Archer-Daniels-Midland Co (ADM) has decided to delay the payment of performance bonuses to certain executives until its financial statements are completed and audited. This move follows the company sidelining its chief financial officer and launching an investigation into accounting practices. The investigation is centered on the nutrition segment, a relatively small unit in ADM's business that played a significant role in executive compensation. Payments from ADM's performance incentive plan for members of the executive council will be postponed, while payments to other employees will proceed as scheduled in March. The investigation led to a 24% drop in ADM shares, the largest fall since 1929. The full-year 2023 financial results release has been delayed until further notice.
The probe focuses on ADM's Nutrition reporting segment and "intersegment transactions." It began after ADM received a request for information from the U.S. Securities and Exchange Commission (SEC). The SEC declined to comment. In 2020, ADM's Compensation and Succession Committee changed long-term executive compensation, tying half of it to operating profit growth of the Nutrition segment. Previously, compensation had been based on adjusted earnings, return on invested capital, and relative total shareholder returns. Despite the Nutrition unit accounting for only 9.3% of ADM revenue in 2020, it reported average operating profit growth of 21.4% from 2020 to 2022, leading to executives receiving substantial performance share units valued at nearly $69 million when vested in February 2023.