Here, Worth looks back at Laurence Fink’s path to power, the power play that landed him in the top spot and where he is now. The chairman and CEO of BlackRock topped the Power 100 list in 2016.
“Tax changes will embolden those activists with a short-term focus to demand answers on the use of increased cash flows,” he said, “and companies who have not already developed and explained their plans will find it difficult to defend against these campaigns.Laurence Fink. Fink makes a point in his letter that the recent corporate tax cut could bring out the kind of activist investors he once denounced. “In the case of Apple,” Jana wrote, “we believe the long-term health of its youngest customers and the health of society, our economy, and the company itself, are inextricably linked.” (Side note: It isn’t clear why Jana went after Apple, considering that it has better tools to manage the use of its products by children than anyone else in the industry but the general idea of technology companies paying more attention to children’s health is a good one.) But here was Jana espousing the importance of issues like public health, human capital management and environmental protection, and saying that “companies pursuing business practices that make short-term sense may be undermining their own long-term viability.” The chief executive of Whole Foods, John Mackey, once referred to Jana as “greedy bastards” when the firm was attacking him. Jana Partners and Calstrs, the huge California retirement system that manages the pensions of the state’s public schoolteachers, wrote a letter to Apple last week demanding that it focus more on the detrimental effects its products may have on children. In a surprising twist, even activist investors are taking up social causes. BlackRock voted in favor of activist-led proposals in 19 percent of proxy fights last year and that number is likely to rise. It also voted in favor of Bill Ackman against ADP. One of its funds voted in favor of the activist Nelson Peltz last year in his proxy fight with Procter & Gamble. Perhaps even more notably, Exxon also changed its policy of non-engagement, and now permits meetings between shareholders and independent directors.īlackRock has even begun siding with activist investors themselves, something it hasn’t publicized. The climate disclosure proposal ultimately passed, and just last month Exxon agreed to publish climate impact reports. Fink says he is adding staff to help monitor how companies respond only time will tell whether BlackRock truly uses his firm’s heft to influence new social initiatives. It is a refrain that we’re hearing more and more from various pockets of the business community, and in fact last year company leaders found themselves taking stands on issues like immigration policy, race relations, gay rights and more.īut for the world’s largest investor to say it aloud - and declare that he plans to hold companies accountable - is a bracing example of the evolution of corporate America. Fink wrote that he is seeing “many governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining.” He added, “As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges.” In a candid assessment of what’s happening in the business world - and perhaps taking a veiled shot at Washington at the same time - Mr. “It is huge for an institutional investor to take this position across its portfolio.‘‘ He said he’s seen “nothing like it.’’
“It will be a lightning rod for sure for major institutions investing other people’s money,” said Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management and an expert on corporate leadership. It may be a watershed moment on Wall Street, one that raises all sorts of questions about the very nature of capitalism.
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