Ross Kerber, Simon Jessop

LONDON/BOSTON -BlackRock Inc is planning to allow large clients to have a greater say in the voting at their annual meetings. Some industry experts believe this could lead companies being subjected more resistance from disgruntled shareholders.

BlackRock (NYSE 🙂 – The world’s biggest money manager, with assets of $9.5 trillion, is a common voting entity for investors. It has become one of Wall Street’s most powerful voices in matters ranging in importance from climate change to corporate director elections and diversity in the workforce.

BlackRock informed clients that from next year certain institutional account owners will have the ability to vote for about 40% of BlackRock’s $4.8 trillion worth assets.

Other people could opt to vote for a third party and then use BlackRock to cast their votes.

These changes may make it harder for companies to pass shareholder vote decisions. This is because institutional investors, which often have stricter corporate governance voting procedures, like large pension funds or endowments, will be able to exercise more control, according to Matt DiGuiseppe (vice president, corporate governance software company Diligent).

DiGuiseppe indicated that “I anticipate this will have an important negative impact on (a company’s) level of support that is received by its management.”

Industry insiders are not all in agreement.

Bruce Goldfarb is the president of Okapi Partners LLC. He said that he expects only a minor impact from these changes.

Goldfarb stated that he doubts many BlackRock investors will have policies which are different to the policies BlackRock has already established and implemented by its investment team.

The move is business-wise for BlackRock in all cases, according to James McRitchie. James McRitchie is a private investor that files shareholder resolutions as investors increasingly consider the social impacts of their portfolios.

He said that more people view their investments as engagement tools, and not bets on alpha, or are able to get higher returns.

BlackRock stated that the option to vote for companies in certain index strategies would be available in separately managed accounts or in certain pools of funds in Britain and America.

BlackRock stated in a letter that these options were designed to give you more control over proxy voting if you feel it is necessary. The letter stated that BlackRock intends to expand voting options to other investment products.

BlackRock is often the owner of 5% to 10% of major corporations because of a huge surge in money invested into low-cost index fund funds. Although this trend has begun to change, the firm and its competition used to defer to shareholder recommendations from companies.

BlackRock opposed directors this year and supported climate resolutions more frequently under a new chief of stewardship, while it maintained support for management pay 95% at U.S. businesses.

Professor Jill Fisch from the University of Pennsylvania said that BlackRock has made significant changes to allow pension funds and large asset owners more control over company decisions. She also suggested that rival fund managers may follow in BlackRock’s footsteps, at least for U.S investors.

Fisch explained that while big asset managers may try to be good at what they do, it’s not who I want running this country.