The Chemours Co. unveiled a plan this week to overhaul its financial reporting policies after top executives were found to have manipulated up to $575 million in vendor payments and receivables schedules over the last two years.
The plan, announced as part of Chemours’ annual report, is part of the chemical maker’s attempt to address a scandal that has led to the ousting of its CEO and the placement of its CFO and controller on ongoing administrative leave.
Newly appointed President and CEO Denise Dignam attempted to assuage investor concerns on a call this week. “We’ve been working diligently over the past few weeks to get to today,” Dignam told analysts Thursday morning. “We don't want turbulence, but I do believe change is good. And I think that there's going to be benefits that come out of these changes.”
The chemical company also released more details of its internal financial probe into the mishandling of funds by top executives, who manipulated vendor payment schedules to meet Chemours’ publicized cash flow targets.
Details show senior management “engaged in efforts” to delay up to $100 million in vendor payments scheduled for Q4 2023 to be sent in Q1 2024. They also pushed up roughly $260 million of receivables from vendors from Q1 2024 to Q4 2023.
Chemours’ audit committee found executives took similar actions in 2022, pushing out roughly $40 million in vendor payments from Q4 2022 to Q1 2023, and roughly $175 million of vendor receivables were moved from Q1 2023 to Q4 2022.
Now, the company is rolling out a plan to strengthen its policies and employee training on proper financial reporting, as well how to report issues to its ethics hotline and ensure concerns are elevated to the proper managers.
Chemours’ compensation committee will also review the metrics used to determine executive and employee incentive compensation.
Dignam and interim CFO Matt Abbott take on the helm as the company is also on the financial defensive. Chemours’ net sales were down 11% year over year in FY 2023 and it reported an $18 million loss in Q4. The company is now looking to cut $125 million in costs this year after cutting $50 million in 2023, Dignam said during the call.
“We have fundamentally changed how we operate at the top of this organization,” the CEO said. “We are now business led rather than corporate led. This means more decision-making at the business level, and it means lowering corporate costs and embedding resources in the businesses."
