At a time when compensation packages on Wall Street are under the microscope, influential proxy advisory firms Glass Lewis and ISS have urged BlackRock shareholders to vote against CEO Larry Fink’s proposed 27 million dollar remuneration package during the company’s upcoming annual meeting on May 15. This stance reflects broader concerns about the disconnect between pay and performance at top finance firms, including Morgan Stanley and Goldman Sachs.
Both proxy advisory firms criticise the excessive compensation awarded to BlackRock’s senior executives, particularly pointing out that it significantly surpasses the industry median. Fink’s proposed package includes a 1.5 million dollar base salary, 1.1 million in other compensation, and a 7.9 million cash bonus, with the rest in restricted shares. Forbes estimates Fink’s personal assets at around 1.2 billion dollars.
Glass Lewis and ISS’s objections also extend to transparency issues at BlackRock regarding how executive compensation is justified by performance metrics. Despite such concerns, last year’s annual meeting saw Fink’s 32.7 million dollar package approved with a 92 percent majority vote.
Scrutiny directly more broadly
Similar scrutiny is directed at Morgan Stanley and Goldman Sachs. Morgan Stanley’s recent executive payments have also been criticized for excessive amounts relative to their industry peers and performance. Former CEO James Gorman received a 37 million dollar payout, while potential successors received significant one-time payments despite a comparative underperformance.
Goldman Sachs CEO David Solomon’s 2023 compensation, totaling 31 million dollars, represents a 24 percent increase from the previous year, a period which saw a profit decline at the bank. The package includes a 2 million dollar base salary, 8.7 million cash bonus, and an equity award valued at 20.3 million, contingent on future performance.
Glass Lewis has expressed concern over the compensation versus performance ratio at Goldman Sachs, highlighting governance issues and missteps in the bank’s consumer market strategy that led to substantial losses. This marks a significant shift from last year when there were minimal governance concerns at Goldman Sachs.