KPMG LLP's board elected Timothy P. Flynn, 48, as chairman and chief executive, replacing Eugene O'Kelly, who will step down from that role to deal with a recent diagnosis of advanced-stage cancer.
O'Kelly, 53, has served as chairman and chief executive since 2002. Previously, he was vice chairman of the firm's financial services practice and a member of the management committee. O'Kelly, who joined KPMG in 1972 in San Francisco, was admitted to the partnership in 1982.
The firm also named John B. Veihmeyer, 49, as deputy chairman and COO. Both elections must be ratified by the partnership. A vote is expected to be completed by June 10.
Consistent with the U.S. firm's governance, which provides that the chairman and deputy chairman are elected jointly for a six-year term, KPMG said that deputy chairman Joseph Mauriello would also relinquish his position upon ratification of the new leadership team. Mauriello previously announced plans to retire in 2006. Once approved by the partnership, Flynn and Veihmeyer will serve until 2011.
"This was unquestionably one of the most difficult career decisions of my life, but I knew that I was compelled to make a choice that was fair both to my family as well as the firm," O'Kelly told KPMG's 1,600 partners in a message today. "I've concluded that I could not devote ample time to the demands of the firm while I was dealing with the time and energy that my recovery process will entail."
O'Kelly said that he plans to remain a partner with the firm.
A 26-year veteran of KPMG, Flynn, 48, was elected to the partnership in 1988. He previously served as vice chair of Audit & Risk Advisory Services, with operating responsibility for the firm's audit practice, as well as its risk advisory services and financial advisory services practices. Prior to that, he was vice chair of human resources. He has also served as global managing partner of audit for KPMG International, serving as chairman of the global audit steering group and as a member of the international executive team.
O'Kelly is credited with bringing reforms aimed at restoring KPMG's professional credibility, such as separating risk management and quality oversight from the firm's business management activity.
During his tenure as chairman, KPMG, along with several other firms, came under scrutiny from regulators for its past role in promoting abusive tax shelters. O'Kelly initiated a top-level management shakeup in early 2004 that saw the departure of several executives amid ongoing investigations by the Internal Revenue Service and the Justice Department into the Big Four firm's past tax shelter activities, following a November 2003 Senate subcommittee report showing that KPMG collected roughly $124 million in fees from shelters from 1997 through 2001.
In January, in a move to further strengthen the firm's governance, O'Kelly brought on board U.S. District Judge Sven Erik Holmes in the newly created position of vice chair of legal affairs. Flynn said that one of his first actions as CEO will be to elevate Judge Holmes' role to report directly to him as chairman.
John Veihmeyer, 49, was formerly the managing partner of KPMG's Washington office and mid-Atlantic area managing partner for audit and risk advisory services. In late 2003, he was elected to KPMG's board of directors and was named chairman of the KPMG Foundation. Veihmeyer joined KPMG in 1977 and was elected to the partnership in 1987. He previously served as partner-in-charge of KPMG's audit practice in Washington/Baltimore, and was the lead SEC partner and professional practice partner for the mid-Atlantic area.
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