In January 2025, BlackRock issued its latest proxy voting guidelines which are in effect for the 2025 proxy season. BlackRock is one of the largest shareholders of many US companies. Accordingly, companies are encouraged to understand the organization’s approach to voting and engagement on key corporate governance matters as detailed in its guidelines. The 2025 voting guidelines provide clarifications on familiar governance topics, some of which are discussed below. 

• Board diversity. The most notable change in the 2025 voting guidelines relates to its approach to board diversity. BlackRock has shifted its focus in the board room from “diversity” to “board composition” and to achieving a variety of experiences, perspectives, and skillsets. BlackRock’s 2024 voting guidelines had a separate section titled “Board diversity,” in which it had expressed that the boards of US companies should aspire to be 30 percent diverse with a goal of at least two women directors and a director who identified as a member of an underrepresented group.

The 2025 voting guidelines instead include a section titled “Board composition” noting that BlackRock takes a case-by-case approach in its assessment of board composition and looks for companies to explain how their board composition supports their governance practices. 

Many diversity initiatives, including efforts to increase board diversity, have come under attack recently (see our alert on the Fifth Circuit’s decision striking down Nasdaq’s board diversity rule).  It remains to be seen whether other large institutional investors that previously expressed expectations for minimum board diversity thresholds will remove or modify such provisions from their voting guidelines.

• Board and directors.  As part of the board’s broad risk oversight responsibilities, BlackRock stresses the importance of providing information regarding management’s long-term strategy and strategic targets, and the effectiveness of these mechanisms in overseeing the management of business risks and opportunities and the fulfillment a company’s strategy. Where companies have not adequately disclosed and demonstrated that the board has fulfilled its corporate governance and risk oversight responsibilities, it may consider voting against the election of directors who, on BlackRock’s assessment, have responsibility for the issues.

• Oversight role of the board. BlackRock has updated the common circumstances in which it may vote against members of the audit committee to include failure to provide timely disclosure of remediation of material weaknesses.
• Capital structure proposals – equal voting rights. BlackRock specifies that management proposals to collapse multiple share class capital structures for a premium will be evaluated on a case-by-case basis.
• Executive compensation. BlackRock expresses concern about when a company’s rationale for increases in total compensation is solely based on peer benchmarking, rather than through the consideration of rigorous measure(s) of outperformance and encourages companies to clearly explain how compensation outcomes have rewarded performance.
• Clawback proposals. BlackRock indicates that it expects boards to exercise limited discretion in forgoing, releasing or settling amounts subject to clawbacks for executive officers and to provide no indemnification or insurance coverage for losses incurred by executive officers. The 2025 voting guidelines maintain BlackRock’s prior position favoring recoupment from or the forfeiting of the grant of any awards by any senior executive whose behavior caused material financial harm to shareholders, material reputational risk to the company, or resulted in a criminal investigation, even if such actions did not ultimately result in a material restatement of past results.
• Equity compensation plans. The guidelines expand on the conditions under which it will support an equity plan and related share reserve requests.
• Option repricings/exchanges. BlackRock clarifies that it may vote against members of the compensation committee if a board implements or approves a repricing or option exchange without shareholder approval. Where such a repricing or option exchange includes named executive officers, it may also vote against the company’s say-on-pay proposal.
• Material sustainability – related risks and opportunities – climate change. BlackRock’s updated guidelines include additional language supporting the use of the International Sustainability Standards Board (ISSB) standards and Task Force on Climate -Related Financial Disclosure (TCFD) framework for preparing climate-related disclosures. BlackRock will look to the board to oversee management’s approach to managing material climate risks in a company’s business model and may express its concern about board oversight through engagement and voting. It also suggests that companies provide sustainability-related disclosures sufficiently in advance of their annual meetings in order to provide investors with time to assess the data and make an informed decision.
• Corporate form.  The guidelines urge a company proposing to change its corporate form to a public benefit corporation or similar entity to put it to a shareholder vote if it is not already required to do so under applicable law. According to the guidelines, such a company should also provide supporting documentation from companies or shareholder proponents, articulating how the interests of shareholders and different stakeholders would be impacted as well as the accountability and voting mechanisms that would be available to shareholders.
• Shareholder proposals. BlackRock has indicated that it is likely to support shareholder proposals that request disclosures that help BlackRock, as a long-term investor, better understand the material risks and opportunities companies face and how they are managing them, in particular where the information is additive given the company’s existing disclosures.   

Companies that have BlackRock as one of their institutional investors are encouraged to review its 2025 voting guidelines to assess how any of its most recent changes may impact BlackRock’s voting at their annual meetings and whether early and ongoing engagement with BlackRock is warranted.