Energy technology company FMC Technologies will pay a $2.5 million penalty to settle charges that it overstated profits in one of its business segments, the U.S. Securities and Exchange Commission said on Thursday.
Two now former executives made the improper adjustments after being pressured to improve the financial performance of the Houston-based company’s energy infrastructure department, the SEC said.
FMC Technologies and the two executives consented to the SEC’s order without admitting or denying the findings, the agency said.
A spokesman for FMC and lawyers for the executives could not immediately be reached for comment.
The former controller of the department, Jeffrey Favret, and another controller, Steven Croft, improperly reduced the value of the company’s liability for employee paid time off. That, in turn, led to overstating the department’s pre-tax operating profits by $800,000, allowing it to meet an internal target for the first quarter of 2013, the SEC said.
Favret and Croft also corrected a $730,000 error recorded in 2012 that increased their department’s operating results for first quarter 2013, but never notified the company’s top controller, the SEC said.
The two later signed letters to the company in which they represented that they did not make adjustments larger than $250,000 outside of the accounting period at the time, the SEC said.
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Favret agreed to pay a $30,000 penalty and Croft agreed to pay a $10,000 penalty. The two also agreed to suspensions from working on SEC-related accounting matters. They can apply for reinstatement after two years, the SEC said.
Another FMC Technologies department also failed to properly account for employee paid time off in 2012, the SEC said. The company also improperly accounted for interest income associated with certain large loans made within the company that year, resulting in an $8 million out-of-period adjustment in 2014.