NEW YORK—At its annual meeting, scheduled for May 6, the board of directors of Motorola Inc. has asked shareholders to vote against a proposal that would bar the company from hiring the same firm to provide both its auditing and accounting services.
The Sheet Metal Workers’ National Pension Fund, Alexandria, Va., which owns 162,000 shares of Motorola stock, initiated the proposal. In part, the pension fund said, “it is critically important to the integrity of the auditing process and the confidence of investors that firms performing audits for public corporations avoid business relationships that might compromise their independence or raise the perception of compromised judgement.”
For its 2000 fiscal year, Motorola paid KPMG L.L.P. $3.9 million for audit services and $62.3 million for non-audit services. Motorola said $35.5 million of those non-audit-related payments to KPMG were “unique, one-time fees relating to the design and implementation of an IT-based, enterprise management system.”
The Motorola board’s Audit and Legal Committee has since mandated that company auditors may not provide IT consulting, internal audit or financial transaction structuring services in the future. The committee also has decided that KPMG will not provide tax assistance for Motorola’s expatriate employees after the fiscal year 2001 tax returns are completed.
“Given the protective policies already in place, the company does not believe it is necessary to place arbitrary limitation on senior management, the Audit and Legal Committee and the board of directors in exercising their business judgement for the selection of auditors or other outside vendors,” the board said in response to the proxy proposal by the union pension fund.
