Shutdown Lowdown – Comment by Gary LaBranche, President and CEO, NIRI

The partial shutdown of the U.S. government has ended after 35 days. Perhaps one of the biggest insights gained over the course of the shutdown was a better understanding of just how much impact the federal government has on so many aspects of life and commerce, in ways big and small.

A NIRI member recently shared a story that shows how even the simplest IR matters were impacted by the shutdown. His company’s business can be impacted by bad weather and had been. Preparing for earnings, he asked for data to illustrate the degree of adverse weather. His colleagues sought the data, only to report back that the data was not available as the National Oceanic and Atmospheric Administration was closed due to the shutdown.

Both Nasdaq and the New York Stock Exchange can attest to the impact of the shutdown on the equity markets. Companies filing for IPOs had to sit on their hands as their registration paperwork sat in SEC limbo. While companies may proceed with their IPOs if the SEC doesn’t act within 20 days, few corporate general counsels would recommend doing so. As a result, January 2019 will be the first January since 1995 in which no IPOs were issued.

Proxy statements have also been impacted by the shutdown. Each year, the SEC reviews corporate no-action requests to exclude shareholder proposals that don’t comply with SEC rules. But with only 285 of its 4,436 employees on the job, the SEC was unable to rule on these requests during the shutdown. Depending on their annual meeting dates, some companies may be forced to issue proxy statements with shareholder proposals that they would rather not include.

Many NIRI members are frequent travelers, as I am. We saw first-hand just how much the shutdown impacted air travel. I flew on eight flights during the shutdown, and each time became more and more concerned about how the stress was impacting air traffic controllers and others. They were required to work but were unpaid, as were the TSA agents. I had the chance to chat with several air traffic controllers who were handing out leaflets at Ronald Reagan National Airport outside of Washington, D.C. As one of the millions whose life is literally in the hands of these dedicated public employees, I have a stake in their health and well-being. I did not like to see the additional stress under which they had to operate.

If a deal isn’t reached in a little less than three weeks, the shutdown might resume, or perhaps the president will declare an emergency and move forward into a firestorm of lawsuits. Your guess is as good as mine. In any event, I think we all have a better appreciation for the ways in which the government is intertwined with our personal and professional lives. We all have a stake in how the government operates, or doesn’t, even if we’d rather not. As voters, we have the power to hold accountable all of those responsible.

All the best,

Gary A. LaBranche, FASAE, CAE
President and Chief Executive Officer
National Investor Relations Institute