November 21, 2016

Glass Lewis Issues ’17 Voting Guidelines

As noted on their blog, Glass Lewis posted 49 pages of “Guidelines for the 2017 Proxy Season” on Friday, which includes a summary of the policy changes on the first page. Dorsey & Whitney has a new blog – and Kimberley Anderson has blogged some analysis of the policy changes there…

Glass Lewis: Companies Allowed to Review Rudimentary Draft Reports! Get In Early!

On Friday, Glass Lewis also announced “open enrollment” in its “Issuer Data Report” program. This enables companies a chance to access – for free! – a data-only version of their Glass Lewis report. This is an opportunity for companies to weigh in prior to Glass Lewis completing its recommendations for the upcoming proxy season!

As Glass Lewis doesn’t provide drafts of its voting recommendations report for companies to review like ISS does (for the S&P 500), this is your only chance to review what Glass Lewis factors into its recommendations. Open enrollment ends on the earlier of January 6th – or when Glass Lewis decides its annual limit has been reached. So do it now!

See these blogs by Gibson Dunn, Dorsey & Whitney and Mike Melbinger…and don’t forget my “Proxy Advisors Handbook“…

PCAOB: New ’17 Budget & 5-Year Plan – & Hanson Dissents!

Last week, as noted in this press release, the PCAOB approved its 2017 fiscal-year budget of $268.5 million and its 2016-2020 strategic plan. The total accounting support fee for 2017 is $268 million, with $232.6 million allocated to public companies and $35.3 million to brokers. The budget still has to be submitted to the SEC for its approval.

The big news is that there was one dissent among the 5 PCAOB Board members when voting on their budget! Jay Hanson dissented, as noted in his statement. Here’s a note from Lynn Turner on this:

I understand this is the first vote since the PCAOB was created in 2002, in which a board member voted not to approve their budget. It appears the principle point of disagreement is over economic analysis. Interesting, the US Treasury Committee did recommend the PCAOB do more analysis through a fraud center. However, as I understand it, some on the board do not support research that may result in unfavorable data for the profession becoming public.

Interestingly, the PCAOB inspects only a couple hundred audits each year of the total audits of public companies and broker-dealers which totals over 10,000 entities. Those inspections have consistently found a 20-40% rate of non-compliance with generally accepted auditing standards, despite the auditor saying in their report they had complied.

Broc Romanek