As the June 30 deadline for 11-Ks looms, its becoming increasingly apparent that the SEC is unlikely to give any firm guidance on whether 906 certifications are required (despite the paragraph in the internal control report adopting release issued Friday that noted that the SEC and DOJ were in discussions). As the due diligence for these certifications is likely to take a lot of time – because there is likely to be so many different third-party entities involved – companies should start figuring out what they will do to support the certification now.
The question remains – who should sign the 11-K certification. The answer likely is whoever signs the 11-K: the company’s CEO and CFO – or the plan adminstrator (if that is a natural person) or whoever has the highest responsibility for the plan.
The next question is whether the certification should have the “fairly presents” language since there is no income statement involved – some companies have changed the certification to read that the fairly presents language relates to the “net assets available for benefits and changes in net assets available for benefits of the Plan.” See the two 11-Ks filed by Intel this morning – one of these is at http://www.sec.gov/Archives/edgar/data/50863/000005086303000185/pr1165ex99.htm.
Under the leadership of board chair Ralph Whitworth (whose day job is principal of Relational Investors, one of the few groups that have used short slates in the past decade), Apria became the 1st company to voluntarily allow shareholders to nominate directors directly (last month, Hanover Compresser did it as part of a lawsuit settlement). Holders of 5% or more will be able to nominate up to 2 directors which will be placed on the ballot opposite 9 management nominees.
In the wake of the recent actions at Freddie Mac and new revelations at WorldCom (not to mention items like E&Y classifying janitorial inspection services as “audit related” at HealthSouth), it looks like it might be an uphill battle for those that wish the SEC will “go slow” to facilitate the ability of shareholders to nominate directors.
A joint survey conducted by ACCA/NACD was just released with some interesting results. A poll of 600 directors and general counsel demonstrates significant agreement about who bears responsibility for the recent wave of corporate governance scandals – and considerable doubt about the proposed remedies. See http://www.acca.com/Surveys/resp_corpgov.pdf.
Recently, CalPERS sent letters to the companies in the Wilshire 2500 index informing them that they withhold their vote for the election of audit committee members as directors if the auditor provides non-audit services. This appears to be aimed at certain forms of tax related consulting and information systems design and implementation services, which are permitted under SEC rules with audit committee approval – without regard to the dollar amount of those services or their relation to the amount of total audit fees. CalPERS does exclude preparation of tax forms and SEC compliance documents from the types of non-audit services that to which it objects.
Yesterday, the NASD proposed that the CEO and Chief Compliance Officer of member firm to jointly certify annually that the firm has adequate compliance and supervisory policies and procedures in place – see http://www.nasdr.com/pdf-text/0329ntm.pdf.
The panelists included: Andrew Brownstein, Partner, Wachtell Lipton Rosen & Katz; Richard Ferlauto, Director of Pension and Benefit Policy, AFSCME; Lawrence Hamermesh, Professor, Widener University; Richard Koppes, Of Counsel, Jones Day; Ted White, Director of Corporate Governance, CalPERS; and Beth Young, Senior Research Analyst, TheCorporateLibrary.com and Corporate Governance Consultant.