Stop thinking short term, CEOs: BlackRock's Fink
BlackRock chief Larry Fink said Wednesday he wants businesses to develop a better barometer for how they are planning and executing their strategies.
Fink on Monday released a letter to the CEOs of -listed companies and major European corporations cautioning them against taking a short-term view of their business that focuses on quarterly earnings reports.
He proposed eliminating the practice of offering quarterly guidance and said chief executives and boards should provide a strategic framework for long-term value creation.
"The main point of the letter is please provide us with a strategic plan of how you think your company is going to evolve," he told CNBC's "Squawk Box." "Tell us about your ecosystem. Let us understand what your thinking is."
"I don't want to have anything that's proprietary, or anything that will harm you as related to competitive issues, but you can give us a guidepost as to how you're building a business plan for your business and where you're taking it," he added.
With more $4.6 trillion of assets under management, BlackRock is the world's largest investor.
On Tuesday, the RLJ Companies founder and chairman Robert Johnson expressed concern about Fink's proposal, saying companies could face scrutiny from investors if shareholders perceive that a firm knew tough times were ahead but did not say so in guidance.
Fink said more and more companies are not giving guidance, and he clarified that he was not advocating for an abandonment of quarterly earnings reports, just advocating a different lens through which they are viewed.
"It's not as important ... if you miss by a theoretical penny with the analyst. You could talk through the lens of your long-term plans and your pivots and all that. And I actually believe it gives us a better dialogue between your shareholders and obviously company management," he said.
Fink was reportedly one of a number of prominent executives and investors who attended a secret January meeting in New York that tackled the perceived danger of activist investors.
He said he would neither confirm nor deny whether he was at the meeting — or whether such a meeting occurred — but said those types of gatherings happen on an ongoing basis as business leaders continually collaborate to improve the quality of governance and build better dialogues with investors.
— CNBC's Katie Kramer contributed reporting to this story.