BlackRock UK Letter to FTSE 350 Warns of Votes Against Companies for High Pay
January 21, 2017
BlackRock's investment stewardship team in Europe recently sent letters to the Chairs of FTSE 350 companies warning that the investor would vote against company pay plans and directors if compensation was not aligned with long-term performance and potentially out of line with increases in general workforce pay. The letter, written by Amra Balic, who heads BlackRock's European governance team states "In the case of a significant pay increase that is out of line with the rest of the workforce, BlackRock expects the company to provide a strong supporting rationale." The letter seems to indicate that BlackRock's application of its proxy voting guidelines may be more rigid in 2017, stating that "While our key remuneration principles have not changed, the upcoming votes on remuneration policies provide an opportunity for us to give companies more clarity on aspects of our approach." In addition, the letter states that its analysis "includes the critical assessment of pay outcomes and gauging performance based on metrics that are under the direct control of senior management," reinforcing the trend that large investors will start to carefully analyze the links between metrics and performance. The Financial Times, which broke the story, reported that BlackRock also urges companies to disclose which pay consultants they have engaged for the Board and how much they have spent on consulting services.