Activist: BlackRock Has Power to Influence (Updated)

Editor's note: This column has been updated since its original publication June 17. A correction also has been published for one section of the column.

BlackRock's(BLK) announcement last week that it would purchase Barclays Global Investors from U.K. bank Barclays(BCS) for $13.5 billion confirmed that BlackRock would yield an enormous influence on corporate America.

In fact, the combined firm will own $2.8 trillion in assets, twice the size of its nearest rivals State Street (STT) and Fidelity, which hold $1.4 trillion in assets each.

If you've looked up recently the shareholder ownership tables for any large or small public company, you likely have seen BGI's name among the top five holders of the stock. You've also likely seen BlackRock's name in the top 10. And, with this deal, you will now almost certainly see the new BGI (BlackRock Global Investors) in the list of top three or four shareholders.

Most financial analysis of this BlackRock-BGI tie-up have focused on the price paid, the assets now under management and the growth of BGI over the last few years as an asset for Barclays. Barclays certainly owned a jewel that they wouldn't have parted with unless external capital demands from the British government required it, and also unless BGI's own executives had a compensation structure that incented a full sale. BGI accounted for 15% of Barclays' pretax profit last year.

Yet, there's another interesting question about this tie-up that has gone unmentioned: How will this new BGI behemoth vote its shares in future corporate elections?

Until now, BGI has had a reputation among some for being a shareholder that largely votes its shares in favor of management. A third-party Web site, Proxy Democracy, founded last year by Harvard Ph.D student Andrew Eggers, which tracks how large institutional investors actually vote their shares, recently ranked BGI's family of funds at the 11th percentile in terms of their "overall activism score." This means that 89% of other mutual funds tended to vote in a more pro-shareholder fashion at corporate elections than BGI.