A recent WSJ article notes that a growing number of shareholders are voting against the ratification of auditors at annual meetings. While the ratification of auditors is nonbinding, pushback against a company’s auditors can put companies in a difficult place when considering the engagement post-meeting. The article notes that “about 3.8% of investors voted against the ratification of S&P 500 companies’ auditors this year through May 19, almost triple the proportion of a decade earlier, according to research firm Audit Analytics, and up from 3.1% last year.”
While the numbers are pretty small and we have not seen any situations where there was majority support against the ratification of the auditors, any pushback above the 1% level could be seen as potentially problematic. The usual topics of audit quality and non-audit services seem to top the list of investor concerns.
– Dave Lynn