Moderna CFO Fired After First Day
Wild news in the Covid-19 world today: Vaccine maker Moderna has fired its new CFO one day into the job, after the executive’s previous employer disclosed in an SEC filing that it had launched an investigation into fraudulent financial reporting.
Moderna disclosed the departure of Jorge Gomez in a terse press release issued Wednesday morning. His firing, the company said, “follows the May 10 public disclosure by Mr. Gomez’s former employer, Dentsply Sirona, of an ongoing internal investigation into certain matters, including financial reporting.”
This story is, of course, totally nuts; and it prompts so many questions. Did Moderna really miss this issue during background checks for such a senior-level hire? Did Gomez not disclose it during his job interviews? Did he get an on-site booster for those 24 fleeting hours when he was a Moderna employee?
Dentsply Sirona’s SEC filing from Tuesday offers a few more clues. The company, which makes dental equipment, opened an investigation in March after several employees raised concerns about how Dentsply was using incentives to sell products to distributors in the second half of 2021. The audit committee of the board wants to know whether those incentives were properly accounted for in quarterly reports, and also whether “certain former and current members of senior management” directed the use of those incentives to hit compensation goals.
The audit committee said it has hired outside counsel and forensic auditors to investigate, and disclosed the matter to the Securities and Exchange Commission. Dentsply also delayed the filing of its first-quarter 2022 report (which was due this week) while the investigation continues.
Gomez
Back to Gomez. He announced his departure from Dentsply in April, with an effective resignation date of Friday, May 6. Which means he showed up for work at Moderna on Monday, and was fired the next day when Dentsply disclosed its accounting investigation and delayed 10-Q filing.
Even better: for his one day of work at Moderna, Gomez will receive his full year’s salary of $700,000, plus COBRA health insurance coverage for 12 months. Moderna did say that Gomez will forfeit his signing bonus, relocation reimbursement, and equity awards.
Still, that’s quite a handsome payout for getting fired. You know Bernie Sanders and Elizabeth Warren will have a field day with this one.
We could say that the lesson here for others is to perform more rigorous background checks on prospective hires, although due process rights and securities rules make this situation particularly messy. Could Dentsply’s audit committee have informed Moderna of its investigation ahead of disclosing it to investors? Most likely not; an accounting probe implicating your CFO is definitely material information, and tipping off the Moderna recruiters would be a violation of Regulation FD. Plus, to be clear, Gomez hasn’t been charged with any wrongdoing.
On the other hand — ooof, that $700,000 severance package to Gomez looks terrible. Perhaps another lesson here is to go over your employment contracts with a fine-tooth comb. Think expansively about the scenarios under which you might fire an employee for cause and claw back or cancel compensation. Taking that extra time is well worth the cost, since the damage to employee morale and belief in the wisdom of senior management is far greater.
Anyway, Moderna’s share price was down 6 percent by early afternoon. One might say the company needs a shot in the arm.