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Jessica Fino 26 Apr 2018 11:36am

KPMG survives shareholder revolt at General Electric

Big Four firm KPMG has managed to secure its 109-year-old audit client General Electric (GE) despite several shareholders opposing its re-election

During GE’s annual general meeting yesterday, only 64.9% of shareholders voted in favour of the re-appointment of KPMG. Two shareholder advisory groups have recommended against the conglomerate retaining its auditor.

GE is KPMG’s longest-standing client, according to Audit Analytics, and paid $142.9m (£102.48m) for audit, audit-related and tax fees last year.

After the vote, which showed two fifths of shareholders opposed the re-election, GE said in a statement to the Wall Street Journal that its audit committee would “certainly be taking this indication from our shareowners into account”.

Meanwhile, the majority of shareholders at Wells Fargo also agreed to re-appoint KPMG, despite last week’s $1bn (£701m) fine as part of a deal to settle potential charges relating to misconduct at its home mortgage and auto loans business.

A total of 91.1% of shareholders decided to retain KPMG as Wells Fargo’s auditors, which has been doing audit work at the US bank since 1931.

The endorsement came despite proxy advisor Glass Lewis’ recommendation that they should vote otherwise “in light of several ongoing concerns”.

The bank was also fined $185m (£132.6m) and accused of “widespread illegal practice” by US regulators in 2016, after an independent review revealed that in order to meet targets, bank staff had opened 2.5 million fake consumer and small business retail banking deposit accounts and unsecured credit cards on behalf of existing customers.

Meanwhile, GE announced in January that it was being investigated by the US Securities and Exchange Commission over its accounting practices.

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