BlackRock backs more “shareholder democracy”
As investors push for a bigger say in how companies tackle a variety of issues — including supporting or opposing environmentally and socially minded goals — Larry Fink wants to give them even more of a voice in the boardroom.
In a letter to clients of BlackRock, the $8 trillion money manager that he runs, Fink wrote that a “revolution in shareholder democracy” was growing. For its part, BlackRock will expand a program that lets investors in its funds choose how they vote in corporate elections, in a recognition that shareholders “don’t want to sit on the sidelines.”
But even Fink concedes that giving investors more say could make the business of running a publicly traded company messier than ever, especially when he says voting “should be as easy to do so as it is to buy a mutual fund or E.T.F. on your mobile phone today.”
“The next generation of investors will increasingly demand to be heard,” Fink wrote. BlackRock aims to give them a voice through Voting Choice, an initiative it announced last year to give institutional investors and some individual ones options for voting at annual shareholder meetings.
The firm said that Voting Choice was now open to investors representing $1.8 trillion of its $3.8 trillion in index funds. BlackRock is also expected to extend the option to clients in some British mutual funds for next year’s voting season.
Giving investors more say over their holdings is one way to address a major criticism of giant money managers: that they hold too much sway over publicly traded companies by virtue of their huge share holdings. Charles Schwab and Vanguard said recently that they were exploring similar programs.
That could pose new challenges for corporate America. “Those of us who lead public companies will have a broader set of shareholders with whom to engage,” Fink wrote in his letter. Giving shareholders more say may force companies to adopt more politics-style campaigns, which would most likely be expensive, to reach a more expansive base of voting investors.
Still, it is unclear whether shareholders will more broadly make use of this new ability. (BlackRock said clients accounting for $452 billion in assets used the program as of Sept. 30.) And it may further empower third-party proxy advisory firms, who advise shareholders on how to vote on an array of corporate matters, and who have already been criticized as having too much sway.
BlackRock is facing heat from across the political spectrum. Republican officials have criticized the firm for pushing the companies it owns stakes in to do more to combat climate change, including withdrawing state money from its funds. At the same time, environmental activists have said that BlackRock isn’t doing enough on the issue.
HERE’S WHAT’S HAPPENING
The dollar gains and global stocks fall after the Fed’s rate move. After the central bank raised rates by three-quarters of a point on Wednesday, its chair, Jay Powell, said that the Fed would most likely continue to raise rates more than previously thought, but that a slowdown in increases was around the corner. U.S. futures are lower in premarket trading.
Morgan Stanley is reportedly ready to start job cuts. The Wall Street bank will begin layoffs globally within weeks, Reuters reports, owing to slowdowns in deal making and the Chinese economy.
More attorneys general move to block a big planned dividend at Albertsons. The District of Columbia, California and Illinois sued to block the grocery chain from issuing a $4 billion special payout to shareholders before antitrust regulators review its proposed sale to Kroger. It’s the latest pushback against a merger that critics say could lead to higher prices.
Peloton disappoints with poor earnings and a weak outlook. Shares in the embattled fitness company were down 20 percent in premarket trading after it reported a worse-than-expected loss and said its holiday sales would fall short of analyst estimates. Still, its C.E.O., Barry McCarthy, promised that a turnaround was coming: “The ship is turning,” he said.
Are the big layoffs at Twitter near?
The long-anticipated job cuts at Twitter may be at hand. Elon Musk plans to announce the layoffs of about half of the company’s employees — some 3,700 people — as soon as Friday, according to Bloomberg.
Employees had expected a huge culling ever since Musk purportedly told potential investors he was looking to cut as much as 75 percent of staff (though he later denied cuts would be that deep). The reason? He’s trying to drastically cut costs to make the math work on his $44 billion acquisition.
Musk has also had a busy week. He has met with advertisers and, more recently, with civil rights groups to assure them that Twitter won’t become — in his own words — a “free-for-all hellscape” of unmoderated content. And he has continued to publicly work out a plan to charge Twitter users for things like being verified, while finding time to troll critics of such a move.
Elsewhere in the Twitter-Musk universe:
Most Twitter employees, even those hired to work remotely, will be required to go to a company office, Axios reports.
The cosmetics company L’Oréal has denied a report that it will pause ad campaigns on the social network.
Expect a blitz of bids for the Commanders
For years, Dan Snyder has taken heat from lawmakers, former employees and, increasingly, from fellow N.F.L. owners over a series of scandals surrounding the Washington Commanders, which he has owned since 1999. Now it appears that he has reached a breaking point, having hired Bank of America to explore options for selling all or part of the franchise.
The move will put one of the N.F.L.’s best-known — and most troubled — teams on the block, with the promise of a big price to be paid by an eager bidder. How big? Forbes estimates that the Commanders’ value is $5.6 billion, and in any case, the team will almost certainly fetch more than the Denver Broncos, which sold for $4.65 billion.
Snyder has been under pressure for years. Here’s a recap of various scandals during his ownership:
Snyder appears to have few allies among fellow N.F.L. owners. Last month, Jim Irsay, the owner of the Indianapolis Colts, became the first to speak out against Snyder, saying that “serious consideration” should be given to removing him.
The N.F.L. commissioner Roger Goodell said any decision about Snyder should be made only after White’s investigation is finished.
What’s next? It’s unclear what options Snyder and his wife and co-C.E.O., Tanya Snyder, will accept, particularly given that a spokesman has said that they “remain committed to the team.” Sports business executives speculated that the two may want just to sell a stake, but noted that few investors might be willing to risk being associated with Snyder now.
One potential buyer is the media mogul Byron Allen, who had bid for the Broncos. (That franchise was ultimately bought by the Walmart heir Rob Walton.) And since N.F.L. teams are typically up for sale infrequently, expect other deep-pocketed moguls to come knocking.
“China remains an important business and trading partner for Germany and Europe — we don’t want to decouple from it.”
— Olaf Scholz, Germany’s chancellor, writes in an opinion article ahead of a contentious trip to Beijing this week, the first by a leader of a Group of 7 nation since the coronavirus pandemic’s start.
The Moonves scandal weighs on Paramount
Years after Les Moonves, then one of the most powerful executives in media, was fired from CBS over sexual misconduct accusations, the network’s current parent company agreed to pay millions in an effort to close the matter.
Paramount, the parent company, and Moonves will pay a combined $9.75 million, after a deal with the New York attorney general’s office. The company said it would pay the bulk of that, $7.25 million. Moonves has denied the accusations; Paramount did not admit to wrongdoing or liability as part of the settlement.
“The matter involved alleged misconduct by CBS’s former C.E.O., who was terminated for cause in 2018, and does not relate in any way to the current company,” Paramount, which was formed by the merger of CBS and Viacom after Moonves’s ouster, said.
But the inquiry found evidence that CBS executives were aware of the Moonves claims — and sought to conceal them, according to Letitia James, the attorney general. Among the findings:
A captain in the L.A. Police Department tipped off CBS to a complaint against Moonves, then worked with the company for months to keep the matter hidden.
CBS allowed Gil Schwartz, then the company’s communications chief, to sell millions’ worth of stock in June 2018 — which, James said, was insider trading, because Schwartz had known about the Moonves accusations.
THE SPEED READ
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