Equities

ADM Hires 3M's Patolawala as CFO Amid $8B Scandal Recovery

ADM appoints 3M's Monish Patolawala as CFO after $8 billion accounting scandal, shares rise 1.3%.

By Alex P. Chase

7/10, 11:45 EDT
Archer-Daniels-Midland Company
3M Company
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Key Takeaway

  • ADM appoints Monish Patolawala from 3M as new CFO to restore credibility after an $8 billion accounting scandal.
  • ADM shares have declined 12% YTD, reflecting ongoing challenges in nutrition unit and crop prices.
  • Patolawala's move follows significant leadership changes at 3M, including the appointment of a new CEO.

New CFO Appointment

Archer-Daniels-Midland Co. (ADM) has appointed Monish Patolawala, a seasoned executive from 3M Co., as its new Chief Financial Officer (CFO), effective August 1. This move comes as ADM seeks to restore its credibility with shareholders following an accounting scandal. Patolawala's appointment ends a six-month period of interim leadership in ADM’s finance department. Former CFO Vikram Luthar was placed on administrative leave in January and agreed to resign effective September 30 amid an accounting investigation that significantly impacted the company's market value.

Ismael Roig, ADM’s president of Europe, Middle East, and Africa and the animal nutrition unit, has been serving as interim CFO during this transitional period. The new CFO will be tasked with steering the company through a challenging phase, including turning around its troubled nutrition unit and navigating a downturn in crop prices and processing margins. ADM's shares have been down about 12% since the start of the year, reflecting the market's reaction to these ongoing issues.

Financial Scandal Impact

The accounting scandal that led to the departure of former CFO Vikram Luthar had a profound impact on ADM. The scandal wiped out more than $8 billion of the company’s market value in a single day, shaking the commodity trading world. In March, ADM disclosed a $137 million impairment charge related to its animal nutrition business following an internal probe. This disclosure brought some relief to investors who had feared the fallout would be worse. However, the company remains under investigation by the US Securities and Exchange Commission and the Department of Justice.

ADM's shares were up less than 0.5% as of 11:10 a.m. in New York, indicating a cautious market response to the new CFO appointment. The company is working to regain investor confidence and stabilize its financial standing.

3M Leadership Changes

Monish Patolawala's departure from 3M Co. comes amid significant leadership changes at the industrial product maker. Patolawala, who served as 3M’s CFO for four years, played a crucial role in guiding the company through the spinoff of its health-care business, Solventum Corp., and managing multiple billion-dollar settlements related to contaminated drinking water. His move to ADM follows the recent appointment of aerospace veteran Bill Brown as 3M’s new CEO.

Deane Dray, an analyst with RBC Capital Markets, noted, “New external hire CEOs typically like to hand-pick their own CFOs at least three-quarters of the time, so this announcement is consistent with the practice where Bill Brown can select his own finance executive.” Dray also mentioned that the departure of high-caliber employees in the running for top management positions is a relatively common outcome in such scenarios.

Shares in 3M were little changed at 9:32 a.m. in New York, with the stock up 9.1% this year through Tuesday, compared to a 17% increase in the S&P 500. ADM shares rose 1.3% on Wednesday following the announcement of Patolawala's appointment.