WASHINGTON, D.C. 20549
BlackRock, Inc.
| | 2) | | | 2) | Form, Schedule or Registration Statement No.: | | | 3) | | Filing Party: | | | 4) | | Date Filed: |
2018 PROXY STATEMENT Notice of Annual Meeting May 23, 2018 New York, New York
Generating Long-Term Shareholder Value BlackRock’s mission is to provide better financial futures for our clients. Our framework for creating long-term shareholder value is directly aligned with that mission. BlackRock, Inc. (“BlackRock” or the “Company”) has strategically invested to build a broad, diverse investment platform, strong technology and risk management capabilities and a global footprint to meet clients’ needs in all market environments. Our diverse platform enables us to generate consistent financial results and continuously invest in our business through market cycles. We believe that continuously investing in our platform to meet clients’ evolving needs enables us to: | | | | | | | | | | | Generate differentiated organic growth | | | | Leverage our scale for the benefit of clients and shareholders | | | | Return capital to shareholders on a consistent and predictable basis | | |
This framework was developed in close collaboration with our Board of Directors (the “Board”), and the Board continues to play an active role in overseeing our broader strategy and in measuring our ability to successfully execute it. BlackRock remains focused on investing for the future. Throughout BlackRock’s history, we have demonstrated an ability to optimize organic growth in the most efficient way possible while prudently returning capital to shareholders. We prioritize investment in our business to first drive growth and then return “excess” cash flow to shareholders. Our capital return strategy is balanced between dividends, where we target a 40-50% payout ratio, and a consistent share repurchase program. In 2018, we will continue to invest in BlackRock’s future – to grow our asset management and technology capabilities, to expand our geographic footprint and to further enhance our talent – to ensure we are meeting our daily responsibilities to our clients and delivering financial returns for shareholders.
BlackRock, Inc.55 East 52nd Street 
PRELIMINARY COPY—SUBJECT TO COMPLETIONNew York, New York, 10055
April [15], 201613, 2018 Fellow Stockholder:To Our Shareholders:
Thank you for your confidence in BlackRock. It is my pleasure to invite you to BlackRock, Inc.’s 2016our 2018 Annual Meeting, of Stockholders. We will holdto be held on May 23, 2018 at the meeting on Wednesday, May 25, 2016, beginning at 8:00 a.m., local time, at theLotte New York Palace Hotel, 455 Madison Avenue, New York, New York 10022.
The attached Notice of Annual MeetingHotel. As we do each year, we will review our business and financial results for the year, address the voting items in the Proxy Statement describe the business that we will conduct atand take your questions. Whether you plan to attend the meeting or not, your vote is important and provide information about BlackRock.we encourage you to review the enclosed materials and submit your proxy.
As bothBlackRock celebrates its 30th anniversary this year, I have the opportunity to reflect on the most pressing issues facing investors today and how BlackRock must continue to adapt to serve clients’ needs effectively. It is a great privilege and responsibility to manage the assets entrusted to us, most of which are invested for long-term goals such as retirement. Just as we believe in the importance and benefits of clients investing for the long-term, we also approach BlackRock with that same future perspective. You can find more detail about BlackRock’s purpose and strategy for future growth in my letter to shareholders in this year’s Annual Report. In 2017, BlackRock continued to deliver on each component of our framework for creating long-term shareholder value, while simultaneously investing in our business. Our diverse asset management platform, industry leading technology and risk management capabilities and thought leadership enabled us to generate $367 billion of net inflows during the year, representing 7% organic asset growth and reflecting the trust we have earned from clients to help solve their most difficult investment challenges. We continued to invest in our business for future growth while simultaneously expanding our operating margin and returned $2.8 billion to shareholders through a combination of dividends and share repurchases. The execution of our strategy is dependent on a strong corporate governance framework. Whether acting as a fiduciary and a public company,for clients or shareholders, we believe that good corporate governance is critical to achieving sustainable returns over the long term. Wemeeting our overall objectives. That includes engaging with you, our shareholders, to better understand and address issues that are important to you. To support our mission of creating better financial futures for clients, we are vocal advocates for the adoption of sound corporate governance policies that include strong boardBoard leadership, prudent management practices and transparency. thoughtful strategic deliberations. We believe that we haveBlackRock has implemented such a corporate governance framework at BlackRock, including the “proxy access” proposalset of principles, guidelines and practices that we are submittingsupport sustainable financial growth and long-term value creation for your approval,shareholders and hope that you will find that reflected in the attached Proxy Statement. We also encourageagree as 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 ofread the Proxy Statement. Whether
It has always been important that BlackRock’s Board of Directors functions as a key strategic and governing body that challenges our leadership team to be better and more innovative. BlackRock’s Board continues to play an integral role in our governance, growth and success. Thank you planagain for your commitment to attend the meeting or not, please review the attached materialBlackRock. Our Board of Directors 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. WeI look forward to seeing you at the meeting.on May 23, 2018 in New York City.
Sincerely, 
Laurence D. Fink Chairman and Chief Executive Officer Just as we believe in the importance and benefits of clients investing for the long-term, we also approach BlackRock Inc.with that same future perspective. 55 East 52nd Street, New York, New York 10055
Annual Meeting of Shareholders PRELIMINARY COPY—SUBJECT TO COMPLETION
April [15], 2016
NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS
To our 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 Wednesday, May 25, 2016, beginning at 8:00 a.m., local time. Shareholders
| | | | | Date: | | Wednesday, May 23, 2018 | | | Time: | | 8:00 AM EDT | | | Place: | | Lotte New York Palace Hotel 455 Madison Avenue New York, New York 10022 | | | Record Date: | | March 29, 2018 | | |
Agenda and Voting Matters At or before our Annual Meeting, we will ask that you to:vote on the following items:
| | | | | | | | | | | | | | | (1) | elect 19 directors to serve on our Board of Directors; | |
| | (2) | approve, by non-binding advisory | | How to vote:Your vote is important | | | | | | | 
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| | | | | | | Internet Visit the compensation ofwebsite listed on your
proxy card. You will need the named executive officers (the “NEOs”) as disclosed
control number that appears on
your proxy card when you access
the web page. | | Mail Complete and discussedsign the proxy card
and return it in the Proxy Statement;enclosed postage
pre-paid envelope. |
| | (3) | ratifyTelephone If your shares are held in the appointmentname of Deloitte & Touche LLP as BlackRock’s independent
a broker, bank or other nominee: follow
the telephone voting instructions, if any,
provided on your voting instruction card.
If your shares are registered public accounting firm for in your
name: call1-800-690-6903 and follow
the year 2016; |
telephone voting instructions. You willneed the control number that appears onyour proxy. | | (4) | consider and approve a management proposal to amend the bylaws to implement “proxy access”; |
In Person You may attend the Annual Meeting
and vote by ballot. Your admission
ticket to the Annual Meeting is either
attached to your proxy card or is in
the email by which you received your
Proxy Statement. | (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 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 statementour Proxy Statement to our stockholdersshareholders via the Internet,our website instead of mailing printed copies of those materials to each stockholder.shareholder. By doing so, we save costs and reduce our impact on the environment. Beginning on April [15], 2016,13, 2018, we will mail or otherwise make available to each of our stockholdersshareholders a Notice of Internet Availability of Proxy Materials, which contains instructions about how to access our proxy materials and vote online. If you attend the Annual Meeting, you may withdraw your proxy and vote in person, if you so choose. 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 20162018 Annual Meeting of StockholdersShareholders of BlackRock, Inc. By Order of the Board of Directors, 
| | | R. Andrew Dickson III Corporate Secretary April 13, 2018 | | BlackRock, Inc. 5540 East 52nd52nd Street,
New York, New York 1005510022 Important Notice Regarding the Availability of Proxy Materials for the 2016 Annual Meeting of Stockholders to be held on Wednesday, May 25, 2016: Our Proxy Statement and 2015 Annual Report are available free of charge on our website at[•].
TABLE OF CONTENTS
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Important Notice Regarding the Availability of Proxy Materials for the 2018 Annual
Meeting of Shareholders to be held on Wednesday, May 23, 2018: our Proxy
Statement and 2017 Annual Report are available free of charge on our website at
www.blackrock.com/corporate/en-us/investor-relations
Proxy Summary This summary provides an overview of selected information in this year’s Proxy Statement. We encourage you to read the entire Proxy Statement before voting. Annual Meeting of Shareholders | | | 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 serveDate
| | Wednesday, May 23, 2018 | Time | | 8:00 AM EDT | Location | | Lotte New York Palace Hotel 455 Madison Avenue New York, New York 10022 | Record Date | | March 29, 2018 |
Voting Matters Shareholders will be asked to vote on the following matters at the Annual Meeting: | | | | | | | | | Board Recommendation | | ITEM 1. Election of Directors the 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. Criteria for Board Membership
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 mustdirector nominees have the timeknowledge, experience, skills 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 neededbackgrounds necessary to contribute to an effective and well-functioning Board. The composition
| | | VoteFOR each director nominee | | ITEM 2. Approval, in a Non-Binding Advisory Vote, of the current Board reflectsCompensation for Named Executive Officers BlackRock seeks a diverse range of skills, qualifications and professional experience that is relevantnon-binding advisory vote from its shareholders to BlackRock’s global strategy, business and governance. The following biographical information regarding each director nominee highlightsapprove 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 favorcompensation of the remaindernamed executive officers as disclosed and discussed in this Proxy Statement. The Board values the opinions of those nominatedour shareholders and may be voted for substitute nominees, unlesswill take into account the Boardoutcome of Directors choosesthe advisory vote when considering future executive compensation decisions.
| | | VoteFOR | | ITEM 3. Approval of an Amendment to reducethe BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan BlackRock is asking shareholders to approve an amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan (“Stock Plan”) to increase the number of directors serving onshares of common stock authorized for issuance under the Stock Plan. This increase will allow BlackRock to continue to provide equity incentive awards as part of ourpay-for-performance compensation program, which the Board believes is essential to maintaining a competitive compensation program aligned with shareholder interests. | | | VoteFOR | | ITEM 4. Ratification of Directors.the Appointment of the Independent Registered Public Accounting Firm All
The Audit Committee has appointed Deloitte LLP to serve as BlackRock’s independent registered public accounting firm for the 2018 fiscal year and this appointment is being submitted to our shareholders for ratification. The Audit Committee and the Board believe that the continued retention of Deloitte LLP to serve as BlackRock’s independent auditors is in the best interests of the Company and its shareholders. | | | VoteFOR | | ITEM 5. Shareholder Proposal — Production of an Annual Report on Certain Trade Association and Lobbying Expenditures The Board believes that the actions requested by the proponent are unnecessary and not in the best interest of our shareholders. | | | VoteAGAINST | |
BLACKROCK, INC. 2018 PROXY STATEMENT 1
| | | | | | | | | | | | | Proxy Summary ●Board Composition | | | | |
| | | | | What’s New? | | This year, we have updated our Proxy Statement to help you better understand BlackRock’s governance and compensation practices. We believe a broader understanding of BlackRock and our perspective on governance will be beneficial to you as you consider this year’s voting matters. This year’s updated items include: | | • | | Board refreshment through the election of three new directors | | | • | | Enhanced disclosure on our Board diversity and search process (see “Board Diversity” and “Director Candidate Search” on pages 10 and 11, respectively) | | | • | | Enhanced disclosure on our Board and BlackRock’s culture (see“Our Board and Culture: Engaged and vital to our success” on page 21 and“Director Engagement — BlackRock Corporate Culture and Purpose” on page 24) | | | • | | Updates to our Compensation Disclosure and Analysis | | | • | | BlackRock’s Mission Statement on Sustainability |
Board Composition (18 director nominees) The Nominating and Governance Committee (the “Governance Committee”) regularly reviews the overall composition of the Board and its Committees to assess whether they reflect the appropriate mix of skill sets, experience, backgrounds and qualifications that are relevant to BlackRock’s current and future global strategy, business and governance. Over the course of the past year, the Governance Committee identified three new candidates with strong senior executive, international, technology and financial services experience who were elected to the Board in March of this year. Board Tenure The Board considers length of tenure when reviewing nominees in order to maintain an overall balance of experience, continuity and fresh perspective. | | | | | | | 0 - 5 Years: | | 5 - 10 Years: | | 10+ Years: | | 7 years:Average tenure of all director nominee biographical informationnominees | 7 director nominees (39%) | | 5 director nominees (28%) | | 6 director nominees (33%) | | 5 years:Average tenure of independent director nominees |
Board Profile | | | | | | | | | | |  | | Current & Former CEOs 12 of 18 | |  | | Non-U.S. or Dual Citizens 6 of 18 | |  | | Women 5 of 18 |
Board Independence and Lead Independent Director Each year the Board reviews and evaluates our Board leadership structure. The Board has appointed Laurence Fink as its Chairman and Murry Gerber as its Lead Independent Director. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15 | | of BlackRock’s 18 director nominees are independent |
2BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Proxy Summary ●Our Director Nominees | | | |  |
Our Director Nominees | | | | | | | | | | | | | | | | | | | | | | | | | | | | Committee Memberships | | | Nominee | | Age at
Record
Date | | Primary Occupation | | Director
since | | Audit | | Compensation | | Governance | | Risk | | Executive | | | Mathis Cabiallavetta | | 73 | | Former Chairman of UBS, Vice Chairman of Swiss Re Ltd. and of Marsh & MacLennan Companies, Inc. | | 2007 | | ● | | | | ● | | ● | | | | | Pamela Daley | | 65 | | Former Senior Vice President of General Electric Company Corporate Business Development and Senior Advisor to Chairman | | 2014 | | Chair | | | | | | ● | | ● | | | William S. Demchak | | 55 | | Chairman, CEO and President of The PNC Financial Services Group, Inc. | | 2003 | | | | | | | | ● | | ● | | | Jessica P. Einhorn | | 70 | | Former Dean of Paul H. Nitze School of Advanced International Studies at The Johns Hopkins University and former Managing Director, World Bank | | 2012 | | | | ● | | | | ● | | | | | Laurence D. Fink | | 65 | | Chairman and CEO of BlackRock | | 1999 | | | | | | | | | | Chair | | | William E. Ford | | 56 | | CEO of General Atlantic | | 2018 | | | | | | | | | | | | | Fabrizio Freda | | 60 | | President and CEO of The Estée Lauder Companies Inc. | | 2012 | | | | | | ● | | | | | | | Murry S. Gerber Lead Independent Director | | 65 | | Former Executive Chairman, Chairman, President and CEO of EQT Corporation | | 2000 | | ● | | ● | | | | | | ● | | | Margaret L. Johnson | | 56 | | Executive Vice President of Business Development of Microsoft Corporation | | 2018 | | | | | | | | | | | | | Robert S. Kapito | | 61 | | President of BlackRock | | 2006 | | | | | | | | | | | | | Sir Deryck Maughan | | 70 | | Former Senior Advisor, Partner and Managing Director of Kohlberg Kravis Roberts & Co. L.P. | | 2006 | | ● | | | | | | Chair | | ● | | | Cheryl D. Mills | | 53 | | Founder and CEO of BlackIvy Group and former
Chief of Staff to Secretary of State Hillary Clinton | | 2013 | | | | ● | | ● | | | | | | | Gordon M. Nixon | | 61 | | Former President, CEO and Director of
Royal Bank of Canada | | 2015 | | | | ● | | Chair | | ● | | ● | | | Charles H. Robbins | | 52 | | Chairman and CEO of Cisco Systems, Inc. | | 2017 | | | | | | | | ● | | | | | Ivan G. Seidenberg | | 71 | | Former Chairman and CEO of Verizon
Communications Inc. | | 2011 | | ● | | Chair | | ● | | | | ● | | | Marco Antonio Slim Domit | | 49 | | Chairman of Grupo Financiero Inbursa, S.A.B. de C.V. | | 2011 | | ● | | ● | | | | | | | | | Susan L. Wagner | | 56 | | Former Vice Chairman of BlackRock | | 2012 | | | | | | | | ● | | | | | Mark Wilson | | 51 | | CEO of Aviva plc | | 2018 | | | | | | | | | | | | |
BLACKROCK, INC. 2018 PROXY STATEMENT 3
| | | | | | | | | | | | | Proxy Summary ●Governance Highlights | | | | |
Governance Highlights We are vocal advocates for the adoption of sound corporate governance policies that include strong Board leadership, prudent management practices and transparency. Highlights of our governance practices include: Annual election of directors Majority voting for directors in uncontested elections Lead Independent Director may call special meetings of directors without management present Executive sessions of independent directors Annual Board and Committee evaluations Risk oversight by Board and Committees Strong investor outreach program Robust stock ownership requirements for directors and executives Annual advisory approval of executive compensation Adoption of proxy access Annual review of Committee charters and Corporate Governance Guidelines Stock Ownership Guidelines Our stock ownership guidelines require the Company’s Global Executive Committee (“GEC”) members to own and maintain shares with a target value of: | | | | • $10 million for the Chief Executive Officer (“CEO”); | | As of December 31, 2017, all NEOs exceeded our stock ownership guidelines. | | • $5 million for the President; and | | | • $2 million for all other GEC members. | |
Shareholder Engagement and Outreach We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important to you. We report back to our Board on this engagement and on specific issues to be addressed. Executive management, Investor Relations and the Corporate Secretary engage on a regular basis with shareholders to understand their perspectives on a variety of corporate governance matters, including executive compensation, corporate governance policies and corporate sustainability practices. We also communicate with shareholders through a number of routine forums, including quarterly earnings presentations, U.S. Securities and Exchange Commission (“SEC”) filings, the Annual Report and Proxy Statement, the annual shareholder meeting, investor meetings and conferences and web communications. We relay shareholder feedback and trends on corporate governance and sustainability developments to our Board and its Committees and work with them to both enhance our practices and improve our disclosures. Compensation Policies and Practices Our commitment to design an executive compensation program that is consistent with responsible financial and risk management is reflected in the following policies and practices: | | | |  | • | | Review pay and performance alignment; | | • | | Balance short and long-term incentives, cash and equity, and fixed and variable pay elements; | | • | | Maintain a clawback policy; | | • | | Requireone-year minimum vesting for awards granted under the Stock Plan; | | • | | Maintain robust stock ownership and retention guidelines; | | • | | Prohibit hedging, pledging or short selling BlackRock securities; | | • | | Limit perquisites; | | • | | Assess and mitigate compensation risk; | | • | | Solicit annual advisory vote on executive compensation; and | | • | | Annually review the independence of the compensation consultant retained by the Management Development & Compensation Committee (the “Compensation Committee”). |
| | | |  | • | | No ongoing employment agreements or guaranteed compensation arrangements for NEOs; | | • | | No automatic single trigger vesting of equity awards or transaction bonus payments uponchange-in-control; | | • | | No dividends or dividend equivalents on unearned restricted stock, restricted stock units, stock options or stock appreciation rights; | | • | | No repricing of stock options; | | • | | No cash buyouts of underwater stock options; | | • | | No tax reimbursements for perquisites; | | • | | No taxgross-ups for excise taxes; | | • | | No supplemental retirement benefits for NEOs; and | | • | | No supplemental severance benefits for NEOs beyond standard severance benefits under BlackRock’s Severance Pay Plan. |
4BLACKROCK, INC. 2018 PROXY STATEMENT what we do what we don’t do
| | | | | | | | | | | | | Proxy Summary ●2017 Performance Highlights | | | | |
2017 Performance Highlights1 The strength of BlackRock’s 2017 results reflect the long-term strategic advantages we have created by consistently investing in our business. Full-year results reflected industry-leading organic growth, with record full-year net inflows of $367 billion, continued Operating Margin expansion and consistent capital management. Investment performance results across our alpha-seeking and index strategies as of December 31, 2017 remain strong and are detailed in Item 1 of our 2017 Form10-K. Differentiated Organic Growth Organic Assetgrowth of 7% in 2017 contributed to strong Organic Revenue growth2 
Consistent Capital Return $2.8 billion was returned to shareholders in 2017 through a combination of dividends and $1.1 billion of share repurchases 
Operating Leverage Operating Margin, as adjusted, of 44.1% was up40 bps from 2016 
Earnings Growth Diluted earnings per share, as adjusted, of $22.60increased 17% versus 2016
| 1 | Amounts in this section, where noted, are shown on an “as adjusted” basis. For a reconciliation with generally accepted accounting principles (“GAAP”) in the United States, please see Annex A. |
| 2 | Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net newAladdin revenue, excluding the effect of market appreciation/ (depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in such given year. |
BLACKROCK, INC. 2018 PROXY STATEMENT 5 Assets Under Management ($B) Revenue ($M) Operating Income ($M) (as adjusted)2 Operating Margin (as adjusted)2 Cash Dividend Per Share ($)Share Buyback ($M) Net Income ($M) Earnings Per Share (as adjusted)2 ($M)
| | | | | | | | | | | | | Proxy Summary ●How We Determine Annual Incentive Amounts for Our CEO and President | | | | |
How We Determine Annual Incentive Amounts for Our CEO and President | | | | | | | | | | | | | | | | | | | BlackRock Performance % of Award Opportunity | | | | Measures | | | | BlackRock Performance | | | | | | | | | 2016 | | 2017 | | Change | Financial Performance 
| | | | Net New Business ($bn) | | | | $202 | | $367 | | +82% | | | | | Net New Base Fee Growth | | | | 4% | | 7% | | +300bps | | | | | Operating Income, as adjusted1 ($m) | | | | $4,674 | | $5,287 | | +13% | | | | | Operating Margin, as adjusted1 | | | | 43.7% | | 44.1% | | +40 bps | | | | | Diluted Earnings Per Share, as adjusted1 | | | | $19.29 | | $22.60 | | +17% | | | | | Share Price Data | | | | BLK | | LC Traditional Peers2 | | | | | NTM P/E Multiple3 | | | | 20.2x | | 14.3x | | | | | Annual appreciation | | | | 35% | | 28% | Business Strength 
| | | | Deliver superior client experience through competitive investment performance across global product groups | | | | BlackRock’s alpha-seeking investments platform delivered very strong performance in 2017 and improved performance against peers | | | | | Drive organization discipline through execution of our strategic initiatives | | | | Demonstrated successful execution across multiple complex strategic initiatives that have positioned the Company well for growth | | | | | Lead in a changing world | | | | Elevated the use of technology across the organization and made progress in advancing BlackRock’s technology agenda | Organizational Strength 
| | | | Drive high performance | | | | Advanced the high performance goal through execution of key senior talent moves in 2017 | | | | | Build a more diverse and inclusive culture | | | | Strong progress in 2017 diverse hiring to meet or exceed company-wide 2020 diversity targets | | | | | Develop great managers and leaders | | | | Continued to focus on manager excellence, succession planning, the depth of our leadership bench, and proactive development of key talent |
| 1. | Amounts are shown on an “as adjusted” basis. For a reconciliation with GAAP in the United States, please see Annex A. |
| 2. | Large Cap (“LC”) Traditional Peers refers to Alliance Bernstein, Affiliated Managers Group, Inc., Franklin Resources, Inc., Eaton Vance, Invesco, Legg Mason and T. Rowe Price. |
| 3. | NTM P/E multiple refers to the Company’s share price as of March 1, 2016.December 31, 2017 divided by the consensus estimate of the Company’s expected earnings over the next 12 months. Sourced from Factset. |
In addition to annual incentive awards, the Compensation Committee expects to continue to make annual grants of long-term equity awards to both Messrs. Fink and Kapito, with at least half of such awards being contingent on future financial or other business performance requirements in addition to share price performance. 6BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Proxy Summary ●NEO Total Annual Compensation Summary | | | | |
NEO Total Annual Compensation Summary Following a review of full-year business and individual Named Executive Officer (“NEO”) performance, the Compensation Committee determined 2017 total annual compensation outcomes for each NEO, as outlined in the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 Annual Incentive Award | | | | | | | | | | | | | | | | | | | | | | Name | | Base
Salary | | | Cash | | | Deferred
Equity | | | Long-Term
Incentive Award
(“BPIP”) | | | Total Annual
Compensation
(“TAC”) | | | % change in
TAC vs. 2016 | | | Performance-
Based Stock
Options | | Laurence D. Fink | | $ | 900,000 | | | $ | 10,000,000 | | | $ | 4,600,000 | | | $ | 12,450,000 | | | $ | 27,950,000 | | | | 10% | | | | – | | Robert S. Kapito | | $ | 750,000 | | | $ | 8,125,000 | | | $ | 3,514,000 | | | $ | 9,626,000 | | | $ | 22,015,000 | | | | 10% | | | | – | | Robert L. Goldstein | | $ | 500,000 | | | $ | 3,275,000 | | | $ | 2,325,000 | | | $ | 2,100,000 | | | $ | 8,200,000 | | | | 12% | | | $ | 10,000,000 | | Mark S. McCombe | | $ | 500,000 | | | $ | 2,725,000 | | | $ | 1,775,000 | | | $ | 1,950,000 | | | $ | 6,950,000 | | | | 11% | | | $ | 10,000,000 | | Gary S. Shedlin | | $ | 500,000 | | | $ | 2,700,000 | | | $ | 1,750,000 | | | $ | 1,850,000 | | | $ | 6,800,000 | | | | 11% | | | $ | 7,500,000 | |
The amounts listed above as “2017 Annual Incentive Award: Deferred Equity” and “Long-Term Incentive Award (“BPIP”)” were granted in January 2018 in the form of equity and are separate from the cash award amounts listed above as “2017 Annual Incentive Award: Cash.” In conformance with SEC requirements, the 2017 Summary Compensation Table on page 68 reports equity in the year granted but cash in the year earned. In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see “Performance-Based Stock Options” on page 55. Pay-for-Performance Compensation Structure for NEOs Our total annual compensation structure embodies our commitment to align pay with performance. More than 90% of our regular annual executive compensation is performance based and “at risk.” Compensation mix percentages shown below are based on 2017year-end compensation decisions for individual NEOs by the Compensation Committee. 
| 1 | All grants of BlackRock equity (including the portion of the annual incentive awards granted in Restricted Stock Units (“RSUs”) and BlackRock Performance Incentive Plan (“BPIP”) Awards) are approved by the Compensation Committee under the Stock Plan, which has been previously approved by shareholders. The Stock Plan allows multiple types of awards to be granted. |
| 2 | The value of the 2017 long-term incentive BPIP Awards and the value of the equity portion of the bonus for 2017 annual incentive awards was converted into RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018. |
| 3 | For NEOs other than the CEO and President, higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company’s deferral policy, as detailed on page 50. |
2017 CEO Total Annual Compensation-$27.95M Base Salary (Cash) $900k 97% of total compensation is variable and based on performance Annual Incentive (Cash) $10.00M 125% of target Annual Incentive (Deferred Equity1,2) $4.6M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $12.45M 75% of equity is awarded in BPIP 2017 President Total Annual Compensation- $22.02M Base Salary (Cash) $750k Annual Incentive (Cash) $8.13M 125% of target Annual Incentive (Deferred Equity1,2) $3.51M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $9.63M 75% of equity is awarded in BPIP 60-61% of total annual compensation is awarded in equity 2017 Total Annual Compensation for NEOs (excluding CEO and President) Base Salary (Cash) 7-8% of pay 92-94% of total compensation is variable and based on performance Annual Incentive (Cash3) 39-40% of pay Annual Incentive (Deferred Equity1,2,3) 26-28% of pay Long-Term Incentive (BPIP) (Performance Based Equity1,2) 26-28% of pay 53-54% of total annual compensation is awarded in equity BLACKROCK, INC. 2018 PROXY STATEMENT 7
Item 1: Election of Directors 
Director Nominees Our Board has nominated 18 directors for election at this year’s Annual Meeting on the recommendation of our Governance Committee. Each director will serve until our next annual meeting and until his or her successor has been duly elected, or until his or her earlier death, resignation or retirement. We expect each director nominee to be able to serve if elected. If a nominee is unable to serve, proxies will be voted in favor of the remainder of those directors nominated and may be voted for substitute nominees, unless the Board decides to reduce its total size. If all 18 nominees are elected, our Board will consist of 18 directors, 15 of whom, representing approximately 83% of the Board, will be “independent” as defined in the New York Stock Exchange (the “NYSE”) listing standards. Stockholder Agreement with The PNC Financial Services Group, Inc. BlackRock’s stockholder agreement with The PNC Financial Services Group, Inc. (the “PNC Stockholder Agreement”) provides, subject to the waiver provisions of the agreement, that BlackRock will use its best efforts to cause the election at each annual meeting of shareholders so that the Board will consist of: no more than 19 directors, not less than two nor more than four directors who will be members of BlackRock management, two directors who will be designated by PNC, and the remaining directors being independent for purposes of the rules of the NYSE and not designated by or on behalf of PNC or any of its affiliates. The PNC Financial Services Group, Inc. (“PNC”) has designated one member of the Board, William S. Demchak, Chairman, President and Chief Executive Officer of PNC. PNC has notified BlackRock that for the time being it will not designate a second director to the Board, although it retains the right to do so at any time in accordance with the PNC Stockholder Agreement. PNC has additionally been permitted to invite an observer to attend meetings of the Board as anon-voting guest. The PNC observer is Gregory B. Jordan, the General Counsel and Head of Regulatory and Governmental Affairs of PNC. Laurence D. Fink and Robert S. Kapito are members of BlackRock’s management team and are currently members of the Board. For additional detail on the PNC Stockholder Agreement, see“Certain Relationships and Related Transactions – PNC Stockholder Agreement” on page 40. 8BLACKROCK, INC. 2018 PROXY STATEMENT It has always been important that BlackRock’s Board of Directors functions as a key strategic and governing body that challenges our leadership team to be better and more innovative. Laurence D. Fink Chairman and Chief Executive Officer
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominees | | | | |
Majority Vote Standard for Election of Directors Directors are elected by a majority of the votes cast in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of shares voted “against” that director nominee). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors would be a plurality of the shares represented in person or by proxy at any meeting and entitled to vote on the election of directors. Whether an election is contested is determined seven days in advance of when we file our definitive Proxy Statement with the SEC. Director Resignation Policy and Mandatory Retirement Age Under the Board’s Director Resignation Policy, any incumbent director who fails to receive a majority of votes cast in an uncontested election must tender his or her resignation to the Board. The Governance Committee would then make a recommendation to the Board about whether to accept or reject the resignation or take other action. The Board will act on the Governance Committee’s recommendation and publicly disclose its decision and rationale within 90 days from the date the election results are certified. The director who tenders his or her resignation under the Director Resignation Policy will not participate in the Board’s decision. The Board has established a mandatory retirement age of 75 years for directors, as reflected in BlackRock’s Corporate Governance Guidelines. Director Nomination Process The Governance Committee oversees the director nomination process. The Committee leads the Board’s annual review of Board performance and reviews and recommends to the Board BlackRock’s Corporate Governance Guidelines, which include the minimum criteria for membership on the Board. The Governance Committee also assists the Board in identifying individuals qualified to become Board members and recommends to the Board a slate of candidates, which may include both incumbent and new director nominees, to submit for election at each annual meeting of shareholders. The Committee may also recommend that the Board elect new members to the Board to serve until the next annual meeting of shareholders. Identifying and Evaluating Candidates for Director The Governance Committee seeks advice on potential director candidates from current directors and executive officers when identifying and evaluating new candidates for director. The Governance Committee also may direct management to engage third-party firms that specialize in identifying director candidates to assist with its search. Shareholders can recommend a candidate for election to the Board by submitting director recommendations to the Governance Committee. For information on the requirements governing shareholder nominations for the election of directors, pleasesee “Deadlines for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders”on page 92. The Governance Committee then reviews publicly available information regarding each potential director candidate to assess whether the candidate should be considered further. If the Governance Committee determines that the candidate warrants further consideration, then the Chairperson (or a person designated by the Governance Committee) will contact the candidate. If the candidate expresses a willingness to be considered and to serve on the Board, then the Governance Committee typically requests information from the candidate and reviews the candidate’s accomplishments and qualifications against the criteria described below. The Governance Committee’s evaluation process does not vary based on whether a candidate is recommended by a shareholder, although the Governance Committee may consider the number of shares held by the recommending shareholder and the length of time that such shares have been held. BLACKROCK, INC. 2018 PROXY STATEMENT 9
| | | | | | | | | | | | | Item 1: Election of Directors ●Criteria for Board Membership | | | | |
Criteria for Board Membership Director Qualifications and Attributes The Governance Committee and the Board take into consideration a number of factors and criteria in reviewing candidates for nomination to the Board. The Board believes, that at a minimum, a director candidate must demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of BlackRock. Equally important, a director candidate must have an impeccable record and reputation for honest and ethical conduct in his or her professional and personal activities. In addition, nominees for director are selected on the basis of experience, diversity, knowledge, skills, expertise, ability to make independent analytical inquiries, understanding of BlackRock’s business environment and a willingness to devote adequate time and effort to the responsibilities of the Board. Board Diversity BlackRock and its Board believe diversity in the boardroom is critical to the success of the Company and its ability to create long-term value for our shareholders. The Board has and will continue to make diversity in gender, ethnicity, age, career experience and geographic location – as well as diversity of mind – a priority when considering director candidates. The diverse backgrounds of our individual directors help the Board better evaluate BlackRock’s management and operations and assess risk and opportunities for the Company’s business model. BlackRock’s commitment to diversity enhances Board involvement in our Company’s multi-faceted long-term strategy and inspires deeper engagement with management, employees and clients around the world. Our Board has nominated 18 directors for election, 15 of whom are independent. The Board includes 5 women, 1 of whom is African American, and 6 directors who arenon-U.S. or dual citizens. Several of our nominees live and work overseas in countries and regions that are key areas of growth and investment for BlackRock, including Mexico, Canada, the United Kingdom and Continental Europe. As BlackRock’s business has evolved, so has its Board. Our Board consists of senior leaders (including 12 current or former company CEOs) with substantial experience in financial services, consumer products, manufacturing, technology, banking and energy, and several directors have held senior policy and government positions. To learn more about our Board, we encourage you to visit our website athttp://ir.blackrock.com/board-of-directors. Core qualifications and areas of expertise represented on our Board include: 
10BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Item 1: Election of Directors ●Criteria for Board Membership | | | | |
Board Tenure and Size To ensure the Board has an appropriate balance of experience, continuity and fresh perspective, the Board considers, among other factors, length of tenure when reviewing nominees. The average tenure of BlackRock’s director nominees is approximately 7 years, while the average tenure for independent director nominees is approximately 5 years. Six directors, comprising 33% of the Board, have served more than 10 years and bring a wealth of experience and knowledge concerning BlackRock. Five directors, comprising 28% of the Board, have served between 5 and 10 years. Following the 2018 Annual Meeting of Shareholders, assuming all of the nominated directors are elected, there will be seven directors, comprising 39% of the Board, who have joined the Board within the past 5 years and bring fresh perspective to Board deliberations. The Board has not adopted a policy that limits or sets a target for Board size and believes the current size and diverse composition of the Board is best suited to evaluate management’s performance and oversee BlackRock’s global strategy and risk management. As described in“Board Evaluation Process” on page 23, the Governance Committee and the Board evaluate Board and Committee performance and effectiveness on at least an annual basis and, as part of that process, ask each director to consider whether the size of the Board and its standing Committees are appropriate. Compliance with Regulatory and Independence Requirements The Governance Committee takes into consideration regulatory requirements, including competitive restrictions and financial institution interlocks, independence requirements under the NYSE listing standards and our Corporate Governance Guidelines in its review of director candidates for the Board and Committees. The Governance Committee also considers a director candidate’s current and past positions held, including past and present board and committee memberships, as part of its evaluation. Service on Other Public Company Boards Each of our directors must have the time and ability to make a constructive contribution to the Board as well as a clear commitment to fulfilling the fiduciary duties required of directors and serving the interests of the Company’s shareholders. BlackRock’s CEO does not currently serve on the board of directors of any other public company, and none of our current directors serve on more than four public company boards, including BlackRock’s Board. Director Candidate Search Consistent with BlackRock’sage-based retirement policy, at least 6 of BlackRock’s current directors will retire within the next 6 years, inclusive of Messrs. Al-Hamad and Grosfeld. In order to maintain a Board with an appropriate mix of experience and qualifications, the Governance Committee, with the help of management and an outside consultant, engages in a year-round process to identify and evaluate new director candidates in conjunction with its recurring review of Board and Committee composition. Consistent with our long-term strategic goals and the qualifications and attributes described above, search criteria include significant experience in financial services, the technology sector and consumer branding, as well as international experience. In March of this year, the Governance Committee selected William E. Ford, Margaret L. Johnson and Mark Wilson as director candidates with significant leadership and experience in asset management, technology and international financial services, respectively, and recommended each to the Board for consideration as director candidates for the Board. Ms. Johnson was recommended for consideration to the Governance Committee by a third-party search firm and Messrs. Ford and Wilson were referrals from our CEO. On March 15, 2018, following a review of the candidates’ qualifications and independence, the Board voted unanimously to elect each director candidate to our Board. Board Recommendation For this year’s election, the Board has nominated 18 director candidates. The Board believes these director nominees provide BlackRock with the combined depth and breadth of skills, experience and qualities required to contribute to an effective and well-functioning Board. The composition of the current Board reflects a diverse range of skills, qualifications and professional experience that is relevant to our global strategy, business and governance. The following biographical information about each director nominee highlights the particular experience, qualifications, attributes and skills possessed by each director nominee that led the Board to determine that he or she should serve as director. All director nominee biographical information is as of March 29, 2018. | | | 
| | The Board of Directors recommends stockholdersshareholders vote “FOR”“FOR” the election of each of the following 1918 director nominees. |
BLACKROCK, INC. 2018 PROXY STATEMENT 11
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
Director Nominee Biographies | | | 
| |
Mathis Cabiallavetta Director Nominee BiographiesMr. 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.”).
Abdlatif Yousef Al-Hamad
| Director Since 2009, Age 78
Qualifications As a former leader of Swiss Re Ltd. and Marsh & McLennan Companies, Inc. as well as UBS A.G., Mr. Cabiallavetta brings executive experience from these large and complex multinational businesses and provides substantial expertise in global capital markets, and, as a result, he offers unique insights to the Board’s oversight of BlackRock’s global operations and risk management. Other Public Company Directorships (within the past 5 years) • Swiss Re Ltd. (2008 – present) (Vice Chairman from 2009 – 2015) • Philip Morris International Inc. (2002 – 2014) |
| | | 
| | | 
| | 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.
| | Pamela Daley Ms. Daley retired from General Electric Company (“GE”) in January 2014, having most recently served as a Senior Advisor to its Chairman from April 2013 to January 2014. Prior to this role, Ms. Daley served as Senior Vice President of GE’s Corporate Business Development from 2004 to 2013 and as Vice President and Senior Counsel for Transactions from 1991 to 2004. As Senior Vice President, Ms. Daley was responsible for GE’s mergers, acquisitions and divestiture activities worldwide. Ms. Daley joined GE in 1989 as Tax Counsel. Previously, Ms. Daley was a Partner of Morgan, Lewis & Bockius, where she specialized in domestic and cross-bordertax-oriented financings and commercial transactions. Ms. Daley currently serves as a director of SecureWorks Corp. Ms. Daley previously served on the board of BG Group, an international oil and gas company traded on the London Stock Exchange, until it was acquired by Royal Dutch Shell, and Patheon N.V., until it was acquired by Thermo Fisher, Inc. Qualifications With over 35 years of transactional experience and more than 20 years as an executive at GE, one of the world’s leading multinational corporations, Ms. Daley brings significant experience and strategic insight to the Board in the areas of leadership development, international operations, transactions, business development and strategy. Other Public Company Directorships (within the past 5 years) • SecureWorks Corp. (2016 – present) • Patheon N.V. (2016 – 2017) • BG Group (2014 – 2016) |
Mathis Cabiallavetta12BLACKROCK, INC. 2018 PROXY STATEMENT Age 73 Tenure 10 Years Committees Audit Nominating & Governance Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Company & Financial Reporting Age 65 Tenure 4 Years Committees Audit (Chair) Executive Risk Qualifications Senior Executive & Corporate Governance Global Business Financial Services Public Company & Financial Reporting Public Policy & Government/ Regulatory Affairs
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | 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 CommitteeWilliam S. Demchak
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.
|
CORPORATE GOVERNANCE
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”.
Board Leadership
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 of directors of PNC since April 2014, as Chief Executive Officer since April 2013 and as President since April 2012. Prior to that, Mr. Demchak held a number of supervisory positions at PNC, including Senior Vice Chairman, Head of Corporate and Institutional Banking and Chief Financial Officer. Before joining PNC in 2002, Mr. Demchak served as the Global Head of Structured Finance and Credit Portfolio for J.P. Morgan Chase & Co. and additionally held key leadership roles at J.P. Morgan prior to its merger with Chase Manhattan Corporation in 2000.
Qualifications As the Chairman, President and Chief Executive Officer of PNC, a large, national diversified financial services company providing traditional banking and asset management services, Mr. Demchak brings substantial expertise in financial services, risk management and corporate governance to bear as a member of the Board. Mr. Demchak was designated to serve on the Board by PNC pursuant to the PNC Stockholder Agreement. Other Public Company Directorships (within the past 5 years) • PNC (2013 – present) (Chairman from 2014 – present) | | | 
| | Jessica P. Einhorn Ms. Einhorn served as Dean of the Paul H. Nitze School of Advanced International Studies at The Johns Hopkins University from 2002 until June 2012. Prior to becoming Dean, she was a consultant at Clark & Weinstock, a strategic consulting firm. Ms. Einhorn also spent nearly 20 years at the World Bank, concluding as Managing Director in 1998. Between 1998 and 1999, Ms. Einhorn was a Visiting Fellow at the International Monetary Fund. Prior to joining the World Bank in 1978, she held positions at the U.S. Treasury, the U.S. State Department and the International Development Cooperation Agency of the United States. Ms. Einhorn currently serves as a Director of both the Peterson Institute for International Economics and the National Bureau of Economic Research. As of July 2012, Ms. Einhorn is resident at The Rock Creek Group in Washington, D.C., where she is a Senior Advisor and longstanding member of The Rock Creek Group Advisory Board. The combined
Qualifications Ms. Einhorn’s leadership experience in academia and at the World Bank, along with her experience in the U.S. government and at the International Monetary Fund, provides the Board with a unique perspective and anin-depth understanding of international finance, economics and public policy. Through her service with other public companies, Ms. Einhorn also has developed expertise in corporate governance and risk oversight. Other Public Company Directorships (within the past 5 years) • Time Warner, Inc. (2005 – present) |
Age 55 Tenure 15 Years Committees Executive Risk Qualifications Senior Executive & Corporate Governance Risk Management & Compliance Financial Services Public Company & Financial Reporting Branding & Marketing Age 70 Tenure 5 Years Committees Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/Regulatory Affairs BLACKROCK, INC. 2018 PROXY STATEMENT 13
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Laurence D. Fink Mr. Fink is founder, Chairman and Chief Executive Officer structure allowsof BlackRock. He also leads the firm’s Global Executive Committee. He is responsible for robustsenior leadership development and frequent communication betweensuccession planning, defining and reinforcing BlackRock’s vision and culture, and engaging relationships with key strategic clients, industry leaders, regulators and policy makers. Mr. Finkco-founded BlackRock in 1988, and under his leadership, the firm has grown into a global leader in investment management, risk management and advisory services for institutional and retail clients. Qualifications As one of the founding principals and Chief Executive Officer of BlackRock since 1988, Mr. Fink brings exceptional leadership skills andin-depth understanding of BlackRock’s businesses, operations and strategy. His extensive and specific knowledge of BlackRock and its business enable him to keep the Board and managementapprised of the Company. To further facilitate coordination withmost significant developments impacting the independent directorsCompany and to ensureguide the exerciseBoard’s discussion and review of independent judgment bythe Company’s strategy. Other Public Company Directorships (within the past 5 years) • None | | | 
| | William E. Ford Mr. Ford is the Chief Executive Officer of General Atlantic, a position he has held since 2007. He also serves as Chairman of General Atlantic’s Executive Committee and is a member of the firm’s Investment and Portfolio Committees. Mr. Ford is actively involved with a number of educational andnot-for-profit organizations. He is a member of the board of Rockefeller University, where he is Vice Chair, and serves on the board of directors of the National Committee on United States-China Relations, and is a member of The Council on Foreign Relations. He is also a member of the Steering Committee for the CEO Action for Diversity and Inclusion initiative. Mr. Ford has formerly served on the boards of First Republic Bank, NYSE Euronext, E*Trade, Priceline and NYMEX Holdings. Qualifications Mr. Ford brings to the Board extensive global investment management experience and financial expertise acquired over his 25 years at General Atlantic, one of world’s leading growth equity firms. Other Public Company Directorships (within the past 5 years) • Axel Springer (2016 – present) • IHS Markit Ltd. (2010 – present) |
14BLACKROCK, INC. 2018 PROXY STATEMENT Age 65 Tenure 18 Years Committees Executive (Chair) Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Company & Financial Reporting Public Policy & Government/ Regulatory Affairs Age 56 Tenure 0 Years Committees None Qualifications Senior Executive & Corporate Governance Public Company & Financial Reporting Global Business Financial Services
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Fabrizio Freda Mr. Freda has served as President and Chief Executive Officer of The Estée Lauder Companies Inc. (“Estée Lauder”) since July 2009 and is also a member of its board of directors. Mr. Freda previously served as Estée Lauder’s President and Chief Operating Officer from 2008 to July 2009. Estée Lauder is a global leader in beauty with more than 25 brands and over 40,000 employees worldwide. Prior to joining Estée Lauder, Mr. Freda held various senior positions at Procter & Gamble Company over the span of 20 years. From 1986 to 1988, Mr. Freda directed marketing and strategic planning for Gucci SpA. Qualifications Mr. Freda’s extensive experience in product strategy, innovation and global branding brings valuable insights to the Board. His chief executive experience at Estée Lauder, an established multinational manufacturer and marketer of prestige brands, provides the Board selects onewith unique perspectives on the Company’s marketing, strategy and innovation initiatives. Other Public Company Directorships (within the past 5 years) • The Estée Lauder Companies Inc. (2009 – present) | | | 
| | Murry S. Gerber* Mr. Gerber has served as a member of the boards of directors of U.S. Steel Corporation since July 2012 and Halliburton Company since January 2012. Previously, Mr. Gerber served as Executive Chairman of EQT Corporation, an integrated energy production company, from 2010 until May 2011, as its membersChairman and Chief Executive Officer from 2007 to 2010, and as its Chairman, President and Chief Executive Officer from 1998 to 2007. Qualifications As a former leader of a large, publicly traded energy production company and as a current or former member of the board of directors of three large, publicly traded companies, Mr. Gerber brings to the Board extensive expertise and insight into corporate operations, management and governance matters, as well as expert knowledge of the energy sector. Other Public Company Directorships (within the past 5 years) • U.S. Steel Corporation (2012 – present) • Halliburton Company (2012 – present) * The Board selected Mr. Gerber to serve as the lead independent director. Lead Independent Director effective as of May 25, 2017. |
Age 55 Tenure 15 Years Committees Executive Risk Qualifications Senior Executive & Corporate Governance Risk Management & Compliance Financial Services Public Company & Financial Reporting Branding & Marketing Age 70 Tenure 5 Years Committees Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/Regulatory Affairs BLACKROCK, INC. 2018 PROXY STATEMENT 15
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Margaret L. Johnson Ms. Johnson has been an Executive Vice President of Business Development at Microsoft Corporation since September 2014. She is responsible for driving strategic business deals and partnerships across various industries. Ms. Johnson joined Microsoft from Qualcomm Incorporated, where she served in various leadership positions across engineering, sales, marketing and business development. She most recently served as Executive Vice President of Qualcomm Technologies, Inc. and President of Global Market Development. Ms. Johnson is a Director of PATH and a Trustee of The Paley Center for Media. Qualifications Ms. Johnson brings to the Board substantive experience in the field of technology as well as business and strategic development expertise acquired over her 28 years at Microsoft and Qualcomm. Other Public Company Directorships (within the past 5 years) • Live Nation Entertainment (2013 – present) | | | 
| | Robert S. Kapito Mr. Kapito has been President of BlackRock since 2007 and is a member of BlackRock’s Global Executive Committee and Chairman of the Global Operating Committee. Mr. Kapitoco-founded BlackRock in 1988 and is also a director of iShares, Inc. He is responsible for theday-to-day oversight of BlackRock’s key operating units including Investment Strategies, Client Businesses, Technology & Operations, and Risk & Quantitative Analysis. Prior to 2007, Mr. Kapito served as Vice Chairman of BlackRock and Head of BlackRock’s Portfolio Management Group. Qualifications As one of our founding principals, Mr. Kapito has served as an executive leader of BlackRock since 1988. He brings to the Board industry and business acumen in additionto in-depth knowledge about BlackRock’s businesses, investment strategies and risk management, as well as extensive experience overseeingday-to-day operations. Other Public Company Directorships (within the past 5 years) • None |
16BLACKROCK, INC. 2018 PROXY STATEMENT Age 56 Tenure 0 Years Committees None Qualifications Senior Executive & Corporate Governance Global Business Public Policy & Government/ Regulatory Affairs Technology Branding & Marketing Age 70 Tenure 11 Years Committees None Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Branding & Marketing
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Sir Deryck Maughan Sir Deryck served as a Senior Advisor of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) from January 2013 until December 2014. Previously, he was a Partner and Head of the Financial Institutions Group of KKR since 2009 and a Managing Director since 2005. He was Chairman of KKR Asia from 2005 to 2009. Prior to joining KKR, Sir Deryck served as Vice Chairman of Citigroup from 1998 to 2004, as Chairman and Chief Executive Officer of Salomon Brothers from 1992 to 1997 and as Chairman and Chief Executive Officer of Salomon Brothers Asia from 1986 to 1991. He also served as Vice Chairman of the NYSE from 1996 to 2000. Prior to joining Salomon Brothers in 1983, Sir Deryck worked at Goldman Sachs. He served in H.M. Treasury (UK Economics and Finance Ministry) from 1969 to 1979. Sir Deryck also served as a director of GlaxoSmithKline plc from 2004 to 2016 and Thomson Reuters from 2008 to 2014. Qualifications Sir Deryck’s internationally focused leadership positions at KKR, a global leader in private equity, fixed income and capital markets, and at Citigroup and Salomon Brothers provide the Board with a valuable perspective on international finance and global capital markets and extensive experience in assessing value, strategy and risks related to various business models. Other Public Company Directorships (within the past 5 years) • GlaxoSmithKline plc (2004 – 2016) • Thomson Reuters (2008 – 2014) | | |  | | Cheryl D. Mills Ms. Mills is Founder and Chief Executive Officer of the BlackIvy Group, an investment company that grows and builds businesses inSub-Saharan Africa. Previously, she served as Chief of Staff to Secretary of State Hillary Clinton and Counselor to the U.S. Department of State from 2009 to 2013. Ms. Mills was with New York University from 2002 to 2009, where she served as Senior Vice President for Administration and Operations and as General Counsel. She also served as Secretary of the University’s Board of Directors has appointed Thomas O’BrienTrustees. From 1999 to serve2001, 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 lead independent director. White House Associate Counsel. She began her career as an Associate at the Washington, D.C. law firm of Hogan & Hartson. Ms. Mills previously served on the boards of Cendant Corporation (now Avis Budget Group, Inc.) and Orion Power. Qualifications Ms. Mills brings to the Board a range of leadership experiences from government and academia, and through her prior service on the boards of corporations andnon-profits, she provides expertise on issues concerning government relations, public policy, corporate administration and corporate governance. Other Public Company Directorships (within the past 5 years) • None |
Age 53 Tenure 4 Years Committees Management Development & Compensation Nominating & Governance Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Public Policy & Government/ Regulatory Affairs Branding & Marketing BLACKROCK, INC. 2018 PROXY STATEMENT 17
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Gordon M. Nixon, C.M., O.Ont. Mr. O’Brien isNixon was President, Chief Executive Officer and a senior member of the Board. His dutiesboard of directors of Royal Bank of Canada from 2001 to 2014. He first joined RBC Dominion Securities Inc. in 1979, where he held a number of operating positions and served as Chief Executive Officer from December 1999 to April 2001. Mr. Nixon has served on the lead independentboard of directors of BCE Inc. since 2014 and was named Chairman of the board upon hisre-election in April 2016. He is also a director include:of George Weston Limited and is on the advisory board of Kingsett Capital. advising the Chairman on the selectionQualifications With 13 years of Committee chairpersons; ensuring appropriate information is sentexperience 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 workinganin-depth knowledge of the North American market. His experience growing a diversified, global financial services organization in a highly regulated environment also provides the Board with valuable insight into risk management, compensation and corporate governance matters.Other Public Company Directorships (within the past 5 years) • BCE Inc. (2014 – present) • George Weston Limited (2014 – present) | | |  | | Charles H. Robbins Mr. Robbins serves as the Chairman and Chief Executive Officer of Cisco Systems, Inc. (“Cisco”). Prior to assuming this role in July 2015, he was Senior Vice President of Cisco’s Worldwide Field Operations and led its Worldwide Sales and Partner Organization where he helped drive and execute many of Cisco’s investment areas and strategy shifts. He serves as Chairman of the U.S.-Japan Business Council, Chair of the IT Governors Steering Committee for the World Economic Forum and is a member of the International Business Council for the World Economic Forum and the Business Roundtable. Qualifications Mr. Robbins brings to the Board extensive experience in the fields of technology, global sales and operations acquired over his 19 years at Cisco, one of world’s leading information technology companies. Other Public Company Directorships (within the past 5 years) • Cisco Systems, Inc. (2015 – present) |
18BLACKROCK, INC. 2018 PROXY STATEMENT Age 61 Tenure 2 Years Committees Executive Nominating & Governance (Chair) Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/ Regulatory Affairs Age 52 Tenure 1 Year Committees Risk Qualifications Senior Executive & Corporate Governance Public Policy & Government/ Regulatory Affairs Branding & Marketing Technology
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Ivan G. Seidenberg Mr. Seidenberg retired as the Chairman of the board of directors of Verizon Communications Inc. in December 2011 and previously served as its Chief Executive Officer from 2002 to 2011. Prior to the creation of Verizon Communications Inc., Mr. Seidenberg was the Chairman and Chief Executive Officer of Bell Atlantic and NYNEX Corp. Mr. Seidenberg has been an Advisory Partner of Perella Weinberg Partners, a global independent advisory and asset management firm, since June 2012. Qualifications Mr. Seidenberg brings extensive executive leadership, technological and operational experience to the Board from his tenure at Verizon Communications Inc., one of the world’s leading providers of communications services. Through his extensive experience on the boards of public companies, he has developed anin-depth understanding of business and corporate governance. Other Public Company Directorships (within the past 5 years) • Boston Properties, Inc. (2014 – 2016) | | | 
| | Marco Antonio Slim Domit Mr. Slim has been Chairman of the board of directors of Grupo Financiero Inbursa, S.A.B. de C.V. since 1997 and previously served as Chief Executive Officer of Grupo Financiero Inbursa from 1997 until April 2012. Mr. Slim is also a member of the board of directors of Grupo Carso, S.A.B. de C.V. and Chairman of The Carlos Slim Health Institute and of Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL), an infrastructure company. Mr. Slim was a member of the board of directors of Teléfonos de México, S.A.B. de C.V. from 1995 until April 2014. Qualifications Mr. Slim’s experience at Grupo Financiero Inbursa provides the Board with knowledge and expertise in international finance, and particular insight into emerging and Latin American markets. In addition, as a member of the board of directors of several international companies that invest globally, Mr. Slim brings substantive expertise in developing new businesses in international markets, shareholder rights and business strategy and integration to identifythe Board. Other Public Company Directorships (within the past 5 years) • Grupo Carso, S.A.B. de C.V. (1991 – present) • Grupo Financiero Inbursa, S.A.B. de C.V. (Chairman from 1997 – present) • Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V.
(Chairman from 2012 – present) • Teléfonos de México, S.A.B. de C.V. (1995 – 2014) |
Age 71 Tenure 7 Years Committees Audit Executive Nominating & Governance Management Development & Compensation (Chair) Qualification Senior Executive & Corporate Governance Public Company & Financial Reporting Public Policy & Government/ Regulatory Affairs Branding & Marketing Technology global business Age 49 Tenure 6 Years Committees Audit Management Development & Compensation Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Company & Financial Reporting BLACKROCK, INC. 2018 PROXY STATEMENT 19
| | | | | | | | | | | | | Item 1: Election of Directors ●Director Nominee Biographies | | | | |
| | | 
| | Susan L. Wagner Ms. Wagner retired as Vice Chairman of BlackRock after serving in that role from 2006 to 2012. Ms. Wagner also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee. Ms. Wagner previously served as BlackRock’s Chief Operating Officer and as Head of Corporate Strategy. She currently serves as a director of Color Genomics, Apple Inc. and Swiss Re Ltd. Qualifications As one of the founding principals of BlackRock, Ms. Wagner has over 25 years of experience across various positions. Accordingly, she is able to provide the Board with valuable insight and perspective on risk management, operations and strategy, as well as a broad and deep understanding of the asset management industry. Other Public Company Directorships (within the past 5 years) • Apple Inc. (2014 – present) • Swiss Re Ltd. (2014 – present) | | | 
| | Mark Wilson Mr. Wilson is the Chief Executive Officer of Aviva plc (“Aviva”), a multinational insurance company headquartered in the UK. Prior to joining Aviva, Mr. Wilson worked in Asia for 14 years, including as Chief Executive Officer of AIA Group Limited, a leading pan-Asian company. Mr. Wilson is recognized for his leadership on sustainability issues and is a member of the UN Business and Sustainable Development Commission. In addition, he is a member of the Development Board of the Royal Foundation for the Duke and Duchess of Cambridge, Prince Harry and Ms. Meghan Markle. Qualifications As Chief Executive Officer of Aviva, Mr. Wilson brings to the Board extensive experience in the Europe, Middle East and Africa (“EMEA”) region and his operational and executive expertise in the insurance industry and in international finance provides the Board with an experienced outlook on international business strategy, development and sustainability. Other Public Company Directorships (within the past 5 years) • Aviva plc (2013 – present) |
20BLACKROCK, INC. 2018 PROXY STATEMENT Age 53 Tenure 4 Years Committees Management Development & Compensation Nominating & Governance Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Public Policy & Government/ Regulatory Affairs Branding & Marketing Age 61 Tenure 2 Years Committees Executive Nominating & Governance (Chair) Management Development & Compensation Risk Qualifications Senior Executive & Corporate Governance Global Business Risk Management & Compliance Financial Services Public Policy & Government/ Regulatory Affairs
Corporate Governance BlackRock’s corporate governance framework is a set of principles, guidelines and practices that support sustainable financial performance and long-term value creation for our shareholders. Our commitment to corporate governance is integral to our business and reflects not only regulatory requirements, NYSE listing standards and broadly recognized governance practices, but also effective leadership and oversight by our senior management team and Board. We regularly conduct calls with our shareholders to solicit feedback on our corporate governance framework. We make an effort to incorporate this feedback through enhanced policies, processes and disclosure. Our Corporate Governance Framework Our Board is committed to maintaining the highest standards of corporate governance at BlackRock. Because corporate governance practices evolve over time, our Board reviews and approves our Corporate Governance Guidelines, Committee charters and other governance policies at least once a year and updates them as necessary and appropriate. Our Board is guided by our Corporate Governance Guidelines, which addresses director responsibilities, director access to management, director orientation and continuing education, director retirement and the annual performance evaluations of the Board and Committees. The Corporate Governance Guidelines also directs that the Governance Committee consider the periodic rotation of Committee members and Committee Chairs as a means of introducing fresh perspectives and broadening and diversifying the views and experience represented on Committees. | | | | Our Board and Culture:Engaged and vital to our success | We believe our Board should be deeply engaged, provide informed and honest guidance and feedback, and maintain an open dialogue with management, based on a clear understanding of our strategic plans. Our Board plays an integral oversight role in our growth and success. At each Board meeting, we review components of our long-term strategy with our directors and engage in constructive dialogue, which our leadership team embraces. These discussions are not without disagreement – and those honest conversations push us to make the difficult decisions required to build a better BlackRock. Our directors have full and free access to all BlackRock officers and employees at any time to address questions, comments or concerns. Our directors may arrange these meetings independently and without the presence of senior management. Additionally, the Board and Committees have the power to hire independent legal, financial or other advisors without approval from, or consultation with, BlackRock management. | | Our Board plays an active part in our talent development as well, dedicating at least one meeting per year to talent review, evaluating whether we have the right people in the right places to execute our long-term strategy, as well as to make certain we are developing others to fill these roles in the future. Building a generation of leaders, open to both Board and external ideas, is vital to BlackRock’s long-term success. Our Board also takes an active role in ensuring we embrace “best practices” in corporate governance. In 2017, we incorporated feedback from shareholders to focus on how the Board oversees our Company’s corporate culture. The partnership and oversight of a strong and multi-faceted Board with diverse perspectives rooted in deep experience in finance, industry, academia, technology and government is essential to creating long-term shareholder value. |
BLACKROCK, INC. 2018 PROXY STATEMENT 21
| | | | | | | | | | | | | Corporate Governance ●Our Board Leadership Structure | | | | |
Our Board Leadership Structure Why our Board leadership structure is right for BlackRock Our Board and Governance Committee regularly review and evaluate the Board’s leadership structure. Mr. Fink serves as both BlackRock’s CEO and Chairman of the Board, which the Board has determined is the most appropriate and effective leadership structure for the Board and the Company at this time. Mr. Fink has served in this capacity since founding BlackRock in 1988 and, as such, brings over 30 years of strategic leadership experience and an unparalleled knowledge of BlackRock’s business, operations and risks to his role as Chairman of the Board. The Board does not have a policy on whether the roles of the Chairman and CEO should be separated but believes the current combination of the two roles provides BlackRock with, among other things, a clear and effective leadership structure to communicate the Company’s business and long-term strategy to its clients, shareholders and the public. The combinedChairman-CEO structure also provides for robust and frequent communication between the Board’s independent directors and the management of the Company. To further facilitate coordination with the independent directors and to ensure the exercise of independent judgment by the Board, the independent directors annually select one of the independent members to serve as the Lead Independent Director. Under our Lead Independent Director Guidelines, the Lead Independent Director will be elected annually by BlackRock’s independent directors and serve until a successor is elected. Although elected annually, we generally expect the Lead Independent Director to serve for more than one year. | | | | | | | 
Our Lead Independent Director: Murry S. Gerber First Elected in 2017 | | | | | | The Role of the Lead Independent Director Our Lead Independent Director has significant authority and responsibilities to provide for an effective and independent Board. In this role, Mr. Gerber: • Sets and approves the agenda and other discussion items for Board meetings;meetings and leads executive sessions. facilitating communication• At each executive session, facilitates discussion of the Company’s strategy, key governance issues (including succession planning) and the performance of BlackRock senior executives. • Serves as liaison between the independent directors and the Chairman of the Board; convening and leading executive sessions or special meetings of the Board’s independent directors; and
presiding at meetings of the Board in the absence of or at the request of the Chairman of the Board.
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.
Chairman. Executive Sessions• Focuses on Board effectiveness, performance and composition with input from the Governance Committee.
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
• Oversees and Kapito arereports on annual Board and Committee performance self-evaluations, in consultation with 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 DirectorsGovernance Committee. • Serves 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.primary Board contact for shareholder engagement. |
Executive Sessions Executive sessions ofnon-management directors are held at most regularly scheduled Board meetings, and six executive sessions were held in 2017. Each session is chaired by the Lead Independent Director, who facilitates discussion of the Company’s strategy, key governance issues, succession planning and the performance of senior executives. Anynon-management director may request that an additional executive session be scheduled. At least once a year an executive session is held of only those directors determined to be “independent,” within the meaning of the listing standards of the NYSE. The full versions of our Lead Independent Director Guidelines, Corporate Governance Guidelines, Committee Charters, Code of Business Conduct and Ethics and other corporate governance policies are available on our website atwww.blackrock.com under the headings “Our Company and Sites / Our Firm / Investor Relations / Corporate Governance”. 22BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●Board Evaluation Process | | | | |
Board Evaluation Process The effectiveness of the Board and its Committees is critical to BlackRock’s success and to the protection of our shareholders’ long-term interests. To ensure their effectiveness, the Board and each Committee conduct comprehensive annual self-evaluations to identify and assess areas for improvements. The evaluation process includes the following steps: 
BLACKROCK, INC. 2018 PROXY STATEMENT 23
| | | | | | | | | | | | | Corporate Governance ●Board Refreshment | | | | |
Board Refreshment The Governance Committee is responsible for identifying and evaluating potential director candidates, reviewing Board and Committee composition and making recommendations to the full Board. This ongoing process includes: 
Director Engagement – BlackRock Corporate Culture and Purpose Twice a year, our Board and Committee meetings are held outside of New York, including at least one round of meetings outside of the United States. Theseoff-site meetings provide our directors with an opportunity to do a focused review of regional strategies, to meet with employees and management based outside of our New York corporate headquarters and to engage with local clients and government officials. These meetings provide our directors with firsthand exposure to BlackRock’s corporate culture and how employees globally demonstrate BlackRock’s principles and purpose. In 2017, the Board travelled to Toronto, Canada and Copenhagen, Denmark. In addition to Board and Committeeoff-site meetings, members of our Board are encouraged to makeon-site visits to other BlackRock offices at their convenience. In 2017, the Chair of the Audit Committee visited Budapest, Hungary, London, England and Edinburgh, Scotland to speak with local management and employees, tour our new facilities and personally expand her knowledge of BlackRock’s global operations. This year, our directors also attended the BlackRock NY TechFest, a showcase of the latest in BlackRock’s technology capabilities and initiatives by and for employees. As a key part of our commitment to technology and innovation, our directors experienced first-hand where our technology is today and where it is leading us tomorrow. Director Onboarding and Continuing Education All new directors participate in an orientation program, to be conducted within three months of their election. Orientation includes presentations by senior management to familiarize our new directors with BlackRock’s strategic plans, significant financial, accounting and risk management issues, compliance programs, conflict policies, code of ethics and other controls, our principal officers and internal and independent auditors. All Directors are also encouraged to attend continuing educational programs offered by BlackRock or sponsored by universities, stock exchanges or other organizations related to fulfilling their duties as Board or Committee members. Management Succession Planning Our Board plays an integral oversight role in talent development by recognizing the importance of succession planning for the CEO and other key executives at BlackRock. The Board, in consultation with the Compensation Committee, dedicates at least one meeting per year to talent to ensure BlackRock has the right people in place to execute our long-term strategic plans and appropriate succession for key individuals. The Board also works with the Compensation Committee to consider potential successors to the CEO 24BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●Board CommitteesThe BoardRefreshment
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in the event 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 emergency or the CEO’s retirement. Our CEO recommends and evaluates potential successors for BlackRock’s top executives, along with a review of any development plans for these individuals. In the fourth quarter of 2017, we implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders who we believe will play critical roles in BlackRock’s future. We do not consider these awards to be part of our regular annual compensation. For more information about these awards, see“Performance-Based Stock Options” on page 55. Board Committees Each Committee is governed by a Board-approved Charter. Board Committee Meetings and Members The Board has five committees: the Audit Committee, the Compensation Committee, the Governance Committee, the Risk Committee and the Executive Committee. Below is a summary of our current Committee structure and membership information. | | | | |  Chairperson | |  Member | |  Financial Expert |
| | | | | | | | | | | Member | | Audit | | Management Development & Compensation | | Nominating & Governance | | Risk | | Executive | | | | | | | INDEPENDENT DIRECTORS | | | | | | | | | | | Abdlatif Y.Al-Hamad | | | | | | ● | | ● | | | Mathis Cabiallavetta | | ● | | | | ● | | ● | | | Pamela Daley | | ● | | | | | | ● | | ● | Jessica P. Einhorn | | | | ● | | | | ● | | | William E. Ford | | | | | | | | | | | Fabrizio Freda | | | | | | ● | | | | | Murry S. Gerber (Lead Independent Director) | | ● | | ● | | | | | | ● | James Grosfeld | | | | ● | | ● | | | | | Margaret L. Johnson | | | | | | | | | | | Sir Deryck Maughan | | ● | | | | | | ● | | ● | Cheryl D. Mills | | | | ● | | ● | | | | | Gordon M. Nixon | | | | ● | | ● | | ● | | ● | Charles H. Robbins | | | | | | | | ● | | | Ivan G. Seidenberg | | ● | | ● | | ● | | | | ● | Marco Antonio Slim Domit | | ● | | ● | | | | | | | Susan L. Wagner | | | | | | | | ● | | | Mark Wilson | | | | | | | | | | | | | | | | | NON-INDEPENDENT DIRECTORS | | | | | | | | | | | Laurence D. Fink | | | | | | | | | | ● | Robert S. Kapito | | | | | | | | | | | William S. Demchak | | | | | | | | ● | | ● | Number of Meetings Held in 2017 | | 14 | | 10 | | 6 | | 6 | | 0 |
(1)● Chairperson BLACKROCK, INC. 2018 PROXY STATEMENT 25
| | | | | | | | | | | | | Corporate Governance ●Board Committees | | | | 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)The Board met seven times during 2017. In 2017, each nominated director attended at least 75% of the aggregate of: (i) the total number of meetings of the Board held during the period for which such director was a member of the Board and (ii) the total number of meetings held by all Committees of the Board on which such director served, if any, during the period served by such director. Directors are encouraged to and do attend the annual meetings of BlackRock shareholders. Fifteen of the 17 directors who were serving on the Board last year attended the 2017 Annual Meeting of Shareholders. Messrs. Al-Hamad and Grosfeld are retiring from the Board and will not be standing for re-election at the 2018 Annual Meeting of Shareholders. Board Committee Refreshment The Governance Committee considers the periodic rotation of Committee members and Committee Chairs to introduce fresh perspectives and to broaden and diversify the views and experience represented on Committees. On January 11, 2018, the Board appointed Mr. Robbins to serve as a member of the Risk Committee. He brings expertise in global business, technology, public policy and government and regulatory affairs. In addition, Messrs. Ford and Wilson and Ms. Johnson, as recent additions to the Board, are rotating through each Committee and, if elected, will be appointed to one or more Committees in 2018 following a review of existing Committee composition. | | | | | | | | | Audit Committee | | | | | | | | | | CHAIR | | MEMBERS | | | | | | | Pamela Daley | | Mathis Cabiallavetta Murry S. Gerber | | Sir Deryck Maughan Ivan G. Seidenberg | | Marco Antonio Slim Domit | | 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
Role 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.Responsibilities The Audit Committee
The Audit Committee’s primary responsibilities are to assist the Board withinclude 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 regularreceives reports on theon: | | | • The progress and results of the internal audit program areregularly, as provided to the Audit Committee by BlackRock’s Head of Internal Audit. The Head of Internal Audit, alsoand approves BlackRock’s internal audit plan; • External audit findings regularly, attends Risk Committee meetings.as provided by 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(“Deloitte”); • Financial controls regarding compliance with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). This financial controls report isannually, as prepared by the Head of Sarbanes-Oxley ComplianceFinancial Controls and presented by management. Aspects of these reports are presented to the full Board at least six times per yearmanagement; | | | | • Financial updates regularly, as provided by the ChairpersonChief Financial Officer; • Cybersecurity updates, as provided by the Chief Information Security Officer; • Compliance updates, as provided by the Chief Compliance Officer; • Litigation, regulatory and material ethics matters regularly, as provided by BlackRock’s Chief Legal Officer; and • Risk matters regularly, as provided by the Chair of the Risk Committee, the Chairperson of the Audit Committee or the member of management responsible for the given subject area.Committee. | | | 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’sBlackRock’s financial statements. The Audit Committee exercises sole authority to approveapproves all audit engagement fees and terms associated with the retention of Deloitte & Touche LLP.Deloitte. 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, andselects, reviews and evaluates the lead audit partner and considersdetermines 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.Deloitte. The Board of Directors has determined that noeach 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 Committeerules, qualifies as an “audit committee financial expert” under applicable SEC rules, and 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
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26BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●Board Committees | | | | |
| | | | | | | Management Development and Compensation Committee | | | | | CHAIR | | MEMBERS | | | | | The MDCC is responsible forIvan G. Seidenberg
| | Jessica P. Einhorn Murry S. Gerber | | James Grosfeld Cheryl D. Mills | | Gordon M. Nixon Marco Antonio Slim Domit |
| | | | | Role and Responsibilities | | | | | • Reviewing and approving corporate goals and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of those goals and objectives and determining and approving the CEO’s overall compensation levels based on this evaluation; • Reviewing BlackRock’s executive compensation program and establishing the compensation framework of BlackRock’s executive officers, providingofficers; • Reviewing and making recommendations to the Board about director compensation; | | | | • Providing oversight of BlackRock’s employee benefit and compensation plans and reviewing,plans; • Reviewing, assessing and making reports and recommendations to the Board of Directors, as appropriate, on BlackRock’s talent development and succession planning, with an emphasis on performance and succession at the effectivehighest management levels; and • Appointment, compensation and oversight of executive succession. the work of any compensation consultant, legal counsel or other advisor retained by the Compensation Committee. | The Board of Directors has determined that alleach member of the members of the MDCC areCompensation Committee is “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 NYSE listing standards and applicable SEC rules, qualifies as a“non-employee director” under Section 16 of the Exchange Act,applicable SEC rules and is an “outside director”, as defined by Section 162(m) within the meaning of the Internal Revenue Code. Additional information on the MDCC’sCompensation Committee’s processes and procedures for consideration of NEO compensation is addressed in the Compensation Committee Report on page 45 and “Compensation Discussion and Analysis” beginning on page 33 and the Report of the MDCC on page 51.46. The
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| | | | | | | Nominating and Governance Committee | | | | | | | CHAIR | | MEMBERS | | | | | The NominatingGordon M. Nixon
| | Abdlatif Y.Al-Hamad Mathis Cabiallavetta | | Fabrizio Freda James Grosfeld | | Cheryl D. Mills Ivan G. Seidenberg |
| | | | | Role and Governance Committee (the “Governance Committee”) is responsible for assistingResponsibilities | | | | | • Recommending to the Board criteria for the selection of Directors by: identifying individualsnew directors to serve on the Board; • Identifying candidates qualified to become members of the Board of Directors; recommendingBoard; • Recommending to the Board of Directors the director nominees for the next annual meeting of stockholders; recommendingshareholders; • Recommending to the Board director nominees for each Committee; | | | | • Leading the Board in its annual review of Directorsthe Board’s performance; • Evaluating, monitoring and making recommendations to the Board with respect to the corporate governance policies and procedures of the Company; • Recommending to the Board the Corporate Governance Guidelines applicable to BlackRock; 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 • Overseeing BlackRock’s Related Persons Transaction Policy. | The Board of Directors has determined that all of the memberseach member of the Governance Committee areis “independent” withinas defined in the meaning of theNYSE listing standards of the NYSE.and applicable SEC rules, qualifies as a “non-employee director” under applicable SEC rules. The
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BLACKROCK, INC. 2018 PROXY STATEMENT 27
| | | | | | | | | | | | | Corporate Governance ●Board Committees | | | | |
| | | | | | | Risk Committee | | | | | | | CHAIR | | MEMBERS | | | | | Sir Deryck Maughan | | Abdlatif Y.Al-Hamad Mathis Cabiallavetta Pamela Daley | | William S. Demchak Jessica P. Einhorn Gordon M. Nixon | | Charles H. Robbins Susan L. Wagner |
| | | | | Role and Responsibilities The Risk Committee is charged with assistingassists 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 areasrelated policies and processes in connection with the following types 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:and related areas: | Enterprise Risks market• Market risks from volatility in financial markets; credit• Credit risk of default by indemnified securities lending counterparties; operational• Operational risks from failed or inadequate processes relating to (i) operations, (ii) new products and services, (iii) third-party vendor relationships and (iv) model risk; the• The impact of firm-wide risk assessments:assessments including the quantification and analysis of requirements (liquidity, insurance, capital or other risk mitigation) associated with the Company’sour key risks; risks• Risks related to regulatory reform; and
technology• Technology and cybersecurity risks relating to information security, business continuity/resiliency and system capacity. | | | | Fiduciary Risks investment• Investment risks being taken on behalf of clients in their portfolios or accounts; counterparty risks• Risks of default by client counterparties; and pricing• Pricing and valuation risk that CompanyBlackRock’s counterparties misprice assets in client portfolios or accounts. The
Other • Any other areas of risk delegated to the Risk Committee along with BlackRock’s Enterprise Risk Managementby the Board. | The 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 20152017 Form10-K and received reports from members of management responsible for identifying and monitoring these risks.
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| | | | | | | Executive Committee | | | | | | | CHAIR | | MEMBERS | | | | | Laurence D. Fink | | Pamela Daley William S. Demchak | | Murry S. Gerber Sir Deryck Maughan | | Gordon M. Nixon Ivan G. Seidenberg |
| | | | | Role and Responsibilities The Executive Committee has all the powers of the Board, except as prohibited by applicable law, the PNC Stockholder Agreement and BlackRock’s Amended and Restated Bylaws (“Bylaws”), and except to the extent another Committee has
been accorded authority over the matter. The Executive Committee may meet to exercise such powers between meetings of Directors in the Oversight of Risk ManagementBoard. The Executive Committee will only meet if a quorum for a full Board meeting cannot be obtained between regular meetings for emergency business. |
28BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●Board Committees | | | | |
Board and Committee Oversight of Risk Management | | | | | | | | | | | | | | | FULL BOARD The Board of Directors has ultimate responsibility for oversight of BlackRock’s risk management activities.
The Risk, Audit, MDCCCompensation 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 it 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 corporate governance matters. The Risk, Audit, MDCC and Governance Committees report to the full Board at least six6 times a year with updates on their areas of designated risk oversight responsibilities. These Committees work together and with the full Board to help ensure that the Committees and the Board have received all information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management activities. The Executive Committee
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The Executive
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| | | | | | | | | | | RISK COMMITTEE Responsible for
assessing and
overseeing BlackRock’s
levels of risk and risk
management and
related policies and
processes in connection
with fiduciary and
enterprise risks and
other areas of risk
determined by the
Board. Reflecting the
increased importance
of information security,
the Risk Committee has all
added cybersecurity as
a recurring topic at
each meeting. | | | | AUDIT COMMITTEE Oversees the powersintegrity of
BlackRock’s financial
statements and other
disclosures, the
effectiveness of the
internal control
environment, the internal
audit function and the
external auditors, and
compliance with legal
and regulatory
requirements. | | | | MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE Responsible for
overseeing risks
associated with
BlackRock’s executive
and employee
compensation practices
and the effective
management
of executive succession. | | | | NOMINATING AND GOVERNANCE COMMITTEE Oversees risks related to
Board and Committee
succession and other
corporate governance
policies and practices. | | |
Corporate Governance Practices and Policies Director Independence The Board determines annually the independence of directors in accordance with NYSE listing standards and applicable SEC rules. No director is considered independent unless the Board has determined that he or she has no material relationship with BlackRock. The Board has adopted categorical standards to help determine whether certain relationships between the members of the Board and BlackRock or its affiliates and subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with BlackRock) are material relationships for purposes of NYSE listing standards. The categorical standards provide that the following relationships are not material for such purposes: Relationships arising in the ordinary course of business, such as asset management, acting as trustee, lending, deposit, banking or other financial service relationships or other relationships involving the provision of products or services, so long as the products and services are being provided in the ordinary course of business and on substantially the same terms and conditions, including price, as would be available to similarly situated customers; Relationships with companies of which a director is a shareholder or partnerships of which a director is a partner, provided the director is not a principal shareholder of the company or a principal partner of the partnership; BLACKROCK, INC. 2018 PROXY STATEMENT 29
| | | | | | | | | | | | | Corporate Governance ●Corporate Governance Practices and Policies | | | | |
Contributions made or pledged to charitable organizations of which a director or an immediate family member of the director is an executive officer, director or trustee if (i) within the preceding three years, the aggregate amount of such contributions during any single fiscal year of the charitable organization did not exceed the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues for that fiscal year, and (ii) the charitable organization is not a family foundation created by the director or an immediate family member of the director; and Relationships involving a director’s relative unless the relative is an immediate family member of the director. As part of its determination, the Board also considered the relationships described under “Certain Relationships and Related Transactions.” Following its review, the Board has determined that Mses. Daley, Einhorn, Johnson, Mills and Wagner and Messrs. Cabiallavetta, Ford, Freda, Gerber, Maughan, Nixon, Robbins, Seidenberg, Slim and Wilson are “independent” as defined in the NYSE listing standards and that none of the relationships between these directors and BlackRock are material under the NYSE listing standards. The Board had also previously determined that Messrs.Al-Hamad, Grosfeld, Komansky, O’Brien and Varley, who were directors for all or part of 2017 and are not standing forre-election, were “independent.” Following the 2018 Annual Meeting of Shareholders, assuming all of the nominated directors are elected, BlackRock’s Board is expected to consist of 18 directors, 15 of whom, representing approximately 83% of the Board, will be “independent” as defined in the NYSE listing standards. Policy Engagement, Transparency and Protecting Investors As part of our responsibilities to our shareholders and clients, BlackRock advocates for public policies that we believe are in our shareholders’ and clients’ long-term best interests. We support the creation of regulatory regimes that increase financial market transparency, protect investors and facilitate responsible growth of capital markets, while preserving consumer choice and properly balancing benefits versus implementation costs. BlackRock comments on public policy topics through, among other things, our published ViewPoints, which examine public policy issues and assess their implications for investors, and through comment letters and consultation responses that we submit to policy makers. We believe in the value of open dialogue and transparency on these important issues; our position papers and letters are available on the “Insights – Public Policy” section of our website. Governance of Public Policy Engagement BlackRock believes that responsible corporate citizenship requires active engagement in legislative and regulatory processes. Our engagement with policy makers and advocacy on public policy issues is coordinated by our Global Public Policy Group. Members of the Global Public Policy Group work closely with the Company’s business and legal teams to identify legislative and regulatory priorities, both regionally and globally, that will protect investors, increase shareholder value and facilitate responsible economic growth. The head of the Global Public Policy Group is a member of the Company’s Global Executive and Operating Committees and regularly briefs these committees on our public policy priorities and related advocacy efforts. BlackRock’s Chief Legal Officer and the head of the Global Public Policy Group brief the Board’s Risk Committee and keep directors apprised of, and engaged in, the Company’s legislative and regulatory priorities and advocacy initiatives. The Global Public Policy Group and executive leadership regularly meet with and exchange views on legislation and regulatory priorities with public officials and policy makers, regionally and globally, and provide such individuals with educational materials to help inform their decisions. Trade Associations As part of the Company’s engagement in the public policy process, BlackRock participates in a number of trade organizations and industry groups. The principal trade associations that we belong to are the Investment Company Institute, the Asset Management Group of the Securities Industry and Financial Markets Association, the European Fund and Asset Management Association and the Investment Association. The Company makes payments to these organizations, including membership fees and/or dues. However, BlackRock does not control these entities and may not always be aware of the entities’ activities. We recognize that these organizations and groups represent numerous other companies and there may be instances where their positions on certain issues diverge from those of BlackRock. As an asset manager, BlackRock focuses on issues that impact the asset management industry and the clients for whom we act as agent in managing assets. In general, BlackRock’s efforts are focused at the national or regional level, rather than at a state-specific level. 30BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●Corporate Governance Practices and Policies | | | | |
Political Participation Our ability to engage policy makers and participate in the public policy arena is subject to extensive laws and regulations at the international, federal, state and local levels. Under United States federal law, BlackRock may not contribute corporate funds or makein-kind contributions to candidates for federal office or to national party committees. In addition to federal limits on corporate political action, our political contributions at the state and local level in the United States are governed by Municipal Securities Rulemaking Board RuleG-37, SEC Rule206(4)-5 and CFTC Rule 23.451, as well as applicable state and local law. Accordingly, BlackRock does not contribute corporate funds to candidates, political party committees, political action committees or any political organization exempt from federal income taxes under Section 527 of the Internal Revenue Code. Although permitted under federal law, BlackRock has voluntarily elected not to spend corporate funds directly on independent expenditures, including electioneering communications, and does not currently support or oppose ballot initiatives. All contributions required to be disclosed under the Lobbying Disclosure Act are publicly available athttp://lobbyingdisclosure.house.gov. BlackRock maintains a federal political action committee (“PAC”) that is funded in accordance with applicable federal law on a voluntary basis by U.S.-based employees of the Company. The PAC makes contributions at the federal level on abi-partisan basis consistent with the Company’s contribution policies and public policy goals and without regard to the private political preferences of management. As required by law, all political contributions by the PAC are reported to the Federal Election Commission and are publicly disclosed atwww.fec.gov. BlackRock maintains compliance processes designed to ensure that its activities are conducted in accordance with this policy and all relevant laws governing political contributions in the United States. All employees are required to annually review and acknowledge their compliance responsibilities regarding political contributions and must submit all of their proposed personal political contributions to our Legal and Compliance Department to determine if such contributions are consistent with applicable legal restrictions. Shareholder Engagement and Outreach We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important to them. We report back to our Board on this engagement as well as specific issues that need to be addressed. Executive management, Investor Relations and the Corporate Secretary engage on a regular basis with shareholders to solicit feedback on a variety of corporate governance matters, including but not limited to executive compensation, corporate governance policies and corporate sustainability practices. BlackRock also routinely interacts and communicates with shareholders through a number of other forums, including quarterly earnings presentations, SEC filings, the Annual Report and Proxy Statement, the annual shareholder meeting, investor meetings and conferences and web communications. We share our shareholder feedback and trends and developments about corporate governance matters with our Board and its Committees as we seek to enhance our governance and sustainability practices and improve our disclosures. Also see “Compensation Discussion and Analysis”beginning on page 46 for a discussion of our compensation related shareholder engagement initiatives and our historicalsay-on-pay vote results. Communications with the Board Shareholders and other interested parties may contact any member (or all members) of the Board, any Committee or any Chair of any such Committee by mail or electronically. Correspondence may be sent by: | | | Mail: BlackRock, Inc. Attn: Board of Directors c/o Corporate Secretary 40 East 52nd Street New York, New York 10022 | | Online: Go to the BlackRock website atwww.blackrock.com. Under the headings“Our Firm / Investor Relations / Corporate Governance / Governance Overview / Contact Our Board of Directors”, you will find a link that may be used for writing an electronic message to the Board, the Lead Independent Director, any individual director or any group or committee of Directors, except 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 ofdirectors. |
BLACKROCK, INC. 2018 PROXY STATEMENT 31
| | | | | | | | | | | | | Corporate Governance ●Communications with the Board of Directors. It is anticipated that the Executive Committee will only meet if a quorum for a full Board of Directors meeting cannot be obtained between regular meetings for emergency business.Director Independence
The Board of Directors 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 has determined that he or she has no material relationship with BlackRock. The Board of Directors has adopted categorical standards to assist it in determining whether or not certain relationships between the members 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
| | | | |
BlackRock’s Corporate Communications, Investor Relations and Legal and Compliance Departments will review all communications received to determine whether the contents represent a message to or matter for our directors’ review. Requests for a meeting with any member of the Board will also be reviewed accordingly and, if appropriate, arranged by Investor Relations and the Corporate Secretary. Concerns relating to accounting, internal controls or auditing matters are brought to the attention of the Chairperson of the Audit Committee and handled in accordance with procedures established for reporting certain matters to the Audit Committee. Shareholders are encouraged to visit the “Our Firm / Investor Relations / Corporate Governance / Governance Overview” page of the BlackRock website 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 and its Committees and corporate governance policies. The charters for each of the Audit Committee, the Compensation Committee, the Governance Committee, the Risk Committee and the Executive Committee can be found at the same website address. BlackRock intends to satisfy any disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Chief Executive and Senior Financial Officers by posting such information on its corporate website. BlackRock will provide a copy of these documents without charge to each shareholder upon written request. Requests for copies should be addressed to the Corporate Secretary, BlackRock, Inc., 40 East 52nd Street, New York, New York 10022. 2017 Director Compensation Directors receive compensation, including fees and reimbursements of expenses, for their service and dedication to our Company. We recognize the substantial time and effort required to serve as director of a large global investment firm. The goal of our director compensation program is to attract, motivate and retain directors capable of making significant contributions to the long-term success of our Company. In order to align the interest of our directors with the interests of our shareholders, our independent directors are required to own and maintain a minimum target number of shares, having a value equivalent to five times their annual board retainers within five years of being elected to the Board. The Compensation Committee is responsible for reviewing director compensation and making recommendations to the Board. The Compensation Committee reviews the Board’s compensation levels semi-annually. The Compensation Committee also reviews the Board compensation practices of peer corporations. For more information on these peer groups, please refer to“Role of the Compensation Consultant” on page 57. HOW OUR DIRECTOR COMPENSATION PROGRAM ALIGNS WITH LONG-TERM SHAREHOLDER INTERESTS 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:
relationships arising in the ordinary course of business, such as asset management, acting as trustee, lending, deposit, banking or other financial service relationships, so long as the services are being provided in the ordinary course of business and on substantially the same terms and conditions, including price, as would be available to similarly situated customers;
relationships with companies of which a director is a stockholder or partnerships of which a director is a partner, provided the director is not a principal stockholder of the Company or a principal partner of the partnership;
contributions made or pledged to charitable organizations of which a director or an immediate family member of the director is an executive officer, director or trustee if (i) within the preceding three years, the aggregate amount of such contributions during any single fiscal year of the charitable organization did not exceed the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues for that fiscal year, and (ii) the charitable organization is not a family foundation created by the director or an immediate family member of the director; and
relationships involving a director’s relative unless the relative is an immediate family member of the director.
As part of its determination, the Board 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, 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 NYSE listing standards and that none of the relationships between such directors and BlackRock 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.
| | | | | 2015 DIRECTORFOCUS ON EQUITY COMPENSATION
| | | | Our bylaws provide that directors shall receive compensation, including fees and reimbursementSTOCK/EQUITY
OWNERSHIP REQUIREMENT | | | | The largest portion of expenses, for their services as the Board of Directors may determine from time to time. The objective of BlackRock’sindependent 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.annual equity grant, payable in deferred stock units. | | | | In order to align the interest of directors with the interests of stockholders, ourAll 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.retainer.
| | | | | 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)32BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●2017 Director Compensation | | | | 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,
2017 Elements of Director Compensation The following table shows the elements of director compensation provided by BlackRock in 2017. For 2017, each independent director received an Annual Retainer of $75,000 plus Meeting Fees of $1,500, paid quarterly in January, April, July, and October, based on service during the prior quarter. At least $25,000 of the Annual Retainer, or a pro rata portion thereof in the event that a director’s service is less than a full year, is paid in the form of BlackRock common stock. Each director who received compensation had the right to elect to receive BlackRock common stock in lieu of all or a portion of his or her annual Board and Committee retainers in excess of $25,000. In addition, deferred stock units valued at $175,000 were granted on the last business day of the first quarter of 2017. These deferred stock units are fully vested on the date of grant and are settled in shares of BlackRock common stock on the earlier of the third anniversary of the date of grant and the date the director ceases to be a member of the Board. Deferred stock units have no voting rights. Dividend equivalents accrue and are paid in the form of cash. Additional cash compensation was paid for certain Committees and other services, as described below. | | | | | | | | | | Director Compensation Element | | Payment or Value of Equity | | | Board Service(1) | | | | | |  | Annual Retainer(1) | | $ 75,000 (at least $25,000 in common stock) | | Annual Equity Grant(2) | | $ 175,000 deferred stock units | | Board Meeting Fees(1) | | $ 1,500 | | | | Lead Independent Director | | $ 40,000 | | | | Committee Service | | | | | | Committee Annual Retainers(1) | | Chair | | Member | | Audit Committee | | $ 30,000 | | $ 15,000 | | Compensation Committee | | $ 20,000 | | $ 10,000 | | Governance Committee | | $ 15,000 | | $ 5,000 | | Risk Committee | | $ 15,000 | | $ 5,000 | | Committee Meeting Fees(1) | | $ 1,000 | | $ 1,000 | |
| (1) | New Board members rotating through Committees receive one general Committee retainer and Committee meeting fees for the meetings they attend. Retainers and meeting fees are paid in January, April, July and October, based on service during the prior quarter. From time to time, the Company also makes available, as an accommodation to all of its directors upon request, basic office space at its existing locations and administrative support, as needed. |
| (2) | Annual award granted on the last business day of the first quarter of each year to all directors serving on that date and delivered on the earlier of (i) the third anniversary of the date of grant and (ii) the date such director ceases to be a member of the Board. |
Director Compensation – Changes for 2018 The Compensation Committee engaged its independent compensation consulting firm, Semler Brossy, to conduct a competitive market study of its director compensation program for 2018. Based on the study’s findings, and in light of increasing demands and engagement from our Board, the Compensation Committee determined it was appropriate to simplify and modify its director compensation program effective as of the 2018 Annual Meeting of Shareholders. As a result, in early 2018 the Compensation Committee agreed to: Increasing the Annual Retainer to $85,000, while no longer requiring a portion be received in common stock; Increasing the Annual Equity Grant of deferred stock units to $240,000; Increasing the annual fee for service as Lead Independent Director to $100,000; Eliminating fees paid for attendance at Board and Committee meetings; and Adjusting the payments awarded for Committee service. The Committee Annual Retainers for 2018 were approved as follows: $40,000 for Chair and $25,000 for members of the Audit Committee; and $30,000 for Chairs and $15,000 for members of our other three compensated Committees. Additionally, during 2017 the Compensation Committee agreed to provide directors an election to defer future compensation into deferred stock units that are fully vested on the date of grant and are settled in shares of BlackRock common stock on the date the director ceases to be a member of the Board. The modifications to total director compensation preserve our program’s emphasis on deferred equity compensation, which aligns the interests of our directors with the performance of the firm in addition to promoting long-term shareholder interests. BLACKROCK, INC. 2018 PROXY STATEMENT 33
| | | | | | | | | | | | | Corporate Governance ●2017 Director Compensation | | | | |
2017 Total Director Compensation Directors in 2017 who were also employees of BlackRock or designees of PNC are not listed in the below table because they did not receive compensation for serving as directors or Committee members. In 2017, directors who were not employees of BlackRock or PNC each received the amounts set forth in the below table and were also reimbursed for reasonable travel and related expenses. Each director who received compensation received at least $25,000 of his or her annual retainer, or a pro rata portion thereof in the event that a director’s service is less than a full year, in the form of BlackRock common stock valued at an equivalent fair market value. In addition, each director who received compensation had the right to elect to receive BlackRock common stock valued at an equivalent fair market value in lieu of all or a portion of his or her annual retainer in excess of $25,000. 2017 Total Director Compensation Table | | | | | | | | | | | | | | | | | Name | | Fees Earned
or Paid in Cash ($)(1) | | | Stock Awards ($)(2)(3) | | | Total ($) | | | | | | Abdlatif Y.Al-Hamad | | | 82,500 | | | | 200,000 | | | | 282,500 | | | | | | Mathis Cabiallavetta | | | 111,500 | | | | 200,000 | | | | 311,500 | | | | | | Pamela Daley | | | 115,500 | | | | 200,000 | | | | 315,500 | | | | | | Jessica P. Einhorn | | | 85,000 | | | | 200,000 | | | | 285,000 | | | | | | Fabrizio Freda | | | 71,500 | | | | 200,000 | | | | 271,500 | | | | | | Murry S. Gerber | | | 144,500 | | | | 200,000 | | | | 344,500 | | | | | | James Grosfeld | | | 89,500 | | | | 200,000 | | | | 289,500 | | | | | | David Komansky(4) | | | 22,500 | | | | 200,000 | | | | 222,500 | | | | | | Sir Deryck Maughan | | | 125,500 | | | | 200,000 | | | | 325,500 | | | | | | Cheryl D. Mills | | | 88,250 | | | | 200,000 | | | | 288,250 | | | | | | Gordon M. Nixon | | | 106,750 | | | | 200,000 | | | | 306,750 | | | | | | Thomas H. O’Brien(4) | | | 56,000 | | | | 200,000 | | | | 256,000 | | | | | | Charles H. Robbins(5) | | | 41,250 | | | | 25,000 | | | | 66,250 | | | | | | Ivan G. Seidenberg | | | 126,500 | | | | 200,000 | | | | 326,500 | | | | | | Marco Antonio Slim Domit | | | 102,000 | | | | 200,000 | | | | 302,000 | | | | | | John S. Varley(6) | | | 32,000 | | | | 200,000 | | | | 232,000 | | | | | | Susan L. Wagner | | | 71,500 | | | | 200,000 | | | | 271,500 | |
| (1) | Includes the shares of common stock granted on March 31, June 30, September 29 and December 29, 2017, respectively, based on closing market prices on such dates of $383.51, $422.41, $447.09 and $513.71, respectively, awarded at the election of the director in lieu of all or a portion of his or her board annual Board and Committee retainersretainer and/or meeting fees in excess of $25,000.
Each of the following directors elected to receive common stock in lieu of the following amounts:Mr. Al-Hamad – $82,500; Mr. Cabiallavetta – $20,495; Ms. Daley – $115,500; Mr. Freda – $71,500; Mr. Grosfeld – $89,500; Mr. Maughan – $125,500; Ms. Mills – $88,250; Mr. Nixon – $106,750; Mr. Robbins – $41,250; Mr. Seidenberg – $126,500; and Mr. Slim – $102,000. |
| | | | | | | | | | | | | Name | | Fees Earned
or Paid
in Cash
($)(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 | |
| (2) | Includes the annual grants to each director of 456 deferred stock units of BlackRock with a grant date fair value of $175,000 pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note 14 to the consolidated financial statements in our 2017 Form10-K. As of December 31, 2017, eachnon-employee director held the following outstanding deferred stock units: 1,306 deferred stock units for each of Messrs.Al-Hamad, Cabiallavetta, Freda, Gerber, Grosfeld, Maughan, Seidenberg, Slim, Ms. Einhorn, Ms. Daley, Ms. Mills and Ms. Wagner; and 896 deferred stock units for Mr. Nixon. Messrs. Komansky, O’Brien, and Varley did not have any deferred stock units outstanding as their units were settled upon retirement from the Board. Mr. Robbins was not granted an annual deferred stock unit grant in 2017. |
(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| (3) | Includes the shares of common stock granted on March 31, June 30, September 29 and December 29, 2017, respectively, based on closing market prices on such dates of $383.51, $422.41, $447.09 and $513.71, respectively, awarded in respect of the $25,000 of the annual retainer that is required to be paid in the form of 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. |
| (4) | Mr. Komansky and Mr. O’Brien retired from the Board effective May 25, 2017. |
| (5) | Mr. Robbins joined the Board effective May 25, 2017. |
| (6) | Mr. Varley retired from the Board effective June 20, 2017 |
(2)34BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Corporate Governance ●Other Executive Officers | | | | 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. |
Other Corporate Governance 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.
Other Executive Officers In addition to Messrs. Fink and Kapito, whose biographical information is included on pages 14 and 16, respectively, the following is a list of individuals serving as executive officers of BlackRock as of the date of this Proxy Statement, each of whom also serves on BlackRock’s GEC. All of BlackRock’s executive officers serve at the discretion of the Board and CEO. 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.
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.
Also 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.
Communications with the Board
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.
Other Executive Officers
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), age 44 | | Senior Managing Director, has been Chief Operating Officer of BlackRock since 2014 and has ledbeen the Head ofBlackRock Solutions®, which leverages the firm’s unique risk analytics capabilities and capital markets insights to deliver unbiased advice and expertise to other institutions, since 2009. Mr. Goldstein was the Head ofled 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), age 51 | | Senior Managing Director, has been Global Head of Multi-Asset Strategies and Global Fixed Income since February 2016. From 2014 to 2016,2018. Mr. Kushel was the Head of Multi-Asset Strategies from 2016 to 2018, the Chief Product Officer and Head of Strategic Product Management of BlackRock from 20122014 to 2014, he was2016, the Deputy Chief Operating Officer of BlackRock from 20102012 to 2012, he was2014, the Head of the Portfolio Management Group of BlackRock and from 20092010 to 2010, he was2012, and the Chairman of BlackRock’s International platform. Priorplatform from 2009 to that, Mr. Kushel headed BlackRock’s International Institutional platform and BlackRock’s Alternatives and Wealth Management Groups.2010. Mr. Kushel has been with BlackRock since 1991. Matthew J. Mallow (age 72),
| | | Rachel Lord age 52 | | Senior Managing Director, has been Chief Legal OfficerHead of BlackRockEMEA since 2015. Mr. Mallow served as General Counsel of BlackRock from 2012 until 20152017. Ms. Lord also chairs the EMEA Executive Committee 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 headis the Global Executive Sponsor of the Women’s Initiative Network. From 2013 to 2017, she was EMEA Head ofiShares and Head of Global Clients, ETF and Index Investments. Ms. Lord joined BlackRock in November 2013 from Citigroup where she was the Global Head of Corporate Finance Department.Equity Derivatives.
| | | Mark S. McCombe (age 49), age 52 | | Senior Managing Director, has been Head of Americas since 2017. Previously, he served as Global Head of BlackRock Alternative Investors. Mr. McCombe served as the Global Head of BlackRock’s Institutional Client Business from 2014 to 2016 and as well asthe Chairman of BlackRock Alternative Investors since 2014. From 2012from 2014 to 2014, Mr. McCombe2017. He was the Chairman of theBlackRock’s Asia Pacific region of BlackRock.from 2012 to 2014. Before joining BlackRock, Mr. McCombe served as Chief Executive Officer in Hong Kong for The Hong Kong and Shanghai Banking Corporation LimitedHSBC from 2010 to 2011. He2012. | | | Christopher J. Meade age 49 | | Senior Managing Director, has been Chief Legal Officer of BlackRock since 2016 and General Counsel since 2015. Before joining BlackRock in 2015, Mr. Meade was alsothe General Counsel of the U.S. Department of the Treasury. Previously, he was a Group General Managerpartner with the law firm of HSBC plc, Non-Executive DirectorWilmer Cutler Pickering Hale and Dorr. Earlier in his career, Mr. Meade served as a law clerk to Justice John Paul Stevens on the U.S. Supreme Court and Judge Harry T. Edwards of Hang Seng Bank Ltd., and Chairmanthe U.S. Court of HSBC Global Asset Management (HK) Ltd. Prior to 2010, Mr. McCombe was Chief Executive of HSBC Global Asset Management from 2007 to 2010.Appeals for the D.C. Circuit.
| | | Gary S. Shedlin (age 52), age 54 | | Senior Managing Director, has been Chief Financial Officer of BlackRock since 2013. Prior to joining BlackRock, Mr. Shedlin was Vice Chairman, Investment Banking and a Managing Director in the Financial Institutions Group at Morgan Stanley from 2010 to 2013. Prior to that, Mr. Shedlin worked at Citigroup from 2004 to 2010, where he most recently served as Chairman of the Financial Institutions Group. Previously, Mr. Shedlin worked at Lazard Ltd. from 1990 to 2004, where he served as Managing Director and theCo-Head of the Financial Institutions Group.Group at Lazard Ltd.
| | | Jeffrey A. Smith, Ph.D. age 47 | | Senior Managing Director, has been Global Head of Human Resources of BlackRock since 2009. In this capacity, Mr. Smith supports and advises the business, and the Board, on all aspects of its investment in people and culture and the management of organizational change. Mr. Smith’s service with the firm dates back to 2006, including his years with Barclays Global Investors (“BGI”), which merged with BlackRock in 2009. At BGI, Mr. Smith was Global Head of Human Resources. | | | Ryan D. Stork (age 44), age 46 | | Senior Managing Director, has been BlackRock’s Chairman and Head of Asia Pacific since 2014. From 2008 to 2014, Mr. Stork was Global Head of 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.
REPORT OF THE AUDIT COMMITTEE
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 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, 2015 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
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 1, 2016 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 1, 2016, through the exercise of any option, warrant or right.
As of March 1, 2016, there were 163,889,102 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 | | | 34,642,612 | | | | 21.1 | % | | | | 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 | | | 3,759 | | | | * | | Mathis Cabiallavetta(5) | | | 4,504 | | | | * | | Pamela Daley | | | 668 | | | | * | | William S. Demchak | | | — | | | | — | | Jessica P. Einhorn | | | 306 | | | | * | | Laurence D. Fink(5)(6) | | | 1,120,207 | | | | * | | Fabrizio Freda | | | 1,047 | | | | * | | Murry S. Gerber | | | 37,540 | | | | * | | Robert L. Goldstein | | | 29,566 | | | | * | | James Grosfeld(7) | | | 519,802 | | | | * | | Robert S. Kapito(5)(6)(8) | | | 750,541 | | | | * | | David H. Komansky | | | 7,970 | | | | * | | Sir Deryck Maughan | | | 8,350 | | | | * | | Cheryl D. Mills | | | 282 | | | | * | | Gordon M. Nixon Thomas H. O’Brien(5) | |
| 42
13,927 |
| |
| *
* |
| Ivan G. Seidenberg | | | 9,806 | | | | * | | Gary S. Shedlin | | | 10,980 | | | | * | | Marco Antonio Slim Domit | | | 1,511 | | | | * | | John S. Varley | | | 1,047 | | | | * | | Susan L. Wagner(6) | | | 645,305 | | | | * | | | | | All directors, director nominees and executive officers as a group (29 persons)(5)(6) | | | 3,567,873 | | | | 2.2 | % |
* | 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 12, 2016. |
(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 11, 2016. |
(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 1, 2016 or exercisable within 60 days of that date. The shares subject to such options are as follows: for Ms. Wagner (126,087 shares) and for all directors and executive officers as a group (150,094 shares). All other non-management directors do not own any options. |
(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 468,794 shares held in trusts for the benefit of Mr. Kapito, over which Mr. Kapito does not have voting or dispositive power. |
Preferred Stock
As of March 1, 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 763,660 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 1, 2016, PNC owned all issued and outstanding shares of our Series B Preferred Stock and Series C Preferred Stock.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
The Compensation Discussion and Analysis (“CD&A”) provides information about the Company’s 2015 performance, 2015 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
| | Co-President (in memoriam)(1) | Robert L. Goldstein
| | Chief Operating Officer (“COO”) | J. Richard Kushel
| | Chief Product Officer (“CPO”) and Global Head of Strategic Product Management(2) | Gary S. Shedlin
| | Chief Financial Officer (“CFO”) |
(1) | Mr. Hallac was the former Co-President of BlackRock, member of the Company’s GEC and Co-Chair of its Global Operating Committee. He passed away on September 9, 2015. |
(2) | Mr. Kushel was CPO and Global Head of Strategic Product Management from 2012 to 2016. He was appointed head of the Multi-Asset Strategies Group in February 2016. |
BLACKROCK, INC. 2018 PROXY STATEMENT 35
Our compensation philosophy was designed to align management incentives with the long-term interests of our stockholders. Our Board recognizes the importance of executive compensation decisions to our stockholders. The annual say-on-pay advisory vote provides our stockholders with the opportunity to:
evaluate our executive compensation philosophy, policies and practices;
evaluate the alignment of the compensation of BlackRock’s NEOs with the Company’s results; and
cast an advisory vote to approve the compensation of BlackRock’s NEOs.
At the 2015 Annual Meeting of Stockholders, the say-on-pay advisory vote received majority support, with 98% of the votes cast approving the advisory vote on executive compensation. The BlackRock Board of Directors encourages an open and constructive dialogue with stockholders on compensation and other governance issues, as a means to ensure BlackRock’s policies remain aligned with stockholders’ interests.
Stockholder 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 CD&A. We engaged stockholders in advance of this year’s annual meeting to incorporate their views as we continue to enhance our compensation programs and practices.
BLACKROCK STOCKHOLDER VALUE FRAMEWORK
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 2015 results demonstrated the strength and stability of our diversified, multi-client platform. Full-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.
Long-term organic asset growth of 4% in 2015 helped drive Organic Revenue (as described on page 37) of $489 million:
Long-term net inflows of $152 billion reflected positive long-term net inflows across all regions, client businesses and asset classes;
| • | | Flows contributed to long-term annual organic asset growth of 7% in Retail, 13% iniShares and organic decay of (1)% in Institutional client businesses; |
| • | | BlackRock Solutions achieved 2% revenue growth; and |
Revenue rose 3% from 2014 to $11,401 million.
Operating income growth was driven by revenue growth and expense discipline:
As adjusted operating income of $4,695 million was 3% higher than 2014;
As adjusted operating margin of 42.9% was flat relative to 2014; and
As adjusted compensation and benefits expense-to-revenue ratio was 34.9%, representing an increase of 70 basis points (“bps”) from 2014.
Our commitment to consistent capital management contributed to growth in EPS and dividends per 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:
The repurchase of $1.1 billion of outstanding shares drove a reduction in net share count of 1.3 million shares of BlackRock common stock;
Full-year as adjusted diluted EPS of $19.60 increased 1% from $19.34 in 2014; and
The payment of an annual dividend of $8.72 per share reflected an increase of 13% from $7.72 in 2014.
Amounts in this section, where noted, are shown on an “as adjusted” basis. For a reconciliation with generally accepted accounting principles in the United States, please see our 2015 Form 10-K.
Compensation Program Objectives
Our compensation program is designed to:
appropriately balance the Company’s financial results between stockholders and employees;
determine overall compensation based on a combination of Company and individual employee performance;
align the interests of our senior-level employees, including NEOs, with those of stockholders through the use of long-term performance-based equity awards and accumulation of meaningful share ownership positions;
discourage excessive risk-taking; and
attract, motivate and retain high-performing employees.
Enhancements 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
comparisons may be considered)
| 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 an executive compensation program designed to align pay with performance and embody the other principles set out on page 36 is demonstrated in the total annual compensation structure described below.
* | 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 2015 annual incentive awards, the value of the equity portion of the bonus was converted into 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. |
(3) | For 2015 long-term incentive BPIP awards, the award value is converted into a number of 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. |
(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.
NEO Compensation Decisions
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 | % (1) | 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.
Compensation Elements(1)
| | | | | Base Salary | | Annual Incentive Award | | Long-Term Incentive Award
(“BPIP”)
| How it is Paid | | | | | • Cash.
| | • Cash; and
• Deferred Equity (Time-vested RS or RSUs).
| | • Performance-Based Equity (Performance-Based RSUs).
| 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 recognize prior year performance and anticipate continued performance and long-term focus over a multi-year period.
• Aligns the interests of senior-level employees with those of 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 determinations for CEO and President are based upon the pay framework outlined on pages 36 to 37.
• 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. The MDCC considers absolute and/or relative performance outcomes against Company, business and individual NEO goals and objectives, as well as the context in which they were achieved. These goals and objectives are set in the first quarter and performance against them is assessed at year-end. See “Compensation Determination Process” beginning on page 44.
• Higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy. Deferral amounts follow a step-function approach, starting at 15% of award and increasing to 50% of award for the portion of the bonus in excess of $3.0 million.
| | performance below threshold level of performance as set forth in the “January 2016 BPIP Award Determination Matrix” on page 38.
| Commentary | • 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.(2)
• 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 target BPIP award value is converted into a base number of RSUs using the stock price on the date the award is made.(2)
• Dividend equivalents accumulate during the vesting period and are paid in shares after the performance period with respect to the number of shares that are delivered in settlement of the award.
• Expense, based on the number of awards expected to be delivered, is recognized over the vesting period.
|
(1) | In 2014, the Company adopted a new annual incentive program for the CEO and President. Refer to “Enhancements to CEO and President Compensation Structure” on pages 36 to 37. |
(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. |
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 | þ Review 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;
þ Maintain robust stock ownership and retention guidelines;
þ Maintain a trading policy that:
– prohibits executive officers from selling short BlackRock securities;
– 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 Assess and mitigate risk in compensation plans, as described in “Risk Assessment of Compensation Plans” on page 49;
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 consultant on an annual basis.
| | x No ongoing employment agreements or guaranteed compensation arrangements with our NEOs;
x No arrangements with our NEOs providing for automatic single trigger vesting of equity awards upon a change-in-control or transaction bonus payments upon a change-in-control;
x No dividends or dividend equivalents on unearned RS or RSUs; no dividend equivalents on stock options or stock appreciation rights;
x No repricing of stock options;
x No cash buyouts of underwater stock options;
x No tax reimbursements for perquisites or tax gross-ups for excise taxes incurred due to the application of Section 280G of the Internal Revenue Code;
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”).
|
COMPENSATION DETERMINATION PROCESS
Compensation Decision Timeline and Process
The timing and process for the 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* | | Jul* | | Oct | | Nov* | | Dec | | Jan* | | | | | | | | | | | | | | | | | |
Ownership of BlackRock Common and Preferred Stock Common Stock The following table includes certain information about the beneficial ownership of BlackRock’s voting securities as of March 31, 2018 by: (i) each person who is known by BlackRock to own beneficially more than 5% of any class of outstanding voting securities of BlackRock; (ii) each of BlackRock’s directors and nominees; (iii) each of the executive officers named in the 2017 Summary Compensation Table; and (iv) all of BlackRock’s executive officers and directors as a group. Except as otherwise noted, each individual exercises sole voting power or investment power over the shares of voting securities shown. The number of shares of voting securities shown in the following Security Ownership Table as beneficially owned by each director and executive officer is determined under the rules of the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. For purposes of the Security Ownership Table, beneficial ownership includes any shares of voting securities as to which the individual has sole or shared voting power or investment power and also any shares of common stock which the individual has the right to acquire within 60 days of March 31, 2018, through the exercise of any option, warrant or right. 36BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | Set Goals and Objectives | Review Budget | | Set CEO
Goals and
Objectives | | | | Ownership of BlackRock Common and Preferred Stock ●Common Stock | | | | |
As of March 31, 2018, there were 160,308,362 shares of BlackRock’s common stock outstanding. | | | | | | | | | | | | | | | | | | | | Amount of beneficial
ownership
of common stock(1) | | | Percent of
common stock
outstanding | | | Deferred/
Restricted Stock Units(2) | | | Total | | The PNC Financial Services Group, Inc. and affiliates(3) | | | 34,438,549 | | | | 21.48 | % | | | – | | | | 34,438,549 | | One PNC Plaza | | | | | | | | | | | | | | | | | 249 Fifth Avenue | | | | | | | | | | | | | | | | | Pittsburgh, PA 15222 | | | | | | | | | | | | | | | | | The Vanguard Group, Inc.(4) | | | 8,576,055 | | | | 5.34 | % | | | – | | | | 8,576,055 | | 100 Vanguard Blvd. | | | | | | | | | | | | | | | | | Malvern, PA 19355 | | | | | | | | | | | | | | | | | Abdlatif Y.Al-Hamad | | | 5,177 | | | | * | | | | 1,260 | | | | 6,437 | | Mathis Cabiallavetta(5) | | | 5,922 | | | | * | | | | 1,219 | | | | 7,141 | | Pamela Daley | | | 2,242 | | | | * | | | | 1,287 | | | | 3,529 | | William S. Demchak | | | 1,200 | | | | * | | | | 0 | | | | 1,200 | | Jessica P. Einhorn | | | 1,914 | | | | * | | | | 1,219 | | | | 3,133 | | Laurence D. Fink | | | 1,086,024 | | | | * | | | | 20,105 | | | | 1,106,129 | | William E. Ford | | | 2,000 | | | | * | | | | 360 | | | | 2,360 | | Fabrizio Freda | | | 3,053 | | | | * | | | | 1,219 | | | | 4,272 | | Murry S. Gerber | | | 39,136 | | | | * | | | | 1,231 | | | | 40,367 | | Robert L. Goldstein | | | 33,773 | | | | * | | | | 9,620 | | | | 43,393 | | James Grosfeld | | | 506,371 | | | | * | | | | 1,275 | | | | 507,646 | | Margaret L. Johnson | | | 11 | | | | * | | | | 323 | | | | 334 | | Robert S. Kapito(5) | | | 392,891 | | | | * | | | | 15,325 | | | | 408,216 | | Sir Deryck Maughan | | | 14,504 | | | | * | | | | 1,219 | | | | 15,723 | | Mark S. McCombe | | | 18,997 | | | | * | | | | 7,270 | | | | 26,267 | | Cheryl D. Mills | | | 1,729 | | | | * | | | | 1,219 | | | | 2,948 | | Gordon M. Nixon | | | 362 | | | | * | | | | 1,262 | | | | 1,624 | | Charles H. Robbins | | | 193 | | | | * | | | | 323 | | | | 516 | | Ivan G. Seidenberg | | | 11,991 | | | | * | | | | 1,295 | | | | 13,286 | | Gary S. Shedlin | | | 18,318 | | | | * | | | | 7,153 | | | | 25,471 | | Marco Antonio Slim Domit | | | 2,979 | | | | * | | | | 1,266 | | | | 4,245 | | Susan L. Wagner | | | 477,341 | | | | * | | | | 1,219 | | | | 478,560 | | Mark Wilson | | | 7 | | | | * | | | | 323 | | | | 330 | | All directors and executive officers as a group (29 persons)(5) | | | 2,811,542 | | | | 1.75 | % | | | 105,004 | | | | 2,916,546 | |
| * | The number of shares of common stock held by such individual is less than 1.0% of the outstanding shares of common stock. |
| (1) | Does not include unvested restricted stock (“RS”), unvested/unsettled RSUs and unvested stock options. |
| (2) | Does not include BPIP awards. |
| (3) | Based on the Schedule 13G of The PNC Financial Services Group, Inc. and affiliates filed on February 2, 2018. |
| (4) | Based on the Schedule 13G of The Vanguard Group, Inc. filed on February 14, 2018. |
| (5) | Includes shares of BlackRock common stock held jointly, indirectly and/or in trust (other than shares the beneficial ownership of which has been disclaimed). |
Preferred Stock As of March 31, 2018, there were 823,188 shares of BlackRock’s Series Bnon-voting convertible participating preferred stock issued and outstanding, which has a liquidation preference of $0.01 per share (the “Series B Preferred Stock”), and 143,458 shares of BlackRock’s Series Cnon-voting convertible participating preferred stock issued and outstanding, which has a liquidation preference of $40.00 per share (the “Series C Preferred Stock”). As of March 31, 2018, PNC owned all issued and outstanding shares of our Series B Preferred Stock and Series C Preferred Stock. BLACKROCK, INC. 2018 PROXY STATEMENT 37
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our directors, Section 16 officers and persons who own more than 10% of a registered class of BlackRock’s equity securities to file reports of holdings of, and transactions in, BlackRock shares with the SEC and the NYSE. To the best of BlackRock’s knowledge, based on copies of such reports and representations from these reporting persons, we believe that in 2017, our directors, Section 16 officers and 10% holders met all applicable SEC filing requirements. 38BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | Monitor and Evaluate Performance | | | ReviewYear-
to-date
(“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 | | |
Certain Relationships and Related Transactions PNC and its Subsidiaries As of March 31, 2018, PNC beneficially owned approximately 21.2% of BlackRock’s common stock outstanding and 21.7% of BlackRock’s capital stock, which includes outstanding common stock andnon-voting preferred stock. William S. Demchak, Chairman, President and Chief Executive Officer of PNC, serves as a director of BlackRock. Although PNC has a right to, and reserves the right to do so under the PNC Stockholder Agreement, PNC has elected not to appoint a second director to the Board at this time. In addition, PNC has been permitted to invite anon-voting observer to attend Board meetings. Gregory B. Jordan, General Counsel & Head of Regulatory and Governmental Affairs of PNC, is the PNC observer. BlackRock provides investment advisory and administration services to certain PNC subsidiaries and separate accounts for a fee based on assets under management. The amount of investment advisory and administration fees earned from PNC and its affiliates in relation to these services in 2017 totaled $3.2 million. BlackRock provides risk management advisory services to PNC’s corporate and line of business asset/liability management committees, for which it received an annual fee of $6.9 million for 2017. BlackRock also recorded revenue of $2.7 million related tonon-discretionary trading services. BlackRock incurred expenses of $1.2 million to PNC affiliates in 2017 for service fees related to certain retail and institutional clients. Transactions between BlackRock Funds and Client Accounts and PNC and its Subsidiaries From time to time in the ordinary course of our business, acting predominantly as agent for its clients, BlackRock effects transactions in securities and other financial assets with PNC and its subsidiaries. The amount of compensation or other value received by PNC in connection with those transactions is dependent on the capacity in which it participates in each of them, as principal or agent for other principals, and the type of security or financial asset involved. PNC may also act as the underwriter of securities purchased by BlackRock-managed funds and accounts. We principally engage in fixed income transactions with PNC. PNC (including its subsidiaries) was among one of BlackRock’s many fixed income trading counterparties in 2017. Fixed income transactions are typically not traded on a commission basis and, accordingly, the amounts earned by PNC and its subsidiaries on such transactions cannot be determined. PNC may, from time to time in the ordinary course of business, make loans to funds or separately managed accounts or commit to make future loans on substantially the same terms as those prevailing at the time for comparable loans to third parties and may enter into caps, hedges or swaps in connection with these loans. BlackRock may be an investor in orco-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 andco-administration,sub-administration, fund accounting, networking, leases of office space to PNC or its subsidiaries, bank account arrangements, derivative transactions, letters of credit, securities lending, loan servicing and other administrative services for BlackRock-managed funds and accounts. In certain instances, the fees that may be incurred by BlackRock funds or other products are capped at a fixed amount. In these cases, BlackRock may be responsible for payment of fees incurred in excess of these caps and amounts would be reflected in the fees for administrative services described above. Additionally, PNC or its subsidiaries or affiliates may invest in BlackRock funds or other products or buy or sell assets to or from BlackRock funds and separate accounts. BLACKROCK, INC. 2018 PROXY STATEMENT 39
| | | | | | | | | | | | | Certain Relationships and Related Transactions ●PNC and its Subsidiaries | | | | | | | | | | | | | | Review
Preliminary
NEO
Performance | | Discuss NEO
Pay | Assess Final Performance and Determine Compensation | | | | | | | | | | | | | | | Review Final
NEO
Performance | | | | | | | | | | | | | | | | | | | | | | | Approve NEO
Pay | | | | | | | | | | | | | | | | | | | | | | | Approve BPIP
Award
Determination
Matrix |
* | Signifies Board of Directors meetings. Board topics include Financial, Business, Market, Talent Reviews and/or Committee updates. |
PNC Stockholder Agreement BlackRock is a party to the PNC Stockholder Agreement, which governs PNC’s ownership interests in and relationship with BlackRock. BlackRock and PNC are also parties to a registration rights agreement. The following table describes certain key provisions of the PNC Stockholder Agreement as amended and restated. At | | | Share Ownership | | The PNC Stockholder Agreement provides for a limit on the beginningpercentage of each year, management reviewsBlackRock capital stock that may be owned by PNC at any time (which we refer to as the annual budget with“PNC ownership cap”). Due to the MDCC. The MDCC and CEO establish financial and business goals and objectives. These goals and objectives provide the context for an evaluationPNC ownership cap, PNC is generally not permitted to acquire any additional capital stock of performance at year-end. The MDCC regularly meets with the CFO to review YTD actual and projected financial information and reviews full-year financial informationBlackRock if, after year-end.
Throughout the year, all memberssuch acquisition, it would hold greater than 49.9% of the total voting power of the capital stock of BlackRock issued and outstanding at such time or 38% of the sum of the total voting securities and participating preferred stock of BlackRock issued and outstanding at such time and issuable upon the exercise of any options or other rights outstanding at that time.In addition, PNC may not acquire any shares of BlackRock from any person other than BlackRock or a person that owns 20% or more of the total voting power of the capital stock of BlackRock (other than itself) if, after such acquisition, it would hold capital stock of BlackRock representing more than 90% of the PNC voting ownership cap. | Prohibited Actions | | PNC is prohibited from taking part in, soliciting, negotiating with, providing information to or making any statement or proposal to any person, or making any public announcement, with respect to: • An acquisition which would result in PNC holding more than the PNC ownership cap, or holding any equity securities of any controlled affiliate of BlackRock; • Any business combination or extraordinary transaction involving BlackRock or any controlled affiliate of BlackRock, including a merger, tender or exchange offer or sale of any substantial portion of the assets of BlackRock or any controlled affiliate of BlackRock; • Any restructuring, recapitalization or similar transaction with respect to BlackRock or any controlled affiliate of BlackRock; • Any purchase of the assets of BlackRock or any controlled affiliate of BlackRock, other than in the ordinary course of its business; • Being a member of a “group”, as defined in Section 13(d)(3) of the Exchange Act, for the purpose of acquiring, holding or disposing of any shares of capital stock of BlackRock or any controlled affiliate of BlackRock; • Selling any BlackRock capital stock in an unsolicited tender offer that is opposed by the BlackRock Board; • Any proposal to seek representation on the Board review strategic plans, financial and business results, talent development and succession planning,of BlackRock except as wellcontemplated by the PNC Stockholder Agreement; • Any proposal to seek to control or influence the management, Board or policies of BlackRock or any controlled affiliate of BlackRock except as other areas relevantcontemplated by the PNC Stockholder Agreement; or • Any action to encourage or act in concert with any third party to do any of the foregoing. | Additional Purchase of Voting Securities | | The PNC Stockholder Agreement gives PNC the right, in any issuance of BlackRock voting stock, (1) to purchase an amount of such stock or, at PNC’s option, Series B Preferred Stock, upon such issuance that would result in PNC holding the lesser of (a) the PNC ownership cap or (b) an ownership percentage in BlackRock equal to what it held prior to the Company’s performance. The MDCC also reviews other measuresissuance, and (2) if as a result of such stock issuance PNC’s beneficial ownership of the Company’s performance, market intelligencetotal 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 compensationaone-for-one basis such that following the stock issuance, PNC will beneficially own shares of voting securities representing not more than 38% of the total voting power of BlackRock capital stock, unless such issuance constitutes a public offering and information about market conditions. In December, management reports on absolute and/would not, together with any stock issuance constituting a public offering since September 29, 2006, after taking into account any share repurchases by BlackRock since September 29, 2006 and transfers by PNC, decrease PNC’s total voting power to 90% or relative performance compared to major competitors, year-over-year and/or budget (e.g., growth in revenues, operating income, net income, operating margin and net new inflowsless of AUM). The MDCC’s compensation consultant also provides an independent report on publicly disclosed financial information and provides compensation information for certain publicly traded asset management companies to understand performance and trends in compensation among public asset managers (as set forth in “Compensation Consultant” on pages 47 to 48).
the PNC ownership cap. In December, during an executive session with the MDCC, the CEO reviews the performance of all individual NEOs against business goals and objectives. During an executive session that excludes all members of management, the non-management directors assess the performance of the CEO against business goals and objectives.
In January, the MDCC reviews year-end financial results and other performance metrics as well as external data for comparison. The MDCC then determines final total annual incentive award amounts for each of our NEOs. The MDCC determines annual cash incentive award amounts for the CEO and President, utilizing the annual cash incentive award framework, based on financial performance, business strength, and organizational strength, supported by performance measures. The MDCC also determines equity awards made through the long-term incentive BPIP awards. This timing allows the MDCC to consider full-year individual NEO performance assessments along with full-year financial results and non-financial results in its final determination of compensation. The MDCC also determines the Award Determination Matrix for the three-year BPIP performance cycle. In setting financial performance requirements for the BPIP, the MDCC considers past performance and analyst forecasts for BlackRock. Compensation decisions are made on a total annual compensation basis, with consideration of each element of compensation, as described on pages 41 to 42.
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
Generated strong and consistent financial results despite a challenging beta and foreign exchange environment; captured long-term net inflows of $152 billion and delivered strong organic growth that significantly outperformed peers by leveraging BlackRock’s diversified, multi-client platform, enhanced global footprint and broad product range.
Business Strength
| • | | Increased market share with key clients and distributors; maintained momentum across the Institutional platform by delivering organic revenue growth for the second consecutive year; achieved positive flows across the Retail andiShares platforms including flows of more than $1 billion into 65 distinct Retail andiShares funds; and |
40BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | • | | Enhanced client experience by improving and further leveraging theAladdin platform. | | | | | Certain Relationships and Related Transactions ●PNC and its Subsidiaries | | | | |
| | | | Share Repurchase | | Organizational StrengthIf 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.
Continued
| Transfer Restrictions | | PNC may not transfer any capital stock of BlackRock beneficially owned by it, except for transfers to develop a diverse pipelineits respective affiliates and transfers in certain other specified categories of senior talent through succession and a varietytransactions that would result in the beneficial ownership, by any person, of leadership programs; introduced a new, firm-wide performance ratings system; and defined critical capabilities for the Company’s future growth. 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 operationsmore than 10% of the Company. He ensures connectivitytotal voting power of issued and coordinationoutstanding BlackRock capital stock with respect to transfers to persons who would be eligible to report their holdings of operating processes acrossBlackRock 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 groupsof the stock being offered, at the price and terms described in the organization,notice. These notification requirements and purchase rights do not apply in part through the Global Operating Committee, which he leads. He is also responsible for spearheading initiativescase oftax-free transfers to drive investment performancecharitable organizations or foundations andtax-deferred transfers. | Corporate Governance | | Board Designation: The PNC Stockholder Agreement provides that BlackRock will use its best efforts to cause the results withinelection at each annual meeting of BlackRock’s businesses. In alignment with
shareholders such that the Board will consist of no more than 19 directors: the compensation structure on pages 36 to 37, the MDCC determined Mr. Kapito’s total annual compensation based on an assessment• Not less than two nor more than four directors who will be members of performance in the following three categories: financial performance, business strength and organizational strength. In 2015, Mr. Kapito:
Financial PerformanceBlackRock management;
• Two directors who will be designated by PNC, provided, however, that if for any period greater than 90 consecutive days PNC and its affiliates shall beneficially own less than 10% of the BlackRock capital stock issued and outstanding, PNC shall promptly cause one of such PNC designees to resign and the number of PNC designees permissible shall be reduced to one; and provided further, that, if for any period greater than 90 consecutive days PNC and its affiliates shall beneficially own less than 5% of the BlackRock capital stock issued and outstanding, PNC shall promptly cause the second PNC designee to resign and the number of PNC designees permissible shall be reduced to zero; and • The remaining directors who will be independent for purposes of the rules of the NYSE and will not be designated by or on behalf of PNC or any of its affiliates. Of the current directors, William S. Demchak was designated by PNC. PNC has elected not to appoint a second director to the Board at this time, though it reserves the right to do so. In addition, PNC has been permitted to invite anon-voting observer to attend Board meetings. Gregory B. Jordan, General Counsel & Head of Regulatory and Governmental Affairs of PNC, is the organic growth results highlighted above for Mr. Fink, Mr. Kapito provided day-to-day oversight of the business that was instrumental in achieving a 42.9% Operating Margin, as adjusted. Business Strength
Assumed more direct oversight over the alpha strategies teams where investment performance improved across the active platform, with 80% of AUM above benchmark or median for the 1 year period, compared to 71% in 2014.
| • | | Continued to execute against strategic initiatives; accelerated growth of the alternatives business through the launch of the global credit platform and continued expansion of BlackRock’s infrastructure business; oversaw retail technology initiatives that were focused on increased sales force productivity; introduced new value-additive technology and tools likeiRetire® andAladdin Portfolio Builder to help financial advisors scale their practice; and delivered strong growth across the regions (EMEA, Asia-Pacific and Latin America). |
Organizational Strength
Drove acquisition and retention of key senior-level talent and minimized portfolio manager turnover across the investment platform.
Based on this assessment, the MDCC awarded Mr. Kapito $19.985 million in 2015 total annual compensation, representing 0% change compared with 2014.
Individual Compensation Decision Factors for Other NEOs
The determination of each other NEO’s compensation is based on (1) an assessment of the individual NEO’s contributions to overall Company results and individual business results throughout the year, (2) each NEO’s influence on setting long-term strategy and in executing long-term objectives and (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 market intelligence on competitive compensation. See “Market Data” on 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. All long-term equity-based incentive awards granted under BPIP are funded and awarded separately from the total bonus pool and are determined on a subjective basis as part of the MDCC’s total annual compensation decision.
In addition to the 2015 Company results described in “2015 Performance” beginning on page 34, the following information provides highlights of specific 2015 business and individual NEO performance considered by the MDCC in the compensation decisions for our NEOs.
PNC observer. Mr. HallacVoting Agreement:, as Co-President, instilled the BlackRock culture and spirit of innovation throughout the Company and inspired the firmPNC has agreed to transform through the use of technology. Mr. Hallac, former Co-President of BlackRock, member of the Company’s GEC and Co-Chairvote all of its Global Operating Committee, passed away on September 9, 2015. The Committee recognized Mr. Hallac’s contributions by awarding a prorated cash bonus award amount to his estate that was 5% lower than his 2014 variable compensation level.
Mr. Goldstein, as COO, oversaw the day-to-day global operations of the Company. He coordinated a firm-wide budgeting process aimed at optimizing levels of investment spend and expense discipline. Mr. Goldstein led business process and technology efficiency programs, resulting in continued streamlining of the 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. Kushel, 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 both our investment professionals and clients and continued to expand the influence of BlackRock Investment Stewardship through increased quality engagements.
Mr. Shedlin, as CFO, oversaw financial reporting and controls for the Company and also led the corporate finance function. He was also responsible for financial planning and analysis, treasury, tax, investor relations and corporate development. During 2015, he continued to develop the Company’s outreach with key investors and regulators. He oversaw the 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. He also continued to guide the Company’s priorities and resource deployment to enable disciplined growth.
Market Data
Management engages McLagan Partners (“McLagan”), a compensation consultant that specializes in conducting proprietary compensation surveys and interpreting compensation trends. Management used McLagan surveys(2) to (1) evaluate BlackRock’s competitive position overall, as well as by functional business and by title and (2) make comparisons on an individual NEO basis, where 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.
Compensation Consultant
In 2015, the MDCC continued to engage Semler Brossy 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 SEC 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 Committee meetings and at key points throughout the year to provide objective advice to the MDCC on existing and emerging compensation practices among financial services companies in addition to companies in the asset management sector. Semler Brossy reviewed
47
(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. |
The broader suite of companies in the McLagan analyses, which include publicly traded companies as well as private companies, offers additional 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 the McLagan analyses.
ADDITIONAL DETAILS ON COMPENSATION POLICIES AND PRACTICES
Stock Ownership, Clawback Policy, Benefits, Severance, Perquisites and Tax Reimbursements
Stock Ownership Guidelines
Our stock ownership guidelines require the Company’s GEC members to own and maintain a target number ofvoting shares the dollar amount of which is set out below. 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 guidelines are met, they must retain 35% of the net (after-tax) shares delivered from BlackRock equity awards. As of December 31, 2015, all of our NEOs exceeded the stated stock ownership guidelines.
$10 million for the CEO;
$5 million for the President; and
$2 million for all other GEC members.
Clawback Policy
All performance-based compensation (including annual and long-term incentive awards and all equity compensation) is subject to BlackRock’s Clawback Policy and is subject to recoupment if an employee is found to have engaged in fraud or willful misconduct that caused the need for a significant restatement of BlackRock’s financial statements.
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 (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. In 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 2015 for perquisites is described in Footnote (3) to the "2015 Summary Compensation Table" on page 52.
Tax Reimbursements
BlackRock did not provide tax reimbursements for any perquisites or other compensation paid to our 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. As a result of this annual review, the Company believes that the 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:
Performance goals that are reasonable in light of past performance and market conditions;
Longer-term expectations for earnings and growth;
The base salary component of compensation does not encourage risk taking because it is a fixed amount;
A greater portion of annual compensation is deferred at higher annual incentive award levels; and
Deferred compensation is delivered in the form of equity, vests over time, and the value is therefore dependent on the future performance of BlackRock.
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 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:
Do not provide undue incentives for short-term planning or action toward short-term financial rewards;
Do not reward unreasonable risk; and
Provide a reasonable balance between the risks that are inherent in the business of investment management, risk management and advisory services.
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 does not engage in proprietary trading.
Total Bonus Pool Determination
The MDCC approves annually a total bonus pool for BlackRock employees as a group, which includes the NEOs. 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. For 2015, the MDCC approved a total bonus pool of approximately $2.19 billion (including $210 million for long-term incentive awards), which was 3% higher than the total bonus pool approved in 2014.(3)
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 $1.0 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 incentive awards to each of our NEOs pursuant to the stockholder-approved Amended and Restated BlackRock, Inc. 1999 Annual Incentive Performance 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)recommendation 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 ceilingBoard on the amount of annual incentive awards which the MDCC can awardall matters to the NEOs on a tax deductible basis. In determining final awards for each NEO,extent consistent with the MDCC ensures that such awards do not exceedprovisions of the executive officer’s Individual 162(m) Cap.
(3) | Includes payments to employees who departed BlackRock during the year. |
PNC Stockholder Agreement, including the election of directors. MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONApprovals:
The members Under the PNC Stockholder Agreement, the following may not be done without prior approval of all of the MDCC during 2015 were Ms. Mills and Messrs. Komansky (Chairperson), Gerber, Grosfeld and Maughan. Mr. Nixon joined the MDCC in March 2016. No memberindependent directors, or at leasttwo-thirds of the MDCC was, duringdirectors, then in office:
• Appointment of a new Chief Executive Officer of BlackRock; • Any merger, issuance of shares or similar transaction in which beneficial ownership of a majority of the total voting power of BlackRock capital stock would be held by persons different from those currently holding such majority of the total voting power, or any sale of all or substantially all assets of BlackRock; • Any acquisition of any person or business that has a consolidated net income after taxes for its preceding fiscal year an officerthat equals or employee,exceeds 20% of BlackRock’s consolidated net income after taxes for its preceding fiscal year if such acquisition involves the current or formerly an officer or employee, involved in any related person transactions requiring disclosure in this Proxy Statement. No executive officerpotential issuance of BlackRock served (i) as a membercapital stock constituting more than 10% of the Compensation Committee (or other Board committee performing equivalent functions or, in the absencetotal voting power of BlackRock capital stock issued and outstanding immediately after completion of such acquisition; • Any acquisition of any person or business constituting a line of business that is materially different from the lines of business BlackRock and its controlled affiliates are engaged in at that time if such committee,acquisition involves consideration in excess of 10% of the entire Boardtotal assets of Directors)BlackRock on a consolidated basis; |
BLACKROCK, INC. 2018 PROXY STATEMENT 41
| | | | | | | | | | | | | Certain Relationships and Related Transactions ●PNC and its Subsidiaries | | | | |
| | | | | • Except for repurchases otherwise permitted under their respective stockholder agreements, any repurchase by BlackRock or any subsidiary of another entity, oneshares of whose executive officers servedBlackRock capital stock such that, after giving effect to such repurchase, BlackRock and its subsidiaries shall have repurchased more than 10% of the total voting power of BlackRock capital stock within the12-month period ending on the MDCCdate of BlackRock, (ii) as a directorsuch repurchase; • Any amendment to BlackRock’s certificate of another entity, one of whose executive officers served on the MDCC of BlackRock,incorporation 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.Bylaws; REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The following is the MDCC report• Any matter requiring shareholder approval pursuant to stockholders. In accordance with the rules of the SEC, this report shallNYSE; or
• Any amendment, modification or waiver of any restriction or prohibition on any significant shareholder (other than PNC or its affiliates) provided for under its stockholder agreement. Committees: Consistent with applicable laws, rules and regulations, the Audit Committee, the Compensation Committee and the Governance Committee are to be composed solely of independent directors. The Risk Committee and Executive Committee are not subject to any similar laws, rules or regulations, and as such, are composed of a mix of independent andnon-independent directors. The PNC Stockholder Agreement provides that the Executive Committee will consist of not less than five members, of which one must be incorporateddesignated by referencePNC. | Significant Stockholder Transactions | | The PNC Stockholder Agreement prohibits BlackRock or its affiliates from entering into any transaction with PNC or its affiliates, unless such transaction was in effect as of BlackRock’s future filings made underSeptember 29, 2006, is in the Exchange Actordinary course of business of BlackRock or underhas been approved by a majority of the Securities Act and shall not be deemeddirectors of BlackRock, excluding those appointed by the party wishing to be soliciting material or to be filed underenter into the Exchange Act ortransaction. | Termination of the Securities Act.PNC Stockholder Agreement | | Management Development and Compensation Committee Report on Executive Compensation for Fiscal Year 2015
The MDCCPNC Stockholder Agreement will terminate on the first day on which PNC and its affiliates own less than 5% of the capital stock of BlackRock, unless PNC sends a notice indicating its intent to increase its beneficial ownership above such threshold within 10 business days after it has reviewedfallen below such threshold, and discussed the Compensation DiscussionPNC buys sufficient capital stock of BlackRock within 20 business days after PNC has notice that it has fallen below 5% of BlackRock capital stock such that it continues to own greater than 5% of BlackRock capital stock. |
Transactions with BlackRock Directors, Executive Officers and Other Related Parties From time to time, certain directors, their family members and related charitable foundations may have investments in various BlackRock investment vehicles or accounts. For certain types of products and services offered by BlackRock’s subsidiaries, BlackRock directors may receive discounts that are available to our employees generally. In addition, certain of the companies or affiliates of the companies that employ BlackRock’s independent directors may have investments in various BlackRock investment vehicles or accounts or may receive advisory, technology and risk management services. These investments and services are entered into in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with similarly situated customers and eligible employees. How We Review, Approve or Ratify Transactions with Related Persons On February 27, 2007, the Board adopted a written policy regarding related person transactions, which governs and establishes procedures for approving and ratifying related person transactions. The policy defines a related person transaction as any transaction or arrangement in which the amount involved exceeds $120,000, where BlackRock or any of its subsidiaries is a participant and a related person has a direct or indirect material interest. For purposes of the policy, a “related person” is any person who is, or was during the last fiscal year, a BlackRock director or executive officer, or a director nominee, or any person who is a beneficial owner of more than 5% of any class of BlackRock’s voting securities, or any immediate family member of any of the foregoing persons. 42BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Certain Relationships and Analysis required by Item 402(b) of Regulation S-KRelated Transactions ●Transactions with managementBlackRock Directors,Executive Officers and has recommendedOther Related Parties | | | | |
Related person transactions must be approved by a majority of the uninterested members of the Governance Committee or the Board. In the event it is not practicable for BlackRock to wait for approval until the next meeting of the Governance Committee or the Board, the Chairperson of the Governance Committee may approve the transaction. In reviewing any related person transaction, all of the relevant facts and circumstances must be considered, including: The related person’s relationship to BlackRock and his or her interest in the transaction; The benefits to BlackRock; The impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; The availability of comparable products or services that would avoid the need for a related person transaction; and The terms of the transaction and the terms available to unrelated third parties or to employees generally. PNC Approval Process The policy provides that transactions (other than transactions in the ordinary course of business) with PNC are governed by the special approval procedures detailed in the PNC Stockholder Agreement. Those approval procedures prohibit BlackRock or its affiliates from entering into any transaction (other than any transaction in the ordinary course of business) with PNC or its affiliates unless such transaction was in effect as of September 29, 2006 or has been approved by a majority of the directors of BlackRock, excluding those designated for appointment by the party wishing to enter into the transaction. Of the current directors, William S. Demchak was designated by PNC. Prior to the adoption of this policy, related person transactions, including certain of the transactions described above under“— PNC and its Subsidiaries” and“— PNC Stockholder Agreement”, were reviewed with the Board at the time of entering into such transactions. Management Development and Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee during 2017 were Mses. Einhorn and Mills and Messrs. Gerber, Grosfeld, Komansky, Maughan, Nixon, Seidenberg (Chairperson) and Slim. No member of the Compensation Committee was, during the fiscal year, an officer or employee, or formerly an officer or employee, involved in any related person transactions requiring disclosure in this Proxy Statement. No executive officer of BlackRock served (i) as a member of the Compensation Committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of another entity, one of whose executive officers served on the Compensation Committee of BlackRock, (ii) as a director of another entity, one of whose executive officers served on the Compensation Committee of BlackRock, or (iii) as a member of the Compensation Committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of another entity, one of whose executive officers served as a director of BlackRock. BLACKROCK, INC. 2018 PROXY STATEMENT 43
Item 2 Approval, in a Non-Binding Advisory Vote, of the Compensation for Named Executive Officers We are asking our shareholders to approve the compensation of our named executive officers as disclosed in this Proxy Statement. While this vote is advisory, and not binding on the Company, it will provide information to our Board and the Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices. Our Board and the Compensation Committee value the opinions of our shareholders and, to the extent there is any significant vote against the compensation of NEOs as disclosed in this Proxy Statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Before You Vote In considering your vote, we encourage shareholders to review the information on BlackRock’s compensation policies and decisions regarding the NEOs presented in the discussion regarding the Compensation Committee on page 65, as well as “Compensation Discussion and Analysis” beginning on page 46. Ourpay-for-performance compensation philosophy is structured to align management’s interests with our shareholders’ interests. A significant portion of total compensation for executives is closely linked to BlackRock’s financial and operational performance as well as BlackRock’s common stock price performance. BlackRock has adopted strong governance practices for its employment and compensation
programs. Compensation programs are reviewed annually to ensure that they do not promote excessive risk taking. Board Recommendation | | | | | The Board of Directors thatrecommends you vote“FOR” the Compensation Discussion and Analysis be included in this Proxy Statement.approval of the compensation of our NEOs. MEMBERS OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
David H. Komansky, Chairperson
|
44BLACKROCK, INC. 2018 PROXY STATEMENT
Management Development and Compensation Committee Report Management Development and Compensation Committee Report on Executive Compensation for Fiscal Year 2017 The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management and has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. MEMBERS OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE Ivan G. Seidenberg, Chair Jessica P. Einhorn Murry S. Gerber James Grosfeld Sir Deryck Maughan
Cheryl D. Mills Gordon M. Nixon Marco Antonio Slim Domit BLACKROCK, INC. 2018 PROXY STATEMENT 45
Executive Compensation Compensation Discussion and Analysis BlackRock’s executive compensation program is designed to align management incentives with the long-term interests of our shareholders. Our total annual compensation structure embodies our commitment to align pay with performance. This Compensation Discussion and Analysis (“CD&A”) provides shareholders with information about BlackRock’s business and 2017 financial performance, our disciplined compensation approach and 2017 compensation decisions for our NEOs, listed below. | | | | | | | | | Laurence D. Fink Chairman and Chief Executive Officer (“CEO”) | | Robert S. Kapito President | | Robert L. Goldstein Chief Operating Officer (“COO”) | | Mark S. McCombe Head of Americas | | Gary S. Shedlin Chief Financial Officer (“CFO”) |
Table of Contents 46BLACKROCK, INC. 2018 PROXY STATEMENT
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Introduction Shareholder Engagement on Executive Compensation Our Board recognizes the importance of executive compensation decisions to our shareholders. The annualsay-on-pay advisory vote provides our shareholders with the opportunity to: evaluate our executive compensation philosophy, policies and practices; evaluate the alignment of the compensation of BlackRock’s NEOs with BlackRock’s results; and cast an advisory vote to approve the compensation of BlackRock’s NEOs. At the 2017 Annual Meeting of Shareholders, thesay-on-pay advisory vote received majority support, with 90% of the votes cast in favor of our executive compensation. Our Board encourages an open and constructive dialogue with shareholders on compensation to ensure alignment on policies and practices. The Compensation Committee considered shareholder input when it designed the CEO and President compensation framework as well as the BPIP Awards and the December 2017 grants of performance-based stock options. As in prior years, we engaged shareholders in advance of this year’s annual meeting to incorporate their views as we continue to enhance our compensation programs. BlackRock Shareholder Value Framework BlackRock is committed to delivering long-term shareholder value. While our financial results can be affected by global capital market conditions that are beyond our control, management has the ability to influence key drivers of shareholder value. As described below, BlackRock’s framework for long-term value creation is based on our ability to: Generate differentiated organic growth; Use our scale to deliver operating leverage; and Return capital to shareholders on a consistent and predictable basis. 
BlackRock’s commitment to delivering shareholder value is aligned with the way we manage our business. By putting clients’ interests first and delivering investment, risk management and technology solutions to help meet their objectives, we are able to build our business by adding new assets under management (“AUM”) and growing risk management and technology offerings, resulting inOrganic Revenue growth.1 BlackRock’s scale is one of the firm’s key strategic advantages and is an important driver ofoperating leverage that benefits clients and shareholders. We take advantage of scale in numerous areas of our business including through our index-based investment strategies, brand spend, technology platform, including ourAladdin business and our external vendor relationships. Investing for the long-term is a key element of our strategy. Our diversified platform, in terms of styles, products, client types and geographies, enablesstable cash flow through market cycles, positioning BlackRock to invest for future growth and consistently return capital to our shareholders. For more details, refer to“Business Outlook” on page 34 of our 2017 Form10-K. During 2017,we returned $2.8 billion to our shareholders through a combination of share repurchases and dividends. | 1 | | Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net newAladdin
revenue, excluding the effect of market appreciation/(depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue
earned in such given year. |
BLACKROCK, INC. 2018 PROXY STATEMENT 47
| | | | | | | | | | | | | Compensation Discussion and Analysis ●1: Introduction | | | | |
BlackRock 2017 Performance1 The strength of BlackRock’s 2017 results reflect the long-term strategic advantages we have created by consistently investing in our business. Full-year results reflected industry-leading organic growth, with record full-year net inflows of $367 billion, continued Operating Margin expansion and consistent capital management. Investment performance results across our alpha-seeking and index strategies as of December 31, 2017 remain strong, and are included in Item 1 of our 2017 Form10-K. Differentiated Organic Growth Organic asset growth of 7% in 2017 contributed to strong Organic Revenue growth2 Total net inflows of $367 billion were a record and were positive across client type, asset class, region and investment style; Long-term net inflows of $330 billion reflected 7% organic asset growth; | • | | Technology and risk management revenue grew14% year-over-year led by continued momentum inAladdin; and |
Total revenue increased 12% from 2016 to $12,491 million. Operating Leverage We continued to invest in our business while simultaneously expanding our Operating Margin by 40 bps Operating income, as adjusted, of $5,287 million was up 13% versus 2016, reflecting continued margin expansion and investment into the business; and Compensation and benefits expense, as adjusted, as a percent of total revenue was 33.9%, representing a decrease of 60 bps from 2016, while G&A expense increased 12% year-over-year, reflecting higher technology and data spend. Consistent Capital Return $2.8 billion was returned to shareholders in 2017 Annual dividend of $10.00 per share, reflected an increase of 9% from $9.16 in 2016; and $1.1 billion of outstanding shares were repurchased in 2017, driving a reduction in net share count of 2.6 million shares. Earnings Growth Diluted earnings per share, as adjusted, of $22.60 increased 17% versus 2016 Execution of our shareholder value framework - strong organic growth, Operating Margin expansion and consistent repurchases - in 2017 drove a 17% increase in earnings per share. | 1 | Amounts in this section, where noted, are shown on an “as adjusted” basis. For a reconciliation with GAAP in the United States, please see Annex A. |
| 2 | Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net newAladdinrevenue, excluding the effect of market appreciation/ (depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in such current year. |
48BLACKROCK, INC. 2018 PROXY STATEMENT Assets Under Management ($B) Revenue ($M) Operating Income ($M) (as adjusted)2 Operating Margin (as adjusted)2 Cash Dividend Per Share ($)Share Buyback ($M) Net Income ($M) Earnings Per Share (as adjusted)2 ($M)
| | | | | | | | | | | | | Compensation Discussion and Analysis ●1: Introduction | | | | |
Our Compensation Framework Our compensation program for NEOs continues to include base salary, annual incentive awards (cash and deferred equity) and long-term performance-based incentive awards. In the fourth quarter of 2017, we implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders who we believe will play critical roles in BlackRock’s future. We do not consider these awards to be part of our annual compensation framework. For more information regarding performance-based stock options, see“Performance-Based Stock Options” on page 55. Annual Incentive Awards – Pay and Performance Alignment for CEO and President Under this program, target annual cash incentive awards (“cash bonus”) have been established at $8.0 million and $6.5 million for our CEO and President, respectively. Actual cash bonuses can range from 0% up to a maximum of 125% of the target amount ($10.0 million and $8.125 million for the CEO and President, respectively). To determine the actual cash bonus amount, the Compensation Committee used the framework below to assess individual performance. The Compensation Committee created three categories and assigned a weighting factor to each, with 50% of the award opportunity dependent on BlackRock’s financial performance. To assess the performance of our business and organizational strengths, the Compensation Committee uses internal BlackRock performance measures and also considers peer group comparisons. | | | | | | | | | Category | | BlackRock Performance % of Award Opportunity | | Measures Include (internal BlackRock metrics and/or peer comparisons are considered) | Financial Performance | |
| | • | | | | Net New Business | | | | • | | | | Net New Base Fees | | | | • | | | | Organic Revenue Growth | | | | • | | | | Operating Income, as adjusted1 | | | | • | | | | Operating Margin, as adjusted1 | | | | • | | | | Diluted EPS, as adjusted1 | | | | • | | | | Total Shareholder Return and P/E Multiple | Business Strength | |
| | • | | | | Deliver Superior Client Experience | | | | • | | | | Drive Organization Discipline | | | | • | | | | Lead in a Changing World | | | | | | | | | | | | | | | | | | | | | | | | | | Organizational Strength | |
| | • | | | | Drive High Performance | | | | • | | | | Build a more Diverse and Inclusive Culture | | | | • | | | | Develop Great Managers and Leaders | | | | | | | | | | | | | | | | |
In addition to the annual cash incentive awards, the Compensation Committee expects to continue to make annual grants of long-term equity awards to both Messrs. Fink and Kapito, with at least half of such equity awards being long-term and contingent on future financial or other business performance requirements in addition to share price performance. The Compensation Committee maintains accountability in setting the final awards in order to determine the quality of the outcomes and to reflect the executives’ ability to adapt to the evolving business environment throughout the year. | 1. | | For reconciliation with GAAP in the United States, please see Annex A. |
BLACKROCK, INC. 2018 PROXY STATEMENT 49
| | | | | | | | | | | | | Compensation Discussion and Analysis ●1: Introduction | | | | |
How We Determine Other NEO Compensation DETERMINATION OF OTHER NEOs’ ANNUAL INCENTIVE COMPENSATION IS BASED ON: An assessment of the individual NEO’s contributions to overall Company results and individual business results throughout the year; and Each NEO’s influence on setting long-term strategy and in executing long-term objectives. INPUTS TO INDIVIDUAL NEO TOTAL ANNUAL COMPENSATION DECISIONS INCLUDE: | • | | Financial factors, such as revenue, Operating Income, Diluted EPS and Operating Margin, in each case, as adjusted1; |
Non-financial factors such as individual NEO performance in running their respective businesses, overall investment performance, client relationship strength, organizational discipline and inclusion and diversity commitment; and | • | | Other considerations such as external market conditions and market intelligence on competitive compensation. See“Competitive Pay Positioning – Market Data” on page 57. |
The deferred equity component of each of our other NEOs’ annual incentive award is determined by a Company-wide deferral policy. Higher annual incentive awards are subject to higher deferral percentages. All long-term equity-based incentive awards granted under BPIP are funded and awarded separately from the total bonus pool and are determined on a subjective basis as part of the Compensation Committee’s total annual compensation decision. NEO Total Annual Compensation Summary Following a review of full-year business and individual NEO performance, the Compensation Committee determined 2017 total annual compensation outcomes for each NEO, as outlined in the table below. In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see“Performance-Based Stock Options” on page 55. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 Annual Incentive Award | | | | | | | | | | | | | | | | | | | | | | Name | | Base
Salary | | | Cash | | | Deferred
Equity | | | Long-Term
Incentive Award
(BPIP) | | | Total Annual
Compensation
(“TAC”) | | | % change in
TAC vs. 2016 | | | Performance-
Based Stock
Options | | | | | | | | | | Laurence D. Fink | | $ | 900,000 | | | $ | 10,000,000 | | | $ | 4,600,000 | | | $ | 12,450,000 | | | $ | 27,950,000 | | | | 10% | | | | – | | | | | | | | | | Robert S. Kapito | | $ | 750,000 | | | $ | 8,125,000 | | | $ | 3,514,000 | | | $ | 9,626,000 | | | $ | 22,015,000 | | | | 10% | | | | – | | | | | | | | | | Robert L. Goldstein | | $ | 500,000 | | | $ | 3,275,000 | | | $ | 2,325,000 | | | $ | 2,100,000 | | | $ | 8,200,000 | | | | 12% | | | $ | 10,000,000 | | | | | | | | | | Mark S. McCombe | | $ | 500,000 | | | $ | 2,725,000 | | | $ | 1,775,000 | | | $ | 1,950,000 | | | $ | 6,950,000 | | | | 11% | | | $ | 10,000,000 | | | | | | | | | | Gary S. Shedlin | | $ | 500,000 | | | $ | 2,700,000 | | | $ | 1,750,000 | | | $ | 1,850,000 | | | $ | 6,800,000 | | | | 11% | | | $ | 7,500,000 | |
The amounts listed above as “2017 Annual Incentive Award: Deferred Equity” and “Long-Term Incentive Award (BPIP)” were granted in January 2018 in the form of equity and are separate from the cash award amounts listed above as “2017 Annual Incentive Award: Cash.” In conformance with SEC requirements, the 2017 Summary Compensation Table on page 68 reports equity in the year granted, but cash in the year earned. | 1. For reconciliation with GAAP in the United States, please see Annex A. | |
50BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Compensation Discussion and Analysis ●1: Introduction | | | | |
Pay-for-Performance Compensation Structure for NEOs Our total annual compensation structure embodies our commitment to align pay with performance. More than 90% of our regular annual executive compensation is performance based and “at risk.” Compensation mix percentages shown below are based on 2017year-end compensation decisions for individual NEOs by the Compensation Committee.
| 1 | All grants of BlackRock equity (including the portion of the annual incentive awards granted in RSUs and BlackRock Performance Incentive Plan (“BPIP”) Awards) are approved by the Compensation Committee under the Stock Plan, which has been previously approved by shareholders. The Stock Plan allows multiple types of awards to be granted. |
| 2 | The value of the 2017 long-term incentive BPIP Awards and the value of the equity portion of the bonus for 2017 annual incentive awards was converted into RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018. |
| 3 | For NEOs other than the CEO and President, higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy, as detailed on page 50. |
BLACKROCK, INC. 2018 PROXY STATEMENT 51 2017 CEO Total Annual Compensation-$27.95M Base Salary (Cash) $900k 97% of total compensation is variable and based on performance Annual Incentive (Cash) $10.00M 125% of target Annual Incentive (Deferred Equity1,2) $4.6M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $12.45M 75% of equity is awarded in BPIP 2017 President Total Annual Compensation- $22.02M Base Salary (Cash) $750k Annual Incentive (Cash) $8.13M 125% of target Annual Incentive (Deferred Equity1,2) $3.51M Long-Term Incentive (BPIP) (Performance Based Equity1,2) $9.63M 75% of equity is awarded in BPIP 60-61% of total annual compensation is awarded in equity 2017 Total Annual Compensation for NEOs (excluding CEO and President) Base Salary (Cash) 7-8% of pay 92-94% of total compensation is variable and based on performance Annual Incentive (Cash3) 39-40% of pay Annual Incentive (Deferred Equity1,2,3) 26-28% of pay Long-Term Incentive (BPIP) (Performance Based Equity1,2) 26-28% of pay 53-54% of total annual compensation is awarded in equity
Our Compensation Program Compensation Program Objectives Our compensation program is designed to: appropriately balance BlackRock’s financial results between shareholders and employees; determine overall compensation based on a combination of firm, business area and individual employee performance; align the interests of our senior-level employees, including NEOs, with those of shareholders through the use of long-term performance-based equity awards and accumulation of meaningful share ownership positions; discourage excessive risk-taking; and attract, motivate and retain high-performing employees. Compensation Elements | | | | | | | | Element/How it is Paid | | Purpose | | Description | BASE SALARY Cash | | To provide competitive fixed compensation based on knowledge, skills, experience and responsibilities. | | Base salary is a relatively small portion of total annual compensation for NEOs and other senior-level employees; this approach allows BlackRock to effectively manage its fixed expenses. Base salary levels are reviewed periodically in light of market practices and changes in responsibilities. | ANNUAL INCENTIVE AWARD Cash and Deferred Equity (Time-vested RSUs) Terms: The deferred equity portion of the annual incentive award is converted into a fixed number of RSUs using a conversion price.(1) The deferred equity portion of the annual incentive award vests in equal installments over the three years following grant. Dividend equivalents accumulate during the vesting period and are paid following delivery of shares. Expense is recognized over the vesting period. | | To reward achievement of goals and objectives. Aligns with Company-wide performance and business unit / function performance. Deferred equity component aligns compensation with multi-year shareholder outcomes. | | For CEO and President Annual incentive award determinations for CEO and President are based upon the pay framework outlined on page 49. Annual cash incentive awards may range from 0% to 125% of apre-defined target amount. The time-based RSU component of the annual incentive award is determined separately by the Compensation Committee; however, it is expected that up to, but no more than, 50% of total equity compensation value granted with respect to a particular performance year will be time-based with the remainder in the form of performance-based equity. For Other NEOs Annual incentive award determinations do not rely on a specific formula. A variety of factors are considered to determine the size of an NEO’s annual incentive award. The Compensation Committee considers absolute and/or relative performance outcomes against Company, business and individual NEO goals and objectives, as well as the context in which they were achieved. These goals and objectives are set in the first quarter and performance against them is assessed atyear-end. See“Compensation Determination Process” beginning on page 56. Higher annual incentive awards are subject to higher deferral percentages, in accordance with the Company-wide deferral policy. Deferral amounts follow a step-function approach, starting at 15% of award and increasing to 50% of award for the portion of the bonus in excess of $3.0 million. |
| (1) | | For 2017 deferred equity, the award value was converted into a number of RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of BlackRock common stock on January 16, 2018. |
| | | | | | | | | | | | | Compensation Discussion and Analysis ●2: Our Compensation Program | | | |  |
| | | | | Element/How it is Paid | | Purpose | | Description | LONG-TERM INCENTIVE AWARD BlackRock Performance Incentive Plan (BPIP) (Performance-Based RSUs) Terms: The target BPIP Award value is converted into a base number of RSUs using a conversion price.(1) The final number of RSUs delivered at settlement is variable based on certain financial metrics achieved over a three-year performance period. Dividend equivalents accumulate during the vesting period and are paid in cash after the performance period with respect to the number of shares that are delivered in settlement of the award. Expense, based on the expected number of awards to be delivered, is recognized over the vesting period. | | To recognize the scope of an individual employee’s role, business expertise and leadership skills. To recognize prior year performance and anticipate continued performance and long-term focus over a multi-year period. Aligns the interests of senior-level employees with those of shareholders by aligning compensation with long-term drivers of shareholder value. | | While no specific formulas or weights are used to determine the size of long-term incentive awards, the Compensation Committee considers the role and influence of the NEO on setting long-term strategy and in executing long-term objectives in determining individual award amounts. See “Compensation Determination Process” beginning on page 56. The performance-based RSUs are settled in a number of shares of common stock that is determined based on the level of attainment ofpre-established Organic Revenue and Operating Margin, as adjusted, targets over a three-year performance period. The maximum number of shares that may be earned under the program is equal to 165% of the base number of RSUs granted. No shares will be earned in the event of negative Organic Revenue and Operating Margin, as adjusted, below a threshold level of performance over a three-year performance period. |
| (1) | | For 2017 long-term incentive BPIP Awards, the award value was converted into a number of RSUs by dividing the award value by $566.44, which represented the average of the high and low prices per share of common stock of BlackRock on January 16, 2018. |
BlackRock Performance Incentive Plan (BPIP) BlackRock believes in aligning the interests of our senior-level employees, including our NEOs, with those of our shareholders and in closely aligning compensation with long-term performance. In January 2015, with the advice of the Compensation Committee’s independent compensation consultant, Semler Brossy, the Compensation Committee approved a new form of performance-based equity awards, referred to as BPIP Awards, following a comprehensive review of future performance goals and expectations, potential pay outcomes for employees, shareholder input and market trends. BPIP was designed to further align compensation with management’s long-term creation of shareholder value. Each NEO was granted a BPIP Award in January 2015, 2016 and 2017 as part of his or her incentive compensation for their 2014, 2015 and 2016 performance, respectively. Similarly, a portion of each NEO’s incentive compensation for 2017 was in the form of a BPIP Award granted in January 2018. In addition to recognizing an NEO’s performance in the prior year, the BPIP Awards are intended to incentivize continued performance and long-term focus over a multi-year period. The January 2018 BPIP grants (for 2017 performance) are described in further detail below. BlackRock is focused on achieving the right balance of investing to drive future growth in Organic Revenue, and the impact those investments have on our expense base and Operating Margin, as adjusted. BPIP Awards are granted in the form of RSUs that vest after three years. The number of shares vesting under BPIP is based on the attainment of specified levels of Organic Revenue and Operating Margin, as adjusted over a three-year performance period. BLACKROCK, INC. 2018 PROXY STATEMENT 53
| | | | | | | | | | | | | Compensation Discussion and Analysis ●2: Our Compensation Program | | | | |
| | | | | | | BPIP FINANCIAL METRICS BPIP is tied to two key drivers of shareholder value – Organic Revenue and Operating Margin, as adjusted, over a three-year performance period – that are directly influenced by BlackRock’s senior-level employees across market cycles. •Organic Revenue growth is a measure of the expected annual revenue impact of BlackRock’s total net new business in a given year, including net newAladdin revenue, excluding the effect of market appreciation/(depreciation) and foreign exchange. Organic Revenue is not directly correlated with the actual revenue earned in such given year. •Operating Margin, as adjusted, is a measure of BlackRock’s ability to efficiently manage our expense base in the context of the revenue we generate. | | |
Similar to previous BPIP Awards, the January 2018 BPIP Awards have a three-year performance period that commenced on January 1, 2018 and end on December 31, 2020. Each BPIP Award consists of a “base” number of RSUs granted to the recipient. Distributions will be in the form of common stock. BPIP Award Determination For the January 2018 BPIP Awards, the number of shares that a recipient ultimately receives upon settlement will be equal to the base number of RSUs granted, multiplied by a percentage determined in accordance with the January 2018 BPIP Award Determination Matrix below. The percentage will be determined by BlackRock’s annual average Organic Revenue and Operating Margin, as adjusted, during the performance period; performance between two adjacent points on the matrix will be extrapolated. A summary version of the matrix for the January 2018 BPIP Awards is set forth below. 2018 BPIP AWARD DETERMINATION MATRIX | | | | | | | | | | | | | | | | | | | | | | | | | | 3-yr Average Organic Revenue ($M) | | | | 3-yr Average Op Margin, as Adjusted | | <=0 | | | 300 | | | 500 | | | 700 | | | >=900 | | | | >=50.5% | | | 100% | | | | 120% | | | | 133% | | | | 149% | | | | 165% | | | | 48.5% | | | 83% | | | | 109% | | | | 122% | | | | 138% | | | | 154% | | | | 46.5% | | | 67% | | | | 97% | | | | 111% | | | | 127% | | | | 143% | | | | 44.5% | | | 50% | | | | 80% | | | | 100% | | | | 116% | | | | 133% | | | Target Level | 42.5% | | | 33% | | | | 63% | | | | 83% | | | | 105% | | | | 122% | | | | 40.5% | | | 17% | | | | 47% | | | | 67% | | | | 92% | | | | 111% | | | | <=38.5% | | | 0% | | | | 30% | | | | 50% | | | | 75% | | | | 100% | | | |
If target level performance is achieved (i.e., during the three-year performance period, BlackRock has average annual Organic Revenue equal to $500 million and average annual Operating Margin, as adjusted, equal to 44.5%), then a participant will receive a number of shares equal to 100% of the base number of units granted to the participant. If during the three-year performance period, BlackRock has zero or negative average Organic Revenue and average Operating Margin, as adjusted, of 38.5% or less than, the participant will not be entitled to a distribution of any shares under their 2018 BPIP Award. 54BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Compensation Discussion and Analysis ●2: Our Compensation Program | | | | |
If during the three-year performance period, BlackRock were to deliver average Organic Revenue of $700 million and average Operating Margin, as adjusted, of 44.5%, then a recipient receiving a BPIP Award valued at $2.0 million in January 2018 would receive a distribution of 4,096 shares, or 116% of the base number of RSUs granted. Outlined below is an example of how this above-target level achievement would be calculated. JANUARY 2018 BPIP GRANT: EXAMPLE | | | | | BPIP Award Value For Performance Year 2017 and in anticipation of continued performance and long-term focus over a multi-year period | | $2,000,000 | | | Conversion Price The average of the high and low prices per share of common stock of BlackRock on January 16, 2018 (the grant date) | | $566.44 | | | Base number of units granted Determined by dividing the dollar value of the recipient’s award by the conversion price | | 3,531 ($2,000,000 / $566.44) | | | | Hypothetical Performance Results | | $700M | | Jan 1, 2018 to Dec 31, 2020(3-year) average Organic Revenue | | (i.e., above target) | | Jan 1, 2018 to Dec 31, 2020(3-year) average Operating Margin, as adjusted | | 44.5% (i.e., at target) | | | Resulting Award Payout (%) Based on Award Determination Matrix | | 116% | | | | Resulting Award Payout (Number of units) | | 4,096 | Base number of units granted x Award Payout (%) | | (3,531 x 116%) |
If maximum level performance is achieved, then a participant will receive the maximum number of shares (meaning that during the performance period, BlackRock delivered average Organic Revenue equal to or greater than $900 million and average Operating Margin, as adjusted, equal to or greater than 50.5%).The maximum number of shares a participant may receive under BPIP is equal to 165% of the base number of units. Performance-Based Stock Options BlackRock has a robust leadership plan that is reviewed regularly by the Compensation Committee and the full Board, including ongoing succession planning and development initiatives for the senior leadership team. In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. The Compensation Committee approved these grants in December 2017 in consultation with Semler Brossy, and following a comprehensive review of leadership and development plans, potential value outcomes, shareholder input and market trends.One-third of these performance-based stock options will vest on each of the fifth, sixth and seventh anniversaries of the date of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on the date of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth during the performance period is achieved. The term of the stock options is nine years. Consistent with the intent of these grants, if a participant voluntarily terminates employment for any reason, including retirement, all unvested awards are forfeited. The Compensation Committee believes that the stock options drive increased equity ownership for a select group of future leaders and create economic incentives that more closely align the recipients of the stock options with the original entrepreneurial spirit of BlackRock’s founders. The structure of these awards seeks to retain key participants with BlackRock for an extended period, recognizing their important contributions to growing the Company and their potential in leading it into the future. In concert with their regular annual compensation, these awards seek to maximally align participants with our shareholders over a sustained number of years. BLACKROCK, INC. 2018 PROXY STATEMENT 55
Compensation Determination Process The Compensation Committee structures the timing and process for determining individual NEO compensation so that compensation is appropriately aligned with the financial performance of BlackRock. This also ensures recognition of individual NEO leadership and operating contributions toward achieving our overall strategic priorities. | | | 1 | | STEP ONE I January-March SET GOALS AND OBJECTIVES | | | | | Review Budget/Set CEO Goals and Objectives At the start of each year, management reviews the annual budget with the Compensation Committee. The Compensation Committee and CEO establish financial and business goals and objectives. The Board is regularly updated on progress against the business goals and objectives, which provide the context for performance evaluations atyear-end. | | | | 2 | | STEP TWO I March-January of following year REVIEWYEAR-END FINANCIALS | | | | | ReviewYear-End Financials The Compensation Committee regularly meets with the CFO to review actual and projected financial information and reviews and verifies full-year financial information afteryear-end. Throughout the year, all members of the Board review strategic plans, financial and business results, talent development and succession planning, as well as other areas relevant to BlackRock’s performance. The Compensation Committee also reviews other measures of our financial, investment and operating performance, market intelligence on compensation and information about market conditions. | | | | 3 | | STEP THREEINovember-January of following year ASSESS PRELIMINARY PERFORMANCE | | | | | Review Peer Market Data In December, management reports on absolute and relative performance metrics compared to major competitors,year-over-year and budget. These metrics include growth in revenues, operating income, net income, operating margin and net new inflows of AUM and other quantitative and strategic measures. Review Consultant Reports on Compensation Our compensation consultant also provides an independent report on publicly disclosed financial and compensation information for certain publicly traded financial services companies to understand performance and trends in compensation among public asset managers. Review Preliminary NEO Performance / Discuss NEO Pay In December, during an executive session with the Compensation Committee, the CEO reviews the performance of all individual NEOs against business goals and objectives. During an executive session that excludes all members of management, thenon-management directors assess the performance of the CEO against business goals and objectives. | | | |
56BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Compensation Discussion and Analysis ●3: Compensation Determination Process | | | |  |
| | | 4 | | STEP FOURIJanuary of following year ASSESS FINAL PERFORMANCE AND DETERMINE COMPENSATION | | | | | Review Final NEO Performance In early January, the Compensation Committee reviews and confirms each NEO’s performance against individual and Company objectives based on the finalyear-end results. Approve Final Total Annual Cash Incentive Awards The Compensation Committee reviews and verifiesyear-end financial results and other performance metrics as well as external data for comparison. The Compensation Committee then determines final total annual incentive award amounts for each of our NEOs. The Compensation Committee determines annual cash incentive award amounts for the CEO and President utilizing the annual cash incentive award framework, based on financial performance, business strength and organizational strength, supported by performance measures. Approve BPIP Award Determination Matrix The Compensation Committee also determines equity awards made through BPIP. This timing allows the Compensation Committee to consider full-year individual NEO performance assessments along with full-year financial andnon-financial results in its final determination of compensation. The Compensation Committee also determines the Award Determination Matrix for the three-year BPIP performance cycle. In setting financial performance requirements for BPIP, the Compensation Committee considers BlackRock’s past performance and the current market environment. Compensation decisions are made on a total annual compensation basis, with consideration of each element of compensation, as described on pages 52 to 55. | | | |
Competitive Pay Positioning – Market Data Management engages McLagan Partners (“McLagan”), a compensation consultant that specializes in conducting proprietary compensation surveys and interpreting compensation trends. Management used McLagan surveys to evaluate BlackRock’s competitive position overall, as well as by functional business and by title and make comparisons on an individual NEO basis, where 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. Survey participants include both stand-alone, publicly traded asset management companies as well as a broader set of privately held or subsidiary asset management organizations for which publicly available compensation data is not available. Confidentiality obligations to McLagan and to its survey participants prevent BlackRock from disclosing the companies included in the surveys. The Compensation Committee 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. Role of the Compensation Consultant In 2017, the Compensation Committee continued to engage Semler Brossy for objective advice on compensation practices and the competitive landscape for the compensation of BlackRock’s executive officers. Semler Brossy reports directly to the Compensation Committee and interacts with BlackRock management when necessary and appropriate. Semler Brossy provides services only to the Compensation Committee 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 SEC and the Compensation Committee concluded that no conflict of interest exists that would prevent Semler Brossy from independently advising the Compensation Committee. A representative from Semler Brossy met with the Compensation Committee in formal Committee meetings and at key points throughout the year to provide objective advice to the Compensation Committee on existing and emerging compensation practices among financial services companies, as well as companies in the asset management sector. Peer Group Composition – Changes in 2017 The Compensation Committee, with assistance from Semler Brossy, regularly reviews the composition of our peer group to ensure the group continues to serve as an appropriate market reference for executive compensation purposes. In considering the composition of our peer group, the Compensation Committee considers companies that are in our industry or have similar lines of business, are competitors for our executive talent, are large, complex organizations with global reach and/or are similarly sized from a revenue and market cap perspective. During 2017, the Compensation Committee determined that the peer group should be updated BLACKROCK, INC. 2018 PROXY STATEMENT 57
| | | | | | | | | | | | | Compensation Discussion and Analysis ●3: Compensation Determination Process | | | | |
to more closely reflect our current scale, business and strategic priorities. Given that determination, in the fall of 2017 the Compensation Committee removed four companies whose market caps were below $10 billion (BlackRock’s market cap as of December 31, 2017 was $84 billion) and added the three new companies shown on the right of the chart below: 
As previously noted, the McLagan analyses, which include both publicly traded companies as well as private companies in a variety of industries and sectors, offer additional 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 the McLagan analyses. BlackRock does not engage in formal benchmarking in setting executive compensation levels. 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 BlackRock may be inherent in compensation programs. The Board reviews BlackRock’s executive compensation program annually to ensure that it is structured so as not to unintentionally promote excessive risk taking. As a result of this annual review, we believe that the compensation plans are appropriately structured and do not pose risks that could have a materially adverse effect on BlackRock. The Compensation Committee considers the following when evaluating whether employee compensation plans and policies encourage BlackRock employees to take unreasonable risks: Performance goals that are reasonable in light of past performance and market conditions; Longer-term expectations for earnings and growth; The base salary component of compensation does not encourage risk taking because it is a fixed amount; A greater portion of annual compensation is deferred at higher annual incentive award levels; and Deferred compensation is delivered in the form of equity, vests over time, and the value is therefore dependent on the future performance of BlackRock. 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 our 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 rewarded for engaging in high-risk transactions outside of established parameters. Our compensation practices reinforce the fundamentals of BlackRock’s business model in that they: Do not provide undue incentives for short-term planning or action toward short-term financial rewards; Do not reward unreasonable risk-taking; and Provide a reasonable balance between the risks that are inherent in the business of investment management, risk management and advisory services. The Company’s operating income, as adjusted, on which compensation is primarily based, does not include net investment income or gains/losses on BlackRock’s seed orco-investments. While BlackRock may make seed orco-investments in its various funds alongside clients, it does not engage in proprietary trading. 58BLACKROCK, INC. 2018 PROXY STATEMENT Peer group adjustments made in 2017 REMOVED Alliance Bernstein Eaton Vance Legg Mason Federated Investors - REMAINING FOR 2017 + Affiliated Managers Group Ameriprise Financial Bank of New York Mellon Franklin Resources Invesco Northern Trust State Street T. Rowe Price Group ADDED Charles Schwab Goldman Sachs Morgan Stanley New Peer Group effective 2017
| | | | | | | | | | | | | | | | | |
2017 NEO Compensation and Performance Summaries Linking Pay and Performance Here we provide 2017 compensation decisions for each NEO and a summary of his individual performance accomplishments relative to achieving BlackRock’s annual and long-term performance goals. | | | | | | | | | | | | | | | | | | | Laurence D. Fink Chairman and CEO | | | | 2017 Compensation | | | | | | | | Responsibilities: Mr. Fink develops and guides BlackRock’s long-term strategic direction to deliver value for clients and shareholders. He is responsible for senior leadership development and succession planning, defining and reinforcing BlackRock’s mission and culture, and engaging with key strategic clients, industry leaders, regulators and policy makers. | | | | (Thousands) | | | | | | | | | | | Base Salary | | $ | 900 | | | | | | | | Annual Incentive Award – Cash | | $ | 10,000 | | | | | | | | Annual Incentive Award – Equity | | $ | 4,600 | | | | | | | | Long-Term Incentive Award | | $ | 12,450 | | | | | | | | Total Annual Compensation | | $ | 27,950 | | | | | | | | | | | | | | | | |
| | | | | | | | | The Compensation Committee determined Mr. Fink’s total annual compensation based on an assessment of performance in alignment with the compensation structure outlined on pages 52 to 55. | | Based on BlackRock’s financial performance, strong business results and organizational improvement in 2017, the Compensation Committee determined to award Mr. Fink $27.95 million in total compensation, up 10% from his 2016 compensation. | | The Compensation Committee assessed Mr. Fink’s strategic leadership and partnership with the GEC and took into account the key performance factors outlined below. |
| | | | | | | | | | 2017 Key Accomplishments | | | | FINANCIAL PERFORMANCE | | | • | | Under Mr. Fink’s leadership, supported by his reputation as a thought leader for the broader financial services industry and the relationships he has built for BlackRock with institutions, governments and central banks around the world, BlackRock generated total net inflows of $367 billion in 2017, the strongest flows in BlackRock’s history. Total net inflows included long-term net inflows of $330 billion, representing organic asset growth of 7%. | | | • | | Long-term organic growth outperformed peers, demonstrating the strength of BlackRock’s diverse platform, global footprint, strategic relationships with clients and its differentiated ability to use technology to create solutions for clients. | | | • | | Total revenue increased 12% relative to 2016, primarily driven by base fee growth, as a result of strong organic growth and market appreciation, strong performance fees and continued momentum in our technology and risk management businesses. | | | • | | Operating income, as adjusted, increased 13% year-over-year and 2017 Operating Margin, as adjusted, of 44.1% expanded 40 basis points, even as BlackRock continued to invest in the business for future growth. | | | | | • | | Diluted Earnings Per Share, as adjusted, increased 17% year-over-year. | | | | | • | | BlackRock‘s 2017 total shareholder return of 38.2% including both stock price appreciation and dividend payout, exceeded our Peer Group average. |
BLACKROCK, INC. 2018 PROXY STATEMENT 59
| | | | | | | | | | | | | Compensation Discussion and Analysis ●4: 2017 NEO Compensation and Performance Summaries | | | | |
| | | | | | | LaurenceD. Fink, Continued | | | | | | | | | | BUSINESS STRENGTH | | | | | | • | | Mr. Fink’s strategic and talent leadership, with the partnership of Mr. Kapito, helped enable BlackRock’s active investments platform to deliver strong performance in 2017 and improved performance relative to peers. | | | • | | BlackRock demonstrated successful execution across several strategic initiatives, in-line with the Company’s long-term strategy, that have positioned the firm for future growth, including technology, factors/smart beta, ETFs and infrastructure. | | | • | | Mr. Fink’s focus on technology has elevated its use across the organization. BlackRock made significant progress in advancing its technology agenda, including evolving the Digital Wealth platform, implementing Aladdin Risk for Wealth Management and increasing reach with financial advisors through enhanced U.S. Wealth Advisory sales enablement technology capabilities. | | | • | | With Mr. Fink’s engagement, BlackRock increased market share with key clients and distributors, maintaining its #1 market share of ETF AUM and net flows globally and sustaining momentum across the Institutional platform with two consecutive years of organic asset growth. | | | • | | Under Mr. Fink’s guidance, BlackRock continued to drive its growth strategy through several tactical acquisitions and investments. BlackRock expanded its infrastructure platform with the acquisition of First Reserve’s Infrastructure Funds, continued to build its digital distribution capabilities with the acquisition of Cachematrix and a minority investment in Scalable Capital and reaffirmed its conviction for the Mexican market with BlackRock’s announcement of its agreement to acquire Citibanamex’s asset management business, which is expected to close in the second half of 2018. | | | | | ORGANIZATIONAL STRENGTH | | | | | | • | | Mr. Fink continued to drive the Company’s succession planning, improve the leadership bench, enhance the talent review process and proactively develop key talent. This included naming Rachel Lord as head of EMEA, David Blumer as head of BlackRock Alternative Investors, Mark McCombe as Head of Americas and Frank Cooper as Chief Marketing Officer. | | | • | | Under Mr. Fink’s leadership, as measured by BlackRock’s 2017 Employee Opinion Survey, employee engagement and enablement remains strong, with over 70% of employees showing positive scores in engagement, enablement and satisfaction. | | | • | | Additionally, Mr. Fink strengthened BlackRock’s focus on inclusion and diversity. BlackRock showed strong progress in ethnically diverse hiring and global female hiring during 2017 and is on track to meet or exceed firm wide 2020 diversity targets. Mr. Fink also oversaw the Company’s efforts to create functional and regional diversity progress reports to drive accountability and added two new diverse members to his executive team. | | | • | | Mr. Fink’s focus on formalizing and institutionalizing BlackRock’s culture throughout the organization drove the launch of Knowing BlackRock Core and the BlackRock Academies, unique learning platforms grounded in BlackRock’s “One BlackRock” culture and made available to all employees of the firm. |
60BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Compensation Discussion and Analysis ●4: 2017 NEO Compensation and Performance Summaries | | | | |
| | | | | | | | | | | | | | | | | | | Robert S. Kapito President | | | | 2017 Compensation | | | | | | | | Responsibilities: 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 his leadership, along with Mr. Goldstein, of the Global Operating Committee. He is also responsible for spearheading initiatives to drive investment performance and the results within each of BlackRock’s businesses. | | | | (Thousands) | | | | | | | | | | | Base Salary | | $ | 750 | | | | | | | | Annual Incentive Award – Cash | | $ | 8,125 | | | | | | | | Annual Incentive Award – Equity | | $ | 3,514 | | | | | | | | Long-Term Incentive Award | | $ | 9,626 | | | | | | | | Total Annual Compensation | | $ | 22,015 | | | | | | | | | | | | | | | | |
| | | | | | | | | The Compensation Committee determined Mr. Kapito’s total annual compensation in alignment with the compensation structure on pages 52 to 55. | | The Compensation Committee awarded Mr. Kapito $22.02 million in total compensation for 2017, up 10% from his 2016 compensation. | | The Compensation Committee assessed Mr. Kapito’s leadership and took into account the key performance factors outlined below. |
| | | | | | | | | | 2017 Key
Accomplishments | | | | | | Mr. Kapito partnered with Mr. Fink to help lead the BlackRock Global Executive Committee and deliver all of the financial results outlined in the 2017 performance section on page 48. | | | | | Mr. Kapito’s operational responsibility for BlackRock’s distribution channels and client-facing businesses,
including significant relationships with key intermediary partners, contributed to BlackRock’s net inflows
of $367 billion in 2017, including long-term net inflows of $330 billion, representing organic growth of
7% and driving strong Organic Revenue growth for the firm. These successes helped support
BlackRock’s outperformance relative to peers in capturing long-term asset flows. | | | | | He providedday-to-day oversight of the business that was instrumental in achieving a 44.1%
Operating Margin, as adjusted, expanding 40 basis points from 2016. | | | | | | Mr. Kapito maintained responsibility for all of the firm’s investments, distribution and technology
businesses, thereby overseeing continued growth in most of BlackRock’s key franchises (particularly
ETFs and Index Investments, Global Fixed Income andAladdin). | | | | | | Under his direct leadership, helped by strategic oversight by Mr. Fink, BlackRock’s investment teams
generated strong long-term performance: | | | | | | • For taxable Fixed Income, 73% and 90% of assets were above benchmark or peer median for the3-
and5-year periods, respectively. | | | | | | • Fortax-exempt Fixed Income, 68% and 72% of assets were above benchmark or peer median for
the3- and5-year periods, respectively. | | | | | | • For Fundamental Equity, 72% and 73% of assets were above benchmark or peer median for the3-
and5-year periods, respectively. | | | | | | • For Systematic Equity, 87% and 90% of assets were above benchmark or peer median for the3- and
5-year periods, respectively. | | | | | | Mr. Kapito also played a pivotal role in overseeing the Company’s response to regulatory changes,
including MiFID II, and the continued evolution and preparations taken in our businesses in
connection with the Department of Labor’s Fiduciary Rule. Mr. Kapito transformed the Active Equities platform, in partnership with Mark Wiseman, through the
buildout of the internal equity research capabilities and merging together two distinct cultures
(fundamental and systematic) to produce better results for clients and BlackRock. He increased BlackRock’s focus on inclusion and diversity. BlackRock showed strong progress in
ethnically diverse hiring and global female hiring during 2017 and is on track to meet or exceed firm
wide 2020 diversity targets. Mr. Kapito exemplifies BlackRock culture and Principles internally through
sponsorship of key programs, support of the growth and development of our employee networks and
diversity initiatives. |
BLACKROCK, INC. 2018 PROXY STATEMENT 61
| | | | | | | | | | | | | Compensation Discussion and Analysis ●4: 2017 NEO Compensation and Performance Summaries | | | | |
| | | | | | | | | | | | | | | | | | | Robert L. Goldstein COO | | | | 2017 Compensation | | | | | | | | Responsibilities: As COO, Mr. Goldstein is responsible for ensuring that the Company’s investment, client, risk analytics and technology functions have the necessary connectivity, coordination and operating processes in place to succeed. Mr. Goldstein also leads theBlackRock Solutions business, delivering investment and risk analytics technology to clients. Along with Mr. Kapito, Mr. Goldsteinco-chairs the BlackRock Global Operating Committee. With Mr. Shedlin, he alsoco-chairs the Planning, Budgeting and Alignment Committee, which is responsible for developing the firm’s budget, evaluating new initiatives aimed at driving growth and achieving strategic objectives of the firm. | | | | (Thousands) | | | | | | | | | | | Base Salary | | $ | 500 | | | | | | | | Annual Incentive Award – Cash | | $ | 3,275 | | | | | | | | Annual Incentive Award – Equity | | $ | 2,325 | | | | | | | | Long-Term Incentive Award | | $ | 2,100 | | | | | | | | Total Annual Compensation1 | | $ | 8,200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | 2017 Key Accomplishments | | | | Mr. Goldstein continued to deliver on critical priorities and make key contributions to help drive success for BlackRock in 2017, including: | | | • Growing tech and tech-enabled revenue; | | | • Leading the firm-wide business review and budgeting process; | | | • Effectively managing risk and driving efficiencies; and | | | | | • Inspiring and sponsoring the next generation of leaders at BlackRock. | | | | | | | | Mr. Goldstein continued to partner with Mr. Kapito to lead BlackRock’s Global Operating Committee, as well as led theC-20 (COO Executive Committee), creating an inclusive environment in service of advancing the business agenda. Under his leadership, BlackRock’s tech agenda and businesses continued to demonstrate record- setting, double-digit revenue growth, while also expanding capabilities. Mr. Goldstein continued to execute upon and drive growth within Aladdin Risk for Wealth Management, as well as launched the Digital Wealth organization to seize opportunities in transformation of the wealth landscape. Mr. Goldstein drove the firm’s strategic growth initiatives in 2017, including guiding organization and planning and ensuring appropriate allocation of resources to drive success. He continued to lead and streamline the business review and budgeting processes, while reducing organizational tax and driving connectivity. Mr. Goldstein ensured cross-functional priorities had the appropriate focus and leadership, including projects related to index and market data, BlackRock’s global footprint and BlackRock’s response to MiFiD II. Mr. Goldstein drove operating leverage and efficiency in 2017, resulting in reduced trade processing costs, among other enhancements. Mr. Goldstein also contributed meaningfully to BlackRock’s overall diversity efforts by building a diverse technology talent pipeline and leading the business review process, which includes an accountability mechanism for increasing under-represented populations across the firm. | | 1 In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see“Performance-Based Stock Options” on page 55. |
62BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Compensation Discussion and Analysis ●4: 2017 NEO Compensation and Performance Summaries | | | | |
| | | | | | | | | | | | | | | | | | | Mark S. McCombe Head of Americas | | | | 2017 Compensation | | | | | | | | Responsibilities: As Head of Americas, Mr. McCombe is responsible for driving growth in BlackRock’s businesses in the US, Canada and Latin America and Iberia. He oversees key client relationships in the region and ensures greater connectivity to stay ahead of regulatory, technology and client preference changes in the Americas. He also oversees other distribution businesses in the Americas, including North American Institutional clients,Aladdin and Digital Wealth in the Americas. | | | | (Thousands) | | | | | | | | | | | Base Salary | | $ | 500 | | | | | | | | Annual Incentive Award – Cash | | $ | 2,725 | | | | | | | | Annual Incentive Award – Equity | | $ | 1,775 | | | | | | | | Long-Term Incentive Award | | $ | 1,950 | | | | | | | | Total Annual Compensation1 | | $ | 6,950 | | | | | | | | | | | | | | | | | | 2017 Key Accomplishments | | | | Mr. McCombe was appointed Head of Americas in January 2017. In this role, he has led the integration of the Americas businesses and drove cross-Americas dialogue on key opportunities and threats. He oversaw strong growth across the Americas franchise, with $300 billion of net inflows, representing 9% organic growth, in 2017. During the first part of the year, Mr. McCombe continued to lead BlackRock Alternative Investors where he built out an Alternatives vision with a5-year strategic growth plan and drove commercial impact with record Alternatives capital raising and improved investment performance. Mr. McCombe played a leadership role in advancing BlackRock’s culture and diversity agenda through executive sponsorship of a number of firm-wide programs, including serving as the executive sponsor of the Leadership Excellence and Development (LEAD) program, a firm initiative focused on developing diverse high performing Vice Presidents, and an executive sponsor of the BlackRock OUT & Allies network; and also served as Chairman of the Toigo Foundation, an organization supporting diverse MBA candidates in securing elevated roles in financial services. | 1 In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see “Performance-Based Stock Options” on page 55. |
BLACKROCK, INC. 2018 PROXY STATEMENT 63
| | | | | | | | | | | | | Compensation Discussion and Analysis ●4: 2017 NEO Compensation and Performance Summaries | | | | |
| | | | | | | | | | | | | Gary S. Shedlin CFO | | | | 2017 Compensation | | | | | | | | Responsibilities: As CFO, Mr. Shedlin is responsible for managing BlackRock’s overall financial condition, including resource and capital allocation and expense discipline. He is also responsible for overseeing all corporate finance functions, including financial planning and analysis, accounting, finance operations and controls, tax, treasury, investor relations and corporate development. Mr. Shedlin alsoco-chairs, along with Mr. Goldstein, the Planning, Budgeting and Alignment Committee, which is responsible for developing the firm’s budget, evaluating new initiatives aimed at driving growth and achieving strategic objectives of the firm. | | | | (Thousands) | | | | | | | | | | | Base Salary | | $ | 500 | | | | | | | | Annual Incentive Award – Cash | | $ | 2,700 | | | | | | | | Annual Incentive Award – Equity | | $ | 1,750 | | | | | | | | Long-Term Incentive Award | | $ | 1,850 | | | | | | | | Total Annual Compensation1 | | $ | 6,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 Key Accomplishments | | | | During 2017, Mr. Shedlin continued to make key contributions in support of the Company’s priorities and resource deployment and managing BlackRock’s outreach with key investors and financing counterparties. Mr. Shedlin provided critical oversight and planning related to the financial impact of a number of regulatory and fiscal changes, including Brexit, MiFID II and U.S. Tax Reform. Mr. Shedlin continued to optimize BlackRock’s balance sheet, successfully refinancing the Company’s $700 million 2017 maturity, and capital management strategy by executing a consistent and predictable dividend and share repurchase policy. He also oversaw the execution of several targeted transactions to drive future growth. BlackRock expanded its infrastructure platform with the acquisition of First Reserve’s Infrastructure Funds, continued to build on its digital distribution capabilities with the acquisition of Cachematrix and a minority investment in Scalable Capital and reaffirmed the conviction for the Mexican market with BlackRock’s announcement of its agreement to acquire Citibanamex’s asset management business, which is expected to close in the second half of 2018. Mr. Shedlin played a key role in driving the Company’s diversity efforts, including hiring and elevating a number of female finance executives. | 1 In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. For more information regarding these performance-based stock options, see“Performance-Based Stock Options” on page 55. |
64BLACKROCK, INC. 2018 PROXY STATEMENT
Compensation Policies and Practices Summary of Executive Compensation Practices Our compensation program reflects our commitment to responsible financial and risk management and is exemplified by the following policies and practices: 
BLACKROCK, INC. 2018 PROXY STATEMENT 65
| | | | | | | | | | | | | Compensation Discussion and Analysis ●5: Compensation Policies and Practices | | | | |
Stock Ownership Guidelines Our stock ownership guidelines require the Company’s GEC members to own and maintain a target number of shares (i.e., shares owned outright, not including unvested shares or unexercised stock options), the dollar amount of which is set out below. Until these stock ownership guidelines are met, GEC members must retain 50% of the net(after-tax) shares delivered from BlackRock equity awards. The Compensation Committee monitors the progress made by our NEOs in achieving their stock ownership guidelines and, if circumstances warrant, may modify the guidelines and/or time frames for one or more of our NEOs. As of December 31, 2017, all of our NEOs exceeded the stock ownership guidelines. $10 million for the CEO; $5 million for the President; and $2 million for all other GEC members. Clawback Policy All performance-based compensation (including annual and long-term incentive awards and all equity compensation) is subject to BlackRock’s Clawback Policy and is subject to recoupment if an employee is found to have engaged in fraud or willful misconduct that caused the need for a significant restatement of BlackRock’s financial statements. Benefits BlackRock provides medical, dental, life and disability benefits and retirement savings vehicles in which all eligible employees participate. Our NEOs also have the option to participate in a comprehensive health exam offered to our executives. BlackRock makes contributions to 401(k) accounts of our 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 our NEOs’ annual incentive awards pursuant to the Amended and Restated BlackRock, Inc. Voluntary Deferred Compensation Plan (the “VDCP”). Severance Our 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 a lump sum cash payment equal to two weeks of salary 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 our NEOs, such as financial planning, investment opportunities and personal use of travel services are considered a reasonable part of the executive compensation program. A financial planning perquisite is offered to our NEOs. In 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. Our 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 our NEOs for business and personal use. The compensation attributed to each of our NEOs for 2017 for perquisites is described in footnote (4) to the“2017 Summary Compensation Table” on page 68. 66BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Compensation Discussion and Analysis ●5: Compensation Policies and Practices | | | |  |
Tax Reimbursements BlackRock did not provide tax reimbursements for any perquisites or other compensation paid to our NEOs. Tax Deductibility of Compensation Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation paid to any executive officers subject to Section 162(m) (the “Covered Employees”) to $1 million during any fiscal year unless such compensation qualifies as “performance-based” (although this exception is severely limited beginning in 2018, as described below). Historically, the Company administered its incentive compensation arrangements in a manner that would comply with these tax rules. However, the Compensation Committee maintained the flexibility to paynon-deductible incentive compensation if it determines it is in the best interest of the Company and its shareholders. Separately from determining the total bonus pool in respect of calendar year 2017, the Compensation Committee established the method for calculating the Section 162(m) compliant aggregate cap (the “Aggregate 162(m) Cap”) for annual incentive awards to each of our NEOs pursuant to the shareholder-approved Amended and Restated BlackRock, Inc. 1999 Annual Incentive Performance 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”), was calculated in accordance with the requirements of Section 162(m). Neither the Aggregate 162(m) Cap nor the Individual 162(m) Caps served as a basis for the Compensation Committee’s compensation decisions for our NEOs; instead, these caps served to establish a ceiling on the amount of annual incentive awards which the Compensation Committee can award to the NEOs on a tax deductible basis. In determining final awards for each NEO, the Compensation Committee ensured that such awards do not exceed the executive officer’s Individual 162(m) Cap. The Tax Cuts and Jobs Act, enacted on December 22, 2017, substantially modifies Section 162(m) and, among other things, eliminates the performance-based exception to the $1 million deduction limit effective as of January 1, 2018. As a result, beginning in 2018, compensation paid to Covered Employees in excess of $1 million will generally be nondeductible, whether or not it is performance-based. In addition, beginning in 2018, the Covered Employees will include any individual who served as the CEO or CFO at any time during the taxable year and the three other most highly compensated officers (other than the CEO and CFO) for the taxable year, and once an individual becomes a Covered Employee for any taxable year beginning after December 31, 2016, that individual will remain a Covered Employee for all future years, including following any termination of employment. The Tax Cuts and Jobs Act includes a transition relief rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Company may avail itself of this transition relief rule. However, because of uncertainties as to the application and interpretation of the transition relief rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition relief rule. Moreover, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals in the best interest of the Company and its shareholders, the Compensation Committee does not limit its actions with respect to executive compensation to preserve deductibility under Section 162(m) if the Compensation Committee determines that doing so is in the best interests of the Company and its shareholders. BLACKROCK, INC. 2018 PROXY STATEMENT 67
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
Summary of Executive Compensation Tables The following 20152017 Summary Compensation Table sets forthcontains information concerning compensation provided by BlackRock for the years indicated to the NEOs. Pursuant to SEC rules, the compensation table below includes only those equity-based awards granted in a particular year and not any awards granted afteryear-end, even if awarded for services in that year. It additionally discloses any cash compensation earned in a particular year, even if such payments are made afteryear-end. 20152017 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary
($) | | | Bonus
($)(1) | | | Stock Awards (Fair Value of
Awards) ($)(2) | | | Performance-
Based
Option Awards
(Fair Value
Awards) ($)(3) | | | All Other
Compensation
($)(4) | | | Total
($) | | | | | | | | | | Laurence D. Fink | | | 2017 | | | $ | 900,000 | | | $ | 10,000,000 | | | $ | 16,599,733 | | | | – | | | | $243,500 | | | $ | 27,743,233 | | Chairman and | | | 2016 | | | $ | 900,000 | | | $ | 8,000,000 | | | $ | 16,379,581 | | | | – | | | | $193,250 | | | $ | 25,472,831 | | Chief Executive Officer | | | 2015 | | | $ | 900,000 | | | $ | 8,720,000 | | | $ | 15,979,630 | | | | – | | | | $193,000 | | | $ | 25,792,630 | | | | | | | | | | Robert S. Kapito | | | 2017 | | | $ | 750,000 | | | $ | 8,125,000 | | | $ | 12,834,775 | | | | – | | | | $274,675 | | | $ | 21,984,450 | | President | | | 2016 | | | $ | 750,000 | | | $ | 6,500,000 | | | $ | 12,149,508 | | | | – | | | | $224,425 | | | $ | 19,623,933 | | | | | | 2015 | | | $ | 750,000 | | | $ | 7,085,000 | | | $ | 12,279,750 | | | | – | | | | $224,175 | | | $ | 20,338,925 | | | | | | | | | | Robert L. Goldstein | | | 2017 | | | $ | 500,000 | | | $ | 3,275,000 | | | $ | 3,999,470 | | | $ | 10,460,528 | | | | $ 54,500 | | | $ | 18,289,498 | | Senior Managing Director and | | | 2016 | | | $ | 500,000 | | | $ | 2,850,000 | | | $ | 3,899,900 | | | | – | | | | $ 49,425 | | | $ | 7,299,325 | | Chief Operating Officer | | | 2015 | | | $ | 500,000 | | | $ | 2,850,000 | | | $ | 4,024,823 | | | | – | | | | $ 23,723 | | | $ | 7,398,546 | | | | | | | | | | Mark S. McCombe | | | 2017 | | | $ | 500,000 | | | $ | 2,725,000 | | | $ | 3,374,353 | | | $ | 10,460,528 | | | | $ 49,675 | | | $ | 17,109,556 | | Senior Managing Director and | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Head of Americas(5) | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | Gary S. Shedlin | | | 2017 | | | $ | 500,000 | | | $ | 2,700,000 | | | $ | 3,249,781 | | | $ | 7,845,347 | | | | $ 18,500 | | | $ | 14,313,628 | | Senior Managing Director and | | | 2016 | | | $ | 500,000 | | | $ | 2,350,000 | | | $ | 3,149,532 | | | | – | | | | $ 18,250 | | | $ | 6,017,782 | | Chief Financial Officer | | | 2015 | | | $ | 500,000 | | | $ | 2,350,000 | | | $ | 3,224,672 | | | | – | | | | $ 18,000 | | | $ | 6,092,672 | |
| (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 20162018 (for fiscal year 2015)2017) was based on subjective criteria, as more fully described on pages 4146 to 4267 of the “Compensation“Compensation Discussion and Analysis”Analysis”, and was less than the portion of the performance-based bonus pool available for awards to each NEO under the Performance Plan. |
| | As described on page 4050 of the “Compensation“Compensation Discussion and Analysis”, on January 19, 2016,16, 2018, Messrs. Fink, Kapito, Goldstein, KushelMcCombe and Shedlin were awarded RS or RSUs as part of their discretionary annual bonuses for the 20152017 fiscal year. In accordance with FASB ASC Topic 718, these awards had grant date values of $4,095,000, $3,037,500, $1,900,000, $1,540,000$4,600,000, $3,514,000, $2,325,000, $1,775,000 and $1,400,000,$1,750,000, respectively, based on the average of the high and low prices per share of BlackRock common stock on January 19, 2016,16, 2018, which was calculated to be $296.12.$566.44. Additionally, Messrs. Fink, Kapito, Goldstein, KushelMcCombe and Shedlin received discretionary BPIP awardsAwards consisting of performance-based RSU awards with grant date values of $12,285,000, $9,112,500, $2,000,000, $1,890,000$12,450,000, $9,626,000, $2,100,000, $1,950,000 and $1,750,000,$1,850,000, respectively. The base number of units granted pursuant to BPIP awardsAwards was determined by dividing the individual’s award value by the average of the high and low prices per share of BlackRock common stock on January 19, 2016.16, 2018. |
| (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(14) to the consolidated financial statements in our 2015 Form 10-K.10-K filed on February 28, 2018. The amount included with respect to the BPIP awardsAwards granted in January 20152017 is based on the grant date fair value assuming target level of performance. If maximum level of performance had been assumed, the grant date fair value of the BPIP awardsAwards would have been (i) $19,774,757$20,542,169 for Mr. Fink, (ii) $15,195,984$15,882,687 for Mr. Kapito, (iii) $5,774,357 for Mr. Hallac, (iv) $3,299,633$3,464,406 for Mr. Goldstein, (v) $3,118,077(iv) $3,216,761 for Mr. Kushel,McCombe, and (vi) $2,969,532(v) $3,052,039 for Mr. Shedlin. For Mr. Shedlin, the 2013 awards represent RSUs granted on May 29, 2013. 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 mirrored the schedule on which the forfeited awards would have vested had Mr. Shedlin remained with his prior employer. |
| (3) | $7,908,750In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. Amounts reflect the grant date fair value of performance-based option awards made during the calendar year as determined pursuant to FASB ASC Topic 718. For complete valuation assumptions of the amount shown for Mr. Hallac represents an amount paid to Mr. Hallac’s estate in February 2016 in respect of his servicesawards, see Note (14) to the Company and has been included here because it was paid following his passing. consolidated financial statements in our Form10-K filed on February 28, 2018.
|
| (4) | For each of the NEOs, $18,000$18,500 was attributable to contributions made by BlackRock under itstax-qualified defined contribution (401(k)) plan in 2015.2017. In 2017, $4,825 was attributable to an executive health benefit used by Mr. Goldstein. For Messrs. Fink, Kapito, Hallac, Goldstein, KushelMcCombe and Shedlin, $0, $31,175, $31,175, $5,723, $31,175 and $0, respectively, was attributable to financial planning |
| services. In 2015, $175,0002017, $225,000 was attributable to personal use by each of Messrs. Fink and Kapito, respectively, of company-provided aircraft services. These amounts reflect the incremental cost to BlackRock to provide the aircraft services. Aircraft incremental cost is based on, as applicable, (i) variable operating cost per flight hour for the BlackRock corporate aircraft (including fuel and variable maintenance expenses) |
68BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
| plus any trip-specific incremental costs (such as crew expenses, catering expenses and fees associated with landing, parking and flight planning) or (ii) actual charter cost, in each case, less reimbursement received from the NEO. Messrs. Fink and Kapito are required by the Board to utilize these airplane services for all business and personal travel in the interest of protecting their personal security. For more information regarding perquisites, see “—Compensation Discussion and Analysis – Additional Details“Perquisites.” on Compensation Policies and Practices.”page 66. No nonqualified deferred compensation earnings were determined to be above-market. None of the NEOs participate in any BlackRock-sponsored defined benefit pension plans. |
(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. GoldsteinMcCombe was not a named executive officer in 2013.an NEO prior to 2017. |
(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. |
20152017 Grants of Plan-Based Awards
The following table sets forth information concerning non-equity and equity incentive plan-based compensation provided by BlackRock in 20152017 to our NEOs. | | | | | | | | | | | | Estimated Future Payouts Under Equity
Incentive Plan Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | All Other
Stock Awards:
Number of Shares
or Units
(#) | | | Exercise or
Base Price
of Option
Awards ($/share) | | | Grant Date
Fair Value
of Stock
and Option
Awards($)(5) | | | | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | | Laurence D. Fink | | | 1/16/2015 | | | | 1/13/2015 | (2) | | | | | | | | | 11,618 | | | $ | 3,994,907 | | | | 1/17/2017 | | | | 1/11/2017 | (2) | | | | | | | | | 11,060 | | | | | $ | 4,149,933 | | | | | | | 1/17/2017 | | | | 1/11/2017 | (3) | | | – | | | | 33,180 | | | | 54,747 | | | | | | | $ | 12,449,800 | | | | | 1/16/2015 | | | | 1/13/2015 | (3) | | 0 | | | | 34,854 | | | | 57,509 | | | | | $ | 11,984,722 | | | Robert S. Kapito | | | 1/16/2015 | | | | 1/13/2015 | (2) | | | | | | | | | 8,928 | | | $ | 3,069,937 | | | | 1/17/2017 | | | | 1/11/2017 | (2) | | | | | | | | | 8,552 | | | | | $ | 3,208,881 | | | | | 1/16/2015 | | | | 1/13/2015 | (3) | | 0 | | | | 26,784 | | | | 44,193 | | | | | $ | 9,209,812 | | | | 1/17/2017 | | | | 1/11/2017 | (3) | | | – | | | | 25,654 | | | | 42,329 | | | | | | | $ | 9,625,894 | | Charles S. Hallac | | | 1/16/2015 | | | | 1/13/2015 | (2) | | | | | | | | | 9,669 | | | $ | 3,324,734 | | | | | | 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 | | | | 1/17/2017 | | | | 1/11/2017 | (2) | | | | | | | | | 5,063 | | | | | $ | 1,899,739 | | | | | 1/16/2015 | | | | 1/13/2015 | (3) | | 0 | | | | 5,816 | | | | 9,596 | | | | | $ | 1,999,861 | | | | 1/17/2017 | | | | 1/11/2017 | (3) | | | – | | | | 5,596 | | | | 9,233 | | | | | | | $ | 2,099,731 | | J. Richard Kushel | | | 1/16/2015 | | | | 1/13/2015 | (2) | | | | | | | | | 4,478 | | | $ | 1,539,783 | | | | | | | | 12/4/2017 | | | | 12/4/2017 | (4) | | | – | | | | 108,190 | | | | 108,190 | | | | | | 513.50 | | | $ | 10,460,528 | | | Mark S. McCombe | | | | 1/17/2017 | | | | 1/11/2017 | (2) | | | | | | | | | 3,797 | | | | | $ | 1,424,710 | | | | | | 1/17/2017 | | | | 1/11/2017 | (3) | | | – | | | | 5,196 | | | | 8,573 | | | | | | | $ | 1,949,643 | | | | | | | 12/4/2017 | | | | 12/4/2017 | (4) | | | – | | | | 108,190 | | | | 108,190 | | | | | | 513.50 | | | $ | 10,460,528 | | | | | 1/16/2015 | | | | 1/13/2015 | (3) | | 0 | | | | 5,496 | | | | 9,068 | | | | | $ | 1,889,827 | | | Gary S. Shedlin | | | 1/16/2015 | | | | 1/13/2015 | (2) | | | | | | | | | 4,144 | | | $ | 1,424,935 | | | | 1/17/2017 | | | | 1/11/2017 | (2) | | | | | | | | | 3,731 | | | | | $ | 1,399,946 | | | | | 1/16/2015 | | | | 1/13/2015 | (3) | | 0 | | | | 5,234 | | | | 8,636 | | | | | $ | 1,799,737 | | | | 1/17/2017 | | | | 1/11/2017 | (3) | | | – | | | | 4,930 | | | | 8,134 | | | | | | | $ | 1,849,835 | | | | | | | 12/4/2017 | | | | 12/4/2017 | (4) | | | – | | | | 81,142 | | | | 81,142 | | | | | | 513.50 | | | $ | 7,845,347 | |
| (1) | Grant date is the date on which approved award values excluding options were converted to a number of RSs or RSUs based on the average of the high and low prices of BlackRock common stock on that date. |
| (2) | These January 16, 201517, 2017 awards represent grants of RSUs/RSRSUs awarded to Messrs. Fink, Kapito, Hallac, Goldstein, KushelMcCombe and Shedlin as part of their 20142016 bonus awards and represent the stock portion of such annual bonuses. These awards vestone-third on each of the first three anniversaries of January 31, 2015.2017. At the time of vesting, the NEOs are entitled to payment of accrued dividends with respect to the shares underlying the vested RSUs/RS. |
| (3) | These January 16, 201517, 2017 awards represent BPIP awardsAwards granted to Messrs. Fink, Kapito, Hallac, Goldstein, KushelMcCombe and Shedlin in respect of services performed in 2014.2016. To determine the base number of RSUs comprising each BPIP award,Award, the award value was divided by the grant price ($343.855)375.22). The grant price represents an average of the high and low price of BlackRock common stock on January 16, 201517, 2017 (two trading days following earnings release for the fourth quarter of 2014)2016). The BPIP awardsAwards will be eligible to vest on January 31, 2018,2020, subject to the Company’s attainment of the applicable financial targets during the three-year performance period commencing on January 1, 20152017 and ending on December 31, 2017.2019. The number of shares of common stock each NEO will receive upon settlement of the award will be equal to the base number of RSUs, multiplied by a percentage determined by application of the award determination matrix set forth in the award agreement. The percentage multiplier is determined by the Company’s average annual Operating Margin, as adjusted, and Organic Revenue during the performance period. If performance is below the minimum thresholds set forth on the award determination matrix for both performance metrics, the award payout will be zero. If the Company attains the maximum (or greater) level of performance for both performance metrics, the award payout will be equal to 165% of the base number. Performance at target would result in the NEO receiving 100% of the base number. |
| (4) | In the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these awards to be part of our regular annual compensation determinations for 2017. These awards represent performance-based option awards granted to Messrs. Goldstein, McCombe and Shedlin in connection with the strategic initiative.One-third of these performance-based stock options will vest on each of the fifth, sixth and seventh anniversaries of the date of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on the date of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth during the performance period is achieved. The term of the stock options is nine years. Consistent with the intent of these grants, if a participant voluntarily terminates employment for any reason, including retirement, all unvested awards are forfeited. |
| (5) | Reflects the grant date fair value of awards as determined pursuant to FASB ASC Topic 718. For complete valuation assumptions of the awards, see Note 14(14) to the consolidated financial statements in our 20152017 Form10-K. The amount included with respect to the BPIP awardsAwards is based on the grant date fair value assuming target level of performance. The amount included with respect to the performance-based option awards is based on the grant date fair value assuming the performance hurdles are achieved. |
2015 Outstanding Equity Awards at Fiscal Year-EndBLACKROCK, INC. 2018 PROXY STATEMENT 69
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name
| | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Option
Exercise
Price
($) | | | 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) | | Laurence D. Fink
| | | 1/20/2012 | | | | — | | | | — | | | | — | | | | 32,766 | (3) | | $ | 11,157,478 | | | | | 1/18/2013Summary of Executive Compensation Tables | | | | — | | | | — | | | | — | | | | 10,962 | (2) | | $ | 3,732,780 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 37,472 | (3) | | $ | 12,759,965 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 18,596 | (2) | | $ | 6,332,310 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 24,322 | (3) | | $ | 8,282,127 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 11,618 | (2) | | $ | 3,956,161 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 39,385 | (4) | | $ | 13,411,380 | | Robert S. Kapito
| | | 1/20/2012 | | | | — | | | | — | | | | — | | | | 26,213 | (3) | | $ | 8,926,051 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 7,981 | (2) | | $ | 2,717,690 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 29,583 | (3) | | $ | 10,073,603 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 14,182 | (2) | | $ | 4,829,255 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 19,201 | (3) | | $ | 6,538,325 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 8,928 | (2) | | $ | 3,040,163 | | | | | 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 | | | | | 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 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 1,988 | (2) | | $ | 676,954 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 16,566 | (3) | | $ | 5,641,054 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 3,918 | (2) | | $ | 1,334,157 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 8,960 | (3) | | $ | 3,051,059 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 5,889 | (2) | | $ | 2,005,322 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 6,572 | (4) | | $ | 2,237,897 | | J. Richard Kushel
| | | 1/20/2012 | | | | — | | | | — | | | | — | | | | 19,659 | (3) | | $ | 6,694,283 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 1,558 | (2) | | $ | 530,530 | | | | | 1/18/2013 | | | | — | | | | — | | | | — | | | | 17,750 | (3) | | $ | 6,044,230 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 3,108 | (2) | | $ | 1,058,336 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 8,832 | (3) | | $ | 3,007,473 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 4,478 | (2) | | $ | 1,524,849 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 6,210 | (4) | | $ | 2,114,629 | | Gary S. Shedlin
| | | 5/29/2013 | | | | — | | | | — | | | | — | | | | 2,372 | (5) | | $ | 807,713 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 2,508 | (2) | | $ | 854,024 | | | | | 1/17/2014 | | | | — | | | | — | | | | — | | | | 7,680 | (3) | | $ | 2,615,194 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 4,144 | (2) | | $ | 1,411,115 | | | | | 1/16/2015 | | | | — | | | | — | | | | — | | | | 5,914 | (4) | | $ | 2,013,835 | |
2017 Outstanding Equity Awards at FiscalYear-End | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Option Awards | | | Stock Awards | | Name | | Grant
Date | | | Equity Incentive Plan
Awards: Number of
Securities Underlying
Unexercised Unearned
Options (#) | | | 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 | | | 1/17/2014 | | | | – | | | | – | | | | – | | | | 24,322 | (2) | | $ | 12,494,455 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 3,873 | (3) | | $ | 1,989,599 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 38,165 | (4) | | $ | 19,605,742 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 9,219 | (3) | | $ | 4,735,892 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 45,219 | (4) | | $ | 23,229,452 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 11,060 | (3) | | $ | 5,681,633 | | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 39,484 | (4) | | $ | 20,283,326 | | Robert S. Kapito | | | 1/17/2014 | | | | – | | | | – | | | | – | | | | 19,201 | (2) | | $ | 9,863,746 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 2,976 | (3) | | $ | 1,528,801 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 29,328 | (4) | | $ | 15,066,087 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 6,838 | (3) | | $ | 3,512,749 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 33,541 | (4) | | $ | 17,230,347 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 8,552 | (3) | | $ | 4,393,248 | | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 30,528 | (4) | | $ | 15,682,539 | | Robert L. Goldstein | | | 1/17/2014 | | | | – | | | | – | | | | – | | | | 8,960 | (2) | | $ | 4,602,842 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 1,963 | (3) | | $ | 1,008,413 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 6,368 | (4) | | $ | 3,271,305 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 4,278 | (3) | | $ | 2,197,651 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 7,361 | (4) | | $ | 3,781,419 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 5,063 | (3) | | $ | 2,600,914 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 6,659 | (4) | | $ | 3,420,795 | | | | | | 12/4/2017 | | | | 108,190 | | | | 513.5 | | | | 12/4/2026 | (5) | | | – | | | | – | | Mark S. McCombe | | | 1/17/2014 | | | | – | | | | – | | | | – | | | | 6,144 | (2) | | $ | 3,156,234 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 1,212 | (3) | | $ | 622,617 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 4,457 | (4) | | $ | 2,289,605 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 3,208 | (3) | | $ | 1,647,982 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 6,073 | (4) | | $ | 3,119,761 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 3,797 | (3) | | $ | 1,950,557 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 6,183 | (4) | | $ | 3,176,269 | | | | | | 12/4/2017 | | | | 108,190 | | | | 513.5 | | | | 12/4/2026 | (5) | | | – | | | | – | | Gary S. Shedlin | | | 1/17/2014 | | | | – | | | | – | | | | – | | | | 7,680 | (2) | | $ | 3,945,293 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 1,382 | (3) | | $ | 709,947 | | | | | 1/16/2015 | | | | – | | | | – | | | | – | | | | 5,731 | (4) | | $ | 2,944,072 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 3,152 | (3) | | $ | 1,619,214 | | | | | 1/19/2016 | | | | – | | | | – | | | | – | | | | 6,440 | (4) | | $ | 3,308,292 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 3,731 | (3) | | $ | 1,916,652 | | | | | 1/17/2017 | | | | – | | | | – | | | | – | | | | 5,866 | (4) | | $ | 3,013,423 | | | | | | 12/4/2017 | | | | 81,142 | | | | 513.5 | | | | 12/4/2026 | (5) | | | – | | | | – | |
| (1) | Amounts reflect theyear-end value of RS, RSUs, Challenge Awards and BPIP awards,Awards, based on the closing price of $340.52$513.71 per share of BlackRock common stock on December 31, 2015.29, 2017. With respect to the BPIP awards,Awards, the value shown is based on the number of shares that the NEO would receive upon settlement of the award assuming actual performance through December 31, 2015 (113%2017 and 100% of target) continued throughtarget for the remainder of the three-year performance period. |
| (2) | These RS/RSUs vest one-third on January 31 of each of the first three years after the year in which the grant date occurs. |
(3) | These Challenge Award RSUs require that separate 15%, 25% and 35% stock price targets (based on the grant price) be achieved during thesix-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 on the fourth, fifth or sixth anniversary of January 31 of the year of grant, provided that the price on the delivery date meets the lowest stock price target. Any tranche of the award that has not met the applicable stock price target will be forfeited on the sixth anniversary of January 31 of the year of grant. As of December 31, 2015,2017, all three of the stock price targets related to the Challenge Awards granted on January 20, 2012 and January 18, 2013 had been met. As of December 31, 2015, none of the three stock price targets related to the Challenge Awards granted on January 17, 2014 had been met. The Challenge Awards granted on January 20, 201217, 2014 became fully vested on February 1, 2016January 31, 2018 and have been settled. See “Potential“Potential Payments Upon Termination or Change in Control”Control” beginning on page 5572 for additional details regarding these awards. |
| (3) | These RS/RSUs vestone-third on January 31 of each of the first anniversaries of after the year in which the grant date occurs. |
70BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
| (4) | These BPIP awardsAwards vest subject to the Company’s attainment of certain financial targets during the three-year performance period commencing with the year of grant. The number of units shown reflects the number of shares that the NEO would receive upon settlement |
| of the award assuming actual performance relative to the performance targets through December 31, 2015 (113% of target) continued through2017 and target-level performance for the remainder of the three-year performance period.period (which equals 109.5% of target for the BPIP Awards granted January 16, 2015, 109% of target for the BPIP Awards granted January 19, 2016, and 119% of target for the BPIP Awards granted January 17, 2017). See “Potential“Potential Payments Upon Termination of Employment or a Change in Control” belowControl” on page 72 for additional details regarding these awards. |
| (5) | OfIn the fourth quarter of 2017, BlackRock implemented a key strategic part of our long-term management succession plans by granting long-term incentive awards in the form of performance-based stock options to a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. Consequently, we do not consider these RSUs, 2,372 vested on January 31, 2016. The RSUs were awardedawards to be part of our regular annual compensation determinations for 2017. These awards represent performance-based option awards granted to Messrs. Goldstein, McCombe and Shedlin in connection with Mr. Shedlin’s commencementthe strategic initiative.One-third of employment with BlackRock and the resulting forfeiture of deferred compensation awards granted by his former employer. The vesting schedulethese performance-based stock options will vest on each of the RSUs mirrorsfifth, sixth and seventh anniversaries of the scheduledate of grant, provided a stock price hurdle of at least 25% growth from the strike price of $513.50 (the closing stock price on which the forfeiteddate of grant) is met and maintained for 20 consecutive trading days within five years of grant and positive Organic Revenue growth during the performance period is achieved. The term of the stock options is nine years. Consistent with the intent of these grants, if a participant voluntarily terminates employment for any reason, including retirement, all unvested awards would have vested had Mr. Shedlin remained with his prior employer.are forfeited. |
20152017 Option Exercises and Stock Vested
The following table sets forth information concerning the number of shares acquired and the value realized by our NEOs during the fiscal year ended December 31, 20152017 on the exercise of options or the vesting and/or settlement of RS and RSUs. | | | | Option Awards | | | Stock Awards | | | Option Awards | | | Stock Awards | | Name | | Number of
Shares
Acquired on
Exercise (#) | | | Value
Realized on
Exercise ($)(1) | | | Number of
Shares
Acquired on
Vesting (#) | | | Value
Realized on
Vesting ($)(1) | | | Number of
Shares
Acquired on
Exercise (#) | | | Value
Realized on
Exercise ($)(1) | | | Number of
Shares
Acquired on
Vesting (#) | | | Value
Realized on
Vesting ($)(1) | | | Laurence D. Fink | | | 364,313 | | | $ | 63,383,232 | | | | 33,278 | | | $ | 11,331,492 | | | | – | | | | – | | | | 55,252 | | | $ | 20,729,445 | | | Robert S. Kapito | | | 210,109 | | | $ | 33,474,906 | | | | 24,643 | | | $ | 8,391,188 | | | | – | | | | – | | | | 43,069 | | | $ | 16,158,627 | | Charles S. Hallac | | | 126,087 | | | $ | 21,612,648 | | | | 20,515 | | | $ | 6,183,836 | | | | Robert L. Goldstein | | | — | | | | — | | | | 6,169 | | | $ | 2,100,606 | | | | – | | | | – | | | | 22,626 | | | $ | 8,488,823 | | J. Richard Kushel | | | — | | | | — | | | | 4,995 | | | $ | 1,700,847 | | | | Mark S. McCombe | | | | – | | | | – | | | | 13,800 | | | $ | 5,177,484 | | | Gary S. Shedlin | | | — | | | | — | | | | 5,503 | | | $ | 1,953,420 | | | | – | | | | – | | | | 4,210 | | | $ | 1,579,508 | |
| (1) | Value realized reflects (i) the closing price per share of BlackRock common stock on the day prior to the exercise or vesting date, as applicable.multiplied by (ii) the number of RS or RSUs that vested. |
2017 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 | | — | | — | | $ | 74,768 | | | | — | | | $ | 1,733,567 | | | | – | | | | – | | | $ | 404,229 | | | | – | | | $ | 2,446,235 | | | Robert S. Kapito | | — | | — | | $ | 1,833 | | | | — | | | $ | 195,471 | | | | – | | | | – | | | $ | 7,217 | | | | – | | | $ | 221,399 | | Charles S. Hallac | | — | | — | | $ | 183 | | | $ | 165,876 | | | $ | 0 | | | | Robert L. Goldstein | | — | | — | | $ | 704,375 | | | $ | 114,517 | | | $ | 10,011,745 | | | | – | | | | – | | | $ | 1,239,389 | | | $ | 258,776 | | | $ | 11,747,082 | | J. Richard Kushel | | — | | — | | $ | 41,848 | | | | — | | | $ | 1,158,938 | | | | Mark S. McCombe | | | | – | | | | – | | | | – | | | | – | | | | – | | | Gary S. Shedlin | | — | | — | | | — | | | | — | | | | — | | | | – | | | | – | | | | – | | | | – | | | | – | |
| (1) | Includes earnings on balances in the VDCP (as defined below)., none of which were determined to be above-market. |
Voluntary Deferred Compensation Plan BlackRock maintains the Amended and Restated BlackRock, Inc. Voluntary Deferred Compensation Plan (“VDCP”),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. The participants must specify a deferral period of up to 10 years and distributions may be in up to 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. BLACKROCK, INC. 2018 PROXY STATEMENT 71
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
Potential Payments Upon Termination or Change in Control As described previously, the NEOs do not have individual employment, severance or change in control agreements with BlackRock. In 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 applicable equity award agreements, an NEO experiencing certain terminations ofwhose employment is terminated may be entitled to accelerated vesting and payment (or continued eligibility for vesting and payment) with
respect to such NEO’s outstanding awards. In addition, upon a termination of employment by the Company without cause, an NEO may be eligible to receive severance benefits under the Severance Plan. The applicable terms and estimated payment amounts with respect to the foregoing are set forth in the tables on pages 56 to 59,73 and 74, in each case assuming a termination of employment of the NEO on December 31, 2015.2017. Upon a change in control of BlackRock or a termination (with respect to deferrals prior to the 2016 plan year) of an NEO’s employment for any reason, such NEO’s VDCP balance would be paid out. Upon a termination of an NEO’s employment for any reason with respect to deferrals for the 2016 plan year and beyond, such NEO’s VDCP balance would be paid in accordance with their deferral election. All outstanding VDCP balances were fully vested as of December 31, 2015.2017. Accordingly, no amounts have been included in the table on page 58 below74 with respect to VDCP balances. For additional information, please refer to the “Nonqualified“2017 Nonqualified Deferred Compensation” tables on page 55.Compensation” table above. 72BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
Treatment of Outstanding Equity Awards Upon Termination of Employment or a Change in Control | | | | | | | | | | | Type of Award | | Voluntary
Resignation | | Termination
For Cause | | Termination For Cause | | Involuntary Termination
Without Cause(1) | | Qualified Retirement / Disability | | Death | | | | | | | RS/RSUs Granted
as Part of Annual
Incentive Awards(“Year-End Awards”) | | Qualified
Retirement /
Disability
| | 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 theone-year anniversary of termination will become fully vested on that date. For awards granted after 2016, if termination occurs within theone-year period following a change in control of BlackRock, the awards will vest at the time of termination. | | Awards will continue to vest in accordance with their schedule following termination. Any portion of the award that remains unvested on theone-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
Without Cause
| | Qualified
Retirement /
Disability
| | Death
| RSUs Granted as Challenge Awards(2) | | Unvested
awards
are
forfeited. | | Unvested
awards
are
forfeited. 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 granted prior to 2016 will continue to be eligible to fully vest following the end of the performance period, subject to attainment of the applicable performance targets. Awards granted after 2015 will be eligible to vest on a pro rata basis (based on length of service during the performance period), subject to attainment of the applicable performance targets. If termination occurs within the12-month period following a change in control, awards granted after 2015 will fully vest at target level. | | 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. | | | | | | | Performance-Based Option Awards | | Unvested awards are forfeited; vested but unexercised awards remain exercisable for a90-day period following separation. | | Unvested awards are forfeited; vested and unexercised awards are cancelled. | | Awards will vest on a pro rata basis with respect to each tranche (based on length of service during the vesting period) plus aone-year service credit, and will remain exercisable through the full term, subject to achievement of the applicable performance targets.conditions. If such termination occurs within the12-month period following a change in control, awards will fully vest and remain exercisable through the full term. | | Qualified Retirement: Unvested awards are forfeited; vested but unexercised awards remain exercisable for a90-day period following separation. Disability:Awards will continue to be eligible to fully vest following the end of the performance period,on each vesting date, subject to attainmentachievement of the applicable performance targets.conditions. Any vested options will remain exercisable through the full term. | | Awards will continue
to be eligible to
fully vest on each
vesting date,
subject to
achievement of the
applicable
performance
conditions. Any
vested options will
remain exercisable
through the full
term. |
| (1) | This treatment alsoTreatment described in the event of a termination without cause following a change in control applies toif outstanding awards are assumed or substituted by the Buyout Award held by Mr. Shedlin (describedacquirer. If outstanding awards are not assumed or substituted, such awards would become vested at the time of the change in further detail in Footnote (5) to the “2015 Outstanding Equity Awards at Fiscal Year-End” table on pages 54 to 55)control (at target level for performance-based awards). |
BLACKROCK, INC. 2018 PROXY STATEMENT 73
(2) | The Challenge Awards that were granted in January 2012 provide that, upon the NEO’s termination | | | | | | | | | | | | Summary 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.Executive Compensation Tables | | | | |
Potential Payments Upon Termination of Employment or a Change in Control The amounts in the table below reflect an assumed termination of employment on December 31, 20152017 and are based on the closing price of BlackRock common stock on December 31, 2015,29, 2017, which was $340.52 (except as noted in Footnote (1) below with respect to Mr. Hallac’s Year-End Awards).$513.71. Any amounts payable upon or due to an NEO’s termination by BlackRock other than for cause, due to the NEO’s disability or upon a qualified retirement (as such terms are defined in the applicable award agreements) 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 theone-year period following 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 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Name | | Involuntary
Termination
Without Cause | | | Involuntary Termination
Without Cause Following a Change in Control | | | Death /Disability | | | Qualified Retirement | | | Voluntary
Resignation /
Termination for
Cause | | Laurence D. Fink | | | | | | | | | | | | | | | | | | | | | Year-End Awards(1) | | $ | 12,407,124 | | | | $12,407,124 | | | $ | 12,407,124 | | | | $ 12,407,124 | | | | – | | Challenge Awards(2) | | $ | 12,494,455 | | | | $12,494,455 | | | $ | 12,494,455 | | | | $ 12,494,455 | | | | – | | BPIP Awards(3), (4), (5) | | $ | 41,852,981 | | | | $57,962,413 | | | $ | 63,118,520 | | | | $ 63,118,520 | | | | – | | Severance(10) | | $ | 934,615 | | | | $ 934,615 | | | | – | | | | – | | | | – | | Total(11) | | $ | 67,689,175 | | | | $83,798,607 | | | $ | 88,020,099 | | | | $ 88,020,099 | | | | – | | Robert S. Kapito | | | | | | | | | | | | | | | | | | | | | Year-End Awards(1) | | $ | 9,434,798 | | | | $ 9,434,798 | | | $ | 9,434,798 | | | | $ 9,434,798 | | | | – | | Challenge Awards(2) | | $ | 9,863,746 | | | | $ 9,863,746 | | | $ | 9,863,746 | | | | $ 9,863,746 | | | | – | | BPIP Awards(3), (4), (5) | | $ | 31,780,155 | | | | $44,052,687 | | | $ | 47,978,973 | | | | $ 47,978,973 | | | | – | | Severance(10) | | $ | 778,846 | | | | $ 778,846 | | | | – | | | | – | | | | – | | Total(11) | | $ | 51,857,545 | | | | $64,130,077 | | | $ | 67,277,516 | | | | $ 67,277,516 | | | | – | | Robert L. Goldstein | | | | | | | | | | | | | | | | | | | | | Year-End Awards(1) | | $ | 5,806,978 | | | | $ 5,806,978 | | | $ | 5,806,978 | | | | $ 5,806,978 | | | | – | | Challenge Awards(2) | | $ | 4,602,842 | | | | $ 4,602,842 | | | $ | 4,602,842 | | | | $ 4,602,842 | | | | – | | BPIP Awards(3), (4), (5) | | $ | 6,932,003 | | | | $ 9,615,624 | | | $ | 10,473,519 | | | | $ 10,473,519 | | | | – | | Option Awards(6), (7), (8), (9) | | $ | 3,859 | | | | $ 22,720 | | | $ | 22,720 | | | | – | | | | – | | Severance(10) | | $ | 461,538 | | | | $ 461,538 | | | | – | | | | – | | | | – | | Total(11) | | $ | 17,807,219 | | | | $20,509,701 | | | $ | 20,906,059 | | | | $ 20,883,339 | | | | – | | Mark S. McCombe | | | | | | | | | | | | | | | | | | | | | Year-End Awards(1) | | $ | 4,221,155 | | | | $ 4,221,155 | | | $ | 4,221,155 | | | | $ 4,221,155 | | | | – | | Challenge Awards(2) | | $ | 3,156,234 | | | | $ 3,156,234 | | | $ | 3,156,234 | | | | $ 3,156,234 | | | | – | | BPIP Awards(3), (4), (5) | | $ | 5,427,860 | | | | $ 7,821,235 | | | $ | 8,585,635 | | | | $ 8,585,635 | | | | – | | Option Awards(6), (7), (8), (9) | | $ | 3,859 | | | | $ 22,720 | | | $ | 22,720 | | | | – | | | | – | | Severance(10) | | $ | 134,615 | | | | $ 134,615 | | | | – | | | | – | | | | – | | Total(11) | | $ | 12,943,723 | | | | $15,355,959 | | | $ | 15,985,744 | | | | $ 15,963,025 | | | | – | | Gary S. Shedlin | | | | | | | | | | | | | | | | | | | | | Year-End Awards(1) | | $ | 4,245,813 | | | | $ 4,245,813 | | | $ | 4,245,813 | | | | $ 4,245,813 | | | | – | | Challenge Awards(2) | | $ | 3,945,293 | | | | $ 3,945,293 | | | $ | 3,945,293 | | | | $ 3,945,293 | | | | – | | BPIP Awards(3), (4), (5) | | $ | 6,153,732 | | | | $ 8,512,175 | | | $ | 9,265,787 | | | | $ 9,265,787 | | | | – | | Option Awards(6), (7), (8), (9) | | $ | 2,894 | | | | $ 17,040 | | | $ | 17,040 | | | | – | | | | – | | Severance(10) | | $ | 115,385 | | | | $ 115,385 | | | | – | | | | – | | | | – | | Total(11) | | $ | 14,463,117 | | | | $16,835,705 | | | $ | 17,473,933 | | | | $17,456,893 | | | | – | |
| (1) | Except with respect to Mr. Hallac, thisThis reflects an amount equal to (i) the number of unvested RS/RSUs awarded asYear-End Awards (and the unvested portion of the Buyout Award granted to Mr. Shedlin) outstanding as of December 31, 2015,2017, multiplied by (ii) $340.52$513.71 (the closing price of BlackRock common stock on December 31, 2015)29, 2017). For additional detail on theYear-End Awards, please refer to the “2015“2017 Outstanding Equity Awards at Fiscal Year-End”Year-End” table on page 5470 and the “Treatment“Treatment of Outstanding Equity Awards Upon Termination of Employment”Employment or a Change in Control” table beginning on page 56. Mr. Hallac passed away on September 9, 2015. For Mr. Hallac, this amount reflects the amount realized upon vesting of these awards on such date.73. |
| (2) | Reflects an amount equal to (i) the number of outstanding unvested RSUs awarded as Challenge Awards held by the NEO for which the applicable stock price targets had been attained as of December 31, 2015,2017, multiplied by (ii) $340.52$513.71 (the closing price of BlackRock common stock on December 31, 2015)29, 2017). As of December 31, 2015,2017, all of the stock price targets had been attained for the Challenge Awards granted in January 2012 and January 2013. Because none of the stock price targets applicable to the January 2014 Challenge Award grant had been attained as of December 31, 2015, the table above does not include any amounts attributable to these grants.2014. As described in the “Treatment“Treatment of Outstanding Equity Awards Upon Termination of Employment”Employment or a Change in Control” table beginning on page 56, some or all of the Challenge Awards granted in January 2014 would remain outstanding and eligible to vest following certain terminations of employment.73. As described above, delivery of shares relating to the Challenge Awards for which the stock price targets have been attained will occur only if the minimum stock price target applicable to the award is also attained on the fourth, fifth or sixth anniversary of January 31 (or the next following business day) in which the grant date occurred. The January 20122014 Challenge Awards fully vested on February 1, 2016January 31, 2018 and have been settled. For additional detail on the Challenge Awards, please refer to the “2015“2017 Outstanding Equity Awards at Fiscal Year-End”Year-End” table on page 5470 and the “Treatment“Treatment of Outstanding Equity Awards Upon Termination of Employment”Employment or a Change in Control” table beginning on page 56.73. |
74BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
| (3) | ReflectsBPIP Awards upon an involuntary termination without cause (other than following a change in control): This row reflects the sum of the value attributable to the January 2015 BPIP Awards, January 2016 BPIP Awards, and January 2017 BPIP Awards. For the January 2015 BPIP Awards, the value reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming thatactual performance relative to the performance targets through December 31, 2015 continued through the remainder of the three-year performance period,2017 multiplied by (ii) $340.52$513.71 (the closing price of BlackRock common stock on December 29, 2017). For January 2016 BPIP Awards and January 2017 BPIP Awards, the value reflects an amount equal to the product of (A) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2015).2017 and target-level performance for the remainder of the applicable performance period, multiplied by $513.71, and (B), a fraction, the numerator of which is the number of completed months of service during the performance period as of December 31, 2017, and the denominator of which is the total number of months during the performance period. The actual number of shares that an NEO would receive following the end of the three-year performance period will be based on the Company’s actual performance over the duration of the performance period. For additional detail on the BPIP awards, please refer to the “2015“2017 Grants of Plan-Based Awards”Awards” table on page 53,69, the “2015“2017 Outstanding Equity Awards at Fiscal Year-End”Year-End” table on page 5470 and the “Treatment“Treatment of Outstanding Equity Awards Upon Termination of Employment”Employment or a Change in Control” table beginning on page 56.73. |
| (4) | BPIP Awards upon an involuntary termination without cause within 12 months following a change in control: This row reflects the sum of the value attributable to the January 2015 BPIP Awards, January 2016 BPIP Awards, and January 2017 BPIP Awards. For the January 2015 BPIP Awards, the table reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2017 multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). For the January 2016 and 2017 BPIP Awards, the table reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award at target-level performance during the performance period, multiplied by (ii) $513.71. Under the terms of the Stock Plan, any outstanding awards that are not assumed by the acquirer in the event of a change in control would become fully vested (at target level for performance-based awards). |
| (5) | BPIP Awards upon a termination due to death, disability or qualified retirement: For January 2015 BPIP Awards, the value shown reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming actual performance relative to the performance targets through December 31, 2017 multiplied by (ii) $513.71 (the closing price of BlackRock common stock on December 29, 2017). For both January 2016 BPIP Awards and January 2017 BPIP Awards, the value shown reflects an amount equal to (i) the number of shares that the NEO would receive upon settlement of the award, assuming (A) actual performance relative to the performance targets through December 31, 2017 and (B) target-level performance for the remainder of the applicable performance period, multiplied by (ii) $513.71. |
| (6) | In the fourth quarter of 2017, we implemented a key strategic part of our long-term management succession plans by creating equity incentive grants of performance-based stock options for a select group of senior leaders, excluding the CEO and President, who we believe will play critical roles in BlackRock’s future. These awards were part of a strategic initiative and we do not consider them to be part of our regular annual compensation. |
| (7) | Option Awards upon an involuntary termination without cause: Assuming a termination date of December 29, 2017, the closing price of BlackRock common stock was $513.71 as of such date and, therefore, the stock price hurdle would not have been met. The amounts shown represent the value of a pro rata portion of unvested options as of December 29, 2017, at the closing price on that date. The pro rata portion (with respect to each tranche) which can be earned based on, and subject to, the achievement of the performance conditions is determined by multiplying the unvested options at termination of employment by a fraction, the numerator of which is the number of full months, rounded down, the executive was employed from the date of grant through the termination date plus 12 months, and the denominator of which is the number of full months elapsed from the grant date through the applicable vesting date. |
| (8) | Option Awards upon a termination without cause within 12 months following a change in control or due to death or disability: Assuming a termination date of December 29, 2017, the closing price of BlackRock common stock was $513.71 as of such date and, therefore, the stock price hurdle would not have been met. The amounts shown represent the value of unvested options as of December 29, 2017. |
| (9) | Option Awards upon qualified retirement: all unvested options will be forfeited. |
| (10) | Reflects the amount that would have been payable to the NEO in a lump sum pursuant to the Severance Plan, assuming the NEO’s termination of employment by BlackRock other than for cause on December 31, 2015.2017. |
(5) | As noted above, Mr. Hallac passed away on September 9, 2015. Accordingly, only amounts payable in the event of death have been included with respect to him. |
(6)(11) | Values forYear-End Awards, Challenge Awards, BPIP Awards, Option Awards and Severance are rounded to the nearest whole number and, as a result of such rounding, the sum of such amounts may differ slightly from the amounts set forth in the line item titled “Total”. |
EQUITY COMPENSATION PLAN INFORMATIONCEO Pay Ratio for 2017
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation our CEO: For 2017, our last completed fiscal year: The median of the annual total compensation of all employees of our Company (other than our CEO) was $141,987; and The annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $27,743,233. Based on this information, the ratio of our CEO’s annual total compensation to the median of the annual total compensation of all employees was 195:1. This result is broadly consistent with our historical pay practices. 2017 CEO Pay Ratio=195:1 Methodology To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: | 1. | Selection of Determination Date. We determined that, as of December 31, 2017, our employee population consisted of approximately 13,900 employees globally (as reported in Item 1,Business, in our Annual Report on Form10-K filed on February 28, 2018 (our “Annual Report”)). This population included all of our full-time and part-time employees. |
BLACKROCK, INC. 2018 PROXY STATEMENT 75
| | | | | | | | | | | | | Summary of Executive Compensation Tables | | | | |
| 2. | Identification of Median Employee.To identify the “median employee” from our employee population, we reviewed 2017 total compensation of our employees. Total compensation includes base salary, overtime, 2017 annual incentive award, direct incentives, commission payments and long-term equity incentive grants as reflected in the 2017 annual compensation statements provided to each employee as part of theyear-end compensation process. |
| We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation.We did not make anycost-of-living adjustments in identifying the “median employee.” |
| 3. | Calculation of Annual Total Compensation.Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation of $141,987. The difference between such employee’s total compensation and the reported amount for the ratio calculation is the contributions made by BlackRock under its tax qualified defined contribution (401(k)) plan for 2017 to such employee, which totaled $11,417. |
| For our CEO’s annual total compensation, we used the amount reported in the “Total” column (column (j)) of our 2017 Summary Compensation Table included in this Proxy Statement on page 68. |
Equity Compensation Plan Information The following table summarizes information, as of December 31, 2015,2017, relating to BlackRock equity compensation plans pursuant to which grants of options, RS, RSUsrestricted stock, restricted stock units 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. Second Amended and Restated 1999 Stock Award and Incentive Plan | | | 4,855,876 | (1) | | | 167.76 | (2) | | 7,621,046 | | | | 5,913,094 | (1) | | | $513.50 | (2) | | | 2,438,646 | | Second Amended and Restated BlackRock, Inc. Employee Stock Purchase Plan | | | — | | | N/A | | | 594,404 | | | | | | | | | | | | | | Total Approved by Stockholders | | | 4,855,876 | | | | | 8,215,450 | | | Amended and Restated BlackRock, Inc. Employee Stock Purchase Plan | | | | – | | | | N/A | | | | 542,359 | (3) | | Total Approved by Shareholders | | | | 5,913,094 | | | | | | 2,981,005 | | | | | | | | | | | | | Not Approved | | | | | | | | | | | | | | None | | | — | | | N/A | | | | — | | | | – | | | | N/A | | | | – | | | | | | | | | | | | | Total Not Approved by Shareholders | | | | – | | | | N/A | | | | – | | | Total | | | 4,855,876 | | | | | 8,215,450 | | | | 5,913,094 | | | | | | 2,981,005 | | | | | | | | | | | | |
| (1) | Includes 154,0943,765,532 shares issuable under optionssubject to RSUs (including RSUs which are settled in cash) and 4,701,782 shares in RSBPIP Awards (assuming payout at target levels) and RSUs.2,147,562 stock options. On December 31, 2015, 1,311,8872017, 246,522 shares were available for contribution by PNC pursuant to the share surrender agreement withShare Surrender Agreement between BlackRock and PNC to settle awards outstanding under thisthe Stock Plan and for future BlackRock stock grants under any other plan in accordance with the terms of the share surrender agreement.Share Surrender Agreement. Since February 2009, these shares were held by PNC as Series C Preferred Stock.stock. In February 2016, 548,2272018, 103,064 shares were surrendered. OnAs of March 1, 2016, 763,66031, 2018, 143,458 shares remain available for contribution by PNC. Pursuant to SEC guidance, unvested shares of restricted stock that were issued and outstanding on December 31, 2017 are not included in the first or third column of this table. |
| (2) | Represents weighted averagethe weighted-average exercise price onof stock options only. |
| (3) | Includes 542,359 shares remaining available for issuance under the Employee Stock Purchase Plan, of which 5,821 were subject to purchase during the open offering period that included December 31, 2017. |
76BLACKROCK, INC. 2018 PROXY STATEMENT
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEItem 3
Section 16(a)Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan
BlackRock is asking shareholders to approve an amendment to the Stock Plan (the “Stock Plan Amendment”) to increase the number of shares of common stock, par value $0.01 per share, authorized for issuance under the Stock Plan from 34,500,000 to 41,500,000 shares. The Board believes that the existing number of shares available under the Stock Plan will not be sufficient to meet BlackRock’s anticipated needs to support our equity compensation plan beyond 2018. The increase in the number of shares available under the Stock Plan will allow the Board to continue to provide equity incentive awards as part of ourpay-for-performance compensation program. The Board also believes that the combination of short-term and long-term incentives is essential to maintain a competitive compensation program aligned with shareholder interests and attract, reward and retain top talent. The Stock Plan enables the Compensation Committee to make discretionary stock option, stock appreciation, restricted stock, restricted stock unit, dividend equivalent and other long-term stock-based or cash-based awards to selected employees andnon-employee directors of, and other individuals performing advisory or consulting services to, BlackRock and its present or future affiliates. This proposal is being submitted to BlackRock’s shareholders in compliance with the NYSE Corporate Governance Standards concerning shareholder approval of equity compensation plans and/or material revisions to these plans. While equity incentive awards are an important part of our pay-for-performance compensation program, the Board and the Compensation Committee are mindful of their responsibility to our shareholders to exercise judgment in granting equity-based awards. We review a number of metrics to assess the cumulative impact of our equity compensation programs, including burn rate and overhang. The annual share usage under the Stock Plan for the last three fiscal years was as follows: | | | | | | | | | | | | | | | | 2015 | | | 2016 | | | 2017(3) | | | | | | Burn rate(1) | | | 0.99 | % | | | 1.13 | % | | | 2.19 | % | | | | | Overhang(2) | | | 7.09 | % | | | 6.00 | % | | | 4.98 | % |
| 1. | Burn rate represents (a) (i) stock options granted plus (ii) restricted stock and restricted stock units granted plus (iii) performance-based awards granted divided by (b) the basic weighted average common shares outstanding for the applicable fiscal year. |
| 2. | Overhang represents (a) total plan shares divided by (b) (i) total plan shares plus (ii) common shares outstanding, where (a) total plan shares equals the sum of (i) the number of shares available for future grants plus (ii) the number of options outstanding plus (iii) restricted stock and restricted stock units outstanding plus (iv) performance-based awards outstanding. |
| 3. | 2017 burn rate figures include the performance-based stock options that were granted in the fourth quarter of 2017 in connection with the implementation of a key strategic part of BlackRock’s long-term management succession plans. Performance-based stock options represented about 60% of the total awards granted in 2017, which materially impacted the 2017 burn rate and is not representative of our annual usage. To the extent the performance-based stock options are excluded from the calculation, the 2017 burn rate would be 0.86%. We expect the burn rate to more closely approximate our 2015 and 2016 levels in the future. |
BLACKROCK, INC. 2018 PROXY STATEMENT 77
| | | | | | | | | | | | | Item 3 Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan ●Summary of Stock Plan | | | | |
Summary of the Material Features of the Stock Plan and Stock Plan Amendment The following summary of the material features of the Stock Plan, as amended by the Stock Plan Amendment, does not purport to be complete and is qualified by the specific provisions of the Stock Plan and the Stock Plan Amendment, copies of which are available to any shareholder 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 40 East 52nd Street New York, New York 10022 |
A copy of the Stock Plan is also included as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and filed with the SEC on February 26, 2016. Please also see Annex B for a copy of the Stock Plan Amendment. Shares Available An aggregate of 34,500,000 shares of common stock is currently authorized for issuance under the Stock Plan. As of March 31, 2018, awards representing 5,288,393 shares of common stock were outstanding under the Stock Plan (which, for BPIP Awards, includes the base number of RSUs granted) and 1,469,022 shares of common stock remained available for grant. If BlackRock shareholders approve this proposal, an aggregate of 41,500,000 shares of BlackRock common stock will be authorized for grant under the Stock Plan and 8,469,022 shares of common stock will remain available for grant. Annual Limits: No more than 4,000,000 shares of common stock may be covered by stock-based awards granted to any single individual in any plan year under the Stock Plan. In addition, the aggregate maximum value of all awards granted to non-employee director in any plan year under the Stock Plan (including any awards made at the election of a non-employee director in lieu of cash retainer fees) may not exceed $2,000,000. 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. The closing price of a share of the common stock on the NYSE on March 29, 2018 was $541.72. Stock Plan Administration The Compensation Committee administers the Stock Plan. The Compensation Committee consists exclusively of directors who are“non-employee directors” for purposes of Rule16b-3 of the Exchange Act requires our directors,and “outside directors” for purposes of 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 2015, our directors, Section 16 officers and 10% holders met all applicable SEC filing requirements with the exception of Ms. Wagner, who made one late filing concerning a gift. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PNC and its Subsidiaries
As of March 1, 2016, PNC beneficially owned approximately 21.1% of BlackRock’s common stock outstanding.
William S. Demchak, Chairman, President and Chief Executive Officer of PNC, serves as a director of BlackRock. 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.
BlackRock provides investment advisory and administration services to certain PNC subsidiaries and separate accounts for a fee based on assets under management. The amount of investment advisory and administration fees earned from PNC and its affiliates in relation to these services in 2015 totaled $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 $6.9 million for 2015. BlackRock also recorded revenue of $2.7 million related to non-discretionary trading services.
BlackRock paid $2.0 million to PNC affiliates in 2015 for service fees related to certain retail and institutional clients.
Transactions between BlackRock Funds and Client Accounts and PNC and its Subsidiaries
From time to time in the ordinary course of our business, acting predominantly as agent for its clients, BlackRock effects transactions in securities and other financial assets with PNC and its subsidiaries. The amount of compensation or other value received by PNC in connection with those transactions is dependent on the capacity in which it participates in each of them, as principal or agent for other principals, and the type of security or financial asset involved. PNC may also act as the underwriter of securities purchased by BlackRock-managed funds and accounts. We principally engage in fixed income transactions with PNC. PNC (including its subsidiaries) was among one of BlackRock’s many fixed income trading counterparties in 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 Obligation with PNC
In 2015, BlackRock was a lessee under one lease with PNC, which terminated on September 30, 2015. Prior to the termination162(m) of the lease, BlackRock paid approximately $18,700 for this property as a lessee in 2015.
Stockholder Agreement with PNC
BlackRock is a party to an implementation and stockholder agreement with PNC (the “PNC Stockholder Agreement”), which governsInternal Revenue Code. The Compensation Committee has authority under 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 PNC Stockholder Agreement as amended and restated.
Share Ownership
The PNC Stockholder Agreement provides for a limit on the percentage of BlackRock capital stock that may be owned by PNC at any time (which we refer to as the “PNC ownership cap”). Due to the PNC ownership cap, PNC is generally not permitted to acquire any additional capital stock of BlackRock if, after such acquisition, it would hold greater than 49.9% of the total voting power of the capital stock of BlackRock issued and outstanding at such time or 38% of the sum of the total voting securities and participating preferred stock of BlackRock issued and outstanding at such time and issuable upon the exercise of any options or other rights outstanding at that time.
In addition, PNC may not acquire any shares of BlackRock from any person other than BlackRock or a person that owns 20% or more of the total voting power of the capital stock of BlackRock (other than itself) if, after such acquisition, it would hold capital stock of BlackRock representing more than 90% of the PNC voting ownership cap.
Prohibited Actions
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 respectStock Plan to:
an acquisition which would result in PNC holding more than its ownership cap, or holding any equity securities of any controlled affiliate of BlackRock;Determine the persons to whom awards will be granted,
Determine the terms and conditions (including any business combination or extraordinary transaction involving BlackRock or any controlled affiliate of BlackRock, including a merger, tender or exchange offer or sale of any substantial portionapplicable performance criteria) of the assets of BlackRock or any controlled affiliate of BlackRock; any restructuring, recapitalization or similar transaction with respect to BlackRock or any controlled affiliate of BlackRock;
any purchase of the assets of BlackRock or any controlled affiliate of BlackRock, other than in the ordinary course of its business;
being a member of a “group”, as defined in Section 13(d)(3) of the Exchange Act, for the purpose of acquiring, holding or disposing of any shares of capital stock of BlackRock or any controlled affiliate of BlackRock;
selling any BlackRock capital stock in an unsolicited tender offer that is opposed by the BlackRock Board of Directors;
any proposal to seek representation on the Board of Directors of BlackRock except as contemplated by the PNC Stockholder Agreement;
any proposal to seek to control or influence the management, Board or policies of BlackRock or any controlled affiliate of BlackRock except as contemplated by the PNC Stockholder Agreement; or
any action to encourage or act in concert with any third party to do any of the foregoing.
Additional Purchase of Voting Securities
The PNC Stockholder Agreement gives PNC the right, in any issuance of BlackRock voting stock, (1) to purchase an amount of such stock or, at PNC’s option, Series B Preferred Stock, upon such issuance that would result in PNC holding the lesser of (a) the PNC ownership cap or (b) an ownership percentage in BlackRock equal to what it held prior to the issuance, and (2) if as a result of such stock issuance PNC’s beneficial ownership of the total voting power of BlackRock capital stock decreases to less than 38%, to exchange such number of shares of Series B Preferred Stock for shares of common stock on a one-for-one basis such that following the stock issuance, PNC will beneficially own shares of voting securities representing not more than 38% of the total voting power of BlackRock capital stock, unless such issuance constitutes a public offering and would not, together with any stock issuance constituting a public offering since September 29, 2006, after taking into account any share repurchases by BlackRock since September 29, 2006 and transfers by PNC, decrease PNC’s total voting power to 90% or less of the PNC ownership cap.
Share Repurchase
If BlackRock engages in a share repurchase, BlackRock may require PNC to sell an amount of securities that will cause its beneficial ownership of BlackRock capital stock not to exceed its total ownership cap or voting ownership cap.
Transfer Restrictions
PNC may not transfer any capital stock of BlackRock beneficially owned by it, except for transfers to its respective affiliates and transfers in certain other specified categories of transactions that would result in the beneficial ownership, by any person, of more than 10% of the total voting power of issued and outstanding BlackRock capital stock with respect to transfers to persons who would be eligible to report their holdings of BlackRock capital stock on Schedule 13G or of more than 5% of the total voting power of issued and outstanding capital stock with respect to any other persons.
Right of Last Refusal
PNC must notify BlackRock if it proposes to sell shares of BlackRock capital stock in a privately negotiated transaction. Upon receipt of such notice, BlackRock will have the right to purchase all of the stock being offered, at the price and terms described in the notice. These notification requirements and purchase rights do not apply in the case of tax-free transfers to charitable organizations or foundations and tax-deferred transfers.
Corporate Governance
Board Designation
The PNC Stockholder Agreement provides that BlackRock will use its best efforts to cause the election at each annual meeting of 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, provided, however, that if for any period greater than 90 consecutive days PNC and its affiliates shall beneficially own less than 10% of the BlackRock capital stock issued and outstanding, PNC shall promptly cause one of such PNC designees to resign and the number of PNC designees permissible shall be reduced to one; and provided further, that, if for any period greater than 90 consecutive days PNC and its affiliates shall beneficially own less than 5% of the BlackRock capital stock issued and outstanding, PNC shall promptly cause a second PNC designee to resign and the number of PNC designees permissible shall be reduced to zero;awards, and
the remaining directors who will be independent for purposes of the rules of the NYSEPrescribe, amend and will not be designated by or on behalf of PNC or any of its affiliates.
Of the current directors, William S. Demchak was designated by PNC. PNC has elected not to appoint a second director to the Board 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.
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 Stockholder Agreement, including the election of directors.
Approvals
Under the PNC Stockholder Agreement, the following may not be done without prior approval of all of the independent directors, or at least two-thirds of the directors, then in office:
appointment of a new Chief Executive Officer of BlackRock;
any merger, issuance of shares or similar transaction in which beneficial ownership of a majority of the total voting power of BlackRock capital stock would be held by persons different from those currently holding such majority of the total voting power, or any sale of all or substantially all assets of BlackRock;
any acquisition of any person or business that has a consolidated net income after taxes for its preceding fiscal year that equals or exceeds 20% of BlackRock’s consolidated net income after taxes for its preceding fiscal year if such acquisition involves the current or potential issuance of BlackRock capital stock constituting more than 10% of the total voting power of BlackRock capital stock issued and outstanding immediately after completion of such acquisition;
any acquisition of any person or business constituting a line of business that is materially different from the lines of business BlackRock and its controlled affiliates are engaged in at that time if such acquisition involves consideration in excess of 10% of the total assets of BlackRock on a consolidated basis;
except for repurchases otherwise permitted under their respective stockholder agreements, any repurchase by BlackRock or any subsidiary of shares of BlackRock capital stock such that, after giving effect to such repurchase, BlackRock and its subsidiaries shall have repurchased more than 10% of the total voting power of BlackRock capital stock within the 12-month period ending on the date of such repurchase;
any amendment to BlackRock’s certificate of incorporation or Amended and Restated Bylaws;
any matter requiring stockholder approval pursuant to the rules of the NYSE; or
any amendment, modification or waiver of any restriction or prohibition on any significant stockholder (other than PNC or its affiliates) provided for under its stockholder agreement.
Committees
Consistent with applicable laws,rescind rules and regulations relating to the Audit Committee,Stock Plan.
Eligibility Grants of awards may be made under the MDCC and the Governance Committee areStock Plan to be composed solely(i) employees of independent directors. The Risk Committee and Executive Committee are not
subject to any similar laws, rules or regulations, and as such, are composed of a mix of independent and non-independent directors. The PNC Stockholder Agreement provides that the Executive Committee will consist of not less than five members, of which one must be designated by PNC.
Significant Stockholder Transactions
The PNC Stockholder Agreement prohibits BlackRock or its affiliates from entering into any transaction with PNC or its affiliates, unless such transaction was in effect as of September 29, 2006, is in the ordinary course of business of BlackRock or has been approved by a majority of the directors of BlackRock, excluding those appointed by the party wishing to enter into the transaction.
Termination
The PNC Stockholder Agreement will terminate on the first day on which PNC and its affiliates own less than 5% of the capital stock of BlackRock, unless PNC sends a notice indicating its intent to increase its beneficial ownership above such threshold within 10 business days after it has fallen below such threshold, and PNC buys sufficient capital stock of BlackRock within 20 business days after PNC has notice that it has fallen below 5% of BlackRock capital stock such that it continues to own greater than 5% of BlackRock capital stock.
Transactions with Directors, Executive Officers and Other Related Parties
From time to time, certain directors, their family members and related charitable foundations may have investments in various BlackRock investment vehicles or accounts. For certain types of products and services offered by BlackRock’s subsidiaries, BlackRock directors may receive discounts that are available to our employees generally. In addition, certain of the companies or affiliates of the companies that employ BlackRock’s independent directors may have investments in various BlackRock investment vehicles or accounts. 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 subsidiariesaffiliates, (ii) non-employee members of the Board and (iii) other individuals performing advisory or consulting services for BlackRock or any of its affiliates, in each case as determined and designated by the Compensation Committee. In exercising its discretion to select eligible individuals to participate in the Stock Plan, the Compensation Committee takes into account, among other factors, the need to incentivize eligible individuals to continue as employees, members of the Board, or other service providers, increase their efforts on behalf of BlackRock, and promote the success of BlackRock’s business.
As of March 31, 2018, (i) approximately 14,000 employees of BlackRock and its affiliates were eligible for awards under the Stock Plan, of which 3,428 had been selected by the Compensation Committee for participation in and had received awards under the Stock Plan, (ii) 17 78BLACKROCK, INC. 2018 PROXY STATEMENT
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non-employee members of the Board were eligible for awards under the Stock Plan, of which 17 had been selected by the Compensation Committee for participation in and had received awards under the Stock Plan and (iii) 6 independent contractors were eligible for awards under the Stock Plan, of which 6 had been selected by the Compensation Committee for participation in and had received awards under the Stock Plan. Stock Options and Appreciation Rights Stock option awards may be either “incentive stock options,” as defined in Section 422 of the Internal Revenue Code, or nonqualified stock options. Incentive stock options may be granted only 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 (except for options assumed in a corporate transaction). The Compensation Committee may provide for payment of the exercise price of a stock option in cash or cash equivalents, by an exchange of stock previously owned by the grantee or through a broker-dealer facilitated cashless exercise procedure. 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 Compensation Committee. Stock options and stock appreciation rights are exercisable at such times and upon such conditions as the Compensation Committee may determine, as reflected in the applicable award agreement. The Compensation Committee determines the exercise period except that, in the case of an option, the exercise period may not exceed ten years from the date of grant of the option. Except to the extent that the Compensation Committee or applicable award agreement provides otherwise, in the event of the termination of employment of an employee or other service relationship, the right to exercise stock options and stock appreciation rights held by such employee or other service provider will cease. Dividend equivalent rights may not be granted with respect to options or stock appreciation rights. Restricted Stock and Restricted Stock Units An Restricted Stock award is an award of common stock and an Restricted Stock Unit 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 Compensation Committee 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 ofpre-established performance goals, in such installments, or otherwise, as the Compensation Committee may determine. Except to the extent provided in the applicable award agreement, a participant granted Restricted Stock will have all of the rights of a shareholder, including, without limitation, the right to vote and the right to accrue dividends equal to the dividends paid on shares of common stock. If provided in the applicable award agreement, a holder of Restricted Stock Units will be entitled to dividend equivalents with respect to such RSUs. Dividends or dividend equivalents accrued with respect to Restricted Stock or Restricted Stock Units, respectively, will be paid out only if, and to the extent that, the underlying Restricted Stock or Restricted Stock Unit vests. Upon termination of employment or other service relationship during the applicable restriction period, shares of Restricted Stock, Restricted Stock Units and accrued but unpaid dividends or dividend equivalents, as applicable, that are subject to restrictions will be forfeited unless the award agreement provides otherwise. Subject to the terms of the Stock Plan, the Compensation Committee can determine that restrictions or forfeiture conditions relating to Restricted Stock or Restricted Stock Units will be waived in whole or in part in the event of terminations resulting from specified causes and the Compensation Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock or Restricted Stock Units. Other Stock-Based or Cash-Based Awards The Compensation Committee is also authorized to grant “other stock-based awards” and “cash-based awards”. The Compensation Committee will determine the form of other stock-based awards and 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 executive officer may receive pursuant to a “cash-based award” that is subject to performance goals in any plan year shall be $10,000,000. BLACKROCK, INC. 2018 PROXY STATEMENT 79
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Minimum Vesting An award granted under the Stock Plan after it becomes effective will not vest prior to the first anniversary of the date of grant of the Award. However, the Compensation Committee may grant awards that vest within one year following the date of grant under the following circumstances: Due to the grantee’s retirement, death, disability, leave of absence, termination of employment, or upon the sale or other disposition of a grantee’s Employer or any other similar event, as determined by the Compensation Committee; In accordance with terms described below under the caption “Change in Control”; or As a substitute award in replacement of an award scheduled to vest within one year following the date of grant of such substitute award. Under the Stock Plan, up to 5% of the shares of stock authorized for issuance under the Plan may provide for vesting within one year following the date of grant. Change in Control Unless otherwise provided in an award agreement or other agreement between the Company and the grantee, in the event of a “change in control” (as defined in the Stock Plan): With respect to each outstanding award granted after the effective date that is assumed or substituted in connection with the change in control, if the grantee’s employment is terminated by the Company or its successor or an affiliate without cause (as defined in the applicable award agreement) within the12-month period following the change in control, then the awards held by the grantee will become fully vested (and any performance conditions applicable to such awards will be deemed to have been achieved at target level); and Any outstanding awards granted after the effective date that are not assumed or substituted in connection with the change in control will become fully vested upon the change in control (with any performance conditions applicable to such awards deemed to have been achieved at target level). An award will be considered assumed or substituted in connection with a change in control if, following the change in control, the award is of substantially comparable value and remains subject to substantially the same terms and conditions that were applicable to the award prior to the change in control; provided, that, if applicable, following the change in control, an award will be deemed assumed if it relates to shares of stock of the acquiring or ultimate parent entity. Performance Goals To the extent the Compensation Committee 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 Compensation Committee 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: | | | | | • before-tax income orafter-tax income • operating profit • return on equity, assets, capital or investment • earnings or book value per share | | | | • operating expenses • stock price appreciation • implementation or completion of critical projects or
processes | • sales or revenues | | | | |
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 80BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Item 3 Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan ●Summary of Stock Plan | | | | |
to a market index, a group of other companies or a combination thereof, all as determined by the Compensation Committee. 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 related person has a direct or indirect material interest. For purposesmaximum level of performance above which no additional payment will be made. To the extent possible, each of the policy,foregoing performance goals will be determined in accordance with GAAP. The performance measure or measures and the performance goals established by the Compensation Committee may be different for different fiscal years and different goals may be applicable to BlackRock and its subsidiaries and affiliates. Clawback In addition to any forfeiture provisions otherwise applicable to an award, a “related person”grantee’s right to payment or benefits with respect to an award is subject to reduction, cancellation, forfeiture, clawback or recoupment under BlackRock’s clawback policies or as required by applicable law. Transferability Except as otherwise determined by the Compensation Committee, 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, in whole or in part, except that no amendment that requires shareholder 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 shareholder approval. In addition, no amendment may be made that adversely affects any personof the rights of any award holder previously granted an award without the holder’s consent. The Stock Plan will terminate on May 28, 2025. Registration We intend to file with the SEC a registration statement on Form S-8 covering the increase in the number of shares of common stock authorized for issuance under the Stock Plan. 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 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 was duringloss, generally based on the difference between the sale price and the fair market BLACKROCK, INC. 2018 PROXY STATEMENT 81
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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. Additional Information Future grants under the Stock Plan will be made at the discretion of the Compensation Committee 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. For information relating to the grants under the Stock Plan for the last fiscal year a BlackRock director or executive officer, or a director nominee, or any person who is a beneficial ownerto BlackRock’s NEOs, see the “2017 Grants of more than 5% of any class of BlackRock’s voting securities, or any immediate family member of anyPlan-Based Awards Table” on page 69. Board Recommendation | | | | | The Board of Directors recommends you vote“FOR” the approval of the amendment to the Stock Plan. |
82BLACKROCK, INC. 2018 PROXY STATEMENT
Item 4 Ratification of the foregoing persons. The policy provides that related person transactions must be approved by a majorityAppointment of the uninterested members of the 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 Governance Committee or the Board of Directors, the Chairperson of the Governance Committee may approve the transaction.
In reviewing any related person transaction, all of the relevant facts and circumstances must be considered, including (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 Stockholder Agreement. Those approval procedures prohibit BlackRock or its affiliates from entering into any transaction (other than any transaction in the ordinary course
of business) with PNC or its affiliates unless such transaction was in effect as of September 29, 2006 or has been approved by a majority of the directors of BlackRock, excluding those designated for appointment by the party wishing to enter into the transaction. Of the current directors, William S. Demchak was designated by PNC.
Prior to the adoption of this policy, related person transactions, including certain of the transactions described above under “—PNC and its Subsidiaries” and “—Stockholder Agreement with PNC”, were reviewed with the Board of Directors at the time of entering into such transactions.
ITEM 2
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
FOR NAMED EXECUTIVE OFFICERS
We 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 33 to 50, as well as the discussion regarding the MDCC on 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.
ITEM 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRMIndependent 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’sBlackRock’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, theThe Audit Committee also 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 9, 2016,14, 2018, the Audit Committee appointed Deloitte & Touche LLP to serve as BlackRock’s independent registered public accounting firm for the 20162018 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.Deloitte. 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. The Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP to serve as BlackRock’s independent registered public accounting firm is in the best interests of the Company and its stockholders,shareholders, and we are asking stockholdersshareholders to ratify the appointment of Deloitte & Touche LLP.Deloitte. Although ratification is not required by our bylawsBylaws or otherwise, the Board is submitting the appointment of Deloitte & Touche LLP to our stockholdersshareholders for ratification because we value our stockholders’shareholders’ views on this appointment and as a matter of good corporate governance. In the event that stockholdersshareholders 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.shareholders. 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. BLACKROCK, INC. 2018 PROXY STATEMENT 83
| | | | | | | | | | | | | Item 4 Ratification of the Appointment of the Independent Registered Public Accounting Firm Accounting Firm ●Fees Incurred by BlackRock for Deloitte | | | | |
Fees Incurred by BlackRock for Deloitte & Touche LLP Aggregate fees incurred by BlackRock for the fiscal years ended December 31, 20152017 and 2014,2016, for BlackRock’s principalindependent registered public accounting firm, Deloitte, & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates, are set forth below. | | | | | | | | | | | 2017 | | | 2016 | | | | | 2015 | | | 2014 | | | Audit Fees(1) | | $ | 16,011,200 | | | $ | 15,527,253 | | | $ | 13,922,000 | | | $ | 15,626,000 | | | Audit-Related Fees(2) | | $ | 4,342,700 | | | $ | 4,706,583 | | | $ | 4,315,000 | | | $ | 4,246,000 | | | Tax Fees(3) | | $ | 798,300 | | | $ | 984,600 | | | $ | 1,277,000 | | | $ | 1,243,000 | | | All Other Fees(4) | | $ | 233,000 | | | $ | 385,412 | | | $ | 1,041,000 | | | $ | 462,000 | | | | | | | | | | Total | | $ | 21,385,200 | | | $ | 21,603,848 | | | $ | 20,555,000 | | | $ | 21,577,000 | | | | | | | | | |
| (1) | Audit Fees consisted of fees for the audits of the consolidated financial statements and reviews of the condensed consolidated financial statements filed with the SEC on Forms 10-K and 10-Q, respectively, as well as work generally only the independent registered public accounting firm can be reasonably expected to provide, such as statutory audits and review of documents filed with the SEC, including certain Form 8-K filings.SEC. Audit fees also included fees for the audit opinion rendered regarding the effectiveness of internal control over financial reporting and audits of certain sponsored funds. |
| (2) | Audit-Related Fees consisted principally of assurance and related services pursuant to Statement on Standards for Attestation Engagements (SSAE) No. 1618 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 auditorindependent registered public accounting firm other than audit, audit-related or tax services. All Other Fees included fees primarilyservices related to regulatory advice, for certain fundstechnology subscriptions and translation services. |
Deloitte also provides audit, audit-related and tax services directly to certain of our affiliated investment companies, unit trusts and partnerships. Fees paid to Deloitte directly by these funds for services were $22,477,539 and $19,325,652 for the fiscal years ended December 31, 2017 and 2016, respectively.Audit CommitteePre-Approval Policy In accordance with the BlackRockBlackRock’s Audit CommitteePre-Approval Policy (the “Pre-Approval“Pre-Approval Policy”), all audit and non-audit services performed for BlackRock by BlackRock’s independent registered public accounting firm werepre-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.services. Periodically, the Audit Committee reviews andpre-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 delegatespre-approval authority under thePre-Approval Policy to the ChairmanChair of the Audit Committee. The ChairmanChair or designee must report any pre-approval decisions under the Pre-Approval Policy to the Audit Committee at its next scheduled meeting. Board Recommendation | | | | | The Board of Directors recommends a vote“FOR” the ratification of Deloitte LLP as BlackRock’s independent registered public accounting firm for the fiscal year 2018. |
84BLACKROCK, INC. 2018 PROXY STATEMENT
Audit Committee Report 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. For more information about our Audit Committee’s responsibilities, see “Board Committees – The Audit Committee” under “Item 1 – Election of Directors Recommendation” and our Audit Committee 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 GAAP in the United States. BlackRock’s management is responsible for preparing BlackRock’s financial statements and for maintaining internal control over financial reporting and disclosure controls and procedures. The Boardindependent 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 Directors recommends a vote “FOR”operations and cash flows of BlackRock in conformity with GAAP in the ratification ofUnited States. In performing our oversight role, we have reviewed and discussed BlackRock’s audited financial statements with management and with Deloitte, & Touche LLP as BlackRock’s independent registered public accounting firm for 2017. We have further discussed with Deloitte the fiscal year 2016.
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” (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 bematters required to include inbe discussed under applicable Public Company Accounting Oversight Board (“PCAOB”) standards.
We have received from Deloitte the Company’s proxy materials is 25% ofwritten disclosures required by applicable PCAOB rules regarding Deloitte’s independence, discussed with Deloitte its independence and considered whether the number of directors in office as ofnon-audit services provided by Deloitte are compatible with maintaining its independence. Based on the last day on which a notice of proxy access nomination may be deliveredreview and discussions referred 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 onabove, we recommended to the Board, and the Board decides to reduce the sizeapproved, inclusion of the Boardaudited financial statements in connectionBlackRock’s Annual Report on Form10-K for the year ended December 31, 2017 for filing 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.SEC. 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.MEMBERS OF THE AUDIT COMMITTEE
Calculation of Qualifying OwnershipPamela Daley, Chair
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.Mathis Cabiallavetta
Murry S. Gerber
Ivan G. Seidenberg Marco Antonio Slim Domit 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.
BLACKROCK, INC. 2018 PROXY STATEMENT Nominating Procedures85 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:
verification
Item 5 Shareholder Proposal – Production of an Annual Report on Certain Trade Association and information regarding, the stockholder’s ownership of shares of the Company’s Common Stock as of the date of the submission of the nomination and continuous qualifying ownership through the record date for the annual meeting; the information required by the advance notice of nomination provisions of the Company’s Amended and Restated Bylaws;
a copy of the stockholder’s notice on Schedule 14N that has been filed with the SEC; and
the written consent of the stockholder nominee to being named in the Company’s proxy materials and serving as a director, if elected.
Nominating stockholders also would be required to make certain representations to and agreements with the Company, including:
lack of intent to change or influence control of the Company;
intent to maintain qualifying ownership through the annual meeting date;
refraining from nominating any person for election to the Board other than the stockholder’s nominees submitted through the proxy access process;
engaging and/or participating only in the solicitation of the stockholder’s nominees or Board nominees;
not distributing any form of proxy for the annual meeting other than the form distributed by the Company;
complying with solicitation rules and assuming liabilities related to and indemnifying the Company against losses arising out of the nomination; and
the accuracy and completeness of all facts, statements and other information provided to the Company.
Information Required of All Stockholder Nominees
Each stockholder nominee would be required to make certain written representations to and agreements with the Company, including:
refraining from voting agreements or commitments to act or vote as a director on any issue or question that has not been disclosed to the Company;
not becoming a party to any compensatory, reimbursement or indemnification arrangements with a person or entity other than the Company in connection with such nominee’s candidacy for director or service or action as a director that has not been disclosed to the Company; and
complying with applicable laws, stock exchange requirements and the Company’s policies and guidelines applicable to directors.
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 NomineesLobbying Expenditures
The Company would not be required to include a stockholder nominee in the Company’s proxy materials if: the nominee is not independent under any applicable independence standards;
the election of the nominee would cause the Company to violate its Amended and Restated Bylaws or Amended and Restated Certificate of Incorporation, any stock exchange requirements or any other applicable laws, rules or regulations;
the nominee has been an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, within the past three years;
the nominee is the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in a criminal proceeding within the past ten years; or
the nominee has provided false or misleading information to the Company.
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.
Board of Directors Recommendation
The Board of Directors recommends a vote “FOR” the bylaw amendment to implement proxy access.
ITEM 5
STOCKHOLDER PROPOSAL – PROXY VOTING PRACTICES REGARDING EXECUTIVE
COMPENSATION
The Stephen M. Silberstein Revocable Trust (the “Proponent”Unitarian Universalist Association (“UUA”), 29 Eucalyptus Road, Belvedere, CA 94920,24 Farnsworth Street, Boston, MA 02210-1409, the holder of 582150 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:Whereas BlackRock, like all investment managers,, we believe in full disclosure of BlackRock’s direct and indirect lobbying activities and expenditures to assess whether our company’s lobbying 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,consistent 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 costexpressed goals 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 ourstockholders.
Resolved, the stockholders and unanimously recommends that you vote “AGAINST”of BlackRock request the preparation of a report, updated annually, disclosing: | 1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
| 2. | Payments by BlackRock used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
| 3. | BlackRock’s membership in and payments to anytax-exempt organization that writes and endorses model legislation. |
| 4. | Description of management’s and the Board’s decision making process and oversight for making payments described in sections 2 and 3 above. |
For purposes of this proposal, fora “grassroots lobbying communication” is a communication directed to the following reasons: BlackRock’s proxy voting decisions are madegeneral public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a professional, independent team withintrade association or other organization of which BlackRock is a member.
Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the BlackRock investment function.local, state and federal levels. The report shall be presented to the Audit Committee or other relevant oversight committees and posted on BlackRock’s website. Supporting Statement As a fiduciarystockholders, we encourage transparency and accountability in BlackRock’s use of corporate funds to its clients,influence legislation and regulation. Since 2010, BlackRock has spent over $18 million on federal lobbying. This figure does not include lobbying expenditures to influence legislation in states, where BlackRock also lobbies but disclosure is uneven or absent. For example, BlackRock spent $811,317 on lobbying in California from 2011 – 2016. And BlackRock CEO Laurence Fink has stated that “lobbying is really good because it is maximizing shareholder value” (“Unusual Debate at Davos: Lobbying, Maximizing Shareholder Value and the Duty of CEO’s,”ProMarket,April 1, 2016). BlackRock lists memberships in the Investment Company Institute and the Securities Industry and Financial Markets Association, which together spent over $25 million on lobbying in 2015 and 2016. BlackRock is reportedly a duty to actmember of the Chamber of Commerce (“Is the Most Powerful Lobbyist 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”)Washington Losing Its Grip?”Washington Post, 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 atJuly 14, 2017), which spent more than 15,000 stockholder meetings based on a set of voting guidelines that serve$1.3 billion in lobbying since 1998, and is listed 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 workmember of the Stewardship TeamBusiness Roundtable, which is lobbying against the right of shareholders to file resolutions. BlackRock does not influenced by BlackRock’s commercial interests and that votes are cast onlycomprehensively disclose its memberships in, or payments to, trade associations, nor the long-term economic interests of clients based on the professional judgment of the Stewardship Team. amounts used for lobbying.
We are concerned that BlackRock’s lack of trade association lobbying disclosure presents significant reputational risk. For example, BlackRock believes climate change risk is an investment issue, yet the stockholderChamber undermined the Paris climate accord (“Paris Pullout Pits Chamber against Some of Its Biggest Members,”Bloomberg, June 9, 2017). 86BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Item 5 Shareholder Proposal – Production of an Annual Report on Certain Trade Association and Lobbying Expenditures ●The Board’s Statement in Opposition | | | | |
| The Board’s 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 shareholders and unanimously recommends that you vote “AGAINST” this proposal for the following reasons: Summary We believe that advocating for public policies that increase financial transparency, protect investors and facilitate responsible growth of capital markets is an important part of our responsibilities to our shareholders and clients. We provide on our website extensive disclosure of our public policy engagement efforts, political activities and the decision-making and oversight associated with these efforts and activities. The comment letters we file, policy papers published through our ViewPoints series and our Public Policy Engagement and Political Participation Policies statement can all be found on our website athttps://www.blackrock.com/corporate/en-us/insights/public-policy/public-policy-engagement-and-political-activities-policies. We are also compliant with all lobbying and political contribution disclosure rules and regulations. We review our public disclosure on our public policy engagements and political activities at least annually to ensure it accurately reflects our activities and policies and provides our shareholders with a clear understanding of our priorities. As part of our process we consider feedback from our shareholders and other stakeholders. Earlier this year and prior to our engagement with the proponent, we updated our disclosure to make clear that BlackRock does not use corporate funds to support or oppose ballot initiatives. We received a nearly identical proposal last year from a different proponent. We engaged extensively with last year’s proponent on the issues raised in that proposal and made additional enhancements and improvements to our disclosures as a result of this cooperative dialogue. These additional enhancements included identifying the principal trade associations in which we actively participate and providing links directly on our website to government websites reporting our federal lobbying activities and political contributions made by BlackRock’s political action committee. Similar to last year, we engaged extensively with this proponent to explain our approach to public policy engagement. We believe that our current disclosures are responsive to the requests made in the proposal. A report beyond what has been published on our website and required in our public filings would impose a significant additional administrative burden on the Company but provide only minimal additional information to BlackRock’s shareholders. As a result, we believe that adoption of the proposal is unnecessary and not in the best interest of BlackRock or our shareholders. As detailed in our statement of Public Policy Engagement and Political Participation Policies on our website, BlackRock is committed to: Full Transparency of Positions: • BlackRock comments on public policy topics through its ViewPoints publications and comment letters and consultation responses to policy makers, which are available on the Company’s website. Effective Oversight and Governance: • BlackRock’s Chief Legal Officer and the head of BlackRock’s Global Public Policy Group brief the Board’s Risk Committee and keep our Directors apprised of, and engaged in, the Company’s legislative and regulatory priorities and advocacy initiatives. • BlackRock’s Global Public Policy Group coordinates the Company’s engagement with policy makers and advocacy on public policy issues. • The Global Public Policy Group works closely with the Company’s business and legal teams to identify legislative and regulatory priorities that will protect investors, increase shareholder value and facilitate responsible economic growth. • 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. • BlackRock’s efforts are generally focused at the national level, rather than at a state-specific level. • As part of BlackRock’s engagement in the public policy process, the Company participates in a number of trade organizations and industry groups, principal trade associations of which are publicly disclosed. |
BLACKROCK, INC. 2018 PROXY STATEMENT 87
| | | | | | | | | | | | | Item 5 Shareholder Proposal – Production of an Annual Report on Certain Trade Association and Lobbying Expenditures ●The Board’s Statement in Opposition | | | | |
| Full Compliance with Restrictions on Political Contributions and Filing and Disclosure Obligations: • In compliance with federal regulations, as well as applicable state and local law, BlackRock does not contribute corporate funds to federal, state or local candidates, political party committees, political action committees or any political organization exempt from federal income taxes under Section 527 of the Internal Revenue Code. • Although permitted under federal law, BlackRock does not spend corporate funds directly on independent expenditures, including electioneering communications and ballot initiatives. • BlackRock’s political action committee is funded voluntarily by employees and its contributions are publicly disclosed to the Federal Election Commission. BlackRock publicly discloses all U.S. federal lobbying costs and the issues to which our lobbying efforts relate, on a quarterly basis, as required under the Lobbying Disclosure Act. BlackRock also makes such disclosures at the state or local level to the extent required to do so under applicable lobbying laws. For the reasons stated above, the Board of Directors unanimously recommends that you vote “AGAINST” the shareholder proposal. |
Board Recommendation | | | 
| | The Board of Directors unanimously recommends that you vote“AGAINST” this proposal. |
88BLACKROCK, INC. 2018 PROXY STATEMENT
Annual Meeting Information Questions and Answers about the Annual Meeting and Voting Who is entitled to vote? Holders of record of BlackRock common stock at the close of business on March 29, 2018 are entitled to receive notice and to vote their shares of BlackRock common stock at the 2018 Annual Meeting of Shareholders. As of March 29, 2018, 160,308,362 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 shareholders entitled to vote at the Annual Meeting will be available at the Annual Meeting. It can also 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., 40 East 52nd Street, New York, New York 10022. How do 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 22, 2018 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 shareholders by using individual control numbers. | 
| | Submitting a Proxy via the Internet: You can submit a proxy via the internet until 11:59 p.m. Eastern Time on May 22, 2018 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 22, 2018. |
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. What is required to attend the Annual Meeting? You are entitled to attend the Annual Meeting only if implemented, would impose undue influenceyou 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 our Stewardship TeamMarch 29, 2018. Shareholders, or their valid legal proxies, planning to attend the Annual Meeting in person mustrequest an admission ticket in advance of the Annual Meeting by ourvisitingwww.proxyvote.com and following the instructions provided. You will need the16-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 22, 2018. Please note that seating is limited BLACKROCK, INC. 2018 PROXY STATEMENT 89
| | | | | | | | | | | | | Annual Meeting Information ●Questions and Answers about the Annual Meeting and Voting | | | | |
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. If 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 March 29, 2018, 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 at the Annual Meeting. If you are unable to provide valid photo identification or if we are unable to validate that you were a shareholder (or that you are authorized to act as a legal proxy for a shareholder) 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. 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. How will voting on any other business be conducted? If any other business 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. As of the date this Proxy Statement went to press, we did not know of any other business to be raised at the Annual Meeting. May I revoke my vote? Proxies may be revoked at any time before they are exercised by: written notice to the Corporate Secretary of BlackRock; submitting a proxy on a later date by telephone or Internet (only your last telephone or Internet proxy will be counted) before 11:59 p.m. Eastern Time on May 22, 2018; timely delivery of a valid, later-dated proxy; or voting by ballot at the Annual Meeting. What 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 shareholders entitled to vote at the Annual Meeting is necessary to constitute a quorum. What is the effect of a brokernon-vote or abstention? Abstentions and broker“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 NYSE. The election of directors, approval of NEO compensation, approval of the amendment to the Stock Plan and the shareholder proposal are not deemed “routine” by the NYSE and nominees have no discretionary voting power for these matters. The ratification of the 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 18 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) will be elected as a director. Abstentions and broker“non-votes” will be disregarded 90BLACKROCK, INC. 2018 PROXY STATEMENT
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and have no effect on the outcome of the Item 1 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 NEO compensation, Item 3, the approval of an amendment to the Stock Plan, Item 4, the ratification of Deloitte as BlackRock’s Stewardship Team’sindependent registered public accounting firm for the 2018 fiscal year and Item 5, the approval of the shareholder proposal. Abstentions will be treated as a vote “against” and “brokernon-votes” will have no effect on such matters. Who will count the votes and how can I find the results of the Annual Meeting? Broadridge Financial Solutions, our independent tabulating agent, will count the votes. We will publish the voting guidelines provideresults in a detailed descriptionForm 8-K filed within four business days of the Annual Meeting. Important Additional Information Cost of Proxy Solicitation We will pay the expenses of soliciting proxies. Proxies may be solicited in person or by mail, telephone and electronic transmission on our behalf by directors, officers or employees of BlackRock or its approachsubsidiaries, without additional compensation. We will reimburse brokerage houses and other custodians, nominees and fiduciaries that are requested to analyzingforward soliciting materials to the beneficial owners of the stock held of record by such persons. Multiple Shareholders Sharing the Same Mailing Address or “Householding” In order to reduce printing and assessing compensation policiespostage costs, we try to deliver only one Notice of Internet Availability of Proxy Materials or, if applicable, one Annual Report and outcomesone Proxy Statement to multiple shareholders sharing a mailing address. This delivery method, called “householding”, will not be used if we receive contrary instructions from one or more of the shareholders sharing a mailing address. If your household has received only one copy, we will deliver promptly a separate copy of the Notice of Internet Availability of Proxy Materials or, if applicable, the Annual Report and are updated regularlythe Proxy Statement to ensure theyany shareholder who sends a written request to the Corporate Secretary at the address provided in the Notice of 2018 Annual Meeting of Shareholders. You may also notify us if 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 the Corporate Secretary. Shareholders who participate in householding will continue to reflect governance practices that protect clients.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. The Stewardship Team’s voting guidelines, voting recordIf your household has received multiple copies of BlackRock’s Annual Report and engagement reports, are publishedProxy 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. 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, shareholders 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 headings “About Us“Our Firm / Investment Stewardship”Investor Relations / SEC Filings”, its Annual Reports to Shareholders, Annual Reports on Form10-K, Quarterly Reports on Form10-Q, Current Reports on Form8-K, Proxy Statements 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. BlackRock will provide, companies, clientswithout charge to each shareholder upon written request, a copy of BlackRock’s Annual Reports to Shareholders, Annual Reports on Form10-K, Quarterly Reports on Form10-Q, Current Reports on Form8-K, Proxy Statements and others with an indicationform of proxy and all amendments to those reports. BLACKROCK, INC. 2018 PROXY STATEMENT 91
| | | | | | | | | | | | | Annual Meeting Information ●Important Additional Information | | | | |
Written requests for copies can be made by: | | | | | Mail: Corporate Secretary of BlackRock, 40 East 52nd Street, New York, New York 10022 |
| | Telephone:(212) 810-5300 | 
| | Email:invrel@blackrock.com |
Copies may also be accessed electronically by means of the corporate governance matters of most importance to the Stewardship Team and how it might vote on key itemsSEC homepage on the ballotInternet atwww.sec.gov. The Annual Report on Form10-K 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. Engagementyear ended December 31, 2017 is at the corenot part of the Stewardship Team’s function and is viewed by the Stewardship Team as the most effective methodproxy solicitation materials. Deadlines for Submission 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 BoardProxy Proposals, Nomination of Directors would place undue influence on the Stewardship Team and threaten the independenceOther Business of its function.Shareholders
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 StockholdersShareholders 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 20172019 Annual Meeting of Shareholders must submit their proposals to BlackRock’s Corporate Secretary on or before December [16], 2016.14, 2018.
Director Nominations for Inclusion in BlackRock’s Proxy Materials (Proxy Access) If our proxy access bylaw amendment is approved by stockholders, a stockholderA shareholder (or a group of up to 20 stockholders)shareholders) who has owned at least 3% of our shares continuously for at least three years and has complied with the other requirements in our bylawsBylaws 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 20172019 Annual Meeting must be received no later than December [16], 201614, 2018 and no earlier than November [16], 2016.14, 2018.
Other Proposals and Nominations Apart from the Exchange Act Rule14a-8 and our proxy access bylaw that address the inclusion of stockholdershareholder proposals or stockholdershareholder nominees in our proxy materials, under our bylaws,Bylaws, certain procedures are provided thatmust be followed for a stockholder must followshareholder to nominate persons for election as directors or to introduce an item of business at an annual meeting of stockholders.shareholders. We must receive the notice of your intention to introduce a nomination or proposed item of business at our 20172019 Annual Meeting: not less than 120 days nor more than 150 days prior to the anniversary of the mailing date of BlackRock’s proxy materials for the immediately preceding annual meeting of stockholders;shareholders; or not later than 10 days following the day on which notice of the date of the annual meeting was mailed to stockholdersshareholders or public disclosure of the date of the annual meeting was made, whichever comes first, in the event that next year’s annual meeting is not held within 3025 days before or after the anniversary date of the immediately preceding annual meeting. Assuming that our 20172019 Annual Meeting is held within 3025 days of the anniversary of the 20162018 Annual Meeting, we must receive notice of your intention to introduce a nomination or other item of business at the 20172019 Annual Meeting by December [16], 2016.14, 2018 and no earlier than November 14, 2018. Additional Requirements Under our bylaws,Bylaws, any notice of proposed business must include a description of the business and the reasons for bringing the proposed business to the meeting, any material interest of the stockholdershareholder in the business and certain other information about the stockholder.shareholder. Any notice of a nomination or a proxy access nomination for director nominees must provide information about the stockholdershareholder and the nominee, as well as the written consent of the proposed nominee to being named in the proxy statement and to serve as a director if elected. BlackRock’s bylawsBylaws specifying the advance notice requirements for proposing business or nominations, and for proposing proxy access nominations, are available on BlackRock’s website atwww.blackrock.com under the heading “[•]”“Investor Relations”. 92BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | | | | | Annual Meeting Information ●Deadlines for Submission of Proxy Proposals, Nomination of DirectorsandOther Business of Shareholders | | | | |
Address to Submit Proposals and Nominations In each case, proxy proposals, proxy access nominations and nominations for director nominees and/or an item of business to be introduced at an annual meeting of stockholdersshareholders must be submitted in writing to the Corporate Secretary at the address provided on page 2 of this Proxy Statement.BlackRock, 40 East 52nd Street, New York, New York 10022.
OTHER MATTERSOther Matters
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,
R. Andrew Dickson III Corporate Secretary BLACKROCK, INC. 2018 PROXY STATEMENT 93
| | | By Order of the Board of Directors, | | | | | | | | | | | | | | |
Annex A: Non-GAAP Reconciliation Non-GAAP Financial Measures BlackRock reports its financial results in accordance with GAAP in the United States; however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Management reviewsnon-GAAP financial measures to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock’s financial performance over time. Management also usesnon-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance the comparability of this information for the reporting periods presented.Non-GAAP measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider suchnon-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.Non-GAAP measures may not be comparable to other similarly titled measures of other companies. Management uses both GAAP andnon-GAAP financial measures in evaluating BlackRock’s financial performance. Adjustments to GAAP financial measures(“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow. Computations for all periods are derived from the consolidated statements of income as follows: (1) Operating income, as adjusted, and Operating Margin, as adjusted: Management believes operating income, as adjusted, and Operating Margin, as adjusted, are effective indicators of BlackRock’s financial performance over time and, therefore, provide useful disclosure to investors. | | | | | | | | | | | | | (in millions) | | 2017 | | | 2016 | | | 2015 | | | | | | Operating income, GAAP basis | | $ | 5,272 | | | $ | 4,570 | | | $ | 4,664 | | | | | | Non-GAAP expense adjustments: | | | | | | | | | | | | | | | | | Restructuring charge | | | – | | | | 76 | | | | – | | | | | | PNC LTIP funding obligation | | | 15 | | | | 28 | | | | 30 | | | | | | Compensation expense related to appreciation (depreciation) on deferred compensation plans | | | – | | | | – | | | | 1 | | | | | | Operating income, as adjusted | | | 5,287 | | | | 4,674 | | | | 4,695 | | | | | | Product launch costs and commissions | | | – | | | | – | | | | 5 | | | | | | Operating income used for Operating Margin measurement | | $ | 5,287 | | | $ | 4,674 | | | $ | 4,700 | | | | | | Revenue, GAAP basis | | $ | 12,491 | | | $ | 11,155 | | | $ | 11,401 | | | | | | Non-GAAP adjustments: | | | | | | | | | | | | | | | | | Distribution and servicing costs | | | (492 | ) | | | (429 | ) | | | (409 | ) | | | | | Amortization of deferred sales commissions | | | (17 | ) | | | (34 | ) | | | (48 | ) | | | | | Revenue used for Operating Margin measurement | | $ | 11,982 | | | $ | 10,692 | | | $ | 10,944 | | | | | | Operating Margin, GAAP basis | | | 42.2 | % | | | 41.0 | % | | | 40.9 | % | | | | | Operating Margin, as adjusted | | | 44.1 | % | | | 43.7 | % | | | 42.9 | % |
Operating income, as adjusted,includesnon-GAAP expense adjustments. The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRock’s book value. In 2016, a restructuring charge primarily comprised of severance and accelerated amortization expense of previously granted deferred compensation awards has been excluded to provide an analysis of BlackRock’s ongoing operations and to ensure comparability among periods presented. In 2015, compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded, as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense). BLACKROCK, INC. 2018 PROXY STATEMENT A-1
| | | | | | | | | | | | | Annex A:Non-GAAP Reconciliation ●Non-GAAP Financial Measures | | | | |
Operating income used for measuring Operating Margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of product launch costs (e.g.closed-end fund launch costs) and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenue associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods. Revenue used for Operating Margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products. In addition, management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for Operating Margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the Company earns. For each of these items, BlackRock excludes from revenue used for Operating Margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenue. (2) Compensation and benefitsexpense-to-revenue ratio, as adjusted: | | | | | | | | | | | | | (in millions) | | 2017 | | | 2016 | | | 2015 | | | | | | Employee compensation and benefits, GAAP basis | | $ | 4,255 | | | $ | 3,880 | | | $ | 4,005 | | | | | | LessNon-GAAP expense adjustments: | | | | | | | | | | | | | | | | | PNC LTIP funding obligation | | | 15 | | | | 28 | | | | 30 | | | | | | Compensation expense related to appreciation (depreciation) on deferred compensation plans | | | – | | | | – | | | | 1 | | | | | | Employee compensation and benefits, as adjusted | | $ | 4,240 | | | $ | 3,852 | | | $ | 3,974 | | | | | | Revenue, GAAP basis | | $ | 12,491 | | | $ | 11,155 | | | $ | 11,401 | | | | | | Compensation and benefitsexpense-to-revenue ratio, GAAP basis | | | 34.1 | % | | | 34.8 | % | | | 35.1 | % | | | | | Compensation and benefitsexpense-to-revenue ratio, as adjusted | | | 33.9 | % | | | 34.5 | % | | | 34.9 | % |
Employee compensation and benefits, as adjusted,includesnon-GAAP expense adjustments. The portion of compensation expense associated with certain LTIP funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRock’s book value. Compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded, as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense). Compensation and benefitsexpense-to-revenue ratio, as adjusted, is equal to Employee compensation and benefits, as adjusted, divided by Revenue, GAAP basis. (3) Net income attributable to BlackRock, as adjusted: | | | | | | | | | | | | | (in millions, except per share data) | | 2017 | | | 2016 | | | 2015 | | | | | | Net income attributable to BlackRock, GAAP basis | | $ | 4,970 | | | $ | 3,172 | | | $ | 3,345 | | | | | | Non-GAAP adjustments: | | | | | | | | | | | | | | | | | Restructuring charge (including $23 tax benefit) | | | – | | | | 53 | | | | – | | | | | | PNC LTIP funding obligation, net of tax | | | 11 | | | | 19 | | | | 22 | | | | | | The Tax Cuts and Jobs Act: | | | | | | | | | | | | | | | | | Deferred tax revaluation (noncash) | | | (1,758 | ) | | | – | | | | – | | | | | | Deemed repatriation tax | | | 477 | | | | – | | | | – | | | | | | Other Income tax matters | | | 16 | | | | (30 | ) | | | (54 | ) | | | | | Net income attributable to BlackRock, as adjusted | | $ | 3,716 | | | $ | 3,214 | | | $ | 3,313 | | | | | | Diluted weighted-average common shares outstanding(1) | | | 164.4 | | | | 166.6 | | | | 169.0 | | | | | | Diluted earnings per common share, GAAP basis(1) | | $ | 30.23 | | | $ | 19.04 | | | $ | 19.79 | | | | | | Diluted earnings per common share, as adjusted(1) | | $ | 22.60 | | | $ | 19.29 | | | $ | 19.60 | |
| (1) | Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations. |
A-2BLACKROCK, INC. 2018 PROXY STATEMENT
| | | | | | | | | R. Andrew Dickson III
Corporate Secretary
| | | | Annex A:Non-GAAP Reconciliation ●Non-GAAP Financial Measures | | | | |
Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
For each period presented, thenon-GAAP adjustment related to the restructuring charge and PNC LTIP funding obligation was tax effected at the respective blended rates applicable to the adjustments. The noncash deferred tax revaluation benefit of $1,758 million and the other income tax matters were primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill. These amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to ensure comparability among periods presented. A deemed repatriation tax expense of $477 million has been excluded from the 2017 as adjusted results due to theone-time nature and to ensure comparability among periods presented. Per share amounts reflect net income attributable to BlackRock, as adjusted divided by diluted weighted average common shares outstanding. ANNEX ABLACKROCK, INC. 2018 PROXY STATEMENT A-3
PROPOSED AMENDMENT TO BLACKROCK’S AMENDED AND RESTATED BYLAWS (Item 4)
Annex B Section 2.12 Proxy Access.
(a) Whenever the Board of Directors solicits proxies with respectAmendment to the electionBlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan
THIS AMENDMENT (this “Amendment”) is made as of directors at an annual meeting of stockholders, subjectMay , 2018 to the provisions of this Section 2.12,BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan, as amended from time to time (the “Plan”). Any capitalized terms used and not defined herein shall have 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 defined 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 have such nominee includedmeanings set forth in the 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 statementPlan. WHEREAS, pursuant to Section 148(f) of the 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 the Corporation 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 onPlan, 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 calculated based on the number of directors in office as so reduced. For purposes of determining when the Permitted Number has been reached, each of the following 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 subsequently 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 Notice 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 Corporation’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 below)) 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 common 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 deemed 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 Minimum Holding Period in order to meet the three percent (3%) ownership requirement of the “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 to 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 and from time to time alter, amend, suspend or terminate the Plan in whole or in part, provided that (i) no amendment shall adversely affect any of the future, such stockholder’s or its affiliates’ full right to vote or direct the votingrights of any Grantee, without such shares and/or (2) hedging, offsetting or altering toGrantee’s consent, under any degreeAward theretofore granted under the Plan and (ii) 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 sharesamendment 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 Notice 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 Corporation’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 voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any timeapproved by the stockholder. 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 bestockholders (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 noticeBoard) 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 any of its obligations under this Section 2.12state law, stock listing requirements or (ii) a Stockholder Nominee otherwise becomes ineligible for inclusionother applicable law; and
WHEREAS, the Board has determined to amend the Plan in the Corporation’s proxy materials pursuantmanner set forth below, subject 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 determinedapproval by the Board of Directors (or any duly authorized committee thereof) orstockholders. NOW, THEREFORE, the chairman ofPlan is hereby amended as follows, subject to approval by the annual meeting, (A) the Corporation may omitstockholders: | 1. | The first sentence of Section 5(a) of the Plan is hereby amended and restated in its entirety as follows: |
| “Subject to adjustment as provided in Section 5(d), 41,500,000 shares of Stock shall be reserved for the grant or settlement of Awards under the Plan.” |
| 2. | This Amendment and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. |
| 3. | Except as amended above, the Plan shall remain in full force and effect. |
BLACKROCK, INC. 2018 PROXY STATEMENT B-1
BlackRock’s Mission Statement on Sustainability We are an asset manager whose objective is to the extent feasible, remove the information concerning such Stockholder Nomineecreate better financial futures for our clients and the related Supporting Statement from its proxy materials and/or otherwise communicate to its stockholders that such Stockholder Nominee will not be eligible for election at the annual meeting, (B) the Corporation shall not be required to include in its proxy materials any successor or replacement 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 nominationpeople they serve. We aspire to be invalid and such nomination shall be disregarded notwithstanding that proxiesan industry leader 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.
how we incorporate sustainability into: (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.
This Section 2.12 provides the exclusive method for a stockholder to include nominees for election to the Board of Directors in the Corporation’s proxy materials.
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processes and learning across the firm | | | | Our stewardship of our clients’ assets | | | | Our sustainable investment solutions for our clients | | | | The operations of our own business |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | GOVERNANCE AND BOARD | | | | | | | | | | | | | | | We are vocal advocates for the adoption of sound corporate governance policies that include strong Board leadership, prudent management practices and transparency and have implemented such a framework at BlackRock through a set of principles, guidelines and practices that support sustainable financial performance and long-term value creation for shareholders. We continually review our approach in coordination with the governance philosophy and standards we apply to other companies. BlackRock’s Board plays an integral role in our governance and long-term sustainability. As BlackRock has evolved, so has our Board’s pursuit of strong corporate governance and standards of excellence. In reviewing Director candidates, the Nominating and Governance Committee takes into consideration a candidate’s professional background, gender, race, national origin and age and regularly 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 BlackRock’s current and future global strategy, business and governance. | 2 | | HUMAN CAPITAL | | | | | | | | | | | | | | | As an asset manager, the long-term sustainability of our firm is heavily dependent on our people. We deliberately align employee incentives with the risk and performance frameworks of the firm. We are committed to fostering a unifying culture, encouraging innovation, ensuring that we are developing, retaining and recruiting the best talent and incorporating inclusion and diversity into all levels of our business. We support employees in giving back and volunteering in their local communities and globally for environmental and social efforts that move them. | 3 | | ENVIRONMENTAL SUSTAINABILITY | | | | | | | | | | | | | | | BlackRock is committed to using our resources responsibly to support the long-term sustainability of our firm and of the global environment in which we and our clients live and operate. We do this, for example, by investing in LED technology and green buildings, pursuing a high utilization rate of our corporate offices and consolidating our data centers. Two of our largest data centers are now powered by renewable hydropower. Employees are also encouraged to participate in activities which focus on BlackRock’s impact on the environment, including: low carbon travel to work and video conferencing in lieu of travel. Additionally, we provide opportunities for employees to engage on sustainability-themed initiatives outside of the office. | 4 | | PUBLIC POLICY | | | | | | | | | | | | | | | As an important part of our fiduciary duty to our clients, BlackRock advocates for public policies that we believe are in our clients’ long-term interests. We support the creation of regulatory regimes that increase financial market transparency, protect investors, and facilitate responsible growth of capital markets, while preserving consumer choice and properly balancing benefits versus implementation costs. | 5 | | RISK MANAGEMENT | | | | | | | | | | | | | | | Understanding and managing risk is the cornerstone of BlackRock’s approach to responsible investing. Our Risk and Quantitative Analysis group promotes BlackRock as a leader in risk management by providing independenttop-down andbottom-up oversight to help identify investment, counterparty, operational, regulatory and technology risks. The Board has ultimate responsibility for oversight of BlackRock’s risk management activities. |
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BLACKROCK, INC. 55 EAST 52ND STREET NEW YORK, NYNEW YORK 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 STOCKHOLDERSHAREHOLDER MATERIALS | | If you would like to reduce the costs incurred by BlackRock, Inc. in mailing proxy materials, you can consent to receive all futureFuture 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 stockholdershareholder 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 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. 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. | | STOCKHOLDERSHAREHOLDER MEETING REGISTRATION:REGISTRATION
| | To request an admission ticket to attend the meeting, visit the “stockholder meeting registration”“Register for Meeting” link at www.proxyvote.com and provide the 16-digit control number located on your proxy card.You must have an admissionsadmission ticket to attend the meeting.meeting. You must request an admission ticket by 11:59 p.m. Eastern Time on May 24, 201622, 2018.. | | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | | | | E03585-TBD | | KEEP THIS PORTION FOR YOUR RECORDS | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
E40399-P05894 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED, DATED AND RETURNED. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BLACKROCK, INC. | | | | | | | | | | | | | | A.The Board of Directors recommends a vote FOR all
nominees listed in Item 1, FOR Item 2, FOR Item 3 and FOR Item 2, 3 and 4. | | | | | | | | | | | | | | | | | | | | | | | | | 1.
| | Election of Directors
| | | | | | | | | | | | | | | | | | | | | | | | | Nominees:
| | For
| | Against
| | Abstain
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1a. Abdlatif Yousef Al-Hamad | | ¨ | | ¨ | | ¨ | | | | | | 1. | | | | | | | | Election of Directors | | | | | | | | | | | | | | | | | | | | | 1b. Mathis Cabiallavetta
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| | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | | | 1c. Pamela Daley
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| | | | | | 1m.
| | Cheryl D. Mills
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Against | | Abstain | | | | | | | | | | | | | | | | | | | 1d. William S. Demchak
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| | | | | | 1n.
| | Gordon M. Nixon
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| | | | | | | | | | | | | | | | | | | | | 1e. Jessica P. Einhorn
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| | | | | | 1o.
| | Thomas H. O’Brien
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| | | | | | | | | | | | | | | | | | | | | 1f. Laurence D. Fink
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| | | | | | 1p.
| | Ivan G. Seidenberg
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| | | | | | | | | | | | | | | | | | | | | 1g. Fabrizio Freda
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| | | | | | 1q.
| | Marco Antonio Slim Domit
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| | | | | | | | | | | | | | | | | | | | | 1h. Murry S. Gerber
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| | | | | | 1r.
| | John S. Varley
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| | | | | | | | | | | | | | | | | | | | | 1i. James Grosfeld
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| | | | | | 1s.
| | Susan L. Wagner
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| | | | | | | | | | | | | | | | | | | | 1j. Robert S. Kapito
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| | | | 2.
| | 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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| | | | | | | 1k. David H. Komansky
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| | | | 3.
| | Ratification of the appointment of Deloitte & Touche LLP as BlackRock’s independent registered public accounting firm for the year 2016.
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| | | | | | | 1l. Sir Deryck Maughan
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| | | | 4.
| | Approval of a management proposal to amend the bylaws to implement “proxy access”.
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| | | | | For address changes and/or comments, please check this box and write them on the back where indicated.
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| | | | B. Stockholder Proposal - The Board of Directors recommends a vote AGAINST Item 5.
| | | | | | | | | | | | | | | | | | | 5.Nominees:
| | | | | | | | | | | | | | | | | | | | A stockholder proposal by the Stephen M. Silberstein Revocable Trust regarding proxy voting practices relating to executive compensation.1a. Mathis Cabiallavetta
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | ¨1b. Pamela Daley
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | ¨1c. William S. Demchak
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | ¨1d. Jessica P. Einhorn
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1e. Laurence D. Fink | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1f. William E. Ford | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1g. Fabrizio Freda | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1h. Murry S. Gerber | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1i. Margaret L. Johnson | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1j. Robert S. Kapito | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1k. Sir Deryck Maughan | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1l. Cheryl D. Mills | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1m. Gordon M. Nixon | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1n. Charles H. Robbins | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1o. Ivan G. Seidenberg | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1p. Marco Antonio Slim Domit | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1q. Susan L. Wagner | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1r. Mark Wilson | | ☐ | | ☐ | | ☐ | | | | | | | | 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. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | 2. | | | | | | Approval, in anon-binding advisory vote, of the compensation for named executive officers. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | 3. | | | | | | Approval of an Amendment to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | 4. | | | | | | Ratification of the appointment of Deloitte LLP as BlackRock’s independent registered public accounting firm for the fiscal year 2018. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | B. | | Shareholder Proposal - The Board of Directors recommends a vote AGAINST Item 5. | | | | | | | | | | | | | | | | | | | | | 5. | | | | | | Shareholder Proposal - Production of an Annual Report on Certain Trade Association and Lobbying Expenditures. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | For address changes and/or comments, please check this box and write them on the back where indicated. | | | | | | | | ☐ | | |
| | | | | | | | | | | | | | | All shares will be voted as instructed above. In the absence of instructions, all shares will be voted with respect to registered stockholdersshareholders 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. | | |
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BLACKROCK, INC. 20162018 ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS
May 25, 201623, 2018 8:00 AM, local timeEDT TheLotte 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 isare available through 11:59 PM Eastern Time on May 24, 2016. 22, 2018. 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.www.proxyvote.com. | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — |
E03586-TBD
E40400-P05894 PROXY FOR ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS 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, 2016,29, 2018, at the 20162018 Annual Meeting of StockholdersShareholders to be held on May 25, 2016,23, 2018, beginning at 8:00 a.m., local time,AM, EDT, at TheLotte 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. 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: | | | | | | | | | | | | | | | | Address Changes/Comments: | | | | | | | |
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side | |
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