Mohawk Sued by Pension Funds Citing Revenue Recognition Fraud

A group of pension funds sued Mohawk Industries Inc. in Delaware, seeking company records to investigate “the enormous compensation awarded to, but not earned by,” the top executives allegedly behind a scheme to “fabricate revenues through fictitious” sales.

Mohawk’s “top executives reaped huge compensation for supposedly hitting ‘performance-based’ compensation metrics, even though the company and the senior executives themselves knew” the figures were fraudulent, the Chancery Court complaint says.

The lawsuit, docketed Monday, concerns a revenue recognition scheme allegedly perpetrated by the flooring company’s former president, Brian Carson, after it began losing market share to industry rivals.

The scheme allegedly ...