Walgreens CFO Jettisoned After $1 Billion Forecasting Error
- posted: Oct. 20, 2014
- Graft and Corruption
Walgreen Co. CFO Wade Miquelon and another high-ranking executive in the company were let go from their positions after the revelation of a $1 billion projection error affecting the corporation’s Medicare-related business. Miquelon was replaced by former CFO of Kraft Foods Timothy McLevish.
The decision to release the executives came after Miquelon oversaw a more than $1 billion cut to an $8.5 billion forecast in pharmacy earnings for the fiscal year ending in August 2016. The original projection was made at a Walgreens board meeting in April. The company claims that Miquelon’s departure was caused by a transition to different opportunities.
The other executive who lost his job due to the error, according to the report, was Kermit Crawford, the president of pharmacy, health and wellness at Walgreens. Crawford announced he would retire this summer after having spent more than 30 years with the company, although it would seem the retirement may not have been voluntarily if the Wall Street Journal report detailing these dismissals is accurate.
The error in forecasting was partially based on contracts for Walgreens to sell medications through Medicare. The company gets about 25 to 30 percent of all of its prescriptions through Medicare Part D plans, but did not factor in an increase in the prices of various generic drugs. This caused a significant portion of the forecasting error.
Miquelon and Crawford each will receive severance pay of more than $3 million, with Miquelon also earning a performance-based bonus of more than $1 million. The company has said that each of them will continue in an advisory role for Walgreens.
The ousting of these two executives represents just how damaging internal errors can be. If you need to expose mistakes or wrongdoing within your organization, speak with an experienced lawyer at Whistleblower Law for Managers in Dallas.