Bankrupt Westinghouse Makes Acting CFO Permanent
The company sought higher pay from the U.S. Bankruptcy Court for the acting finance chief and his boss.
Dan Sumner, previously Westinghouse Electric’s 36-year-old interim CFO, has been named CFO by the company’s board. Sumner now faces the stiff challenge of restoring the financial health of the nuclear power plant company, which is currently reorganizing under Chapter 11 of the U.S. Bankruptcy Code.
“Dan has been an invaluable member of the executive team throughout our Chapter 11 process,” José Emeterio Gutiérrez, Westinghouse Electric’s president and chief executive officer, said in a press release. “I am confident he will continue to succeed in restoring our financial health through the company’s strategic transition.”
Sumner has been the company’s acting finance chief since May. On March 29, Westinghouse Electric, and some of the company’s subsidiaries and affiliates, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code. The company is now in the midst of a strategic restructuring.
On October 4, Lisa Donahue, an AlixPartners managing director serving as Westinghouse’s chief transition and development officer, asked the U.S. Bankruptcy Court to hike the salaries of Sumner and Gutiérrez, who had served as Westinghouse’s acting president and CEO before assuming those jobs permanently in June.
Like that of Gutiérrez, “Mr. Sumner’s salary does not reflect his responsibilities and is well below that of his industry peers,” Donahue told the court.
Benchmarked against his industry peers, Gutiérrez’s base compensation was 39% below the market median. Sumner’s was 53% below that metric, according to Donahue. “This base compensation disparity is exacerbated by the fact that Mr. Gutiérrez has been performing CEO and president duties since June 2016 and Mr. Sumner has been performing CFO duties since January 2017 without any previous compensation increases to reflect their increased responsibilities,” she contended.
To bring the executives’ base compensation “in line with the market and fairly compensate them for their responsibilities,” Westinghouse asked the court to adjust Gutiérrez ’s base salary from $627,000 to $1 million and Sumner’s from $234,000 to $375,000, both retroactive to June 1, 2017.
For its part, Westinghouse attributes its woes to “certain financial and construction challenges” in its U.S. nuclear power plant projects, according to a company release. Westinghouse has received $800 million in debtor-in-possession financing from third-party lenders “to help fund and protect its core businesses during its reorganization.”
The company’s debtor-in-possession financing will fund Westinghouse’s core businesses, including those that support operating plants and nuclear fuel components manufacturing and engineering. The financing will also support plant decommissioning, decontamination, remediation, and waste management “as the company works to reorganize around these strong business units.”
Westinghouse’s owner, Toshiba, is under investigation by Japan’s securities regulator because of Toshiba’s accounting of losses incurred by Westinghouse Electric in Toshiba’s latest earnings release, Reuters has reported.
Before becoming acting CFO, Sumner was vice president of finance, with responsibility for global product line and region finance, financial planning and analysis, corporate accounting, and global shared services.
Before that, he served as Westinghouse’s chief compliance officer and director of corporate audit. “Sumner was instrumental in building Westinghouse’s global corporate audit and Sarbanes-Oxley programs, and has held key roles on several strategic initiatives since joining the company in 2010,” according to the company.