March 17, 2005

Thinking About Trying XBRL?

If your company is considering participating in the SEC’s XBRL pilot program – or you want to just learn more about XBRL – check out this interview with Michael Ohata, who is Director, Business Reporting of Microsoft Corporation.

Microsoft is one of the few companies that has been making filings with the SEC using quasi-XBRL; “quasi” since EDGAR doesn’t accept XBRL until April 4th (which is the new start-date that was recently pushed back) but Microsoft and a few others were able to manevuer to accomplish this feat. Recently, the SEC posted this announcement regarding support for XBRL filers.

Survey on Pre-Approval of Non-Audit Services

To help answer some member questions regarding the level of detail provided to audit committees to support non-audit service decisions, we have posted a new survey on pre-approval of non-audit services. Please weigh in by going to home page and clicking on the survey in the middle column.

Are Gross-Ups Appropriate?

Yesterday, the WSJ ran this article analyzing existing gross-up practices related to executive severance payouts. I respect former SEC Commissioner Wallman as much as I respect anyone – but have to politely disagree with the sentiment attributed to him that “gross-ups are a necessary means of attracting top executives and have become a common feature of compensation agreements at Fortune 500 companies.”

Isn’t that the type of “herd” mentality that got the accounting and investment banking industries into all the hot water (i.e. billions paid in settlements) they can bear? Aren’t phenomenal severance payouts a questionable enticement for CEOs to do bad deals? What valid purpose do gross-ups serve?

I agree with a lot of the investor guidelines that urge compensation committees to limit severance payouts to one-times salary – NOT including all the other components of compensation that often make these gross-ups “necessary.” And investors typically feel the same way that the Council of Institutional Investors do about gross-ups – here is what CII’s comp policy states: “Companies should not compensate executives for any excise or additional taxes payable upon the receipt of severance, change-in-control or similar payments.”