CalPERS OKs Audit Independence Proposal

The board of the California Public Employees' Retirement System approved a measure to give governance staff members the discretion to vote against directors in cases of severely compromised auditor independence. According to Dow Jones, the new policy adopted by the $180 billion pension and retirement fund will be applied to the roughly 1,700 companies that it holds in the Wilshire 2500 index. The measure means that CalPERS would vote against ratification of firms that handle certain types of work for audit clients that the fund believes can potentially compromise their independence. The CalPERS vote mirrored a proposal by the Public Company Accounting Oversight Board that would bar tax services seen as likely to compromise an auditor's independence. As a result of the vote, the staff will make decisions case-by-case to withhold votes for the re-election of audit committee members if they see instances where directors have not acted in the best interests of the company shareholders.