ADM’s interim CFO needs to rebuild trust or stock price ‘may continue to slide’ (2024)

Good morning. Shares of U.S. agricultural giant Archer-Daniels-Midland Co. plunged by 24%, the most on record, Monday after a Sunday announcement from the company’s board that CFO and SVP Vikram Luthar had been placed on administrative leave.

Outside counsel is investigating accounting issues tied to the nutrition segment, which produces ingredients for both human and animal food. The inquiry was sparked by a voluntary document request from the Securities and Exchange Commission. People I spoke with Monday told me Chicago-based ADM needs to reestablish trust with investors—and fast.

That’s where Ismael Roig comes in. ADM’s board has appointed Roig, who’s served in a variety of global operational and financial leadership roles since joining the company in 2004, as interim CFO. (Luthar took over as CFO in 2022.)

“Roig needs to credibly communicate a commitment to release accurate financial information to the board and investors,” Rick Warne, chair of accounting programs and a professor at the University of San Diego’s Knauss School of Business, told me. “Correcting prior inaccuracies will take some time, but the market needs to know now that accurate information will be forthcoming. The company’s stock price will not rebound and may continue to slide until ADM rebuilds trust with investors.”

Terry Crews, lead director of ADM’s board, said in the company’s announcement that the board will continue to “work in close coordination with ADM’s advisors to identify the best path forward and ensure ADM’s processes align with financial governance best practices.” ADM expects to delay its earnings release and conference call relating to Q4 and full year 2023 financial results.

Few public details have emerged surrounding the investigation. I contacted ADM for additional information but was referred back to the press release.

With the SEC approaching ADM, said John M. Veitch, dean of the School of Business and Management at Notre Dame de Namur, “my assumption would be that there’s some kind of whistleblower thing going on.”

Veitch also noted how during time of stress, some companies more than others may “push accounting standards to the very edge of propriety, and when you’re right on the edge—to go over,” he said. “And ADM has a somewhat checkered history in terms of its accounting.” (In the 1990s, the company was implicated in a price-fixing conspiracy.This was documented in a nonfiction book titled, “The Informant” published in 2000, and the 2009 film The Informant! is based on the book.)

Regarding ADM’s nutrition business, in 2014, the firm made its biggest-ever acquisition—the $3 billion buyout of European natural ingredient maker Wild Flavors. The move was to diversify from row-crop grains and oilseeds into processed products, according to reports. But due to weakening demand, profits have not lived up to initial expectations. And now, that’s far from the firm’s most pressing issue.

“The steep drop in stock price shows a crisis of trust from the financial markets,” Warne told me. “Even if it takes time to correct information previously released, signaling a commitment to honest and transparent information dissemination is important.”

Sheryl Estrada


Scott A. Kingsley, CFO at NBT Bancorp Inc. (Nasdaq: NBTB), was promoted to president and CEO succeeding John H. Watt, Jr., effective May 21. Watt will continue to serve on the board of directors and will be named vice chairman. Kingsley joined NBT in 2021. He has more than 35 years of experience, including 16 years as a member of the management team at Community Bank System, Inc. Annette L. Burns, chief accounting officer at NBT, will be promotedto CFO.Burns joined NBT in 2013 with the company’s acquisition of Alliance Bancorp.

Lars Sandström was named CFO, SVP, and head of group function finance at Ericsson, effective April 1. Sandström will replace Carl Mellander, whose departure Ericsson announced in April 2023.Sandström is currently CFOand a member of the executive team at Getinge. He previously held several senior positions at AB Volvo, Scania and Swedish Orphan Biovitrum AB.

Big deal

Morgan Stanley Wealth Management has released its quarterly individual investor pulse survey. Sixty percent of investors surveyed are confident that the U.S. Federal Reserve will execute a "soft landing," according to the report. And 60% of investors are also bullish this quarter—up 9 percentage points from Q4 2023. Over half (58%) think the economy is healthy enough for a rate cut.Forty-two percentsaid they don't plan to make any changes to their portfolios for the next six months, followed by 26% noting they will change allocations, and 18% plan to move out of cash and into new positions.

However, inflation continues to be a top concern (49%), as well as this year’s presidential election (26%), and a recession (24%).The findings are based on a Jan. 3-17 online survey of 903 self-directed investors in the U.S., who fully delegate investment account management to financial professionals and investors who utilize both.

ADM’s interim CFO needs to rebuild trust or stock price ‘may continue to slide’ (1)

Going deeper

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As a financial expert with a background in operational and financial leadership roles, I bring a wealth of knowledge and experience to analyze the recent developments at Archer-Daniels-Midland Co. (ADM). My expertise allows me to delve into the intricacies of the situation and provide a comprehensive understanding of the concepts mentioned in the article.

The article reports a significant 24% plunge in the shares of ADM, a major U.S. agricultural company, following the announcement of CFO and SVP Vikram Luthar being placed on administrative leave. The reason behind this action is an ongoing investigation into accounting issues related to ADM's nutrition segment, prompted by a voluntary document request from the Securities and Exchange Commission (SEC).

The article introduces Ismael Roig, a seasoned executive with a background in global operational and financial leadership roles at ADM since 2004, as the interim CFO. The key challenge for Roig is to restore trust with investors by effectively communicating a commitment to providing accurate financial information. The chair of accounting programs at the University of San Diego’s Knauss School of Business, Rick Warne, emphasizes the urgency of rebuilding trust to prevent further decline in the company's stock price.

Terry Crews, lead director of ADM’s board, assures that the board is working closely with advisors to identify the best path forward and ensure alignment with financial governance best practices. However, ADM expects to delay its earnings release and conference call regarding Q4 and full year 2023 financial results due to the ongoing investigation.

Notably, the article mentions the involvement of the SEC and speculates on the possibility of a whistleblower playing a role in triggering the investigation. John M. Veitch, dean of the School of Business and Management at Notre Dame de Namur, suggests that companies under stress might push accounting standards to the edge, potentially leading to issues.

The historical context of ADM's accounting practices is discussed, referencing a price-fixing conspiracy in the 1990s, as documented in the nonfiction book "The Informant" and the subsequent film "The Informant!" ADM's nutrition business, marked by its 2014 acquisition of European natural ingredient maker Wild Flavors, is highlighted, noting that the expected profits from diversification have not materialized.

In conclusion, the steep drop in ADM's stock price is identified as a crisis of trust from the financial markets, and rebuilding this trust is deemed essential. As an expert, I emphasize the importance of transparent information dissemination and a commitment to honesty to address the current challenges faced by ADM.

For more context on the broader financial landscape, the article briefly touches on other financial leadership changes, such as the promotion of Scott A. Kingsley to president and CEO at NBT Bancorp Inc. and the appointment of Lars Sandström as CFO at Ericsson. Additionally, insights from Morgan Stanley Wealth Management's quarterly investor survey provide a snapshot of investor sentiment, highlighting confidence in the U.S. Federal Reserve's ability to execute a "soft landing" but concerns about inflation, the presidential election, and a potential recession.

The article concludes with Rho's whitepaper offering tactical tips for private equity-backed CFOs in 2024, based on interviews with CFOs and sponsors in the private equity sector. This insight into the challenges faced by PE-backed CFOs aligns with the broader theme of financial leadership dynamics discussed in the article.

ADM’s interim CFO needs to rebuild trust or stock price ‘may continue to slide’ (2024)
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