Dive Brief:
- Chemicals company Chemours has placed CEO Mark Newman, CFO Jonathan Lock as well as Controller and Principal Accounting Officer Camela Wisel on administrative leave and named executives to step in to fill the CEO and CFO roles on an interim basis, pending the completion of an internal review of certain financial reporting practices, according to a Wednesday release that was updated Thursday.
- Shares of the Wilmington, Delaware-based company plunged 35% Thursday, after Chemours also delayed for a second time this month the release of its fourth quarter and full-year financial results. On Feb. 13 Chemours said it was “evaluating its internal control over financial reporting with respect to maintaining effective controls related to information and communications,” noting that its audit committee needed more time to complete a related internal review.
- The company provided more detail in the release Wednesday, saying it is “evaluating one or more potential material weaknesses in its internal control over financial reporting as of December 31, 2023 with respect to maintaining effective controls related to the control environment, including the effectiveness of the ‘tone at the top’ set by certain members of senior management and information and communication components of the COSO internal control framework.”
Dive Insight:
The scope of the internal review that is being overseen by the audit committee, the board, and outside counsel appears to be wide-ranging. It includes processes for reviewing reports made to the company’s ethics hotline, working capital practices, including the related impact on metrics within the company’s incentive plans, certain non-GAAP metrics included in filings made with the Securities and Exchange Commission or otherwise publicly released, and related disclosures, according to the release.
In the wake of the shakeup the company appointed Denise Dignam, 58, as its interim CEO and Matthew Abbott, 48, as its interim CFO (principal financial and accounting officer), according to a Thursday Securities and Exchange Commission filing. Dignam has served in various senior roles since joining the company in 2015 including as president of Titanium Technologies. Abbott has served most recently as chief enterprise transformation officer after joining Chemours in 2017, according to his LinkedIn profile. He joined from PricewaterhouseCoopers where he was a partner.
The changes come about seven months after Lock took the finance chief reins of the company, which produces such flagship brands as Teflon and Freon, CFO Dive previously reported. Lock, who joined the company in 2018, succeeded Sameer Ralhan, who notified the company of his intent to step down from the company’s top finance role in June.
Ralhan’s resignation came just days after Chemours, along with fellow chemical companies Corteva and DuPont, announced they would pay more than $1 billion to settle claims of “forever chemicals” that have contaminated U.S. public water systems. The agreement follows a Memorandum of Understanding reached by the three companies in January 2021.
Chemours on Thursday issued a release “correcting and replacing” the Wednesday announcement, with substantially the same information about the management changes and a delayed 10-K filing. The company stated that the earlier release should read that as of Dec. 31, 2023 the company maintained cash and cash equivalents of $1.2 billion, with restricted cash and restricted cash equivalents of $604 million primarily relating to the U.S. public water district settlement.
The company also said it expects to report net loss for the year ended Dec. 31, 2023 within a range of $225 million to $235 million, compared to net income of $578 million in 2022. Last year’s net loss includes $746 million of pre-tax litigation settlements, according to the release.
A company spokesperson declined to comment beyond the public releases.
