Pandemics may come and go, but governance marches on. That’s the message BlackRock seems to have sent earlier this week, when it distributed its “Engagement Priorities for 2020.” Of course, the document was completed well before the onset of the COVID-19 pandemic. However, you’d think that BlackRock, ordinarily a reasonable player in the governance sandbox, would have added a last-minute addendum to the document or at least made public statements acknowledging that the current situation is extraordinary and might be taken into account in evaluating how companies are doing in that sandbox.
Not so, apparently. In fact, some BlackRock spokespeople have suggested that the crisis will separate the governance wheat from the chaff. I suppose that’s true to some extent, but when a company is struggling for its very existence, with many jobs at stake, is it really necessary that it worry about having non-executive board leadership? (Those of you who’ve read this blog probably know my views on board leadership. For those of you who have not followed my screeds, I have seen independent board leadership work wonderfully, and I’ve also seen it fail miserably. So, to me, it’s really not that big a deal.)
I note that BlackRock’s priorities should come as no surprise and generally are reasonable. Aside from board quality (i.e., leadership), it will be looking at:
- environmental risks and opportunities, including board and management oversight;
- corporate strategy and capital allocation;
- compensation that promotes long-termism; and
- human capital management.
Lest you think that BlackRock is an outlier, think again. Any number of institutional investors and advisers have let it be known that companies whose annual meetings are coming up may get a pass on meeting virtually this year, but if they do so they had better shape up in the future. For example, the “DealBook” section of The New York Times quotes Scott Stringer, New York City Comptroller, saying that the funds he oversees “will not take action against boards holding virtual-only annual meetings due to the coronavirus that disclose their rationale and affirm their commitment to holding in-person meetings in the future.” Really? They have to disclose their rationale? Didn’t he just say it? And why commit to holding in-person meetings in the future when a virtual meeting gives far more holders that Mr. Stringer is allegedly protecting an opportunity to attend a meeting than having it at some venue a thousand miles from anywhere?
And so it goes.