Package supply company Sealed Air (NYSE: SEE) announced the for cause termination of its Chief Financial Officer, William G. Stiehl, as an investigation into its accounting and financial reporting practices continues. The investigation calls into question the decision to change auditing firms.
From the June 20, 2019 press release, “Stiehl’s termination is related to an internal review by the Audit Committee of the Board of Directors in connection with the previously disclosed investigation by the U.S. Securities and Exchange Commission (“SEC”). This review followed the Company’s receipt of an additional subpoena for documents and information on May 2, 2019, relating to the process by which the company selected its independent audit firm for the period beginning with fiscal year 2015, and relating to the independence of that audit firm. The Company is continuing to cooperate with the SEC’s investigation.”
Stiehl joined SEE as Chief Accounting Officer and Controller in January 2013 and was promoted to acting Chief Financial Officer in October 2017.
In the company’s first quarter 2019 10-Q filing with the SEC, the maker of protective packaging and bubble wrap stated that it had received “a subpoena for documents, including requests concerning the company’s accounting for income taxes, its financial reporting and disclosures and other matters.”
William G. Stiehl certified the quarterly financial filing on May 1, 2019.
On June 20, 2019, SEE also announced that it had appointed James M. Sullivan as Chief Financial Officer with an effective date of June 24, 2019.
Sullivan’s most recent employment was with Joy Global, now known as Komatsu Mining after acquisition by Komatsu Limited (OTCPK: KMTUF), the second-largest mining and construction equipment manufacturer. Sullivan was the Executive Vice President and Chief Financial Officer of Joy Global, a large mining equipment manufacturer, from 2012 to 2017. Sullivan currently serves on the Board of Directors of Jason Industries, Inc.(NASDAQ: JASN), a parent company of four manufacturing companies in the seating, finishing, components and automotive acoustics markets.
Sullivan is described as, “seasoned financial executive with more than 20 years of experience in leadership roles in the industrial and manufacturing sectors.”
Sealed Air President and Chief Executive Officer Ted Doheny said, “Jim brings a wealth of financial and leadership experience to Sealed Air. He joins us at an exciting time as we execute our Reinvent SEE strategy to drive earnings power.”
Sullivan will receive a $500,000 sign-on bonus, an initial equity award valued at $500,000 assuming he remains in service through the end of 2020, an annual base salary of $650,000 along with a target bonus of 75 percent of his base pay with a 150 percent maximum bonus cap. Sullivan is also eligible for grants and incentives in-line with that of the company’s other senior executives.
In the same release announcing Sullivan as the new CFO, the company reaffirmed its 2019 earnings guidance, which calls for adjusted earnings before interest, taxes, depreciation and amortization of approximately $925 to $945 million and adjusted earnings per share of $2.65 to $2.75.
According to Seeking Alpha, Bank of America Merrill Lynch analyst George Staphos downgraded SEE to neutral from buy on June 21, 2019 citing the potential for compressed earnings multiples until the SEC investigation concludes.
The current 2019 consensus estimate for SEE is $2.73 per share according to NASDAQ.
The shares of SEE are nearly 5 percent lower since the termination announcement.
The Charlotte-based company reported $4.7 billion in sales in 2018; it has approximately 15,500 employees in 123 countries.