For purposes of determining whether to select KPMG as the independent auditor to perform the audit of our financial statements and our internal control over financial reporting for 2007, the Audit Committee conducted a thorough review of KPMG’s performance. The Committee considered:
- KPMG’s performance on the GE audit, including the quality of the GE engagement team and the firm’s experience, client service, responsiveness and technical expertise;
- the firm’s leadership, management structure, client and employee retention and compliance and ethics programs;
- the record of the firm against comparable accounting firms in various matters, such as regulatory, litigation and accounting matters, including in connection with the company’s 2007 restatement;
- the PCAOB report of selected KPMG audits for the 2004 year;
- the firm’s financial strength and performance; and
- the appropriateness of fees charged.
In the course of assisting the committee in its review, company representatives interviewed senior management of KPMG and KPMG’s court-appointed independent monitor with respect to certain of the matters listed above. KPMG LLP was our independent auditor for the year ended December 31, 2006. The firm is a registered public accounting firm.
KPMG representatives are expected to attend the 2007 Annual Meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareowner questions.
We are asking our shareowners to ratify the selection of KPMG LLP as our independent auditor. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of KPMG LLP to our shareowners for ratification as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the company and our shareowners.
Our Board of Directors recommends a vote FOR the following proposal:
RESOLVED: that the selection by the Audit Committee of the Board of Directors of the firm of KPMG LLP, Stamford Square, Stamford, Connecticut, as independent auditor for the company for the year 2007 is hereby ratified.
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