BlackRock chief executive Larry Fink has taken a $4m pay cut after the company’s stock performed poorly last year.
Mr Fink earned $24m in 2018, a 14 per cent drop from the $28m he drew in 2017. The decision to decrease Mr Fink’s compensation reflected the 23.5 per cent drop in BlackRock’s share price last year, according to the company’s annual proxy statement released on Friday.
“BlackRock’s board of directors and I both believe that the performance of our stock price should be a factor in determining the compensation of our senior executives,” Mr Fink said. “Despite our differentiation, BlackRock was not immune to sentiment on the asset management sector last year. As a significant owner of BlackRock shares myself, I share your deep disappointment in our stock’s 2018 performance.”
The dip in BlackRock’s share price was softer than its peers, which together shed 26 per cent, according to a basket of listed fund managers in the S&P 500 index of US stocks. Those shares have since bounced, up 9.2 per cent in the first quarter. BlackRock’s own stock jumped 8.8 per cent in the quarter.
Fund managers have been struggling to retain assets in high-fee, actively-managed funds amid a sweeping shift toward lower-cost “passive” vehicles that do no more than track an index. BlackRock offers both kinds, and its iShares business selling exchange-traded index funds accounted for $1.7tn of its $6tn in assets under management.
“We generated $124bn of net inflows in 2018, including record fourth-quarter iShares flows, despite heightened uncertainty and volatility in global markets,” Mr Fink said.
BlackRock said in January that it would lay off 500 staff to cut costs.
The make-up of Mr Fink’s compensation changed slightly in 2018. His base salary increased to $1.5m from $900,000 the year before, and the cash portion of his pay dropped to $7.7m from $10m. Mr Fink earned 195 times the average BlackRock employee in 2018, the same ratio it reported for 2017.
Other BlackRock executives also saw a drop in their compensation. Robert Kapito, president of the firm, received $19m, also 14 per cent down on the prior year.