Archer-Daniels-Midland Co (ADM) has announced a delay in paying performance bonuses to certain executives until the completion and audit of its financial statements, according to an internal memo seen by Reuters. The decision, outlined in a memo sent to staff on Thursday, follows recent actions by ADM, including sidelining its chief financial officer and initiating an investigation into accounting practices.
The ongoing investigation is specifically focused on ADM's nutrition segment, a relatively small unit that has played a significant role in determining executive compensation. The delayed compensation pertains to ADM's performance incentive plan for members of the executive council, including those who retired last year.
ADM declined to provide additional comments on the matter. Meanwhile, payments to other employees are expected to proceed on the regular schedule, with disbursements scheduled for March, according to details in the staff memo.
The executive council consists of several top executives and heads of other ADM businesses, although the exact number of council members could not be determined. News of the accounting investigation prompted a sharp decline in ADM shares by 24% on January 22, marking the most significant drop since 1929, as reported by the Center for Research in Security Prices.
ADM has postponed the release of its full-year 2023 financial results until further notice. The investigation, focusing on ADM's Nutrition reporting segment and “intersegment transactions,” began after the company received an information request from the U.S. Securities and Exchange Commission (SEC). The SEC has refrained from offering comments on the matter.
In 2020, ADM's Compensation and Succession Committee altered the long-term executive compensation structure, tying 50% of it to the operating profit growth of the Nutrition segment, as per ADM proxy statements. Previously, long-term compensation had been based on adjusted earnings, return on invested capital, and relative total shareholder returns. Despite the Nutrition unit contributing only 9.3% of ADM revenue in 2020, the investigation delves into the significant role it played in executive compensation. In 2023, ADM reported higher-than-forecast average Nutrition operating profit growth from 2020 to 2022, resulting in substantial performance share unit awards to seven executives, valued at nearly $69 million when vested in February 2023.
