Now We Know Why Chemours’ Senior Execs Were Placed on Leave
The three top executives at Chemours that were placed on administrative leave at the end of last month engaged in unethical activities to meet the company’s cash flow targets and, in turn, boost their compensation, the Delaware-based company has revealed in a press release on its website.
Playing loose with payments
An internal audit found that CEO Mark Newman, SVP and CFO Jonathan Lock, and VP, Controller and Principal Accounting Officer Camela Wise engaged in timing actions related to payables and receivables which positively affected free cash flow targets in the reporting period. Specifically, “the members of senior management . . . engaged in efforts in the fourth quarter of 2023 to delay payments to certain vendors that were originally due to be paid in the fourth quarter of 2023 until the first quarter of 2024, and to accelerate the collection of receivables into the fourth quarter of 2023 that were originally not due to be received until the first quarter of 2024,” notes the press release published on March 7. “The audit committee found that these individuals engaged in these efforts in part to meet free cash flow targets that the company had communicated publicly, and which also would be part of a key metric for determining incentive compensation applicable to executive officers.”
The audit committee concluded that there was a lack of transparency with Chemours’ board of directors on the part of the senior executives and that they violated the company’s code of ethics relating to the promotion of “full, fair, accurate, timely, and understandable disclosure.”
Anonymous tip
The matter came to light after an anonymous report was made to Chemours’ ethics hotline. It was not elevated to the general counsel or audit committee until the matter was identified in connection with the company’s year-end 2023 external audit process, the press release notes. This failure resulted from inadequate controls and procedures regarding the evaluation and escalation of hotline reports and poor judgment by certain employees who handle the intake of such reports, the auditors said.
As a consequence of this, Chemours said it is now evaluating potential “material weaknesses” in its internal controls over financial reporting, including the effectiveness of the “tone at the top” set by certain members of senior management.
Chemours also noted that the findings of the internal review did not affect the preliminary, unaudited estimates of 2023 operating results and other financial measures as disclosed in the company’s press release dated Feb. 29, 2024.
Still no date for earnings report
Chemours has not set a date for its earnings report, which has been twice delayed. It said it is “working diligently to complete its year-end reporting process . . . and to file its annual report on Form 10-K with the SEC as promptly as practicable.”
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