November 16, 2016

Proxy Advisors: A New GAO Study

Nearly a decade after its last study on proxy advisors, the GAO issued this 49-page report yesterday on the state of the proxy advisor industry. Taking a quick swing through it, I didn’t see anything all that surprising. Several factors have led to increased demand for proxy advisor guidance (eg. rise of institutional investing & voting requirements) – but views are mixed on the extent of their influence. Proxy advisors have increased the level of shareholder engagement. And more.

It’s a nice summary of the state of the industry as we know it. Nice graphic on page 22 to illustrate how ISS & Glass Lewis communicate their policy-formulating process. All that might change soon enough with Section 1082 of the “Financial Choice Act” or whatever reform legislation gets enacted with a new Administration coming in soon…

The “GAO” is the “Government Accountability Office,” the investigative arm of Congress charged with examining matters relating to the receipt & payment of public funds…and of course, if you really want to know about the proxy advisors, read my “Proxy Advisors Handbook“…

SEC’s Budget Request: Not Going Anywhere? HQ May Move?

Given how the SEC may soon dramatically change – President-Elect Trump will be selecting three new Commissioners right off the bat! – I read SEC Chair White’s testimony before the House yesterday about the SEC’s budget with curiosity. For the 2018 fiscal year, the SEC’s request is $2.227 billion, a $445 million increase over the 2017 request – a 25% increase. Approval of this request isn’t likely – as this Gibson Dunn memo notes, the new Administration may seek to reduce, or least stop the growth in, the SEC’s annual budget.

Even more interesting was the fact that the SEC’s HQ may relocate – here’s an excerpt about that:

The current leases for the SEC’s headquarters buildings (Station Place I, II, and III) will expire in FY 2019, 2020, and 2021. In accordance with the memorandum of understanding (MOU) between the GSA and the SEC, we have begun work with GSA to begin the procurement process for a new headquarters lease. The SEC is working collaboratively with GSA to develop a package of materials to submit through the prospectus lease process. We have been informed by GSA that the SEC must be prepared to obligate the funds necessary for the build out of a new headquarters, if relocation is required, before a new lease can be executed. GSA’s current schedule calls for a new lease to be executed in FY 2018.

Thus, the SEC’s FY 2018 authorization request reflected the GSA’s estimate at that time for the build-out of which would cover expenses for construction, IT cabling and equipment, security-related equipment, and appropriate GSA fees were we required to re-locate. The estimate will continue to be refined as the prospectus lease process unfolds.

Tomorrow’s Webcast: “This Is It! M&A Nuggets”

Tune in tomorrow for the webcast – “This Is It! M&A Nuggets” – to hear Weil Gotshal’s Rick Climan, Kaye Scholer’s Joel Greenberg and McDermott Will’s Wilson Chu impart a whole lot of practical guidance!

Broc Romanek