Chemours suspends chief and senior executives over accounting issues

Chemical giant Chemours has suspended three senior executives, including its chief executive and chief financial officer, pending an internal review over suspicious accounting and compensation practices.

The DuPont spin-off postponed reporting its 2023 financial results in mid-February, saying it needed extra time to complete the reporting process. But on 29 February there were further revelations, with chief executive Mark Newman, chief financial officer Jonathan Lock, and principal accounting officer Camela Wisel placed on administrative leave for the duration of the review.

The review will be overseen by auditors and independent lawyers. It will focus on ‘processes for reviewing reports made to the Chemours ethics hotline’, and ‘practices for managing working capital,’ including company metrics that impact financial incentives for senior managers. In submissions to the US Securities and Exchange Commission, Chemours provided estimates of its top line financials for 2023, and promised to file official, audited figures ‘as soon as practicable’.

‘This is about as serious as you could get. The suggestion is that the financials were off, and they were allegedly done in an improper way,’ says Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, US. ‘They’re saying that the numbers on which the incentives plans were based many be inaccurate and people may have been overpaid based on the metrics that were reported.’

‘They’re going to have to go back and reconstruct the actual financial performance of the company for the period involved,’ says Elson. ‘The audit committee [likely] had a whistleblower; they investigated and found that there was substance to the accusations.’

‘This is a shock. DuPont was a staid, conservative, blue-blood company and it was assumed that Chemours was similar, but these are serious allegations,’ says Elson. ‘To remove both a [chief executive] and the [chief financial officer] is very rare.’

Chemours’ share price dropped by around half following the announcement. Several days later, it remains down almost a third. Market analyst Michael Leithead at Barclays said in a note to investors: ‘What we think many perceived as a relatively minor accounting hang-up two weeks ago now appears wider, longer, and with more ramifications than the market initially believed.’