Mattel CFO to Depart After Whistleblower Probe Reveals Accounting "Weaknesses"

Ynon Kreiz - H 2015
Stuart Wilson/Getty Images for Viacom)

Joseph Euteneuer will leave the Hot Wheels and Barbie toymaker after a transition period of up to six months.

Responding to anonymous whistleblower allegations that Mattel made historical accounting errors, the Hot Wheels and Barbie toymaker on Tuesday said CFO Joseph Euteneuer is leaving the company after a transition period of up to six months.

"I am grateful for my time at the company and look forward to continue working with the leadership and finance teams to ensure a seamless transition," Euteneuer, who joined Mattel two years ago, said in a statement. Mattel has launched a search for a new CFO.

"Joe has been a valued member of our leadership team since joining Mattel two years ago. He has played a key role in our structural simplification program which is nearing completion, and made meaningful contributions to the significant progress we have made in the first phase of our strategy to restore profitability. I thank him for his commitment through the transition of the CFO role," Ynon Kreiz, chairman and CEO of Mattel, added in his own statement.

Mattel, which is in a fierce battle with Hasbro for dominance of the toy market, on Tuesday revealed the results of an independent investigation into allegations contained in an anonymous whistleblower letter received in August which questioned whether there were accounting errors in historical periods and whether Mattel’s outside auditor was independent.

The probe revealed the company understated its income tax expense by $109 million in the third quarter of 2017 and overstated it by $109 million in the fourth quarter of 2017, with no impact for the full year as they were non-cash errors.

"The investigation also determined that Mattel has certain material weaknesses in its internal control over financial reporting," the toymaker disclosed. Shares in Mattel climbed more than 17 percent to $12.43 in after-hours trading on Tuesday, after tanking in August when the whistleblower disclosure first became public.

The accounting errors were made during the CEO reign of Margaret Georgiadis, who stepped down after 13 months in the post and was eventually replaced by Ynon Kreiz in April 2018.

Mattel, as it drives deeper into entertainment content with Mattel Films, is partnering with Get Out star Daniel Kaluuya to produce a live-action movie based on the ubiquitous purple dinosaur Barney. Other Mattel properties are currently being developed as features, including Hot Wheels, Masters of the Universe and Barbie, the latter of which is set up as a film project at Warner Bros. and has Margot Robbie, Greta Gerwig and Noah Baumbach attached.