Good morning,
On April 11, Pfizer and Moderna—two of the leading COVID-19 vaccine producers in the U.S.—separately made new CFO announcements. Both CFOs began in May. One is still CFO, and the other one isn’t.
Moderna announced on May 11 that the company’s CFO Jorge Gomez, who officially started the job on May 9, has departed, effective immediately. His departure follows a May 10 public disclosure by Dentsply Sirona Inc., Gomez’s former employer, of an ongoing internal investigation into certain matters, including financial reporting, Moderna said.
Dentsply Sirona, an American dental equipment manufacturer, reported in its Q1 2022 earnings report on May 10 that the company has filed a form 12b-25, a notification of late filing, with the U.S. Securities and Exchange Commission (SEC) due to an internal investigation.
The audit and finance committee of Dentsply’s board of directors began the investigation in March 2022 focusing on “the company’s use of incentives to sell products to distributors in the third and fourth quarters of 2021, and whether those incentives were appropriately accounted for and the impact of those sales was adequately disclosed in the company’s periodic reports filed with the SEC,” according to the 12b-25 form.
The audit committee is also looking into “allegations that certain former and current members of senior management directed the company’s use of these incentives and other actions to achieve executive compensation targets in 2021.”
I asked Moderna if they knew about the investigation while vetting Gomez. “Moderna was made aware of the internal investigation at Dentsply yesterday through Dentsply’s public filing,” Colleen Hussey, senior director of corporate communications, told me on Wednesday. I asked if Gomez stepped down or was terminated, but Moderna declined to answer. David Meline, the company’s recently retired CFO, resumed his role on May 11, while Moderna reopens its search for a new CFO. Meline’s first week of retirement turned into his first week back on the job.
The buck stops with the CFO
For some insight on internal fraud risk management processes at companies, I had a conversation with Dan Lefler, a partner emeritus at the Los Angeles law firm Irell & Manella LLP.
“The financial statements are prepared by the financial department within a company,” Lefler says. “And that’s the first line of defense to get things right. The second line of defense is the auditors, and the third is the audit committee. You rely on auditors to ask the hard questions and know what the areas are that should be probed; and you rely on the audit committee to do the same thing.”
“But, at the end of the day, it’s the CFO and the controller and the people that are actually handling the company’s accounts that you rely on to make sure that they do things right,” he says.
So, who’s making sure a CFO is not involved in fraud? “The answer is the audit committee and audit firm,” Lefler told me. “I do think most CFOs try to do things right. There are a lot of penalties in place for people if they get things wrong.” For starters, “if the investigation by the audit committee were to conclude that anybody acted consciously improperly, they could refer to the SEC.”
I also asked Lefler what happens if there’s an instance when executives are compensated incorrectly. Clawback provisions in executive compensation agreements are a corporate best practice these days, he says.
See you tomorrow.
Sheryl Estrada
sheryl.estrada@fortune.com
Upcoming events:
Join me for a LinkedIn Live event on May 16 at 12:30 p.m. ET where I will talk with Michele Tam, expert and associate partner at McKinsey & Company, about building the most effective team to support a CFO. You can register here.
The Emerging CFO: Sounding the Alarm: CFOs Tackle Inflation and Interest Rates, a virtual event, will take place on Tuesday, May 17 at 11 a.m. ET. Confirmed speakers include Nicole Carrillo, CAO at LoanDepot, Pascal Desroches, CFO at AT&T, and John Diez, CFO at Ryder. You can register here.
Big deal
A new report by Technavio, a market research company, projects that the metaverse market will reach $677.98 billion between 2022 and 2026. However, during this time period, Technavio predicts the market will also decelerate at a compound annual growth rate (CAGR) of 33.26%. North America is expected to account for the highest market share growth.
Going deeper
Bitcoin’s 50% crash erases all of Elon Musk’s gains on Tesla balance sheet, a new report by Fortune, takes a look at how Musk bet big on cryptocurrency in 2021. "But so far, the grand experiment’s proved a bust," writes Shawn Tully.
Leaderboard
Eduardo Bezerra was named EVP and CFO at Perrigo Company plc (NYSE: PRGO), a provider of consumer self-care products, effective May 16. Bezerra will succeed Ray Silcock, who previously announced his intent to retire. Silcock will serve in an advisory capacity until his retirement on July 15. Bezerra joins Perrigo from Fresh Del Monte Produce, Inc. (NYSE: FDP), where he served as SVP and CFO. He previously served in multiple finance, as well commercial and strategy positions at Monsanto Company for over 20 years, before the company was acquired by Bayer AG, when he took the lead on all finance-related integration matters.
Elizabeth Castro Gulacsy will retire from her position as CFO of SeaWorld Entertainment, Inc. (NYSE: SEAS), a theme park and entertainment company, effective on Dec. 31 or upon the appointment of her successor, if earlier. Gulacsy had a nine-year tenure with the company. A recruiting firm will conduct a search to fill her position.
Overheard
"Demand is greater than pre-pandemic levels, and the industry, as a whole, is trying to catch up. Domestic revenue on business travel is back."
—Delta Air Lines chief executive officer Ed Bastian told Fortune CEO Alan Murray at Fortune's Brainstorm Health in Marina Del Rey, Calif. on Wednesday.
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