The Board believes this expanded attention to cybersecurity is appropriate. In line therewith, the Company’s CEO as well as Ms. Galvin (Chair of the Nominating, Sustainability and Governance Committee as well as member of the Audit Committee) each have completed a two-day master class in cybersecurity organized by the National Association of Corporate Directors (NACD) in early 2023. Also, our Director, Ms. Lindsey, has earned a CERT Certificate in Cybersecurity Oversight from Carnegie Mellon University. Ms. Lindsey is a member of the Company’s Audit Committee.
Financing and Liquidity
Our capital structure and liquidity position evolve with the global economic environment, the demand for carbon black and our abilities to adapt to changing market trends. Changes in growth, continuity and safety capital investment levels over time also play a role. The Board oversees financing and liquidity risks by regularly monitoring our financial and liquidity position to ensure we maintain the financial resources needed to fund our operations, projected growth, and other financing and operating expenses. At each Board meeting, management reviews together with the Board the Company’s financial results and position. We believe these procedures provide adequate risk oversight of financing and liquidity matters affecting the Company. In 2023, the Company renewed its senior secured revolving credit facility, which was intentionally reduced from EUR 350 million to EUR 300 million, as a result of the Company’s stronger cash flow. In line with the Board’s position, the Company added a new feature that includes the linkage of revolving facility funding costs to two sustainability goals. They include continuous greenhouse gas intensity reduction and improvement of its annual EcoVadis rating. Under these terms, the interest rate of the revolving credit facility can be reduced by five basis points – or by 0.05 percent - if the company achieves both of its sustainability targets.
Financial Reporting, Internal Control and Regulatory Compliance
The Audit Committee of the Board provides risk oversight with respect to financial reporting, internal control over financial reporting, general risk management, cybersecurity and related regulatory as well as general compliance matters. Each quarter, our Audit Committee meets and discusses with our independent registered public accounting firm its review of the current interim financial information. After our financial year-end, the Audit Committee discusses with the independent registered public accounting firm its audit of our annual consolidated financial statements, including our internal control procedures over financial reporting. On this basis, the Audit Committee makes a recommendation for the Board’s approval of the inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for filing with the Securities and Exchange Commission. Also, during the financial year, our Audit Committee meets in private sessions (without the presence of management) with our independent registered public accounting firm to discuss any matters related to the audit of our annual consolidated financial statements and our internal controls over financial reporting.
On August 10, 2024, the Company determined that a Company employee, who is not a NEO, was the target of a criminal scheme that resulted in multiple fraudulently induced outbound wire transfers to accounts controlled by unknown third parties. As a result of this incident, we recognized a one-time pre-tax charge of approximately $55.7 million, net of recoveries, for the unrecovered fraudulently induced wire transfers. The Company has cooperated, and will continue to cooperate, with law enforcement as appropriate and is pursuing recovery of these funds through all legally available means, including potentially available insurance coverage. The incident did not result in any unauthorized access to data or systems maintained by the Company. The business and operations of the Company were not affected. In addition, we incurred $3.6 million of professional fees in connection with our investigations. Together, the amount of $59.3 million is reported in our Form 10-K in Loss due to misappropriation of assets, net of Operations in our Condensed Consolidated Statements. The tax benefit related to Loss due to misappropriation of assets, net was $16.4 million.
Following this event, the Audit Committee engaged a third-party forensics advisory firm as well as an IT security firm to investigate the root cause and confirm that no IT system penetration occurred. Additionally, the Audit Committee held a working session with the CFO to address this issue and review the Company’s remediation measures as well as discussed and aligned the remediation with our independent registered public accounting firm. The Audit Committee also oversees the Company’s pursuit in recovering misappropriated funds through legally available means.
Complaint Procedures for Accounting, Internal Control, Auditing and Financial Matters
In accordance with SEC Rules, the Audit Committee has established procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal control, auditing or financial matters (collectively, “Accounting Matters”) and (ii) the confidential, anonymous submission by employees or outside third parties of concerns regarding questionable Accounting Matters. The Audit Committee oversees treatment of complaints and concerns in this area. The Audit Committee can involve an external counsel in any reviews and investigations. The General Counsel reports to the Audit Committee at each quarterly meeting on current compliance matters (if any). Additional information regarding our procedures for anonymous reporting can be found in our Policy on Whistleblower Protection and under the Legal link on our website at https://orioncarbons.com/legal/compliance-guidelines/#reporting violations.
Compensation Risk Oversight
The Compensation Committee of the Board provides risk oversight with respect to compensation of the Company’s employees, including the NEOs. We believe we have established a short-term and long-term compensation program that appropriately incentivizes desired performance and mitigates inappropriate risk-taking. The Compensation Committee solicits input from our CEO with respect to the performance of our executive officers and their compensation levels not less frequently than annually. The members of our Compensation
