Following a six-month investigation, the audit committee of a natural-products and organic-foods company has recommended that the board oust the current CEO and CFO. As a result, CEO Steve Bromley and finance chief John Dietrich of SunOpta Inc. will leave the company by the end of the year.
Bromley, who was once SunOpta’s CFO, will continue to serve on the board of directors until his term ends at the 2008 annual meeting and will not be renominated, the company noted in a regulatory filing. Dietrich and Bromley could not be reached immediately for comment, a spokesperson for the Toronto-based company told CFO.com.
The investigation, which is “substantially” completed, is tied to inventory issues at SunOpta Fruit Group’s berry operations. The issues, which were not explained, required write-downs of $9 million to $11 million. In 2007 SunOpta generated about $800 million in revenue, and it is projected to reach the $1 billion mark in 2008.
SunOpta will file its 2007 year-end statements and its first-quarter 2008 results no later than July 31, according to the filing.
In January the company announced it likely would restate its financial results for the first three quarters of 2007 after discovering the inventory problems. Officials also said the company had engaged an independent third party to assess internal controls and processes, and implemented a series of specific pricing and cost-related actions to address potential causes of the issue.
In addition, SunOpta established a $3 million pretax reserve related to difficulties in collecting for services and equipment provided to a customer under the terms of an existing equipment-supply contract within the SunOpta BioProcess Group. The company said it had knowledge that the customer’s U.S. affiliate was in violation of a technical-development agreement that delineated the intellectual property of each of the parties. “As a result of failed discussions to resolve these issues, the company has taken legal action to protect its intellectual property and recover costs, and thus feels it is necessary to reserve for uncollected amounts,” noted the January filing.
In its announcement this week, SunOpta said its audit-committee investigation has prompted a series of actions within the berry operations designed to address the root causes of the inventory issues that were previously identified, including the removal of the two executives.
Bromley was named president and chief executive officer of SunOpta effective February 1, 2007. He succeeded Jeremy Kendall, who had been CEO for 23 years.
Bromley joined SunOpta in June 2001, and was appointed vice president of finance and CFO in September 2001. He became chief operating officer in September 2003, and president and chief operating officer in January 2005. Before joining the company, Bromley spent more than 13 years in the Canadian dairy industry in a wide range of financial and operational roles with Natrel Inc. and Ault Foods Ltd.
Dietrich was appointed vice president and CFO in September 2003. Before that, he was vice president, finance; corporate controller; and treasurer. In the past five years, he has held finance roles at Natrel as director of business development and at Paragon Trade Brands (Canada) Inc. as director of finance.