BlackRock has moved to encroach on JPMorgan’s territory. It announced plans last year to start a bond-trading system, called the Aladdin Trading Network. The effort failed because it couldn’t attract enough customers, and BlackRock said last month that it would route trades instead through MarketAxess Holdings Inc.’s electronic system. MarketAxess, now a publicly traded company, was founded in 2000 by two executives from JPMorgan.
BlackRock started a capital-markets unit in 2010 to give money-management clients direct access to bond sales, also a business JPMorgan has dominated.
As the biggest manager of exchange-traded funds, investments that generally track indexes, BlackRock has gained stakes exceeding 5 percent in some 2,400 companies worldwide. Early last year, BlackRock decided it was time to leverage this position and assert more power in how corporations are managed.
Fink wrote a letter in January 2012 to 600 companies in which BlackRock had the biggest holdings, saying that the firm wanted to have a direct dialogue with company managements about issues before they come up in proxies or shareholder meetings.
In the letter, Fink said that BlackRock reaches its voting decisions independently of proxy-advisory firms and that they are designed to “protect the economic interests” of investors.
Institutional Shareholder Services and Glass Lewis & Co., the two most influential proxy-advisory firms, have recommended that JPMorgan shareholders vote to split the chairman and CEO roles held by Dimon. At last year’s meeting, 40% of the shares were voted in support of the same proposal.
Even as Fink’s company seeks to take a larger role in proxy matters, it’s leaving the JPMorgan question to others. BlackRock will outsource decisions on the JPMorgan proxy to a London-based firm called Governance for Owners, according to a person familiar with the company’s decision.
PNC Financial Services Group Inc., the Pittsburgh-based lender, owns about 21% of BlackRock. That makes BlackRock subject to restrictions under the Bank Holding Company Act on voting directly on certain shareholdings, according to the person, who asked not to be identified because he’s not authorized to speak on the matter publicly.
BlackRock used Governance for Owners for the JPMorgan vote last year, opting to allow Dimon to keep both roles, the person said. While Governance for Owners is aware of BlackRock’s corporate-governance philosophy, it doesn’t have to follow it, the person said.
In a May 7 television interview on CNBC, Fink said BlackRock’s corporate-governance guidelines published on its website make clear that “we believe there is a role for a combination of chairman and CEO,” adding, “I’m a chairman and CEO.” He said BlackRock has invested “millions of dollars” on its corporate-governance team to make decisions.
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