September 21, 2019

Comp Watch ’16: PCAOB

PCAOB Chairman James Doty had the pleasure of presenting a budget to the SEC today and it probably could've gone better. I'd say that any time you're asking people for money it can be a little nerve-wracking, but this is the federal goverment! There's virtually no chance that you won't offend someone no matter how reasonable your budet is or how much evidence you present in support of it.

So naturally, the Board is asking for more money, $257.7 million to be exact. Here's an excerpt from Doty's statement:

[T]his 2016 Budget represents a 2.7 percent increase over the 2015 Budget but is still short of the 2014 Budget of $258.4 million.

The 2016 Budget is based on an appropriate and realistic assessment of today's competitive market for the hiring of experienced professionals. I'm glad to report that we have also successfully turned around our recruiting efforts. We project approximately 875 staff by the end of 2016, including approximately 25 new staff and a 10 percent turnover rate.

While I'd like to think our interview with Inspections Director Helen MirrenMunter had everything to do with the Board's improved recruiting efforts, I reckon it came down to salaries. The Board pays well! And good salaries and benefits will get you a fair amount of audit talent.

However, as chairman, Doty makes $670k per year. The other four members "earn about $546,000" and with over 800 staff, the compensation expense adds up a bit. So guess what Mary Jo White called attention to during the meeting?

“I encourage the board to take a hard look at funding and expenses in the coming year, including with respect to compensation, and identify possible savings and efficiencies,” SEC Chairman Mary Jo White said at meeting where commissioners voted 2-1 to authorize the PCAOB’s funding.

Also, Commissioner Michael Piwowar said, “A more modest budget should have been presented for 2016,” so you can count him as the one feeling a little insulted by the Board's need to offer employees decent salaries.

[WSJ, PCAOB, SEC]

Correction: An earlier version of this post incorrectly stated the name of the PCAOB Inspections Director. The director's name is Helen Munter not Helen Mirren. Monday!

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