CHEMOURS
CEO ousted for ethics violations / Denise Dignam to take over / NYSE gives six months to update 2023 earnings
Chemours (Wilmington, Delaware, USA; www.chemours.com), the former DuPont chemicals division, has become the second major US player operating under strained circumstances to replace its CEO this month.

Though the internal changes at Chemours differed in significant ways from the shift at the top of 3M (Saint Paul, Minnesota; www.3m.com), both companies are being hit hard by fines for contaminating US drinking water sources with per- and polyfluoroalkyl substances (PFAS), the so-called “forever chemicals”. 

On 22 March 2024 Denise Dignam, president of the Titanium Technologies and Chemical Solutions division at Chemours since 1 April 2023, was appointed as president and CEO of the company, succeeding Mark Newman. The new chief executive, who joined Chemours in 2015, has more than 35 years of experience in the chemical industry.

Dignam had served as interim CEO since 29 February 2024, when the company announced that three senior executives, including Newman and chief financial officer Jonathan Lock, along with controller and principal accounting officer Camela Wisel, had been placed on administrative leave.

Chemours said Matthew S. Abbott, interim CFO since the end of February, will continue in his role while a “comprehensive search” for a permanent CFO is underway. 
Earnings report delayed
Two weeks prior to the move against the managers, the company’s board of directors had disclosed that publication of financial results for the fourth quarter and full year 2023 would be delayed, as additional time was needed to complete the year-end-reporting process. Board member Sandra Phillips Rogers subsequently resigned.

In their initial announcement, the directors added that Chemours was simultaneously “evaluating its internal control” over financial reporting as of 31 December 2023 to deal with issues “related to information and communications”. 

Related: EPA revs regulatory engine; new rules for “inactive” chemicals

A committee appointed by the board to conduct a related review said it found that the three top managers had “violated ethical requirements” relating to the “promotion of full, fair, accurate, timely and understandable disclosure”. 

In parallel, it also emerged that notice of the violations had been reported anonymously through the company’s ethics hotline, but the complaint failed to make its way to the responsible authorities.
Figures altered to meet forecast?
The irregularities uncovered in the probe had been “designed at least in part to meet free cash flow targets that Chemours had communicated publicly, and which also would be part of a key metric for determining incentive compensation applicable to executive officers”, the committee said.

Concretely, the trio was said to have “sped up the collection of receivables, so that the cash would flow into the balance sheet for the 2023 fourth quarter rather than the first quarter of 2024”.

According to unofficial reports, more than three-quarters of the USD 7.6 mn annual pay received by Newman in 2022 – the most recent year reported to the supervisory authority US Securities and Exchange Commission (SEC, Washington, D.C.; www.sec.gov) – did not come in the form of salary but rather in instruments such as stock and non-equity incentives. These were tied to meeting a specific benchmark, which apparently had not been met.

Chemours has not yet published its Q4 and 2023 figures. However, the company said the findings of the internal review “do not affect the preliminary unaudited estimates of operating report results and other financial measures disclosed in a press release on 29 February”.

The New York Stock Exchange (NYSE; www.nyse.com) has given the company six months from 15 March 2024 to file the reporting Form 10-K with the SEC. 

Analysts have said they expect 2023 net sales to total around USD 6 bn, down from the USD 6.8 bn reported for 2022. Chemours is also expected to report full-year losses of more than USD 200 mn for 2023, compared with a 2022 profit of USD 578 mn. The estimated net loss should include USD 746 mn in pre-tax litigation settlements for the discharge of PFAS, the analysts said.
27.03.2024 Plasteurope.com [254958-0]
Published on 27.03.2024
Chemours: CEO Dignam soll Ruhe in den Hühnerstall bringenGerman version of this article...

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