As the world’s largest investor, BlackRock CEO Larry Fink has an enormous interest in the future. Big companies, however, sometimes get very caught up in the present and that can put their futures in peril. Business Insider just got hold of a letter Fink sent to CEOs in American and Europe urging them to give more consideration to their longterm viability. Fink cautions against the “powerful forces of short-termism” — that’s the corporate equivalent of thinking about how you’re going to get through the week when you really should be thinking about how you’ll fare in retirement. (So, of course, it’s understandable — the week can be tough.)
One of the things companies do when they have short-termitis is to give back too much money to shareholders in the form of dividends and buybacks. Fink would rather see more of this money put into future initiatives — perhaps to weather the gathering storm? Fink says “today’s culture of quarterly earnings hysteria” is essentially bad for business, hindering the long-term thinking necessary for success. Then again, his salary, unlike those of many of the CEOs to whom he writes, isn’t pegged to the quarterly stock price. Fink points out that quarterly dividends paid out last year S&P 500 companies are the highest (in proportion to earnings) since 2009.
