TheCorporateCounsel.net

Last month, BlackRock released its updated its voting guidelines that will apply to 2025 annual meetings – including updates to its guidelines for U.S. securities as well as its “Global Principles.” The policy changes are effective as of January 2025.

As this Fenwick alert notes, “while the 2025 proxy voting guidelines are largely consistent with last year’s version, there are a few notable changes, particularly to BlackRock’s policy on board diversity.” On the important topic of board composition, the Fenwick alert goes on to state:

Perhaps the most notable changes to the proxy voting guidelines appear in this section, where the focus is now on “board composition” rather than “diversity” and achieving a variety of “experiences, perspectives, and skillsets.” Going forward, companies are urged to explain how their approach to board composition supports the company’s governance practices.
The updated guidelines (other than a footnote) no longer include references to gender, race/ethnicity, and age. Additionally, the recommendations that boards aspire to at least 30% diversity and include at least two women and one director from an underrepresented group have been removed.

However, the updated guidelines do indicate that to the extent an S&P 500 company board is an outlier and does not have a mix of professional and personal characteristics (including, but not limited to, gender, race/ethnicity, disability, veteran status, LGBTQ+, and national, Indigenous, religious, or cultural identity) that is comparable to market norms, BlackRock may vote on a case-by-case basis against members of the nominating/governance committee.

For companies with smaller market capitalization and those in certain sectors facing more challenges in nominating directors from different backgrounds, BlackRock will look for a relevant mix of professional and personal characteristics.

The alert highlights changes to a number of other governance-related voting guidelines relating to: boards and directors; the oversight role of the board; board term limits and director tenure; capital structure proposals – equal voting rights; material sustainability related risks – climate change; and corporate political activities.

– Dave Lynn