March 9, 2004

PCAOB Already Posts Final Internal

I went to the PCAOB open meeting this morn – remarkably, the PCAOB already has posted its final internal controls release (with still is subject to SEC approval). For the most part, the final release incorporates changes recommended by the corporate community, with some notable exceptions.

One of these exceptions is that the final release retains the standard that requires the independent auditor to evaluate the audit committee’s performance as part of its internal control evaluation (however, the release makes clear that the full board of directors still is primarily responsible for conducting such an evaluation – and added a new element where the auditor must report to the full board if it believes the audit committee ineffectively oversees the company’s external financial reporting and internal controls). More about the PCAOB’s meeting tomorrow.

PLI’s “2004 SEC Speaks”

Thanks to Bryan Cave, we have posted some brief notes from remarks that Alan Beller and other senior SEC staffers made on Friday at PLI’s “2004 SEC Speaks.” We will be posting our own more extensive notes from the conference shortly.

Even More on Disney

A few more items of interest on last week’s historic meeting. Roy Disney and Stanley Gold did indeed engage in some solicitation efforts other than the media and the Web. They retained McKenzie Partners to assist in a solicitation campaign that included mailing letters to all Disney stockholders. They also hired a PR firm.

These solicitation efforts appear to have fallen within the scope of Rule 14a-2(b)(1), the proxy rule that provides an exemption from the filing and disclosure requirements of Rules 14a-3 through 14a-6. As for discretionary authority, this “no-vote” campaign didn’t push the election into a non-routine category – so the NYSE allowed discretionary broker voting on the election of Disney directors.

How Many Directors Get a 35% Withhold Vote?

Yes, I’m gearing up for tomorrow’s shareholder access roundtable hosted by the SEC – here is the final agenda and related materials posted by the SEC yesterday. I had to look twice – Evelyn Davis is on a panel! It should be quite a show!

According to a statement from Rich Daly, head of ADP’s brokerage group, during last year 99 panelists have submitted statements for the roundtable), there were 69 shareholder meetings of the Russell 2000 companies that resulted in at least one director getting a 35% withhold vote (and actually there were 137 directors that triggered that threshold at those 69 meetings). There is other interesting information in Rich’s statement regarding the changes to ADP’s system that would be required if the SEC adopting its proposed framework.

Thanks to Dave Felman of Hill, Ward & Henderson, we have posted these selected interesting excerpts from comments submitted on the SEC’s proposal in our “Shareholder Access Portal.”