The letter said: “Executive pay should be strongly linked to performance, by which we mean strong and sustainable returns over the long term, as opposed to short-term hikes in share prices.”
It added: “…we believe it is the role of the Board of Directors to design and set pay aligned to long-term performance. This includes the critical assessment of pay outcomes and gauging performance based on metrics that are under the direct control of senior management.”
The letter comes at a time when the UK is going through a fresh debate about executive remuneration. Blackrock warned companies that shareholder votes should not be used as a means of providing “pro forma justification” for executive pay hikes.
“We consider misalignment of pay with performance as an indication of insufficient board oversight, which calls into question the quality of the board. We believe that shareholders should hold directors to a high standard in this regard,” said the letter.