Larry Fink's 2012 Letter to CEOs

Dear CEO,

On behalf of our clients, BlackRock seeks to ensure that the companies in which we invest pursue corporate governance practices consistent with superior long-term business performance. To this end, and as a fiduciary for our clients, we seek to engage in dialogue with the leadership of these companies to address issues that may be raised during the proxy season.

That’s why I am writing to acquaint you with BlackRock’s approach to corporate governance and responsible investing (CGRI). I also want to encourage you or your independent Board members, as appropriate, to engage with us if you anticipate any such issues might be raised for your company this proxy season.

We think it is particularly important to have such discussions – with us and other investors – well in advance of the voting deadlines for your shareholder meeting, and prior to any engagement you may undertake with proxy advisory firms. This will give your Board ample time to consider any shareholder feedback and make any changes it deems necessary based on that feedback. Companies that focus only on gaining the support of proxy advisory firms risk forgoing valuable and necessary engagements directly with shareholders.

BlackRock’s approach to corporate governance can be described as value-focused engagement. We reach our voting decisions independently of proxy advisory firms on the basis of guidelines that reflect our perspective as a fiduciary investor with responsibilities to protect the economic interests of our clients. The guidelines are intended very much as a framework. We apply them pragmatically because we believe that effective corporate governance is nuanced. The most important – and frequently the most valuable – form of interaction occurs when companies initiate engagement with us to explore corporate governance issues they expect to encounter. We listen carefully and respectfully to a company’s positions, and are willing to support unconventional approaches as long as they can be expected to serve the interests of long-term shareholders.

Executing a value-focused engagement approach requires a sophisticated team, and we have an expert group of corporate governance specialists to review issues and manage the process, including proxy voting. The team coordinates with our fundamental portfolio managers, in effect acting as a clearinghouse for BlackRock’s views on a company’s corporate governance and its approach to social, ethical and environmental issues.

If you would like to discuss a matter relating to corporate governance with us, please contact Michelle Edkins, Global Head, Corporate Governance and Responsible Investment at michelle.edkins@blackrock.com. I can promise you a fair, respectful and in particular, openminded airing of views.

Yours sincerely,