March 26 BlackRock Inc Chief Executive
Laurence Fink has warned top U.S. companies not to emphasize
dividends or share buybacks if they come at the expense of
Many top corporations have faced pressure from Wall Street
analysts, activist investors and others to increase their
dividends, buy back shares or take other steps to return capital
to investors sooner rather than later.
Fink, in a March 21 letter to the leaders of companies in
the S&P 500, acknowledged the pressure for near-term performance
but reminded companies that they must focus on the longer term.
With $4.3 trillion under management at Dec. 31, BlackRock of New
York wields much influence over the boards of top corporations.
"It concerns us that, in the wake of the financial crisis,
many companies have shied away from investing in the future
growth of their companies," he wrote in the letter, a copy of
which was obtained by Reuters.
"Too many companies have cut capital expenditure and even
increased debt to boost dividends and increase share buybacks,"
"We certainly believe that returning cash to shareholders
should be part of a balanced capital strategy; however, when
done for the wrong reasons and at the expense of capital
investment, it can jeopardize a company's ability to generate
sustainable long-term returns," Fink wrote.
Fink's letter was first reported by The Wall Street
(Reporting by Ross Kerber; Editing by Miral Fahmy)