I would prefer a requirement that mandated a change in auditors every four or five years. I spent six years auditing in the 1980's. Nothing gets an auditors juices flowing like a first time audit on a new client. We were always looking to embarrass the prior firm with a prior period adjustment.
Also, the audits need to be priced so that they are not loss leaders. Audit budgets were being tightened as early as the mid-80's I think that I read somewhere that audit fees for public companies have gone up by approximately 25% over the last two years. Good.
I knew some audit partners who were complete whores. Most took their jobs seriously. The partners are too far removed from the details on an audit. The audit staff and supervisors are the ones that need to rat out the clients. Luckily, I worked in an environment that encouraged that point of views.
Truely independent boards are critical.
nytimes.com
October 8, 2003
SEC Pries Open Boardroom to Shareholders
By REUTERS
Filed at 3:59 p.m. ET
WASHINGTON (Reuters) - U.S. regulators, moving to boost the power of investors in the boardroom, gave initial approval on Wednesday to a plan that would let shareholders nominate board directors using official company ballots.
The Securities and Exchange Commission's decision drew criticism from big business and praise from investor activists who want to wrest control from CEOs of weak boards like those that slept through the scandals at Enron Corp. and elsewhere.
``This is going to be a very controversial proposal ... No matter what we do or don't do, not everyone will be happy,'' said SEC Commissioner Cynthia Glassman at an open meeting.
The SEC voted unanimously to send its proposed shareholder ``proxy access'' plan out for 60 days of public comment, with a final vote to follow by the five-member commission.
Speaking for the Business Roundtable, a powerful Washington lobbying group for chief executives, Pfizer Inc. (PFE.N) CEO Henry McKinnell said the SEC proposal risks ``special interest groups hijacking the director election process.''
``The roundtable continues to be concerned that the SEC's proposed rules will lead to divisive boards,'' said the chief of the world's largest pharmaceuticals manufacturer.
On behalf of investor advocates, union leader Gerald McEntee, president of the American Federation of State, County and Municipal Employees, said, ``We are pleased that the SEC has embraced the concept of shareholder proxy access...
``The Business Roundtable is not interested in corporate accountability, but in protecting over-paid imperial CEOs and their handpicked boards.''
PROXIES TIGHTLY CONTROLLED
Corporate managers today keep a stranglehold over access to the proxy statement, a ballot sent to shareholders of U.S. corporations before annual meetings that is used for voting on director elections and corporate governance issues.
Nominees put forward by shareholders are routinely excluded from the proxy by management. As a result, at most annual meetings, shareholders vote solely on nominees for director seats that have been chosen by management.
If the SEC proposal wins final adoption, managers in 2005 would have to start letting shareholders put their own nominees in the proxy statement if one of two ``trigger'' events occurs.
One trigger would be the filing of a demand for proxy access by a shareholder, or group of shareholders, owning at least 1 percent of voting shares outstanding for at least a year, and a subsequent favorable vote on the demand by more than 50 percent of the votes cast on it, the SEC said.
The other trigger would be when 35 percent or more of votes cast on one or more director nominees were ``withhold'' votes.
If a trigger is tripped, the company would have to open its proxy to a shareholder nominee only if the nominating shareholder or group of shareholders has owned more than 5 percent of outstanding shares for two years or more and intends to hold its stake through the next annual meeting.
Nominating shareholders also would have to show through SEC filings that they don't intend to take over the company. In addition, the shareholder nominee would have to be independent from those making the nomination and from the company.
The number of shareholder nominees a company would have to put in the proxy would be limited to one for a board with eight or fewer directors; two for a board with nine to 19 directors; and three for a board with 20 or more directors. |
