Dow Chemical Defends CEO Who Allegedly Used Company Cash to Fund Vacations, Super Bowl
Published: Jun 05, 2015
June 5, 2015
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – The U.S. Securities and Exchange Commission is investigating Andrew Liveris, chairman and chief executive officer of industrial giant Dow Chemical Co , on allegations that he misused company funds for her personal benefit, Reuters reported late Thursday.
The SEC investigation comes on the heels of accusations made against Liveris in recent lawsuits and complaints by former employees. There is some question as to how broad the SEC is taking the investigation, or if it is limited to the alleged misuse of company funds by the CEO.
Reuters noted the SEC issued subpoenas for “thousands of pages of documents and testimony that were part of a whistleblower-retaliation lawsuit brought last year by a former Dow employee, Kimberly Wood.”
Wood, who was a fraud investigator at the chemical company, made allegations that Liveris, 61, used company money to finance vacations, attend sporting events and enjoy other personal perks.
Midland, Mich.-based Dow, though, defended itself saying Reuters was rehashing old stories that the company previously addressed “through independent review, enhanced audits, and improved controls.”
“These matters were disclosed in 2011 by the filing of a publicly available proxy statement with the SEC. It is our understanding, however, that complaints such as the ones referenced in the article are, as a procedural matter, always forwarded to the SEC,” Dow said in a statement.
A Sidney Morning Herald article published in May noted in 2011, Dow reported in its annual proxy statement that Liveris had reimbursed the company $719,923 for expenses incurred from 2007 to 2010. Its statement offered no details about the expenses, other than classifying them as "not primarily business related."
Liveris has helmed Dow, a $58 billion company, for 11 years. He takes home more than $20 million in annual compensation and has served as an adviser to the administration of President Barack Obama, Reuters noted.
Wood, who worked for Dow for 25 years, was terminated in 2013 after noting her concerns over the alleged spending. She filed state and federal whistleblower lawsuits against the company last year. In her lawsuit she alleged she was fired “repeatedly reporting questionable spending by the CEO on activities unrelated to the company's business,” Reuters noted.
Wood alleged Liveris spent hundreds of thousands of dollars of Dow’s money on a safari, tickets to the Super Bowl and $13,000 for uniforms for his son’s basketball team, the Morning Herald reported. Wood also alleged Dow was using money from various contracts to fund a charity run by Liveris.
Dow and Wood settled the case earlier this year. The terms of the settlement were not disclosed.
In addition to Wood, at least three other employees raised questions about Liveris using corporate funds for personal enjoyment. When he left the company in 2013, former Dow chief auditor Doug Anderson sent a memo to executives raising concerns over what he called “suspected ethical and compliance issues or violations,” Reuters noted.
Despite the allegations, Dow’s stock was slightly up this morning during early trading. The stock was trading for $53.05 per share, up from its opening of $52.60.
In May Dow announced it was cutting 3 percent of its global workforce, between 1,500 and 1,750 positions, in response to an activist investor. At least one critic expressed concern that Liveris, who earned $69 million over the past three years, and other members of senior management, such as Vice Chairman James Fitterling who made $32 million over the same period, would not see their compensation negatively impacted, despite poor stock growth by the company.
Earlier this month Dow Microbial Control, a subsidiary of Dow Chemical, introduced a new style of medical scrubs and lab coats that features Silvadur Antimicrobial, a Dow product that helps reduce, inhibit and minimize the buildup of bacteria on apparel, which can cause odors and affect garment life and fit.
When Will Pfizer's Breakup Happen?
Speculation that the revamping of Pfizer Inc. ’s internal business structure could happen as soon as this year has biotech wondering just when this Big Pharma company could see changes.
Last week an analyst with J.P. Morgan said he thinks there will be a much faster timeline than most of Wall Street had predicted for Pfizer’s stated mission to refocus its efforts on new medicines.
Pfizer initially announced in 2012 that it would be shedding units that were non-essential to that goal. It then promptly sold its nutrition silo to Nestle for $11.85 billion, which was rapidly accompanied by a public spin-off of its animal health business for $2.2 billion.
“While a Pfizer break-up would likely be a 2017 event, we see potential catalysts in 2015-2016," said Chris Schott, an analyst at J.P. Morgan. "Three years of audited financial statements (2014-2016) are required before any part of Pfizer can be spun off, and we also see 2017 as an attractive time for action as investors see Pfizer’s innovative pipeline clearly contributing to growth and the established business having transitioned to a more stable profile."
BioSpace wants to know what you think: Will Pfizer be a changed company by the end of 2015?