10/16/2011
To: SPEEA
Council Members
From: SPEEA Legislative and Public Affairs
Committee
Subject: PRE-SUBMITTED NEW BUSINESS: Submit
a Shareholders’ Proposal to Replace Deloitte and Touche as Boeing’s Corporate Auditor.
Background
Boeing’s annual shareholders’
meeting takes place in April or May each year. Typically, one item of business
is voting on proposals from shareholders. In the past, individuals and
organizations have submitted proposals about Boeing’s pensions, executive compensation,
corporate governance, human rights in China and other issues.
This year, AFL-CIO unions
will be submitting one proposal to Boeing asking for an independent Chair on
the Board of Directors, and another about political contributions.
One timely subject would be a
proposal to replace Boeing’s auditor. Auditors make sure the company follows
generally accepted accounting practices, which are the rules and principles
used by shareholders and analysts to interpret the financial statements. Shareholders
rely on auditors’ reports to understand and trust financial statements about
the health of a company and to evaluate the soundness of the company’s business
plan. Boeing, like all other companies, expects its auditor to be independent,
and professional.
Corporate governance
consultants recommend changing auditors every 5 or 10 years, to refresh the
independence and perspective of the auditing function. Deloitte and Touche has
been Boeing’s auditor since 1932.
Deloitte was the auditor in
1997 when Boeing shocked the financial community by closing the 737 and 747
factories for 3 months, only days after assuring investors that both programs
were doing well. Deloitte was recently sued for $7 billion under claims that
they had failed to detect fraud. As the 787 program scales up to full
production rate, attention is turning to questions of cost and profitability.
SPEEA members operate on
facts and data. We know that long-term success comes from full consideration of
all available information. In business, the auditor plays a key role in
assuring that shareholders have meaningful, accurate and actionable data.
It is moved that: The SPEEA Council authorizes SPEEA to
prepare a shareholder resolution for the Boeing annual meeting calling for
replacement of its auditor on a rotating basis, as a matter of good corporate
governance.
Pro’s
Many SPEEA members are shareholders and a proposal
from SPEEA would say that we are committed to long-term commitment to honor
facts and data when making important decisions.
.
Con’s
A new auditor may find
significant problems, which could hurt the reputation of the company.