April 13, 2011

More Companies Challenge ISS Through Additional Soliciting Materials

Like Disney and Hewlett-Packard before them (see this blog), General Electric and Northern Trust recently filed additional soliciting materials challenging ISS’s recommendations on their say-on-pay. We are compiling a list of all the companies that do this on’s “ISS Policies & Ratings” Practice Area.

In his “ Blog,” Steve Quinlivan notes:

General Electric

GE notes a “significant disagreement” with ISS. GE’s materials directly confront ISS. GE’s points are:

– ISS’s analysis fails to consider actions that aligned pay with performance during the recession.
– Mr. Immelt’s pay increased a modest 6.4% since 2007, the last year he received a bonus.
– ISS’s valuation of Mr. Immelt’s option grant significantly overstates his total compensation.
– ISS’s model to value options differs from GE’s model and is inconsistent with applicable accounting guidance.

Northern Trust

ISS claims Northern Trust has a pay-for-performance disconnect. Northern Trust’s materials reemphasize components of compensation related to equity-based incentive pay, cash incentives and business results. Northern Trust also claims that ISS’s calculations of comparative financial performance are flawed because the index includes several companies engaged in entirely different and unrelated businesses. Its also worth noting that Glass Lewis & Co. recommended shareholders approve executive compensation.

Yesterday, Allegheny Technologies joined those fighting their proxy advisor recommendation with these additional solicitation materials. And ISS’s Ted Allen blogged about how AFSCME has launched the first public “just vote no” campaign this proxy season against two companies over their pay practices.

XBRL: Foreign Private Issuers Using IFRS Get Relief from the SEC

On Friday, Corp Fin issued a no-action letter relieving foreign private issuers that prepare IFRS financial statements from filing XBRL until the SEC specifies a XBRL taxonomy that they can use. This will be a huge relief for FPIs as they were starting at a deadline of fiscal years ending on or after June 15, 2011 and no such taxonomy had yet been specified for IFRS. See more on Vanessa Schoenthaler’s blog including an update that Anne Leslie-Bini of rass-XBRL tells us that as of last June, there were 174 FPIs filing IFRS financials – with more than 300 additional now eligible to do so.

Smaller reporting companies will continue to cross their fingers for some sort of SEC relief too as they begin to comprehend the cost burden of XBRL, as I have blogged about several times recently.

Congress Splits the Baby on SEC’s 2011 Budget

As noted in this WSJ article yesterday, the SEC’s budget of $1.19 billion for the 2011 fiscal year – which we already are halfway through – will be $74 million more than last year (here’s the Senate Appropriations Committee press release). The budget is $116 million more than the steep cuts that the House Republicans tried to slice from the agency. So the SEC has dodged a bullet – for now. Here’s one of my numerous recent blogs regarding the politics being played with the SEC’s budget.

If you haven’t been to the SEC’s home page in a while, you will not have seen the new “Operating Status” box, which presently states: “The SEC is operating under normal conditions. All agency operations are continuing without interruption.” I know I’ll be hearing some sarcastic remarks from some of youse…

– Broc Romanek