Chemours Co. has placed its CEO and two other top executives on administrative leave during an investigation that includes questions regarding ethics and finances.
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 was made by the board of directors of Wilmington, Del.-based Chemours.
In a Feb. 29 news release, officials said the leave is pending completion of an internal review being overseen by the board's audit committee, with the assistance of independent outside counsel. The scope of the investigation includes processes for reviewing reports made to the Chemours ethics hotline and practices for managing working capital, including the impact on metrics in the firm's incentive plans.
As a result of the investigation, Chemours "is evaluating one or more potential material weaknesses" in its internal control over financial reporting as of Dec. 31, 2023, with respect to maintaining effective controls related to the control environment. That evaluation includes the effectiveness of what officials called "the tone at the top" set by certain members of senior management.
The Chemours board has 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.
Also on Feb. 29, Chemours again delayed the release of its financial report for the fourth quarter and full year 2023. That report initially was to be released Feb. 14, then delayed to Feb. 28.
Officials said the firm needs additional time to complete its year-end reporting process, including its review of internal control over financial reporting as of Dec. 31 and for the audit committee to complete the internal review. No new date for the release has been announced.
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.
Officials said that decrease was primarily attributable to lower volumes in Titanium Technologies and in Advanced Materials, partially offset by increased pricing and volumes in Thermal & Specialized Solutions.
For full year 2023, 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 net loss for 2023 includes $746 million of pretax litigation settlements and $153 million of restructuring, asset-related and other charges. The loss was partly offset by a $106 million net pretax gain from the 2023 sale of the firm's glycolic acid business.
Chemours is a supplier of titanium dioxide, a common plastics whitener, as well as fluoropolymers and fluoroelastomers.
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.
The executive news led financial firm BMO Capital Markets to downgrade Chemours stock from outperform to underperform on Feb. 29.
The Motley Fool financial website also addressed the situation in a Feb. 29 article.
"Chemours did not say why it is taking these actions but did refer to unspecified 'reports made to the Chemours ethics hotline,' the article said. "This appears to be more than just an HR problem.
"The company also said it is 'evaluating one or more potential material weaknesses in its internal control over financial reporting' … If that's tied to the ethics issue, we could be looking at a case of some kind of internal financial shenanigans here."
Motley Fool added that "more concerning is Chemours' warning that it may have lost between $225 million and $235 million last year. Spread across 148.4 million shares outstanding, this implies that Chemours lost at least $1.51 per share last year vs. analyst expectations of a $3 per share profit."
On Wall Street, news of the executive actions sent Chemours' stock price down almost 32 percent to less than $20 on Feb. 29. The price had been under $18 at one point during the day. As recently as December, Chemours' share price had been above $32.