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Wednesday, June 7, 2023

Larry and Rob Get Bodyguards

News summary by MFWire's editors

A $9-trillion-AUM (as of March 31), 19,000-plus-person, publicly traded asset manager is now paying hundreds of thousands of dollars for security services for its two top executives. Yet the cost is a mere drop in the bucket compared to the duo's total compensation.

Last year, BlackRock [profile] paid $376,360 "for the personal security" of Larry Fink, chairman and CEO of the New York City-based firm. And this year they're paying for security for BlackRock's president, Rob Kapito. Those two tidbits and more were revealed in BlackRock's April 14 proxy statement, in advance of the firm's annual meeting on May 24.

Those 2022 security expenses for Fink translate into about 1.15 percent of his total 2022 compensation of $32.7 million. If the security expenses for Kapito this year are similar, and if his compensations is in line to the $24.9 million he received last year, then that would translate into about 1.51 percent of his total compensation.

Fink's BlackRock-paid security expenses last year included $198,410 for "security personnel" at his homes and $177,950 to upgrade his homes' security systems. Security is also a factor in Fink and Kapito's transportation expenses: the BlackRock board requires them to fly private.

The proxy statement offers an explanation of the security expenses:
In 2022, at the request of the Board, BlackRock’s security team began to implement individualized personal security programs for Messrs. Fink and Kapito that were recommended in a study performed by an independent, third-party security consulting firm. Under these programs, BlackRock provides certain security-related services to Messrs. Fink and Kapito to address potential threats to their safety that have originated in connection with their roles as CEO and President of the Company, respectively. The Board believes these services are not only necessary and in the interest of the personal safety of Messrs. Fink and Kapito, but they also are in the interests of the Company and its shareholders given the critical value Messrs. Fink and Kapito provide as co-founders and leaders of the Company.

Cheyenne Ligon of Pensions & Investments highlighted the disclosures and offers takes from security specialists Matthew Dumpert of Kroll and Kent Moyer of World Protection Group. Dumpert said that BlackRock's move is "not atypical at all" for "Fortune 200, Fortune 300 companies": BlackRock is a Fortune 300 company.

Indeed, BlackRock and Fink in particular have become increasingly high-profile in recent years, and they've also been increasingly targeted for protests and public criticism from different sides of the political spectrum. Yet a BlackRock spokesperson declined to comment to P&I about what specific concerns prompted the 2022 decision tighten security for Kapito and Fink.

"BlackRock has a robust security program in place aimed at protecting our employees and offices," a BlackRock spokesperson reportedly told P&I. 

Edited by: Neil Anderson, Managing Editor

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