Monsanto to pay SEC $80 Million to settle charges of improper accounting

Monsanto will pay $80 million in penalties to the Securities and Exchange Commission for misstating earnings after failing to properly account for the costs of a sales rebate program for its flagship herbicide product, Roundup.

The SEC said Monsanto, an agribusiness giant based in St. Louis, had insufficient internal controls to properly track millions of dollars in rebates it offered to Roundup retailers and distributors. The rebates were part of a promotion that Monsanto ran after sales of a generic version of the product undercut its business in 2009.

Monsanto booked substantial revenue as a result of the sales promotion from 2009 through 2011, but it did not recognize related costs, which led it to misstate corporate profits over a three-year period.

The company's chief executive, Hugh Grant, reimbursed the company $3,165,852 for cash bonuses and stock awards he received during the period in question, and its former chief financial officer, Carl Casale, returned $728,843 in compensation.

In addition, three accounting and sales executives will also pay penalties totaling $185,000, and the accountants agreed to be temporarily suspended from practicing before the SEC.

The company is neither admitting nor denying wrong

doing in the settlement.

Roundup, one of Monsanto's most profitable products, began losing market share after competitors undercut its sales with cheaper generic brands. In 2009, Monsanto introduced a rebate program that would help make up for price reductions in the product in subsequent years if retailers and distributors met certain sales goals.

Roughly a third of Monsanto's Roundup sales that year occurred in the fourth quarter, when the rebate program was introduced. Monsanto delayed reporting the costs of the rebate program until 2010.

A new rebate program was created in 2010, under which Monsanto paid $44.5 million to its two largest distributors.

The program was repeated the next year, and Monsanto deferred recording the rebate costs from 2010 into 2011.

This story was originally published February 10, 2016 at 12:00 AM with the headline "Monsanto to pay SEC $80 Million to settle charges of improper accounting ."