July 24, 2008

In the Home Stretch: Accounting Industry Reform

On Tuesday, the US Treasury Advisory Committee on the Auditing Profession (ACAP) – co-chaired by former SEC Chair Arthur Levitt and former SEC Chief Accountant Don Nicolaisen – issued a Second Draft Report, which is now subject to a 30-day comment period. Here are the comments submitted on the first draft.

And on Monday, the International Accounting Standards Committee Foundation, which oversees the International Accounting Standards Board (IASB), issued a Discussion Document – the “Public Accountability and the Composition of the IASB – Proposals for Change” – that has a September 20th comment deadline.

Meanwhile, the SEC’s Advisory Committee on Improvements to Financial Reporting (CIFiR) is expected to issue its final report sometime after meeting by teleconference on July 31st. The final report should look similar to its draft final report, with some editorial changes voted on during a July 11th meeting, as described in this entry on FEI’s “Financial Reporting Blog.” Hat tip to Edith Orenstein who write FEI’s “Financial Reporting Blog” for keeping us up-to-speed on all these developments.

Marty Dunn’s “Pro or Troll” on Shareholder Proposals

Test your skills with our new game – “Pro or Troll #9: Shareholder Proposal Process,” to see if you are up to speed on all the lore and latest developments about the hottest topic, shareholder proposals – courtesy of Marty Dunn of O’Melveny & Myers.

RiskMetrics’ Preliminary Post-Proxy Season Report

Earlier this week, RiskMetrics posted its “Preliminary U.S. Postseason Report.” Interestingly, RiskMetrics observes that the bear market tempered activism at the end of the day, with notable exceptions relating to some executive compensation pay packages and hedge fund-led attacks. Here is an excerpt from the Report regarding “say on pay”:

According to results available as of July 15th, “say on pay” proposals have averaged 42.7% support over 52 meetings this year, up slightly from 42.5% support over the same number of meetings in 2007. Shareholders at nine companies, including Lexmark International and Apple, gave greater than 50% support to “say on pay” proposals through July 15, compared with eight during all of 2007. Notably, all of this year’s proposals earned at least 30% support, except at Wal-Mart where officers and directors control a 43.4% stake.

– Broc Romanek