Chemours Co. says it placed its CEO and two other top executives on administrative leave, in part, because of attempts to speed up or slow down payments that would affect their financial incentives.
Officials with Chemours in Wilmington, Del., announced the administrative leaves Feb. 29 and provided an update March 6. The leave affects President and CEO Mark Newman, Senior Vice President and Chief Financial Officer Jonathan Lock and Vice President, Controller and Principal Accounting Officer Camela Wisel. The decision to place those three on leave was made by the board.
Chemours is a supplier of titanium dioxide, a common plastics whitener, as well as fluoropolymers and fluoroelastomers.
In the update, officials said the review relates to an anonymous report made to the Chemours ethics hotline. A complete report of the findings of the internal review was delivered to the board on March 5.
Based on the review, the board's audit committee determined that the three executives placed on leave "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."
The committee also determined the three "made efforts 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."
"The [committee] found that these individuals engaged in these efforts in part to meet free cash flow targets … [that] also would be part of a key metric for determining incentive compensation applicable to executive officers," officials said.
"There was a lack of transparency with the company's board of directors by the members of senior management who were placed on administrative leave with respect to these actions," they added.
As a result, the committee concluded that Newman, Lock and Wisel violated Chemours' code of ethics applicable to their positions and relating to "the promotion of full, fair, accurate, timely and understandable disclosure."
Newman's compensation package totaled $7.6 million for the fiscal year, but only $995,833 of that was in salary, Manufacturing Dive reported. Lock was given a $600,000 base salary when he was named CFO in June 2023, with an incentive plan award worth 75 percent of that salary with the potential for higher payments.
Officials said the anonymous report prompting the review wasn't brought to the firm's general counsel or audit committee until it was identified in connection with Chemours' year-end 2023 external audit process.
The audit committee determined the failure to bring the report to the board sooner "resulted from inadequate controls … regarding the evaluation and escalation of hotline reports and poor judgment by certain employees who handle the intake of such reports."
They added the findings of the internal review did not affect preliminary, unaudited estimates of operating results and other financial measures for full-year 2023. Chemours twice has delayed releasing those results.
Chemours released unaudited financial results on Feb. 29. The firm expects to report sales of around $6 billion for the year, down almost 12 percent from 2022. For the year, Chemours expects to report a loss of between $225 million and $235 million. It had shown a profit of almost $600 million in 2022. The estimated loss for 2023 includes $899 million of pretax litigation settlements and restructuring, asset-related and other charges.
The Chemours board appointed Denise Dignam as interim CEO and Matt Abbott as interim CFO. Dignam joined Chemours in 2015 and has served as president of the firm's Titanium Technologies unit since March 2023. Abbot has been with Chemours since 2017, serving as senior VP and chief enterprise transformation officer since June 2023.
Newman had been president and CEO of Chemours since June 2021. He joined Chemours predecessor DuPont Co. in 2014 then became Chemours CFO in 2015, the same year it was spun off from DuPont. Chemours previously had been DuPont's Performance Materials unit. Prior to DuPont, Newman held financial positions at Sun Coke Energy, General Motors and Ally Financial.
Lock joined Chemours in 2018 and had been CFO since June 2023. Like Newman, he had previous experience at Sun Coke Energy. Lock also had worked for business consulting firm Marakon. Wisel had been with Chemours since its launch in 2015. She previously held financial roles at materials maker Trinseo and financial firm Price Waterhouse Coopers.
On Wall Street, news of the executive actions sent Chemours' stock price down almost 32 percent to less than $20 on Feb. 29 after closing at $28.72 on Feb. 28. The price had recovered to $25.50 in early trading March 8.