Good morning. Super Micro Computer, which makes high-powered AI servers, wants to turn the page on the recent controversy surrounding its financial practices. The scandal will result in the company parting ways with its current chief financial officer, David Weigand, as part of its “ambition for future growth”.
The Fortune 500 company announced on Monday that an independent special committee formed by Super Micro’s Board of Directors had completed a review of financial practices. There was “no evidence of fraud or misconduct by management or the board of directors,” according to the company. The evidence did not raise any “substantial concerns” about the integrity of the company’s senior management or audit committee or “their commitment to ensuring that the company’s financial statements are materially accurate.” And no modification of reported financial data is expected.
Super Micro formed a committee last summer to conduct an investigation after its auditor EY raised concerns about the company’s accounting practices and internal controls over financial reporting to the board’s audit committee in July. EY resigned October as auditor of the company. BDO belongs to the company independent auditor since November. Super Micro is in the process of filing audited financial statements for its fiscal year ended June 30 and for the first quarter of fiscal 2025.
In August, short-seller Hindenburg Research claimed Super Micro continued with questionable accounting practices. After that, the Ministry of Justice opened the probe to the company in September.
Super micro has been removed from the list by Nasdaq in 2018 due to non-compliance with financial reporting deadlines. The company has been approved to rejoin in 2020 after settlement with the Securities and Exchange Commission. During this time, the company parted ways with its CFO, Howard Hideshima, who was alleged by the regulator that they engaged in inappropriate accounting, Wealth reported. In the years since it was relisted, the Super Micro did experienced a 3000% increase in share price. and does business with Nvidia, WealthAmanda Gerut and Sharon Goldman recently reported.
Looking for a financial director
Although Super Micro said in a statement Monday that the commission found no wrongdoing, they suggested finding “a new CFO with extensive experience working as a senior financial professional at a large public company.” This would support the company’s “growth over the past two years in helping to lead the artificial intelligence revolution,” according to the announcement.
Weigand, Super Micro’s chief financial officer since 2021, will remain in the role until the board selects a new CFO. Before becoming CFO, he was the company’s Chief Compliance Officer. Previously, he was vice president of Hewlett Packard Enterprise, vice president of tax at Silicon Graphics International, Inc., and CFO of Renesas Electronics America, a semiconductor company.
To improve governance, the board said there should not be a combined CFO/Chief Compliance Officer (CCO) function, so Super Micro is now also looking for a CCO. The company is also looking for a general counsel. And Kenneth Cheung, currently vice president of finance and corporate controller, has been named chief accounting officer.
I asked Shawn Cole, president and founder of executive search firm Cowen Partners, for insight into which CFO would best serve Super Micro.
“At this stage, a reporting-focused CFO is critical to re-establishing internal controls, ensuring regulatory compliance and strengthening relationships with auditors and stakeholders,” Cole told me. And “ideally someone with experience as a former Big 4 auditor and CPA,” he said. This combination of experience would bring deep expertise in accounting, regulatory compliance and financial management, combined with experience working as a CFO of a large public company in a similar space, he explained.
Companies like Super Micro often benefit from creating hyperfocused C-suite roles to address specific needs, Cole said. “For example, the earlier appointment of a chief accounting officer could have provided the necessary expertise to maintain tighter financial controls and oversight,” he said.
Cole added: Super Micro is an example of “a high-growth company that has outgrown its CFO and team, highlighting the challenges that come with scaling operations and managing a public company.”
Sheryl Estrada
[email protected]
The following sections of CFO Daily are curated by Greg McKenna.
Leaderboard
Celeste Mellett was appointed CFO of the health insurance giant Humane (NYSE: HUM), effective January 11. She will succeed Susan Diamond, who is retiring after 18 years at the firm, including the last three as chief financial officer, and will serve in an advisory role until 2025. Mellet arrives from Global Infrastructure Partners, a fund recently acquired by BlackRock, where she is CFO . She previously held the same role at Fannie Mae and then at investment bank Evercore after starting her career at Morgan Stanley, where she spent 18 years and was most recently global treasurer.
Brad Lakhia was appointed the financial director of the company CBIZ (NYSE: CBZ ), a provider of accounting, assurance and advisory services, effective March 17. He will succeed Ware H. Grove, who will retire after 24 years in the position. Lakhia comes from OPENLANE, a digital marketplace for wholesale used vehicles, where he was EVP and CFO. He previously served as vice president of finance for Goodyear’s Americas business segment, where he spent more than 20 years in two separate terms.
Big deal
Traders jumped on the stock market after the November election meetingaccording to monthly sector data from E*Trade, with users coming in as net buyers in seven of the 11 sectors of the S&P 500. Investors flocked to discretionary and consumer staples, the two most bought sectors. Chris Larkin, CEO of the trading and investment platform, said Target and Costco are the best choices.
Larkin also noted that traders were eager to buy Tesla after CEO Elon Musk bet on Donald Trump it was worth itwhich fueled a big rise in the shares of electric vehicle manufacturers. Meanwhile, communications services settled among the bottom three sectors after Facebook parent Meta reported weaker-than-expected third-quarter earnings.
Going deeper
How much do corporate carbon emissions cost? is new article from the University of Pennsylvania’s Wharton School of Business Journal. Finance professors Robert Stambaugh and Luke Taylor sit down to discuss their new paper, “Carbon Burden,” which puts a dollar value on corporate greenhouse gases emissions. The results have implications for the risk profiles of various companies, as well as for the social and ethical concerns of many investors.
Overheard
“We’ve listened to customers and they want more – more premium options, such as first class seats, available seat upgrades, more free travel for their travel companions and the ability to use miles on more than just an airline ticket.”
— Barry Biffle, CEO of Frontier, said in a press release announcing plans to retrofit the first two rows of its planes to make room for first class seats, part of a larger trend of low-cost carriers increasing flight options, Wealth reported.
