Archer-Daniels-Midland Co (ADM.N) will disburse performance bonuses to certain executives only after the completion and audit of its financial statements. The food processing and commodities trading company said the delay was prompted by a request for documents from the U.S. Securities and Exchange Commission, which the company says is part of an ongoing probe. The probe is focused on ADM’s nutrition reporting segment and “certain inter-segment transactions,” the company said. Compensation from the company’s performance incentive plan for members of the executive council, including those who retired in 2023, will be postponed, according to the memo. Other employees would be paid in March on the company’s regular schedule.
The company, ADM, has 270 plants and 420 crop procurement facilities worldwide that process cereal grains and oilseeds to make products for the food, beverage, nutraceutical, industrial, and animal feed markets. It also provides agricultural storage and transportation services. Over the years, the company has been hit by a series of scandals, including a 1990s price-fixing scheme for the animal feed additive lysine that led to three convictions and $100 million in fines.
ADM’s nutrition business designs and sells plant-based ingredients for foods such as protein drinks, meat alternatives, and animal feed. However, profits for the unit have been falling as more consumers shift toward plant-based food products, and ADM is challenged by weak demand in some markets. ADM also has had to invest in upgrading the business’s technology to keep up with changes in consumer demand and meet stricter environmental regulations.
In a 2022 interview with CFO Dive, Luthar, who joined ADM in 2004, described the strategy shift of the more than century-old agribusiness giant, better known for corn and grains, away from traditional commodities toward newly developed food products closer to the end customer. He also spoke about a change in how executive pay was determined, with half of long-term executive compensation tied to the profit growth of the nutrition business.
According to analyst estimates compiled by Bloomberg, the nutrition segment’s operating income was forecast to drop 18% this year and be the lowest since 2020. The lower profit has pushed ADM to pull its earnings guidance, which it had previously projected in October to be at least $6 per share for 2023.
In the lawsuit, Narula seeks declaratory judgment of non-infringement and other forms of relief. He also wants ADM to be permanently forbidden from using the mark NUTRASOY, and he is seeking compensatory and punitive damages and attorney’s fees. The company did not respond to a request for comment. Based in Chicago, ADM was founded in 1902 and has had many high-profile scandals. One involving a 1990s price-fixing conspiracy inspired the book and movie The Informant, which starred Matt Damon. The company pleaded guilty to the charges in 1996.