BlackRock, the world’s largest asset manager, appears to be growing even bigger according to its second quarter results.
In the wake of this enviable growth, the firm has done the rarely thinkable — announced plans to raise base salaries by 8 percent “for all active employees up to and including the director level” by September 1 of this year.
The raise follows encouraging results. As major media outlets have noted, the asset manager has amassed $9.5 trillion in assets under management (AUM), which means the firm may one day achieve the $10 trillion mark if current trends continue. In addition, the firm achieved a revenue increase of 32 percent to $4.82 billion for the quarter, and its quarterly profits were up 14 percent to $1.378 billion.
Apparently, this looming good news inspired BlackRock executives to think about boosting salaries during a time of pandemic-inspired uncertainty and many challenges.
“After a period like no other in the firm’s history, BlackRock has never been better positioned for the future — and we have you to thank,” Larry Fink, CEO, and Rob Kapito, chief operating officer (COO), at BlackRock, say in a staff memo excerpt obtained by FTF News.
“Your initiative, commitment and teamwork helped ensure that through the pandemic we supported our clients, delivered for shareholders, and gave back to the communities where we operate. And, while it’s not over, we are emerging from the challenges brought on by COVID even stronger,” Fink and Kapito say.
“To recognize your contributions and ensure you’re sharing in our strong growth, we are increasing total compensation by raising base salaries by 8 percent for all active employees up to and including the director level. The increase takes effect September 1, 2021 for those actively employed as of today. In addition to this off-cycle adjustment to base salaries, we will still follow our standard year-end compensation process, which includes eligibility for an additional salary increase effective in early 2022,” according to the memo. “By investing in you, we are investing in the future of the firm. It’s your contributions that are making BlackRock an essential partner for our clients, a leader in our industry and a great place to work.”
While BlackRock staff members are likely to very happy about the raise, investors initially were not.
“Shareholders weren’t thrilled by the prospect of higher wages eating into future profits. BlackRock stock fell by more than 3 percent in morning trading,” according to the July 14 report in The Wall Street Journal.
So, as Wall Street proves again, no good deed goes unpunished.
Perhaps shareholders should think about holding Fink to the promise he made during the presentation of the second quarter results: “We strive to cultivate an environment at BlackRock where employees feel supported and have a diverse, inclusive environment where they can thrive and grow and build a career and life.”
A happy and well-paid staff would be at the heart of the lauded Environmental, Social and corporate Governance (ESG) goals that investors are pushing so hard for, and it might be good for Wall Street to practice what it preaches.