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Because top fund managers like BlackRock rarely discuss their
votes in detail, filings in late August to the U.S. Securities
and Exchange Commission provide a rare window into the
influential ballots they cast at springtime shareholder meetings
like the one held by Exxon on May 25, one of this year's more
contentious.
BlackRock, <BLK.N> which manages nearly $5 trillion, has been
criticized for largely supporting company managers on matters
like executive pay or electing directors. BlackRock funds have
backed corporate directors around 97 percent of the time since
2013, according to research firm Proxy Insight, and mostly
backed Exxon at this year's meeting such as opposing shareholder
proposals addressing climate change.
BlackRock executives say they prefer to press companies behind
the scenes, and vote against management only when such
engagement fails. But in a rare break, filings on Friday showed
funds including the $45 billion BlackRock Global Allocation Fund
<MALOX.O> withheld support from Exxon directors Jay Fishman and
Kenneth Frazier this year.
Fishman, who recently passed away, had been CEO of insurer
Travelers. <TRV.N> Frazier is CEO of drugmaker Merck & Co.<MRK.N>
While spokesman for BlackRock and Exxon declined to comment,
BlackRock's reasoning for the votes appears to be spelled out in
a recent governance report on its website. The report describes
how BlackRock executives tried to discuss strategy and capital
allocation with independent directors of an unnamed "large oil
and gas corporation," but were rebuffed because of a policy
against such talks.
As a result, BlackRock said it withheld support from the
company's lead independent director and the chair of the
committee that set the policy. Fishman had been Exxon's
"presiding director," meant to provide independent board
leadership according to Exxon's proxy statement, while Frazier
led its board affairs committee.
The two were re-elected with 88 and 90 percent of votes cast,
respectively, down from 95 and 98 percent in 2015. BlackRock is
Exxon's second-largest shareholder with about 6 percent of its
stock, according to the proxy. Exxon's other directors got no
less than 95 percent support this year.
How much contact independent directors should have with
outsiders has become a loaded issue because of the rise of
activist investors pushing disruptive agendas.
Asked about BlackRock's concern, Exxon spokesman Alan Jeffers
cited a webpage outlining board communications procedures, which
do not directly address the matter. But Tim Smith, who leads
shareholder engagement efforts at Walden Asset Management, said
Exxon executives have described at meetings the sort of policy
criticized by BlackRock.
Filings also showed BlackRock funds did not back resolutions at
3M Co, <MMM.N> Illinois Tool Works Inc <ITW.N> or Xerox Corp <XRX.N>
calling on the companies to exclude the impact of share buybacks
when calculating executive pay, even though the resolutions
cited the concerns about buybacks raised by BlackRock CEO Larry
Fink.
(Reporting by Ross Kerber in Boston; Editing by Andrea Ricci)
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