BlackRock, which managed approximately $6.288 trillion in assets as of December 31, just announced its fourth-quarter results. The firm reported increases in both headcount and compensation.
After cutting at least 400 jobs as part of its pivot toward artificial intelligence/machine learning-enhanced investing in 2016, BlackRock had approximately 13,000 employees at the end of that year, including 6,700 based in the U.S. By the end of 2017, that figure rose to nearly 14,000 employees, meaning that BlackRock's headcount increase by around a thousand last year.
The asset management giant's 4Q earnings report specifies the amount that the firm increased its salary and bonus payouts.
Employee compensation and benefits expenses increased $160m-plus from 4Q 2016, reflecting higher bonuses driven primarily by higher performance fees and operating income, as well as higher headcount, according to the earnings report.
Employee pay expenses in 4Q increased by $59m from 3Q 2017, again reflecting higher bonuses driven primarily by higher performance fees and operating income, the report said.
Employee compensation and benefits represented 58% of BlackRock’s 4Q expenses of $2bn, a 17% year-over-year increase and a 6% increase over 3Q 2017. In raw terms, those are increases of $164m (compared to 4Q 2016) and $85m respectively.
For the full-year 2017, employee comp and benefits represented 59% of the firm's expenses of $7.2bn, a $388m rise representing a 10% increase over 2016.
The 4Q 2017 income tax benefit stemming from the new Republican tax law included an $84m discrete tax benefit, primarily related to stock-based compensation awards.
A new U.S. tax law, which sliced corporate and individual income rates, also helped the company’s results in Q4, according to Reuters. BlackRock said it saw a $1.2bn tax benefit related to the law and raised its quarterly cash dividend by 15%.
On the earnings call, CEO Larry Fink said the tax reform could lead to increased cash flowing in from clients, allowing him “to invest more in the company’s future,” without offering any specifics about what the investment priorities would be.
Overall, BlackRock achieved 12% full-year revenue growth in 2017 driven by larger base fees and performance fees, as well as technology and risk management revenue, and a 15% increase in full-year operating income.
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