Over the last 6 years, much has been made about how banks lost their way […]
For some reason it is corporate governance day at Dealbreaker, so here is a grab-bag of inchoate nonsense (for a change!). First of all look at this:
The third-largest U.S. proxy adviser recommended that El Paso Corp shareholders vote against a proposed $23 billion sale of the company to Kinder Morgan Inc, switching its position after comments made by a Delaware judge.
Egan-Jones Proxy Services said in a report that it was withdrawing its endorsement of the deal because of “the conflicts of interest cited by (Delaware Chancery Court judge Leo Strine) and the attendant doubts cast on the deal.”
How should you take this? Well, one way to take it would be: if you paid me to tell you how to vote on things, you’d probably want me to look into those things and decide if they’re good things for you, and if they are tell you to vote for them and if not etc. So Egan-Jones* went and looked at this merger and decided it was a good merger and that its clients should vote for it. Then they learned about the conflicts of interest cited by the Delaware court, most of which were publicly available long before the opinion came out,** and changed their minds. Suggesting that they didn’t really do a bang-up job of examining the merger to begin with.
But that’s a stupid way of looking at Egan-Jones’s role because, really, you’re an EP shareholder and you’re like “oh Egan-Jones ran a DCF and this price looks good to them”? You can go read the DCFs of actual investment banks if that’s the sort of thing that gets you going. Nobody’s actually paying proxy advisors (do people pay them? I don’t know) for actual advice on how they should actually vote their shares. Instead they’re paying (maybe?) for some vague patina of good “corporate governance,” which means something like “good processes and independent boards and no conflicts of interest” and gets lots of chin-stroking academic articles written about it.
Remember Donna Murdoch? Her story is a bit complicated but essentially: Murdoch and her husband […]
For the March issue of Bloomberg Markets magazine, reporter Richard Teitelbaum explores the riddle wrapped […]