1. Black Rock- A sense of Purpose
Laurence Fink,
Founder, Chairman and CEO of Black Rock Inc.
The Annual Letter to CEOs
2018

2. Black Rock
The world’s leading publicly traded investment management firm
Manages $5.1 trillion in assets
Employees represent more than 50 nations and speak more than 100 languages

3. Society is demanding to serve a social purpose
Every company must deliver not only financial performance
It must deliver a positive contribution to society
Companies must benefit all of their shareholders, employees, customers and the community

4. Absence of Purpose A company cannot achieve its full potential
It loses the licence to operate from key stakeholders
It will succumb to short-term pressures to distribute earning
It will provide subpar returns to the investors

5. INDEX FUND
a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500).
An index mutual fund provides broad market exposure, low operating expenses and low portfolio turnover.
These funds adhere to specific rules or standards (e.g. efficient tax management or reducing tracking errors) that stay in place no matter the state of the markets. 

6. Globally- investors increase use of index funds
Index investors are long-term investors, providing capital for companies to grow and prosper
If companies do not follow long-term growth, BR sells companies securities
BR is active, engages agents and invest time and resources to foster long-term value

7. New model of Shareholder engagement
Focus on stronger and deeper communication between shareholders and companies

8. A new Model for Corporate Governance
Past perspective:
Companies were focusing on quarterly results
Shareholder engagement has been focused on annual meetings and proxy votes
Actual perspective:
The role of shareholder engagement is more meaningful and productive
Needs a year-around conversation and improvement of long-term value

9. Companies must be able to describe their strategy for long-term growth
Company’s strategic framework for long-term value creation is being reviewed by BoD
BoD is engaged with the strategic direction of the company
Directors, review the Board process for overseeing the strategy

10. To sustain financial performance, CEO must :
Actions and policies
The preparation for potential challenges
The context of its shorter-term decisions
The statement of long-term strategy is essential to understand the company’s:
The company’s strategy must be articulated to achieve financial performance
Understand the societal impact of the business
Understand how broad and structural trends affect the company’s potential for growth
To sustain financial performance, CEO must :

11. These strategy statements should:
Continue to evolve along with the business environment
Explicitly recognize possible areas of investor dissatisfaction
These strategy statements should:

12. The US example What to do with increased after-tax cash flow?
It is up to CEO to explain to shareholders how major legislative or regulatory changes will impact not just the following year Balance sheet, but how it will affect long-term strategy for growth
Critical moment for companies to explain their long-term plans to investors
How CEO should use it to create long-term value?
What to do with increased after-tax cash flow?
Companies should explain to investors how the significant changes to tax law fit into their long-term strategy

13. Board engagement is essential in developing long-term strategy
An engaged board and long-term approach- are valuable for creating long-term value for shareholders
Directors- assume deeper involvement with a firm’s long-term strategy
Board- meet sporadically, but have continuous responsibility

14. Diverse Board – diverse mix of genders, ethnicities, career experiences, ways of thinking and diverse mindset
They are able to better identify opportunities and promote long-term growth
They are less succumb to group thinking or miss new threats

15. Your strategy, Your Board and Your Purpose
The ability to manage environmental, social and governance matters demonstrates the leadership and good governance essential to sustainable growth and integrating these issues with investment process

16. Your strategy, Your Board and Your Purpose
BR in 2018 has the purpose:
To participate in discussions about long-term value creation
Work to build a better framework for serving all stakeholders
Demonstrate to clients the leadership and clarity that drive not only the company’s Investments returns, but also the prosperity and security of their citizens

17. Companies must ask themselves:
What role do companies play in the community?
How are companies managing their impact on the environment?
Are companies working to create a diverse workforce?
Are companies adapting to technological change?
Are companies providing the retraining and opportunities that their employees and their business will need to adjust to an increasingly automated world?
Are companies using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that will help them achieve their goals?