Laurence “Larry” Fink, the founder and chief executive of BlackRock, recently told the firm’s 14,000 employees that he is instituting potentially the most aggressive diversity program in Corporate America ensuring that, “a bunch of white men”, will no longer be running the world’s largest money management firm.
BlackRock, he said is now “putting the pieces in place so that five years from now we’ll have a more diverse (company) not just a bunch of white men.”
Larry Fink, BlackRock CEO, speech to employees
The comments, obtained by FOX Business and confirmed by a BlackRock spokeswoman, come as Fink has ruffled feathers inside his company, as well as among some clients for embracing a number of progressive political causes and advocating what has been described as “corporate socialism” – a management concept that implores CEOs to run their companies in a way that doesn’t just benefit shareholders, but also “the communities in which they operate.”
In his comments on diversity, Fink used surprisingly strident language and said executives could see their paychecks cut if they didn’t meet certain hiring goals, according to a text of his remarks. Some BlackRock executives told FOX Business they believe that Fink is now instituting hiring quotas at BlackRock.
Fink, of course, isn’t the only CEO who supports progressive politics. Famed investor Warren Buffett was a staunch supporter of President Obama, and has spoken about the need for the rich to pay more in taxes to close the budget deficit.
But even corporate titans like Buffett attempt to avoid overt political discussions because they don’t want to upset shareholders and clients who might disagree with them. Legally, their primary responsibility is to enhance shareholder value, not to make the world a better place.
As a result, the tone of Fink’s recent pronouncements on issues such as the environment, diversity and corporate responsibility has now sparked a debate inside C-suites and among corporate governance experts. At issue is the propriety of a public company executive using business resources and his perch as CEO to advance a personal agenda.
“This is fundamentally not the role of a public company and it’s unfair to investors who may not agree with his politics,” said Charles Elson, a corporate governance expert at the University of Delaware. “A CEO shouldn’t use house money to further a goal that may not create economic returns.”
Finks remarks to his employees on diversity have yet to be reported and they came on the heels of his annual “Letter to CEOs,” a yearly missive where he has increasingly pushed his fellow corporate titans to embrace progressive causes and manage with a “social purpose.”
In this year’s letter, released last Thursday, Fink stated that, “society is increasingly looking to companies, both public and private, to address pressing social and economic issues. These issues range from protecting the environment to retirement to gender and racial inequality, among others.”
“Society is increasingly looking to companies, both public and private, to address pressing social and economic issues. These issues range from protecting the environment to retirement to gender and racial inequality, among others.”
Larry Fink, BlackRock CEO 2019 “Letter to CEOs”
In private remarks to all of BlackRock’s employees a day earlier, Fink underscored the firm’s diversity efforts. To be sure, Corporate America and Wall Street in particular, have begun various programs and incentives for management to attract and retain more women and minorities to their executive ranks. Meeting diversity goals is among several factors that corporate managers are graded on.
But Fink appeared to go further at least in his remarks. He warned managers that their bonuses and pay will decline if they fail to meet diversity hiring targets, while using language to describe the new diversity effort that some BlackRock executives considered offensive. “My leadership team is being measured and their pay is being reflected…