Harvard Law School Forum on Corporate Governance Publishes Olshan Client Alert on BlackRock’s Voting Options Initiative
The Harvard Law School Forum on Corporate Governance, one of the top online resources for discourse on corporate governance, recently published a client alert authored by Partners Andrew Freedman and Ron Berenblat titled “BlackRock’s Recent Move Could Benefit Shareholder Activists in Election Contests.” The article discusses the October 7 announcement by BlackRock that it has launched an initiative to provide its institutional clients, such as pensions and endowments, the opportunity to make their own voting decisions on proxy matters tied to their investments. Beginning in 2022, these voting options will first be made available to institutional clients invested in its index strategies holdings within institutional separate accounts globally and certain pooled funds in the U.S. and UK that are managed by BlackRock. The authors of this client alert believe that the action taken can have long-term benefits for shareholder activists. “We believe this could be a positive development for shareholder activists and potentially lead to a higher overall success rate in contested elections. In prior years, BlackRock has been particularly unsympathetic to activists in contested elections… Allowing BlackRock’s institutional clients to depart from the firm’s historical tendency to vote in favor of management by giving these clients the ability to vote on their own could tilt voting results in favor of activists at shareholder meetings of companies where BlackRock is a significant shareholder.” The authors ultimately conclude that BlackRock’s decision, “[W]ill likely influence strategic and capital deployment decisions both companies and activists will make when BlackRock is a shareholder. We envision companies and activists will widen their solicitation outreach to target not only the BlackRock Investment Stewardship team, but also individual institutional clients who could potentially take control of their proxy voting under the new voting framework.”
Read the article in its entirety here.