In a significant development, Macy’s Inc. has announced the recovery of more than $600,000 in executive bonuses following the revelation of a substantial accounting scandal. This incident has raised serious concerns about the company’s internal financial controls and governance practices.​

The Unveiling of the Accounting Scandal

The controversy came to light when Macy’s disclosed that an employee had concealed approximately $154 million in delivery expenses over a three-year period. This concealment led to an overstatement of the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) by about $81 million in 2023. Consequently, executive bonuses, which were tied to these inflated earnings metrics, were erroneously increased. ​

Clawback of Executive Bonuses

In response to the inflated bonuses, Macy’s is actively seeking to reclaim a total of $609,613 from its executives. As of April 1, 2025, the company has successfully recovered $257,520 and is working to retrieve the remaining $352,093 during the current fiscal year. The specific executives involved have not been publicly identified. ​

Details of the Employee’s Actions

The employee responsible for the accounting discrepancies was found to have intentionally made erroneous accounting entries and falsified documentation to understate delivery expenses. Macy’s maintains that this individual acted alone and was not motivated by personal gain. Following the discovery, the employee was terminated.

Impact on Financial Reporting and Stock Performance

The revelation of the accounting irregularities delayed Macy’s quarterly earnings report and negatively impacted its stock value. The company has since restated several financial figures, revealing that its actual net income for 2023 was 57% lower than initially reported. ​

Leadership Changes Amidst the Scandal

In the wake of the scandal, Macy’s announced significant leadership changes. Thomas Edwards has been appointed as the new Chief Financial Officer (CFO) and Chief Operating Officer (COO), effective June 22, 2025. Edwards, who previously held similar roles at Capri Holdings, replaces Adrian Mitchell. These changes are part of Macy’s broader strategy to address internal control issues and improve operational efficiency. ​

Broader Implications and Company Outlook

This incident underscores the critical importance of robust internal controls and transparent financial reporting. Macy’s is also facing other challenges, including plans to close 150 underperforming stores by 2027 and addressing disappointing financial guidance attributed to inflation and tariff uncertainties. The company is under pressure to restore investor confidence and ensure such lapses do not recur. ​

Macy’s proactive steps to recover the overpaid bonuses and implement leadership changes reflect its commitment to rectifying the issues stemming from the accounting scandal. However, the company must continue to strengthen its internal controls and governance practices to prevent future occurrences and rebuild stakeholder trust.​

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