Thirty Years After ‘Informant!’ Scandal, Inquiry Probes Executive Bonuses at ADM
A Midwestern agribusiness may seem like an unlikely setting for million-dollar corporate intrigue, but that’s not for lack of trying on the part of Archer-Daniels-Midland Co. Roughly 30 years after the food-processing company endured a Hollywood-worthy price-fixing scandal, Chicago-based ADM now faces questions about the abrupt suspension of its chief financial officer and inquiries into its accounting practices and executive payouts.
Historians of corporate hanky panky probably remember ADM as the subject of a nonfiction book published in 2000 entitled The Informant: A True Story, journalist Kurt Eichenwald’s account of a price-fixing scheme at ADM in the 1990s involving the animal feed additive lysine. In 2009, film director Steven Soderbergh turned the book into The Informant!, a breezy comedy starring Matt Damon and Scott Bakula. The movie chronicled the escapades of former ADM executive Mark Whitacre, who fed the FBI information about collusion in the food commodities industry while simultaneously embezzling more than $9 million from the company.
ADM now finds itself back in the news after disclosing in a Form-8K dated January 19 that it had placed CFO Vikram Luthar on administrative leave. Additionally, the company revealed it had tasked outside counsel with looking into “certain accounting practices and procedures” involving its nutrition segment. The moves came in response to a voluntary document request by the Securities and Exchange Commission. News of the investigation prompted a selloff of ADM stock that resulted in a 24% drop in the market value of its shares.
The mystery surrounding ADM’s decision to distance itself from its CFO and the reasons behind the SEC’s document request may lie with the company’s big bet on its nutrition division. According to Fortune, the nutrition segment is responsible for less than 10% of ADM’s revenue, but the division has an “outsized influence on recent executive bonuses.” In 2020 and 2021, ADM tied a significant amount of its executives’ compensation packages to growth in the company’s nutrition unit. The move was a smashing success – at least for the executives’ bank accounts. They collected stock payouts valued at north of $70 million, with more payouts set to be doled out this year.
Days after suspending its CFO and announcing the investigation, ADM said in a staff memorandum reviewed by Reuters that it would delay paying performance bonuses to some executives until its financial statements are completed and audited. The memo also indicated compensation from the company’s performance incentive plan for members of its executive council, including those who retired last year, would be postponed.
The latest events at ADM don’t sound like they would generate enough material for Soderbergh and Damon to give a green light to a sequel to The Informant!. However, the last time the company landed in trouble with the authorities, some ADM higher-ups went to jail and the company paid roughly $100 million in fines for its actions. Present-day ADM executives are probably more concerned with not re-living that part of their predecessors’ story.
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