside these funds and accounts.
Merrill Lynch and certain other Bank of America affiliates (together with affiliates of Wachovia Corporation) were co-arrangers of the permanent financing to the funds that acquired the Peter Cooper Village and Stuyvesant Town apartment complex in New York City in November 2006. As of December 31, 2013, approximately $4.4 billion of this financing, including a $3.0 billion senior loan and mortgage, remained outstanding, excluding accrued interest. As of December 31, 2013, BlackRock owned a 50% interest in the general partner of the funds and had also made a minority equity investment in the funds. These financings were established in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable loans. Following a default on such financing in January 2010, the special servicer representing the senior lenders of this financing commenced an action to foreclose the senior loan and mortgage on February 16, 2010. In addition, the senior lenders have obtained ownership of certain mezzanine debt secured by ownership interests in the borrower of the mortgage on which the funds have also defaulted. Accordingly, the lenders have the ability to foreclose on such ownership interests and thus acquire indirect ownership of the apartment complex. Any such foreclosure would, upon completion, eliminate the interest of the funds in the apartment complex.
BlackRock products and client accounts also enter into a variety of other arrangements with Bank of America and its affiliates on an arm’s length basis in the ordinary course of business. Such arrangements include, but are not limited to, serving as custodian, trustee 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 Bank of America or its subsidiaries, bank account arrangements, derivative transactions, letters of credit, securities lending, distribution, 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 certain cases, BlackRock may be responsible for payment of fees incurred in excess of such caps and such amounts would be reflected in the fees for administrative services described above. Additionally, Bank of America 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.
PNC and its Subsidiaries
As of March 31, 2014,2016, PNC beneficially owned approximately 21.0%21.1% of BlackRock’s common stock outstanding.
James E. Rohr, the Executive Chairman of PNC, and William S. Demchak, Chairman, President and Chief Executive Officer of PNC, serveserves as directorsa director of BlackRock. Mr. Rohr notified BlackRock that he willPNC has elected not seek or accept re-electionto appoint a second director to the Board of Directors at this time, though it reserves the 2014 Annual Meeting. PNC has notified BlackRock that for the time being it will not designate a directorright to replace Mr. Rohr on the Board of Directors.do so. In addition, PNC has been permitted to invite ana non-voting observer to attend Board of Director meetings as a non-voting guest. Following Mr. Rohr’s retirement at the 2014 Annual Meeting, this PNC observer is expected to be themeetings. Gregory B. Jordan, General Counsel and& Head of Regulatory and Governmental Affairs of PNC.PNC, is the PNC observer.
BlackRock provides investment advisory and administration services to certain PNC subsidiaries and separate accounts for a fee based on AUM.assets under management. The amount of investment advisory and administration fees earned from PNC and its affiliates in relation to these services in 20132015 totaled $5.1$3.6 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 $7.1$6.9 million for 2013.
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2015. BlackRock also recorded revenue of $2.9$2.7 million related to non-discretionary trading services and $260,000 for certain advisory valuation services.
BlackRock paid $2.1$2.0 million to PNC affiliates in 20132015 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 managedBlackRock-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 2013.2015. 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 such 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 such cases, BlackRock may be responsible for payment of fees incurred in excess of such caps and such 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.
Lease ObligationsObligation with Merrill Lynch and PNC
In 2013,2015, BlackRock was a lessee under five leases or subleases with Merrill Lynch, all of which were entered into in connection with the September 29, 2006 Merrill Lynch transaction. In 2013, BlackRock was also a lessee under one lease with PNC.PNC, which terminated on September 30, 2015. Prior to the termination of the lease, BlackRock paid approximately $704,000$18,700 for these propertiesthis property as a lessee in 2013.2015.
Stockholder Agreement with PNC
On February 15, 2006, BlackRock entered intois a party to an implementation and stockholder agreement with PNC. The agreement was amended and restated on February 27, 2009 and was further amended on June 11, 2009. The agreementPNC (the “PNC Stockholder Agreement”), which governs the ownership interests and relationship of PNC in and with BlackRock. BlackRock and PNC are also parties to a registration rights agreement.
The following paragraphs describe certain key provisions of the implementation and stockholder agreement with PNC Stockholder Agreement as amended and restated.
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Share Ownership
The PNC implementation and stockholder agreementStockholder 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 itsthe PNC voting ownership cap.
Prohibited Actions
At all times, 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:
Additional Purchase of Voting Securities
The PNC implementation and stockholder agreementStockholder 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
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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 the closing of the MLIM Transaction,September 29, 2006, after taking into account any share repurchases by BlackRock since the closing of the MLIM TransactionSeptember 29, 2006 and transfers by PNC, decrease PNC’s total voting power to 90% or less of the PNC ownership cap.
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 theirits 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 implementation and stockholder agreementStockholder Agreement provides that BlackRock will use its best efforts to cause the election at each annual meeting of stockholders such that the Board of Directors will consist of no more than 19 directors:
Of the current directors, James E. Rohr and William S. Demchak werewas designated by PNC. PNC has elected not to appoint a second director to the Board of Directors 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.
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Voting Agreement
PNC has agreed to vote all of its voting shares in accordance with the recommendation of the Board of Directors on all matters to the extent consistent with the provisions of the PNC implementation and stockholder agreement,Stockholder Agreement, including the election of directors.
Approvals
Under the PNC implementation and stockholder agreement,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:
Committees
Consistent with applicable laws, rules and regulations, the Audit Committee, the MDCC and the Nominating and 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 implementation and stockholder agreementStockholder 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 implementation and stockholder agreementStockholder 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.
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Termination
The PNC implementation and stockholder agreementStockholder 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.
Registration Rights Agreements with PNC
On September 29, 2006, BlackRock entered into a registration rights agreement with PNC. Pursuant to the agreement with PNC, PNC has the right to require BlackRock to register certain BlackRock securities owned by it. PNC has the right to make two such requests in any 12-month period subject to each request being for securities with a minimum value of $150,000,000. Additionally, the agreement grants PNC customary “piggyback” registration rights. Pursuant to the registration rights agreement, BlackRock may suspend registration for a reasonable period of time if the Chief Executive Officer of BlackRock determines in good faith, upon consultation with counsel, that the use of a registration statement would require premature disclosure of non-public information, the disclosure of which would be materially adverse to BlackRock, with such suspension period to be limited to 60 days with the total number of suspension days of a 12-month period limited to 120 days. Subject to the terms of the stockholder agreement, BlackRock is generally required to pay all expenses in connection with obtaining registrations under the registration rights agreement while PNC will pay all sales and commission-related expenses.
Stockholder Agreement with Merrill Lynch
On February 15, 2006, BlackRock entered into a stockholder agreement with Merrill Lynch, which governed the ownership interests and relationship of Merrill Lynch in and with BlackRock. This agreement was amended and restated on February 27, 2009, June 11, 2009 and November 15, 2010. The stockholder agreement expired on July 31, 2013. The terms of the stockholder agreement provided for, among other things:
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Transactions with Directors, Executive Officers and Other Related Parties
Gary S. Shedlin, Senior Managing Director and Chief Financial Officer of BlackRock, was formerly Vice Chairman, Investment Banking and a Managing Director in the Financial Institutions Group at Morgan Stanley from 2010 to 2013. Morgan Stanley and its affiliates have provided, and may in the future provide, investment banking, commercial lending, financial advisory and other services for BlackRock. Also, from time to time in the ordinary course of business, acting as agent for its clients, BlackRock effects transactions in securities and other financial assets with Morgan Stanley and its subsidiaries. An affiliate of Morgan Stanley is a joint lead arranger, joint bookrunner and documentation agent under BlackRock’s Credit Facility with a commitment of $255 million as of December 31, 2013. BlackRock had no amounts outstanding under the Credit Facility as of December 31, 2013. Morgan Stanley and its affiliates received approximately $214,000 in fees in connection with BlackRock’s Credit Facility in 2013.
From time to time, certain directors, their family members and related charitable foundations may have investments in various BlackRock investment vehicles or accounts. For certain types of products and services offered by BlackRock’s subsidiaries, BlackRock directors may receive discounts that are available to our employees generally. In addition, certain of the companies or affiliates of the companies that employ BlackRock’s independent directors may have investments in various BlackRock investment vehicles or accounts. These investments are entered into in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with similarly situated customers and eligible employees.
Policy Regarding the Review, Approval or Ratification of Transactions with Related Persons
On February 27, 2007, the Board of Directors adopted a written policy regarding related person transactions, which governs and establishes procedures for the approval and ratification of 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.
The policy provides that related person transactions must be approved by a majority of the uninterested members of the Nominating and Governance Committee or the Board of Directors. In the event it is not practicable for BlackRock to wait for approval until the next meeting of the Nominating and Governance Committee or the Board of Directors, the Chairperson of the Nominating and Governance Committee may approve the transaction.
In reviewing any related person transaction, all of the relevant facts and circumstances must be considered, including (i) the related person’s relationship to BlackRock and his or her interest in the transaction, (ii) the benefits to BlackRock, (iii) 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, stockholder or executive officer, (iv) the availability of comparable products or services that would avoid the need for a related person transaction and (v) the terms of the transaction and the terms available to unrelated third parties or to employees generally.
The policy provides that transactions (other than transactions in the ordinary course of business) with PNC are governed by the special approval procedures set forth in the PNC implementation and stockholder agreement.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
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the directors of BlackRock, excluding those designated for appointment by the party wishing to enter into the transaction. Of the current directors, James E. Rohr and William S. Demchak werewas designated by PNC.
Prior to the adoption of this policy, related person transactions, including certain of the transactions described above under “—Bank of America and its Subsidiaries,” “—PNC and its Subsidiaries,”Subsidiaries” and “—Stockholder Agreement with PNC,”PNC”, were reviewed with the Board of Directors at the time of entering into such transactions.
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APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED BLACKROCK, INC. 1999 STOCK AWARD AND INCENTIVE PLAN AND RE-APPROVAL OF PERFORMANCE GOALS
Proposed Amendment to the Stock Plan
The BlackRock Stock Plan enables the MDCC to make discretionary stock option, stock appreciation, restricted stock, RSU, dividend equivalent and other long-term stock-based or cash-based awards to selected employees, non-employee directors and independent contractors of BlackRock and its present or future affiliates. The Board of Directors believes that the Stock Plan is instrumental in attracting future Stock Plan participants and in retaining and motivating current Stock Plan participants.
BlackRock is asking stockholders to approve an amendment to the Stock Plan in order to (i) increase the number of shares of common stock authorized for issuance under the Stock Plan from 27,000,000 to 34,500,000 shares and (ii) prohibit the repricing of stock options under the Stock Plan. BlackRock is also asking stockholders to re-approve the performance goals set forth in the Stock Plan. This proposal is being submitted to BlackRock’s stockholders in order to ensure the Stock Plan’s compliance with Section 162(m) of the Internal Revenue Code and with the NYSE Corporate Governance Standards concerning stockholder approval of equity compensation plans (the “Corporate Governance Standards”), as further described below. The Board of Directors believes that the existing number of shares available under the Stock Plan will not be sufficient to meet BlackRock’s anticipated needs to attract, reward and/or retain top talent. The increase in the number of shares available under the Stock Plan will allow the Board of Directors to continue to provide equity awards consistent with prior practice. The Board of Directors believes that the combination of short-term and long-term incentives is instrumental in attracting new professionals and retaining top talent.
BlackRock has not historically repriced stock options or other awards. In order to demonstrate commitment to this principle, the Board of Directors has determined that it is advisable to include a prohibition against repricing without stockholder approval in the Stock Plan itself.
Section 162(m) of the Internal Revenue Code denies a tax deduction for certain compensation in excess of $1 million per year paid by a company to Covered Employees (as defined in Section 162(m) of the Internal Revenue Code). Certain compensation, including compensation based on the attainment of performance goals, is excluded from this deduction limit if certain requirements are met. Among these requirements is that the material terms (including the performance goals) pursuant to which the compensation is to be paid (including the business criteria on which the performance goal is based and the maximum amount that can be paid to any individual if the performance goal is attained) are disclosed and approved by stockholders prior to payment. Accordingly, if the amendment to the Stock Plan is approved by stockholders and other conditions of Section 162(m) of the Internal Revenue Code relating to the exclusion for performance-based compensation are satisfied, compensation paid to Covered Employees pursuant to the Stock Plan should not be subject to the deduction limit of Section 162(m) of the Internal Revenue Code.
The Corporate Governance Standards provide that stockholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto. The Stock Plan is an equity compensation plan (i.e., a plan that provides for the delivery of our common stock to BlackRock employees as compensation for their services) and we are asking in this proposal for your approval of the amendment to the Stock Plan in compliance with the Corporate Governance Standards.
BlackRock is also asking its stockholders to re-approve the performance goals set forth in the Performance Plan. This proposal is described further in “Item 3—Re-Approval of Performance Goals Under the Amended and Restated BlackRock, Inc. 1999 Annual Incentive Performance Plan.”
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The following summary of the material features of the Stock Plan does not purport to be complete and is qualified by the specific provisions of the Stock Plan, a copy of which is available to any stockholder of BlackRock upon written request to the Corporate Secretary of BlackRock at BlackRock’s principal executive offices. Requests for copies should be addressed to:
BlackRock, Inc.
Attn: Corporate Secretary
55 East 52nd Street
New York, New York 10055
Shares Available
An aggregate of 27,000,000 shares of common stock is currently authorized for issuance under the Stock Plan. As of March 31, 2014, awards representing 5,876,366 shares of common stock were outstanding under the Stock Plan and 1,669,953 shares of common stock remained available for grant. If BlackRock stockholders approve this proposal, an aggregate of 34,500,000 shares of BlackRock common stock will be authorized for grant under the Stock Plan and 9,169,953 shares of common stock will remain available for grant. No more than 4,000,000 shares of common stock may be covered by stock-based awards to any single individual in any plan year under the Stock Plan.
The number of shares of common stock authorized for issuance under the Stock Plan, as well as the number of shares subject to outstanding awards and the annual limitation on grants to any single individual, are subject to equitable adjustment upon the occurrence of any stock dividend or other distribution, recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange or other similar corporate transaction or event.
Stock Plan Administration
The MDCC administers the Stock Plan. The MDCC consists exclusively of directors who are “non-employee directors” for purposes of Rule 16b-3 of the Exchange Act and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code. The MDCC has authority, subject to the provisions of the Stock Plan, to, among other things, determine the persons to whom awards will be granted, determine the terms and conditions (including any applicable performance criteria) of the awards, and prescribe, amend and rescind rules and regulations relating to the Stock Plan.
Eligibility
Grants of awards may be made under the Stock Plan to selected employees, non-employee directors and independent contractors of BlackRock and its present or future affiliates, at the discretion of the MDCC. As of March 31, 2014, approximately 11,475 BlackRock employees were eligible for awards under the Stock Plan. The closing price of a share of common stock on the NYSE on March 31, 2014 was $314.48.
Stock Options and Appreciation Rights
Stock option awards may be either “incentive stock options,” as such term is defined in Section 422 of the Internal Revenue Code, or nonqualified stock options. Incentive stock options may only be granted to employees. The exercise price of an option may not be less than the fair market value per share of common stock on the date of grant. The exercise price of a stock option may be paid in cash, by the surrender of common stock or by a combination of these methods. An award agreement may also allow an option recipient to elect to pay the exercise price by having shares of common stock sold by a broker pursuant to a cashless same-day sale exercise.
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Stock appreciation rights may be granted alone or together with stock options. A stock appreciation right is a right to be paid an amount equal to the excess of the fair market value of a share of common stock on the date the stock appreciation right is exercised over either the fair market value of a share of common stock on the date of grant (in case of a free standing stock appreciation right) or the exercise price of the related stock option (in case of a tandem stock appreciation right). Payment can be made in cash, common stock or both, as specified in the award agreement or as determined by the MDCC.
Stock options and stock appreciation rights are exercisable at such times and upon such conditions as the MDCC may determine, as reflected in the applicable award agreement. The MDCC determines the exercise period except that, in the case of an incentive stock option, the exercise period may not exceed ten years from the date of grant of the incentive stock option.
Except to the extent that the applicable award agreement provides otherwise, in the event of the termination of employment of an employee or termination of the independent contractor relationship, the right to exercise stock options and stock appreciation rights held by such employee or independent contractor will cease.
Restricted Stock and Restricted Stock Units
A restricted stock award is an award of common stock and a RSU award is an award of the right to receive cash or common stock at a future date. In each case, the award is subject to restrictions on transferability and such other restrictions, if any, as the MDCC may impose at the date of grant. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established performance goals, in such installments, or otherwise, as the MDCC may determine. Except to the extent restricted under the award agreement relating to the restricted stock, a participant granted restricted stock will have all of the rights of a stockholder, including, without limitation, the right to vote and the right to accrue dividend equivalents equal to the dividends paid on shares of common stock. Such dividend equivalents will be paid at the time of settlement of such awards.
Upon termination of employment or termination of the independent contractor relationship during the applicable restriction period, shares of restricted stock, RSUs and accrued but unpaid dividends or dividend equivalents that are subject to restrictions will be forfeited unless the award agreement provides otherwise. The MDCC can determine that restrictions or forfeiture conditions relating to restricted stock or RSUs will be waived in whole or in part in the event of terminations resulting from specified causes. The MDCC may in other cases waive in whole or in part the forfeiture of restricted stock.
Dividend Equivalents and Other Stock- or Cash-Based Awards
The MDCC may grant a participant the right to receive cash or common stock, in each case equal in value to dividends paid with respect to a specified number of shares of common stock. These dividend equivalents may be awarded on a freestanding basis or in connection with another award and may be paid currently or on a deferred basis. The MDCC is also authorized to grant stock-based and cash-based awards. The MDCC will determine the form of “other stock-based awards” and “other cash-based awards” that may be awarded under the Stock Plan, as well as all of the terms and conditions applicable to these awards, including whether the vesting or payment of an award will be based on the attainment of one or more performance goals. Other stock-based awards will be valued in whole or in part by reference to, or will be otherwise based on, shares of common stock. Other stock-based awards may be granted alone or in addition to other awards under the Stock Plan. The maximum payment that any “covered employee” within the meaning of Section 162(m) may receive pursuant to an “other cash-based award” in respect of any fiscal year during a performance period shall be $1,000,000.
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Performance Goals
To the extent the MDCC grants an award under the Stock Plan with payment or vesting based on the attainment of one or more performance goals, such payment or vesting is permitted if, and only to the extent that, the performance goals established by the MDCC are met. The performance goals may relate to the performance of BlackRock, a subsidiary, affiliate, division or strategic business unit or any combination thereof. The performance goals will be based on one or more of the following criteria: (i) before-tax income or after-tax income, (ii) operating profit, (iii) return on equity, assets, capital or investment, (iv) earnings or book value per share, (v) sales or revenues, (vi) operating expenses, (vii) stock price appreciation and (viii) implementation or completion of critical projects or processes. Where applicable, the performance goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to the performance of BlackRock relative to a market index, a group of other companies or a combination thereof, all as determined by the MDCC. The performance goals may include a threshold level of performance below which no payment will be made, levels of performance at which specified payments will be made and a maximum level of performance above which no additional payment will be made. To the extent possible, each of the foregoing performance goals will be determined in accordance with generally accepted accounting principles and will be subject to certification by the MDCC. The performance measure or measures and the performance goals established by the MDCC may be different for different fiscal years and different goals may be applicable to BlackRock and its subsidiaries and affiliates.
Transferability
Except as otherwise determined by the MDCC, awards granted under the Stock Plan may be transferred only by will or by the laws of descent and distribution.
Amendment and Termination
The Stock Plan may be altered, amended, suspended or terminated by the Board of Directors or the MDCC, in whole or in part, except that no amendment that requires stockholder approval in order for the Stock Plan to continue to comply with state law, stock exchange requirements or other applicable law will be effective unless the amendment has received the required stockholder approval. In addition, no amendment may be made that adversely affects any of the rights of any award holder previously granted an award without the holder’s consent. The Stock Plan will terminate on March 27, 2016.
United States Federal Income Tax Information
The following summary is intended as a general guide to the United States federal income tax consequences relating to the issuance and exercise of stock options granted under the Stock Plan. This summary does not attempt to describe all possible federal or other tax consequences of such grants or tax consequences based on particular circumstances.
Incentive Stock Options
An optionee generally recognizes no taxable income for income tax purposes as the result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Internal Revenue Code. Optionees who neither dispose of their shares (“iso shares”) within two years after the stock option grant date nor within one year after the exercise date normally will recognize a long-term capital gain or loss equal to the difference, if any, between the sale price and the amount paid for the iso shares. If an optionee disposes of the iso shares within two years after the stock option grant date or within one year after the exercise date (each a “disqualifying disposition”), the optionee will realize ordinary income at the time of the disposition in an amount equal to the excess, if any, of the fair
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market value of the iso shares at the time of exercise (or, if less, the amount realized on such disqualifying disposition) over the exercise price of the iso shares being purchased. Any additional gain will be capital gain, taxed at a rate that depends upon the amount of time the iso shares were held by the optionee. BlackRock will be entitled to a deduction in connection with the disposition of the iso shares only to the extent that the optionee recognizes ordinary income on a disqualifying disposition of the iso shares.
Nonstatutory Stock Options
An optionee generally recognizes no taxable income as the result of the grant of a nonstatutory stock option. Upon the exercise of a nonstatutory stock option, the optionee normally recognizes ordinary income equal to the difference between the stock option exercise price and the fair market value of the shares on the exercise date. If the optionee is a BlackRock employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any subsequent gain or loss, generally based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss. BlackRock generally is entitled to a deduction equal to the amount of ordinary income recognized by the optionee as a result of the exercise of a nonstatutory stock option.
New Plan Benefits and Additional Information
Future grants under the Stock Plan will be made at the discretion of the MDCC and, accordingly, are not yet determinable. In addition, benefits under the Stock Plan will depend on a number of factors, including the fair market value of common stock on future dates and the exercise decisions made by optionees. Consequently, it is not possible to determine the benefits that might be received by participants under the Stock Plan. During the last fiscal year, BlackRock did not grant any stock options or stock appreciation rights to any of the executive officers named in the Summary Compensation Table; however, all executive officers as a group (consisting of twelve individuals, including the six NEOs) were granted an aggregate of 116,735 RSUs and all employees, including all officers who are not executive officers, as a group were granted an aggregate of 1,543,797 shares of restricted stock and RSUs. For information relating to the grants under the Stock Plan for the last fiscal year to BlackRock’s NEOs, see the “2013 Grants of Plan-Based Awards” table.
Board of Directors Recommendation
The Board of Directors recommends a vote “FOR” the approval of the amendment to the Stock Plan and re-approval of the performance goals under the Stock Plan.
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RE-APPROVAL OF PERFORMANCE GOALS UNDER THE AMENDED AND RESTATED
BLACKROCK, INC. 1999 ANNUAL INCENTIVE PERFORMANCE PLAN
Proposed Re-Approval of the Performance Goals
BlackRock is asking its stockholders to re-approve the performance goals set forth in the Performance Plan. This Proposal is being submitted to BlackRock’s stockholders in order to ensure the Performance Plan’s continued compliance with Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code denies a tax deduction for certain compensation in excess of $1 million per year paid by a company to Covered Employees. Certain compensation, including compensation based on the attainment of performance goals, is excluded from this deduction limit if certain requirements are met. Among these requirements is that the material terms (including the performance goals) pursuant to which the compensation is to be paid (including the business criteria on which the performance goal is based and the maximum amount that can be paid to any individual if the performance goal is attained) are disclosed and approved by stockholders prior to payment. Accordingly, if the performance goals under the Performance Plan are re-approved by stockholders and other conditions of Section 162(m) of the Internal Revenue Code relating to the exclusion for performance-based compensation are satisfied, compensation paid to Covered Employees pursuant to the Performance Plan should not be subject to the deduction limit of Section 162(m) of the Internal Revenue Code.
The following summary of the material features of the Performance Plan does not purport to be complete and is qualified by the specific provisions of the Performance Plan, a copy of which is available to any stockholder of BlackRock upon written request to the Corporate Secretary of BlackRock at BlackRock’s principal executive offices. Requests for copies should be addressed to:
BlackRock, Inc.
Attn: Corporate Secretary
55 East 52nd Street
New York, New York 10055
Purpose
The purpose of the Performance Plan is to encourage behavior by participants that creates superior financial performance and strengthens the commonality of interests between the participants and stockholders in creating superior stockholder value.
Awards; Eligible Employees
Awards under the Performance Plan are in the form of annual bonuses. These awards may be granted to officers and other employees of BlackRock in the sole discretion of the MDCC. As of March 31, 2014, there were approximately 11,475 individuals who may be considered for participation in the Performance Plan. The MDCC will specify the performance goals applicable to each award.
Administration
The Performance Plan is administered by the MDCC. The MDCC has the authority to administer the Performance Plan, including, without limitation, the authority to grant awards; to determine the persons to whom and the time or times at which awards will be granted; to determine the terms, conditions, restrictions and performance criteria, including performance goals, relating to any award; to
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determine whether, to what extent, and under what circumstances an award may be settled, cancelled, forfeited or surrendered; to construe and interpret the Performance Plan and any award; to prescribe, amend and rescind rules and regulations relating to the Performance Plan; to determine the terms and provisions of award agreements; to make equitable adjustments to the performance goals in recognition of unusual or non-recurring events affecting BlackRock or any subsidiary or affiliate or the financial statements of BlackRock or any subsidiary or affiliate, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles; and to make all other determinations deemed necessary or advisable for the administration of the Performance Plan.
Performance Goals
Payment of awards to participants is permitted if, and only to the extent that, performance goals established by the MDCC are met for BlackRock’s fiscal year. The performance goals may relate to the performance of BlackRock, a subsidiary, affiliate, division or strategic business unit or any combination thereof. The performance goals will be based on one or more of the following criteria: (i) before-tax income or after-tax income, (ii) operating profit, (iii) return on equity, assets, capital or investment, (iv) earnings or book value per share, (v) sales or revenues, (vi) operating expenses, (vii) stock price appreciation and (viii) implementation or completion of critical projects or processes. Where applicable, the performance goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to the performance of BlackRock relative to a market index, a group of other companies or a combination thereof, all as determined by the MDCC. The performance goals may include a threshold level of performance below which no payment will be made, levels of performance at which specified payments will be made and a maximum level of performance above which no additional payment will be made. To the extent possible, each of the foregoing performance goals will be determined in accordance with generally accepted accounting principles and will be subject to certification by the MDCC. The performance measure or measures and the performance goals established by the MDCC may be different for different fiscal years and different goals may be applicable to BlackRock and its subsidiaries and affiliates.
Annual Limitation on Bonus Payments to Any Individual
The Performance Plan currently provides that no executive officer can receive an annual bonus under the Performance Plan in excess of 1.5% of BlackRock’s total annual revenue, determined in accordance with generally accepted accounting principles, excluding non-operating income. The MDCC may, in its discretion, reduce or eliminate any award under the Performance Plan, but in no event may the MDCC discretionarily increase the amount of an award payable to any Covered Employee.
Payment of Awards
Unless otherwise determined by the MDCC, all payments in respect of awards granted under the Performance Plan will be made, in cash, within a reasonable period after the end of BlackRock’s fiscal year.
Amendment; Termination
The Board of Directors or the MDCC may from time to time amend, suspend or discontinue the Performance Plan. No amendment, however, may affect adversely any of the rights of any participant under any award following the end of the applicable performance period. In addition, the Performance Plan provides that, absent the requisite approval of BlackRock’s stockholders, no amendment may be made to the Performance Plan that would require such approval in order to remain compliant with Section 162(m) of the Internal Revenue Code.
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New Plan Benefits and Additional Information
Since benefits under the Performance Plan will be determined by the MDCC and performance goal criteria may vary from performance period to performance period and from participant to participant, benefits to be paid under the Performance Plan are not determinable at this time. As discussed in “Compensation Discussion and Analysis,” for the last fiscal year the six executive officers listed in the Summary Compensation Table shared in a compensation pool based on pre-incentive operating income, as determined by the MDCC. A summary of awards made under the Performance Plan for BlackRock’s last fiscal year to these executive officers is contained in the Summary Compensation Table and accompanying footnotes.
Board of Directors Recommendation
The Board of Directors recommends a vote “FOR” the re-approval of the performance goals under the Performance Plan.
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NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
FOR NAMED EXECUTIVE
OFFICERS
In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act), weWe are holding a non-binding advisory vote for stockholders to approve the compensation of our NEOs as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K.
While this vote is advisory, and not binding on our Company, it will provide information to our Board of Directors and the MDCC regarding investor sentiment about our executive compensation philosophy, policies and practices. Our Board and the MDCC value the opinions of our stockholders and, to the extent there is any significant vote against the compensation of NEOs as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the MDCC will evaluate whether any actions are necessary to address those concerns.
In considering their vote, stockholders may wish to review with care the information on BlackRock’s compensation policies and decisions regarding the NEOs presented in “Compensation of Executive Officers” on pages 3133 to 46,50, as well as the discussion regarding the MDCC on pages 20-21.page 22.
Our compensation philosophy is structured to align management’s interests with our stockholders’ 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 of Directors Recommendation
The Board of Directors recommends a vote “FOR” the approval of the compensation of our NEOs.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee conducts a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence. In addition, the Audit Committee considers whether, in order to ensure continuing auditor independence, there should be periodic rotation of the independent registered public accounting firm, taking into consideration the advisability and potential costs and impact of selecting a different firm.
At its meeting on March 11, 2014,9, 2016, the Audit Committee appointed Deloitte & Touche LLP to serve as BlackRock’s independent registered public accounting firm for 2014. This appointment is being submitted to the stockholders for ratification. Representatives of the firm of Deloitte & Touche LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
2016 fiscal year. Deloitte & Touche LLP or its predecessors have served as BlackRock’s independent registered public accounting firm since 2002.
The Audit Committee exercises sole authority to approve all audit engagement fees and terms associated with the retention of Deloitte & Touche LLP. In addition to ensuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit partner and considers whether, in order to ensure continuing auditor independence, there should be regular rotation of the independent registered public accounting firm.partner. The Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP to serve as BlackRock’s independent auditorsregistered public accounting firm is in the best interests of the Company and its stockholders, and we are asking stockholders to ratify the appointment of Deloitte & Touche LLP. Although ratification is not required by our bylaws or otherwise, the Board is submitting the appointment of Deloitte & Touche LLP to our stockholders for ratification because we value our stockholders’ views on this appointment and as a matter of good corporate governance. In the event that stockholders fail to ratify the appointment, it will be considered a recommendation to the Board and the Audit Committee to consider the selection of a different firm. Even if the appointment is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
Fees Incurred by BlackRock for Deloitte & Touche LLP
Aggregate fees incurred by BlackRock for the fiscal years ended December 31, 20132015 and 2012,2014, for BlackRock’s principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates, are set forth below.
2013 | 2012 | 2015 | 2014 | |||||||||||||
Audit Fees(1) | $ | 15,820,748 | $ | 15,832,196 | $ | 16,011,200 | $ | 15,527,253 | ||||||||
Audit-Related Fees(2) | 4,473,667 | 4,511,137 | $ | 4,342,700 | $ | 4,706,583 | ||||||||||
Tax Fees(3) | 1,349,561 | 1,013,951 | $ | 798,300 | $ | 984,600 | ||||||||||
All Other Fees(4) | 369,055 | 413,686 | $ | 233,000 | $ | 385,412 | ||||||||||
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Total | $ | 22,013,031 | $ | 21,770,970 | $ | 21,385,200 | $ | 21,603,848 | ||||||||
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(1) | Audit Fees consisted of fees for the audits of the consolidated financial statements and reviews of the |
(2) | Audit-Related Fees consisted principally of assurance and related services pursuant to Statement on Standards for Attestation Engagements (SSAE) No. 16 and International Standard on Assurance Engagements (ISAE) 3402, fees for employee benefit plan audits, attestation services for Global Investment Performance Standards (GIPS®) verification and other assurance engagements. |
(3) | Tax Fees consisted of fees for all services performed by the independent registered public accounting firm’s tax personnel, except those services specifically related to the audit and review of the financial statements, and consisted principally of tax compliance and reviews of tax returns for certain sponsored investment funds. |
(4) | All Other Fees consisted of fees paid to the principal auditor other than audit, audit-related or tax services. All Other Fees included fees primarily related to regulatory |
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Audit Committee Pre-Approval Policy
In accordance with the BlackRock Audit Committee Pre-Approval Policy (the “Pre-Approval Policy”), all audit and non-audit services performed for BlackRock by BlackRock’s independent registered public accounting firm were pre-approved by the Audit Committee, which concluded that the provision of such services by Deloitte & Touche LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The responsibility for pre-approval of audit and permitted non-audit services includes pre-approval of the fees for such services and the other terms of the engagement. Periodically, the Audit Committee reviews and pre-approves all audit, audit-related, tax and other services that are performed by BlackRock’s independent registered public accounting firm for BlackRock. In the intervals between the scheduled meetings of the Audit Committee, the Audit Committee delegates pre-approval authority under the Pre-Approval Policy to the ChairpersonChairman of the Audit Committee. The ChairpersonChairman must report any pre-approval decisions under the Pre-Approval Policy to the Audit Committee at its next scheduled meeting.
Board of Directors Recommendation
The Board of Directors recommends a vote “FOR” the ratification of Deloitte & Touche LLP as BlackRock’s independent registered public accounting firm for the fiscal year 2014.2016.
The Board is recommending that stockholders approve an amendment to our Amended and Restated Bylaws to implement “proxy access” (the “Amendment”). In October 2015, the Company announced its intention to submit a proxy access bylaw amendment to stockholders for approval at the Annual Meeting. Proxy access allows eligible stockholders to include their own nominees for director in the Company’s proxy materials for an annual meeting of stockholders, along with the candidates nominated by the Board. The Board’s decision to seek stockholder approval of the Amendment reflects its continuing commitment to consider the views of the Company’s stockholders. The Amendment would become effective upon the required approval by our stockholders. The Board believes that the Amendment includes requirements and provisions designed to provide meaningful rights of proxy access to long-term stockholders of BlackRock who have full economic interest in our shares while reducing risks of abuse.
Description of the Proposed Amendment
The following description of the proposed Amendment is only a summary and is qualified in its entirety by reference to the complete text of the Amendment, which is attached to this Proxy Statement as Annex A. You are urged to read the Amendment in its entirety. If the Amendment is approved by stockholders, the Board expects to adopt certain technical and conforming amendments to the advance notice provisions in the bylaws.
Eligibility of Stockholders to Nominate up to 25% of our Directors
Any stockholder or group of up to 20 stockholders who have maintained continuous qualifying ownership of at least 3% of the shares of the Company’s outstanding Common Stock for at least the previous three years would be permitted to include a specified number of director nominees in the Company’s proxy materials for its annual meeting of stockholders. For purposes of the 20-stockholder limit, any two or more funds under common management and investment control or that meet certain other requirements would count as one stockholder.
The maximum number of candidates nominated by all eligible stockholders that the Company would be required to include in the Company’s proxy materials is 25% of the number of directors in office as of the last day on which a notice of proxy access nomination may be delivered to the Company. If the 25% calculation does not result in a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 25%. If one or more vacancies occur on the Board and the Board decides to reduce the size of the Board in connection with the annual meeting, the nominee limit would be calculated based on the reduced number of directors. Any stockholder-nominated candidate who is either subsequently withdrawn or included by the Board in the Company’s proxy materials as a Board-nominated candidate would be counted against the nominee limit, as would any director who was a proxy access nominee for any of the two preceding annual meetings whom the Board decides to nominate for re-election to the Board. No stockholder-nominated candidates would be included in the Company’s proxy materials in the event any stockholder has provided notice of a director nomination under the advance notice provision of our bylaws.
Any nominating stockholder who submits more than one nominee would be required to rank its proposed nominees. If the number of stockholder-nominated candidates exceeds the nominee limit, the highest ranking individual from the list proposed by each nominating stockholder, beginning with the nominating stockholder with the largest qualifying stock ownership and proceeding through the list of nominating stockholders in descending order of qualifying stock ownership, would be selected for inclusion in the proxy materials until the nominee limit is reached.
Calculation of Qualifying Ownership
In order to ensure that the interests of stockholders seeking to include director nominees in the Company’s proxy materials are aligned with those of other stockholders, a nominating stockholder would be deemed to own only those shares of outstanding Common Stock of the Company as to which the stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares. Borrowed or hedged shares would not count as “owned” shares for purposes of the Amendment.
A stockholder will be deemed to “own” shares of outstanding Common Stock that have been loaned by or on behalf of the stockholder to another person if and only if the stockholder has the right to recall such loaned shares on five business days’ notice and agrees to recall the loaned shares promptly upon being notified that any of its nominees will be included in the Company’s proxy materials. A stockholder also will be deemed to own shares of Common Stock held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted in the election of directors and possesses the full economic interest in the shares.
Nominating Procedures
In order to provide adequate time to assess stockholder-nominated candidates, requests to include stockholder-nominated candidates in the Company’s proxy materials must be delivered to or mailed and received at the Company’s principal executive offices no earlier than 150 days and no later than 120 days before the first anniversary of the date that the Company distributed its proxy statement to stockholders for the previous year’s annual meeting of stockholders.
Information Required of All Nominating Stockholders
Each stockholder seeking to include a director nominee in the Company’s proxy materials would be required to provide certain information to the Company, including:
Nominating stockholders also would be required to make certain representations to and agreements with the Company, including:
Information Required of All Stockholder Nominees
Each stockholder nominee would be required to make certain written representations to and agreements with the Company, including:
Stockholder nominees also would be required to submit completed and signed questionnaires required of the Company’s directors, and provide any additional information required for the Board’s independence evaluation and determination.
Exclusion of Stockholder Nominees
The Company would not be required to include a stockholder nominee in the Company’s proxy materials if:
The Board or the chairman of the annual meeting would declare a director nomination by a stockholder to be defective, and such nomination would be disregarded, if (i) the director nominee or the stockholder breaches any of their respective obligations under the Amendment or (ii) the stockholder does not appear at the annual meeting in person or by proxy to present the nomination.
Future Disqualification of Stockholder Nominees
Any stockholder nominee who is included in the Company’s proxy materials but subsequently withdraws from or becomes ineligible for election at the annual meeting, or does not receive at least 25% of the votes cast in favor of his or her election, would be ineligible for nomination for the next two annual meetings.
Supporting Statement
Nominating stockholders would be permitted to include in the Company’s proxy statement for the applicable annual meeting a 500-word statement in support of their nominee(s). The Company may omit any information or statement that the Company, in good faith, believes would violate any applicable law or regulation, including by being materially false or misleading.
REQUIREMENTS, INCLUDING Board of Directors Recommendation
The Board of Directors recommends a vote “FOR” the bylaw amendment to implement proxy access.
STOCKHOLDER PROPOSAL – PROXY VOTING PRACTICES REGARDING EXECUTIVE
COMPENSATION
The Stephen M. Silberstein Revocable Trust (the “Proponent”), 29 Eucalyptus Road, Belvedere, CA 94920, the holder of 582 shares of common stock (according to information provided to BlackRock by the Proponent), has advised us that it intends to introduce the following resolution:
Whereas: BlackRock, like all investment managers, is responsible for voting proxies of companies in its portfolios. It has a fiduciary responsibility (or duty) to vote proxies in a responsible manner, which includes ensuring executive pay is sufficiently tied to performance and discourages excessive and unwarranted CEO pay.
From July 1, 2014 through June 30, 2015, BlackRock approved, with its “Say on Pay” proxy votes, 99 percent of CEO pay packages in the S&P 500 companies. This level of support was higher than that of other investment managers; the average approval rating of 118 of these managers was 90 percent.
We find BlackRock’s voting record inconsistent with evidence on long term performance. BlackRock’s publication “Our Approach to Executive Compensation” states that it will oppose advisory votes in specific cases, including when: “We determine that compensation is excessive relative to peers without appropriate rationale or explanation, including the appropriateness of the company’s selected peers.”
As noted above, the company has voted in favor of most executive compensation advisory votes (Say on Pay proposals). Yet a report by the As You Sow Foundation,The 100 Most Overpaid CEOS, shows that when viewed over the long term, growth in executive compensation of S&P 500 companies, has generally outpaced performance.
Numerous academic studies, for example Lucien Bebchuck’s “Pay Without Performance”, have shown a history of growing executive pay disconnected from company performance. Even when companies purport to link performance, in reality they often do not. For example, some analysts point out that company performance is frequently determined by forces outside the executives’ control. Other analyses have highlighted weak performance targets, for example revenue growth merely equal to the inflation rate.
Resolved: Shareowners request that the Board of Directors issue a report to shareholders by December 2016, at reasonable cost and omitting proprietary information, which evaluates options for bringing its voting practices in line with its stated principle of linking executive compensation and performance, including adopting changes to proxy voting guidelines, adopting best practices of other asset managers and independent rating agencies, and including a broader range of research sources and principles for interpreting compensation data. Such report should assess whether and how the proposed changes would advance the interests of its clients and shareholders.
THE BOARD OF DIRECTORS STATEMENT IN OPPOSITION
The Board of Directors believes that the actions requested by the Proponent are unnecessary and not in the best interests of our stockholders and unanimously recommends that you vote “AGAINST” this proposal for the following reasons:
BlackRock’s proxy voting decisions are made by a professional, independent team within the BlackRock investment function.
As a fiduciary to its clients, BlackRock has a duty to act in their best interests, including protecting and enhancing the value of their assets. Consistent with these duties, BlackRock has established a highly-regarded Investment Stewardship team (the “Stewardship Team”), comprised of over 20 corporate governance professionals, who work as part of BlackRock’s investment function to deliver value to BlackRock’s clients. The Stewardship Team undertakes proxy voting as its broadest form of engagement. Every year the Stewardship Team votes globally at more than 15,000 stockholder meetings based on a set of voting guidelines that serve as a benchmark against which it assesses a company’s overall approach to corporate governance.
The Stewardship Team serves an independent function. Reporting and oversight structures have been put in place at BlackRock to ensure that the work of the Stewardship Team is not influenced by BlackRock’s commercial interests and that votes are cast only in the long-term economic interests of clients based on the professional judgment of the Stewardship Team. We are concerned that the stockholder proposal, if implemented, would impose undue influence on our Stewardship Team by our Board of Directors.
BlackRock’s Stewardship Team’s voting guidelines provide a detailed description of its approach to analyzing and assessing compensation policies and outcomes and are updated regularly to ensure they continue to reflect governance practices that protect clients.
The Stewardship Team’s voting guidelines, voting record and engagement reports, are published on the BlackRock website atwww.blackrock.com under the headings “About Us / Investment Stewardship” to provide companies, clients and others with an indication of the corporate governance matters of most importance to the Stewardship Team and how it might vote on key items on the ballot for stockholder meetings. On an annual basis, the Stewardship Team reviews its proxy voting policies in light of corporate governance and proxy voting trends and its experience engaging with companies to ensure its policies continue to reflect governance practices that protect the economic interests of our clients. Periodically, the Stewardship Team benchmarks its voting guidelines against those of peers and proxy advisors to check relevance, understand relative positioning, and identify market developments. Engagement is at the core of the Stewardship Team’s function and is viewed by the Stewardship Team as the most effective method of building mutual understanding with a company’s management to better inform the Stewardship Team’s voting decisions and engagement strategies.
The Stewardship Team has adopted policies that reflect its approach to engagement and voting on matters relating to executive compensation. The Stewardship Team’s publication “Our Approach to Executive Compensation”, which is available atwww.blackrock.com under the headings “About Us / Investment Stewardship / Guidelines, Reports and Position Papers”, describes in significant detail the Stewardship Team’s approach. As noted in the publication, the Stewardship Team expects companies to set out a compensation policy that reflects the strategic objectives of the company and links rewards to executives with those to stockholders over time. The publication does not set forth a prescriptive position on structure, performance metrics or level of payouts. When the Stewardship Team has concerns about a company’s compensation policies or practices, it will generally first engage with the management or the board in order to explain the Stewardship Team’s concerns and encourage change rather than vote against compensation. If management should choose not to engage, or should the Stewardship Team consider management’s explanations on compensation outcomes unacceptable, the Stewardship Team will consider voting against compensation and against the re-election of the compensation committee members. The publication and the voting guidelines do not state that the Stewardship Team will vote against compensation policies in all instances when the Stewardship Team determines that compensation is excessive as the Proponent’s proposal suggests, nor is that the Stewardship Team’s approach to optimizing its engagement efforts.
We do not believe that additional reporting on the Stewardship Team’s approach to compensation policies is warranted or would add value to our stockholders’ understanding of the Stewardship Team’s approach to compensation. We are also concerned that the stockholder proposal, if implemented, would place undue emphasis on the voting record of the Stewardship Team and jeopardize the Stewardship Team’s ability to engage with the management of companies and exercise their professional discretion on behalf of clients. Moreover, introducing the proposed level of intrusive oversight by BlackRock’s Board of Directors would place undue influence on the Stewardship Team and threaten the independence of its function.
For the reasons stated above, the Board of Directors unanimously recommends that you vote “AGAINST” the stockholder proposal.
DEADLINES FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF STOCKHOLDERS
Proposals to be Considered for Inclusion in BlackRock’s Proxy Materials
Stockholders who, in accordance with the Exchange Act Rule 14a-8, wish to present proposals for inclusion in the proxy materials to be distributed by us in connection with our 20152017 Annual Meeting must submit their proposals to BlackRock’s Corporate Secretary on or before December 16, 2014.2016.
Director Nominations for Inclusion in BlackRock’s Proxy Materials (Proxy Access)
If our proxy access bylaw amendment is approved by stockholders, a stockholder (or a group of up to 20 stockholders) who has owned at least 3% of our shares continuously for at least three years and has complied with the other requirements in our bylaws may nominate and include in BlackRock’s proxy materials director nominees constituting up to 25% of our Board. Notice of a proxy access nomination for consideration at our 2017 Annual Meeting must be received no later than December 16, 2016 and no earlier than November 16, 2016.
Other Proposals and Nominations
Apart from the Exchange Act Rule 14a-8 and our proxy access bylaw that addressesaddress the inclusion of stockholder proposals or stockholder nominees in our proxy materials, under our bylaws, certain procedures are provided that a stockholder must follow to nominate persons for election as directors or to introduce an item of business at an annual meeting of stockholders. These procedures provide that nominations for director nominees and/or an item of business to be introduced at an annual meeting of stockholders must be submitted in writing to:
BlackRock, Inc.
Attn: Corporate Secretary
55 East 52nd Street
New York, New York 10055
We must receive the notice of your intention to introduce a nomination or proposed item of business at our 20152017 Annual Meeting:
Assuming that our 20152017 Annual Meeting is held within 30 days of the anniversary of the 20142016 Annual Meeting, we must receive notice of your intention to introduce a nomination or other item of business at the 20152017 Annual Meeting by December 16, 2014. If we do not receive2016.
Additional Requirements
Under our bylaws, any notice by that date, or if we meet other requirements of the SEC rules, the persons named as proxies in the proxy materials relating to that meeting will use their discretion in voting the proxies when these matters are raised at the meeting.
The nomination notice must contain the following information about the nominee:
Notice of a proposed item of business must include:
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As to the stockholder giving notice, the notice must include:
BlackRock’s bylaws specifying the advance notice requirements for proposing business or persons (including their names) pursuantnominations, and (in the event the bylaw amendment is approved at the Annual Meeting) for proposing proxy access nominations, are available on BlackRock’s website atwww.blackrock.com under the heading “Investor Relations”.
Address to which the nomination isSubmit Proposals and Nominations
In each case, proxy proposals, proxy access nominations and nominations for director nominees and/or an item of business to be made byintroduced at an annual meeting of stockholders must be submitted in writing to the stockholder;
The Chairperson of the meeting may refuse to allow the transaction of any business not presented beforehand, or to acknowledge the nomination of any person not made, in compliance with the foregoing procedures.
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The Board of Directors knows of no other business to be presented at the meeting. If, however, any other business should properly come before the meeting, or any adjournment thereof, it is intended that the proxy will be voted with respect thereto in accordance with the best judgment of the persons named in the proxy.
By Order of the Board of Directors, | ||
Corporate Secretary |
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ANNEX A
BLACKROCK, INC.
PROPOSED AMENDMENT TO BLACKROCK’S AMENDED AND RESTATED 1999 STOCK AWARD AND INCENTIVE PLANBYLAWS (Item 4)
Reference is hereby madeSection 2.12 Proxy Access.
(a) Whenever the Board of Directors solicits proxies with respect to the Amended and Restated BlackRock, Inc. 1999 Stock Award and Incentive Plan, dated aselection of May 24, 2010directors at an annual meeting of stockholders, subject to the provisions of this Section 2.12, the Corporation shall include in its proxy statement for such annual meeting, in addition to any persons nominated for election by or at the direction of the Board of Directors (or any duly authorized committee thereof), the name, together with the Required Information (as amended, supplemented or otherwise modified fromdefined below), of any person nominated for election (the “Stockholder Nominee”) to the Board of Directors by an Eligible Stockholder (as defined in Section 2.12(d)) that expressly elects at the time of providing the notice required by this Section 2.12 to time, the “Stock Plan”). Capitalized terms used but not defined herein shall have the meanings ascribed to themsuch nominee included in the Stock Plan.
The parties hereto hereby agree,Corporation’s proxy materials pursuant to this Section 2.12. For purposes of this Section 2.12, the “Required Information” that the Corporation will include in its proxy statement is (i) the information provided to the Secretary of the Corporation concerning the Stockholder Nominee and the Eligible Stockholder that is required to be disclosed in the Corporation’s proxy statement pursuant to Section 7(d)14 of the Stock Plan,Exchange Act and the rules and regulations promulgated thereunder and (ii) if the Eligible Stockholder so elects, a Supporting Statement (as defined in Section 2.12(h)). For the avoidance of doubt, nothing in this Section 2.12 shall limit the Corporation’s ability to solicit against any Stockholder Nominee or include in its proxy materials the Corporation’s own statements or other information relating to any Eligible Stockholder or Stockholder Nominee, including any information provided to the Corporation pursuant to this Section 2.12. Subject to the provisions of this Section 2.12, the name of any Stockholder Nominee included in the Corporation’s proxy statement for an annual meeting of stockholders shall also be set forth on the form of proxy distributed by the Corporation in connection with such annual meeting.
(b) In addition to any other applicable requirements, for a nomination to be made by an Eligible Stockholder pursuant to this Section 2.12, the Eligible Stockholder must have given timely notice of such nomination (the “Notice of Proxy Access Nomination”) in proper written form to the Secretary of the Corporation. To be timely, the Notice of Proxy Access Nomination must be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not less than one hundred twenty (120) days nor more than one hundred fifty (150) days prior to the first anniversary of the date that effective May 29, 2014, the Stock PlanCorporation first distributed its proxy statement to stockholders for the immediately preceding annual meeting of stockholders. In no event shall any adjournment or postponement of an annual meeting or the public announcement thereof commence a new time period (or extend any time period) for the giving of a Notice of Proxy Access Nomination pursuant to this Section 2.12.
(c) The maximum number of Stockholder Nominees nominated by all Eligible Stockholders that will be included in the Corporation’s proxy materials with respect to an annual meeting of stockholders shall not exceed twenty-five percent (25%) of the number of directors in office as of the last day on which a Notice of Proxy Access Nomination may be delivered pursuant to and in accordance with this Section 2.12 (the “Final Proxy Access Nomination Date”) or, if such amount is not a whole number, the closest whole number below twenty-five percent (25%) (such number, as it may be adjusted pursuant to this Section 2.12, the “Permitted Number”). In the event that one or more vacancies for any reason occurs on the Board of Directors after the Final Proxy Access Nomination Date but before the date of the annual meeting and the Board of Directors resolves to reduce the size of the Board of Directors in connection therewith, the Permitted Number shall be amendedcalculated based on the number of directors in office as follows:
(a) The first sentenceso reduced. For purposes of Section 5determining when the Permitted Number has been reached, each of the Stock Planfollowing persons shall be counted as one of the Stockholder Nominees: (i) any individual nominated by an Eligible Stockholder for inclusion in the Corporation’s proxy materials pursuant to this Section 2.12 whose nomination is hereby amendedsubsequently withdrawn, (ii) any individual nominated by an Eligible Stockholder for inclusion in the Corporation’s proxy materials pursuant to this Section 2.12 whom the Board of Directors decides to nominate for election to the Board of Directors and (iii) any director in office as of the Final Proxy Access Nomination Date who was included in the Corporation’s proxy materials as a Stockholder Nominee for either of the two (2) preceding annual meetings of stockholders (including any individual counted as a Stockholder Nominee pursuant to the immediately preceding clause (ii)) and whom the Board of Directors decides to nominate for re-election to the Board of Directors. Any Eligible Stockholder submitting more than one Stockholder Nominee for inclusion in the Corporation’s proxy materials pursuant to this Section 2.12 shall rank such Stockholder Nominees based on the order in which the Eligible Stockholder desires such Stockholder Nominees to be selected for inclusion in the Corporation’s proxy materials in the event that the total number of Stockholder Nominees submitted by Eligible Stockholders pursuant to this Section 2.12 exceeds the Permitted
Number. In the event that the number of Stockholder Nominees submitted by Eligible Stockholders pursuant to this Section 2.12 exceeds the Permitted Number, the highest ranking Stockholder Nominee who meets the requirements of this Section 2.12 from each Eligible Stockholder will be selected for inclusion in the Corporation’s proxy materials until the Permitted Number is reached, going in order of the amount (largest to smallest) of shares of common stock of the Corporation each Eligible Stockholder disclosed as owned in its entirety to read as follows:
“Subject to adjustment as providedNotice of Proxy Access Nomination. If the Permitted Number is not reached after the highest ranking Stockholder Nominee who meets the requirements of this Section 2.12 from each Eligible Stockholder has been selected, then the next highest ranking Stockholder Nominee who meets the requirements of this Section 2.12 from each Eligible Stockholder will be selected for inclusion in the PlanCorporation’s proxy materials, and this process will continue as many times as necessary, following the same order each time, until the Permitted Number is reached. Notwithstanding anything to the contrary contained in this Section 2.12, the Corporation shall not be required to include any Stockholder Nominees in its proxy materials pursuant to this Section 2.12 for any meeting of stockholders for which the Secretary of the Corporation receives notice (whether or not subsequently withdrawn) that a stockholder intends to nominate one or more persons for election to the Board of Directors pursuant to the advance notice requirements for stockholder nominees set forth in Section 2.9.
(d) An “Eligible Stockholder” is a stockholder or group of no more than 20 stockholders (counting as one stockholder, for this purpose, any two or more funds that are part of the same Qualifying Fund Group (as defined therein), 34,500,000below)) that (i) has owned (as defined in Section 2.12(e)) continuously for at least three (3) years (the “Minimum Holding Period”) a number of shares of Stockcommon stock of the Corporation that represents at least three percent (3%) of the Corporation’s outstanding common stock as of the date the Notice of Proxy Access Nomination is delivered to or mailed and received by the Secretary of the Corporation in accordance with this Section 2.12 (the “Required Shares”), (ii) continues to own the Required Shares through the date of the annual meeting and (iii) satisfies all other requirements of, and complies with all applicable procedures set forth in, this Section 2.12. A “Qualifying Fund Group” is a group of two or more funds that are (A) under common management and investment control, (B) under common management and funded primarily by the same employer or (C) a “group of investment companies” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended. Whenever the Eligible Stockholder consists of a group of stockholders (including a group of funds that are part of the same Qualifying Fund Group), (1) each provision in this Section 2.12 that requires the Eligible Stockholder to provide any written statements, representations, undertakings, agreements or other instruments or to meet any other conditions shall be reserveddeemed to require each stockholder (including each individual fund) that is a member of such group to provide such statements, representations, undertakings, agreements or other instruments and to meet such other conditions (except that the members of such group may aggregate the shares that each member has owned continuously for the grant or settlement of Awards underMinimum Holding Period in order to meet the Plan.”
(b) The second sentence of Section 7(d)three percent (3%) ownership requirement of the Stock Plan“Required Shares” definition) and (2) a breach of any obligation, agreement or representation under this Section 2.12 by any member of such group shall be deemed a breach by the Eligible Stockholder. No person may be a member of more than one group of stockholders constituting an Eligible Stockholder with respect to any annual meeting.
(e) For purposes of this Section 2.12, an Eligible Stockholder shall be deemed to “own” only those outstanding shares of common stock of the Corporation as to which the stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares;provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such stockholder or any of its affiliates in any transaction that has not been settled or closed, (B) borrowed by such stockholder or any of its affiliates for any purposes or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell or (C) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar instrument or agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is hereby amendedto be settled with shares or with cash based on the notional amount or value of shares of outstanding common stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such stockholder’s or its affiliates’ full right to vote or direct the voting of any such shares and/or (2) hedging, offsetting or altering to any degree any gain or loss realized or realizable from maintaining the full economic ownership of such shares by such stockholder or affiliate. For purposes of this Section 2.12, a stockholder shall “own” shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A stockholder’s ownership of shares shall be deemed to continue during any period in which (i) the
stockholder has loaned such shares, provided that the stockholder has the power to recall such loaned shares on five (5) business days’ notice and includes in its entirety to read as follows:
“Notwithstanding the foregoing, (i) no amendment shall affect adverselyNotice of Proxy Access Nomination an agreement that it (A) will promptly recall such loaned shares upon being notified that any of its Stockholder Nominees will be included in the rightsCorporation’s proxy materials and (B) will continue to hold such recalled shares through the date of the annual meeting or (ii) the stockholder has delegated any Grantee, without such grantee’s consent, undervoting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any Award theretofore granted undertime by the Plan; (ii) any amendmentstockholder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the common stock of the Corporation are “owned” for these purposes shall be approved by shareholders, unless otherwise determined by the Board of Directors (or any duly authorized committee thereof). For purposes of this Section 2.12, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.
(f) To be in proper written form for purposes of this Section 2.12, the Notice of Proxy Access Nomination must include or be accompanied by the following:
(i) a written statement by the Eligible Stockholder certifying as to the number of shares it owns and has owned continuously during the Minimum Holding Period, and the Eligible Stockholder’s agreement to provide (A) within five (5) business days following the later of the record date for the determination of stockholders entitled to vote at the annual meeting or the date notice of the record date is first publicly disclosed, a written statement by the Eligible Stockholder certifying as to the number of shares it owns and has owned continuously through the record date and (B) immediate notice if the Eligible Stockholder ceases to own any of the Required Shares prior to the date of the annual meeting;
(ii) one or more written statements from the record holder of the Required Shares (and from each intermediary through which the Required Shares are or have been held during the Minimum Holding Period) verifying that, as of a date within seven (7) calendar days prior to the date the Notice of Proxy Access Nomination is delivered to or mailed and received by the Secretary of the Corporation, the Eligible Stockholder owns, and has owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Stockholder’s agreement to provide, within five (5) business days following the later of the record date for the determination of stockholders entitled to vote at the annual meeting or the date notice of the record date is first publicly disclosed, one or more written statements from the record holder and such intermediaries verifying the Eligible Stockholder’s continuous ownership of the Required Shares through the record date;
(iii) a copy of the Schedule 14N that has been or is concurrently being filed with the United States Securities and Exchange Commission as required by Rule 14a-18 under the Exchange Act;
(iv) the information and representations that would be required to be set forth in a stockholder’s notice of a nomination pursuant to Section 2.9(d), together with the written consent of each Stockholder Nominee to being named in the proxy statement as a nominee and to serving as a director if elected;
(v) a representation that the Eligible Stockholder (A) will continue to hold the Required Shares through the date of the annual meeting, (B) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control at the Corporation, and does not presently have such intent, (C) has not nominated and will not nominate for election to the Board of Directors at the annual meeting any person other than the Stockholder Nominee(s) it is nominating pursuant to this Section 2.12, (D) has not engaged and will not engage in, and has not and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the annual meeting other than its Stockholder Nominee(s) or a nominee of the Board of Directors, (E) has not distributed and will not distribute to any stockholder of the Corporation any form of proxy for the annual meeting other than the form distributed by the Corporation, (F) has complied and will comply with all laws and regulations applicable to solicitations and the use, if any, of soliciting material in connection with the annual meeting, and (G) has provided and will provide facts, statements and other information in all communications with the Corporation and its stockholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
(vi) an undertaking that the Eligible Stockholder agrees to (A) assume all liability stemming from any legal or regulatory violation arising out of the Eligible Stockholder’s communications with the stockholders of the Corporation or out of the information that the Eligible Stockholder provided to the Corporation, (B) indemnify and hold harmless the Corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of any nomination submitted by the Eligible Stockholder pursuant to this Section 2.12 or any solicitation or other activity in connection therewith and (C) file with the Securities and Exchange Commission any solicitation or other communication with the stockholders of the Corporation relating to the meeting at which its Stockholder Nominee(s) will be nominated, regardless of whether any such filing is required under Regulation 14A of the Exchange Act or whether any exemption from filing is available for such solicitation or other communication under Regulation 14A of the Exchange Act;
(vii) a written representation and agreement from each Stockholder Nominee that such Stockholder Nominee (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Stockholder Nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation in such representation and agreement or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation in such representation and agreement, (C) would be in compliance, if elected as a director of the Corporation, and will comply with the Corporation’s code of conduct and ethics, corporate governance guidelines, stock ownership and trading policies and guidelines and any other policies or guidelines of the Corporation applicable to directors and (D) will make such other acknowledgments, enter into such agreements and provide such information as the Board of Directors requires of all directors, including promptly submitting all completed and signed questionnaires required of the Corporation’s directors;
(viii) in the case of a nomination by a group of stockholders together constituting an Eligible Stockholder, the designation by all group members of one member of the group that is authorized to receive communications, notices and inquiries from the Corporation and to act on behalf of all members of the group with respect to all matters relating to the nomination under this Section 2.12 (including withdrawal of the nomination); and
(ix) in the case of a nomination by a group of stockholders together constituting an Eligible Stockholder in which two or more funds that are part of the same Qualifying Fund Group are counted as one stockholder for purposes of qualifying as an Eligible Stockholder, documentation reasonably satisfactory to the Corporation that demonstrates that the funds are part of the same Qualifying Fund Group.
(g) In addition to the information required pursuant to Section 2.12(f) or any other provision of these Bylaws, (i) the Corporation may require any proposed Stockholder Nominee to furnish any other information (A) that may reasonably be requested by the Corporation to determine whether the Stockholder Nominee would be independent under the rules and listing standards of the principal United States securities exchanges upon which the common stock of the Corporation is listed or traded, any applicable rules of the U.S. Securities and Exchange Commission or any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s directors (collectively, the “Independence Standards”), (B) that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such Stockholder Nominee or (C) that may reasonably be requested by the Corporation to determine the eligibility of such Stockholder Nominee to be included in the Corporation’s proxy materials pursuant to this Section 2.12 or to serve as a director of the Corporation, and (ii) the Corporation may require the Eligible Stockholder to furnish any other information that may reasonably be requested by the Corporation to verify the Eligible Stockholder’s continuous ownership of the Required Shares for the Minimum Holding Period.
(h) The Eligible Stockholder may, at its option, provide to the Secretary of the Corporation, at the time the Notice of Proxy Access Nomination is provided, a written statement, not to exceed five hundred (500) words, in support
of the Stockholder Nominee(s)’ candidacy (a “Supporting Statement”). Only one Supporting Statement may be submitted by an Eligible Stockholder (including any group of stockholders together constituting an Eligible Stockholder) in support of its Stockholder Nominee(s). Notwithstanding anything to the contrary contained in this Section 2.12, the Corporation may omit from its proxy materials any information or Supporting Statement (or portion thereof) that it, in good faith, believes would violate any applicable law or regulation.
(i) In the event that any information or communications provided by an Eligible Stockholder or a Stockholder Nominee to the Corporation or its stockholders ceases to be true and correct in all material respects or omits to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, such Eligible Stockholder or Stockholder Nominee, as the case may be, shall promptly notify the Secretary of the Corporation of any such defect in such previously provided information and of the information that is required to correct any such defect; it being understood that providing such notification shall not be deemed to cure any such defect or limit the remedies available to the Corporation relating to any such defect (including the right to omit a Stockholder Nominee from its proxy materials pursuant to this Section 2.12). In addition, any person providing any information to the Corporation pursuant to this Section 2.12 shall further update and supplement such information, if necessary, so that all such information shall be true and correct as of the record date for the determination of stockholders entitled to vote at the annual meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days following the later of the record date for the determination of stockholders entitled to vote at the annual meeting or the date notice of the record date is first publicly disclosed.
(j) Notwithstanding anything to the contrary contained in this Section 2.12, the Corporation shall not be required to include in its proxy materials, pursuant to this Section 2.12, any Stockholder Nominee (i) who would not be an independent director under the Independence Standards, (ii) whose election as a member of the Board of Directors would cause the Corporation to be in violation of these Bylaws, the Certificate of Incorporation, the rules and listing standards of the principal United States securities exchanges upon which the common stock of the Corporation is listed or traded, or any applicable law, rule or regulation, (iii) who is or has been, within the past three (3) years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, (iv) whose election as a member of the Board of Directors would cause the Corporation to seek, or assist in the seeking of, advance approval or to obtain, or assist in the obtaining of, an interlock waiver pursuant to the rules or regulations of the Board of Governors of the Federal Reserve System or the Office of the Comptroller of the Currency, (v) who is a director, trustee, officer or employee with management functions for any depositary institution, depositary institution holding company or entity that has been designated as a Systemically Important Financial Institution, each as defined in the Depository Institution Management Interlocks Act, (vi) who is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in such a criminal proceeding within the past ten (10) years, (vii) who is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, or (viii) who shall have provided any information to the Corporation or its stockholders that was untrue in any material respect or that omitted to state a material fact necessary to make the statements made, in light of the circumstances in which they were made, not misleading.
(k) Notwithstanding anything to the contrary set forth herein, if (i) a Stockholder Nominee and/or the applicable Eligible Stockholder breaches any of its agreements or representations or fails to comply with state law, stock listing requirementsany of its obligations under this Section 2.12 or other applicable law; and (iii)(ii) a Stockholder Nominee otherwise becomes ineligible for inclusion in the Corporation’s proxy materials pursuant to this Section 2.12 or dies, becomes disabled or otherwise becomes ineligible or unavailable for election at the annual meeting, in each case as determined by the Board of Directors (or any duly authorized committee thereof) or the chairman of the annual meeting, (A) the Corporation may omit or, to the extent feasible, remove the information concerning such Stockholder Nominee and the related Supporting Statement from its proxy materials and/or otherwise communicate to its stockholders that such Stockholder Nominee will not repricebe eligible for election at the annual meeting, (B) the Corporation shall not be required to include in its proxy materials any previously-granted Optionsuccessor or Stock Appreciation Right without obtaining shareholder approval forreplacement nominee proposed by the applicable Eligible Stockholder or any other Eligible Stockholder and (C) the Board of Directors (or any duly authorized committee thereof) or the chairman of the annual meeting shall declare such repricing.”nomination to be invalid and such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the Corporation. In addition, if the Eligible Stockholder (or a representative thereof) does not appear at the annual meeting to present any nomination pursuant to this Section 2.12, such nomination shall be declared invalid and disregarded as provided in clause (C) above.
A-1(l) Any Stockholder Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of stockholders but either (i) withdraws from or becomes ineligible or unavailable for election at the annual meeting, or (ii) does not receive at least twenty-five percent (25%) of the votes cast in favor of such Stockholder Nominee’s election, will be ineligible to be a Stockholder Nominee pursuant to this Section 2.12 for the next two (2) annual meetings of stockholders. For the avoidance of doubt, the immediately preceding sentence shall not prevent any stockholder from nominating any person to the Board of Directors pursuant to and in accordance with Section 2.9.
BLACKROCK, INC. 55 EAST 52ND STREET NEW YORK, NY 10055 | VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER MATERIALS If you would like to reduce the costs incurred by BlackRock, Inc. in mailing proxy materials, you can consent to receive all future Proxy Statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided
If you vote your proxy by Internet or telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. STOCKHOLDER MEETING REGISTRATION: To request an admission ticket to attend the meeting, visit the “stockholder meeting registration” link at www.proxyvote.com and provide the 16-digit control number located on your proxy card.You must have an admissions ticket to attend the meeting.You must request an admission ticket by 11:59 p.m. Eastern Time on May 24, 2016. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS | ||||
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED, DATED AND DATED.RETURNED.
BLACKROCK, INC.
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A.The Board of Directors recommends a vote FOR all nominees and FOR | ||||||||||||||||||||||||||||||||||||||
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1a. Abdlatif Yousef Al-Hamad | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||||
1b. Mathis Cabiallavetta |
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1c. Pamela Daley |
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1d. William S. Demchak | ¨ | ¨ | ¨ | 1n. | Gordon M. Nixon | ¨ | ¨ | ¨ | ||||||||||||||||||||||||||||||
1e. Jessica P. Einhorn |
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1f. Laurence D. Fink | ¨ | ¨ | ¨ | 1p. | Ivan G. Seidenberg | ¨ | ¨ | ¨ | ||||||||||||||||||||||||||||||
1g. Fabrizio Freda | ¨ | ¨ | ¨ | 1q. |
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Approval, in a non-binding advisory vote, of the compensation of the named executive officers, as disclosed and discussed in the Proxy Statement. |
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1l. Sir Deryck Maughan | ¨ | ¨ | ¨ | 4. | Approval of a management proposal to amend the bylaws to implement “proxy access”. |
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5. | A stockholder proposal by the Stephen M. Silberstein Revocable Trust regarding proxy voting practices relating to executive compensation. | ¨ | ¨ | ¨ | ||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | All shares will be voted as instructed above. In the absence of instructions, all shares will be voted with respect to registered stockholders that return a signed proxy card, FOR all nominees listed in Item 1, FOR Item 2, FOR Item 3, FOR Item 4 and AGAINST Item 5, and with respect to participants in the BlackRock, Inc. Retirement Savings Plan, in the manner required or permitted by the governing plan documents. | |||||||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX]
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BLACKROCK, INC.
20142016 ANNUAL MEETING OF STOCKHOLDERS
May 29, 201425, 2016
8:00 AM, local time
The New York Palace Hotel
455 Madison Avenue
New York, New York 10022
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING.
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time on May 28, 2014.24, 2016.
Your Internet or telephone vote authorizes the named proxies to vote the shares in the same manner
as if you marked, signed and returned your proxy card.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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M72294-P49904
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E03586-P78643
PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS
BLACKROCK, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Gary S. Shedlin and R. Andrew Dickson III, and each of them, as proxies, each with full power of substitution, and authorizes them to represent and to vote, as designated on the reverse side of this form, all shares of common stock of BlackRock, Inc. held of record by the undersigned as of March 30, 2016, at the 2016 Annual Meeting of Stockholders to be held on May 25, 2016, beginning at 8:00 a.m., local time, at The New York Palace Hotel, 455 Madison Avenue, New York, New York 10022, and in their discretion, upon any business that may properly come before the meeting or any adjournment of the meeting, in accordance with their best judgment.
If no other indication is made on the reverse side of this form, the proxies shall vote FOR all nominees listedin Item 1, FOR Item 2, FOR Item 3, FOR Item 4 and AGAINST Item 5.
PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS
BLACKROCK, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Gary Shedlin and Russell McGranahan, and each of them, as proxies, each with full power of substitution, and authorizes them to represent and to vote, as designated on the reverse side of this form, all shares of common stock of BlackRock, Inc. held of record by the undersigned as of April 3, 2014, at the 2014 Annual Meeting of Stockholders to be held on May 29, 2014, beginning at 8:00 a.m., local time, at the New York Palace Hotel, 455 Madison Avenue, New York, New York, and in their discretion, upon any matter that may properly come before the meeting or any adjournment of the meeting, in accordance with their best judgment.
If no other indication is made on the reverse side of this form, the proxies shall vote FOR all nominees listed in Item 1, FOR Item 2, FOR Item 3, FOR Item 4 and FOR Item 5.
This proxy may be revoked at any time prior to the time voting is declared closed by giving the Corporate Secretary of BlackRock, Inc. written notice of revocation or a subsequently dated proxy, or by casting a ballot at the meeting.
If the undersigned is a participant in the BlackRock, Inc. Retirement Savings Plan (the “RSP”), then the undersigned hereby directs Bank of America, N.A., FSB, as Trustee of the RSP to vote all the shares of BlackRock common stock credited to the undersigned’s account as indicated on the reverse side at the meeting and at any adjournment(s) thereof.
Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side