Archer-Daniels-Midland Co (ADM), a major grains trading company, has decided to postpone the payment of performance bonuses to some of its executives. This decision comes as the company is currently under investigation for its accounting practices.
According to a leaked memo, ADM has put a hold on the payment of performance bonuses until the completion and auditing of its financial statements. The decision was communicated to the staff through a memo on Thursday. The delay in bonuses follows the recent sidelining of the company’s chief financial officer and the initiation of an investigation into its accounting practices.
The investigation is primarily focused on the nutrition segment of ADM’s business. This relatively small unit has had a significant impact on executive compensation, leading to the delay in bonuses. While the payments to other employees will be made in March as per the regular schedule, the bonuses for the executive council members, including those who retired last year, will be postponed.
The investigation into ADM’s accounting practices has already had a significant impact on the company’s financials and operations. The news of the probe led to a 24% drop in ADM shares, marking the largest fall since 1929, according to the Center for Research in Security Prices.
ADM has also delayed the release of its full-year 2023 financial results until further notice. The investigation began after the company received a request for information from the U.S. Securities and Exchange Commission. It focuses on the Nutrition reporting segment and “intersegment transactions.”
The investigation is significant as a change in ADM’s Compensation and Succession Committee in 2020 tied half of long-term executive compensation to the operating profit growth of the Nutrition segment. The outcome of the investigation will have implications for the company’s executive compensation structure.
ADM declined to comment on the matter when approached by Benzinga. The company’s decision to postpone the payment of performance bonuses reflects its commitment to ensuring the accuracy and integrity of its financial statements. As the investigation progresses, ADM will need to address any issues identified and take appropriate actions to restore investor confidence.
In conclusion, ADM’s decision to postpone the payment of performance bonuses to some executives highlights the ongoing investigation into its accounting practices. The delay in bonuses and the impact on executive compensation underscore the significance of the investigation for the company’s financials and operations. As ADM navigates through this challenging period, it will be crucial for the company to address any accounting issues and restore investor trust.
