Auditor Ratification: A closer look at votes against

While shareholders have the option to vote on their company’s auditor, the outcome is almost never in any dispute whatsoever. A recent analysis of shareholder votes filed between January 1, 2014, and December 31, 2016, shows that, on average, 98% of votes were cast in favor of auditor ratification. The remaining 2% is comprised of votes against auditor ratification (1%) and abstained votes (1%). Similarly, in our last analysis of auditor ratification votes, we found that 95 out of 100 times, fewer than 5% of votes were cast against the auditor.

The table below highlights the 1% of votes against auditor ratification over the past three years, in which the percentage of votes cast against ratification fell in the given bins. There were 8,422 ratification proposals, for example, in which the votes against ratification were between 0% and 1.0% of the total number of votes cast. In all, about 96% of auditor ratification proposals had 5% or less of the votes cast against ratification. On the other hand, just 19 votes (0.2%) had more than 25% of the total votes cast against ratification.


That said, sometimes shareholders – for whatever reason – vote in large numbers against the ratification of the auditor. In this blog, we look at some recent instances where shareholders did just that.

Over the last three years, the largest percentage of votes against auditor ratification has decreased. However, it is not surprising that those companies having the highest percentage of votes against auditor ratification each year have had going concern, internal control, and disclosure control flags.


In 2016, there were sixteen companies with more than 20% votes against ratification. (CIK 754813), Immersion Corp (CIK 1058811) and Big Lots Inc. (CIK 768835) top the charts having more than 40% of votes against auditor ratification. Interestingly, two out of these three companies have also had a CFO change this year.

It is important to note that voting results are non-binding and management is under no obligation to accept the results. All three companies discussed above have reappointed the auditor despite shareholder objections.

Again, this is a magnified analysis as votes against ratification only comprise 1% of the total votes. For more information about Auditor Ratification, please contact us at