CBIZ, Inc. disclosed in a regulatory filing that it inadvertently purchased and delivered up to 481,049 shares of its common stock through its 2007 Employee Stock Purchase Plan between October 2023 and April 2026 without having a sufficient number of shares registered with the Securities and Exchange Commission. The company’s board has approved a voluntary rescission offer to affected current and former employees, and management has simultaneously identified two material weaknesses in its internal control over financial reporting.
The Voluntary Rescission Offer
The company stated that the shares in question were acquired on the open market at prevailing market prices, meaning the company’s treasury stock and total shares outstanding were not affected. To remedy the registration failure, CBIZ will offer eligible participants the choice to sell their shares back to the company at the discounted price they originally paid, plus statutory interest, or to receive compensation for any loss if they previously sold the shares at a price below what they paid.
If every eligible participant elects to participate, CBIZ estimates its maximum aggregate payment would be approximately $20.2 million, calculated as of June 30, 2026, including estimated statutory interest. The actual cost may be lower depending on participation rates, and the company will also incur related tax reimbursement and third-party administrative expenses. The rescission offer is expected to launch in the third quarter of 2026.
Material Weaknesses Identified
In connection with evaluating the share registration issue, management identified a material weakness in the company’s internal control over financial reporting related to the administration of the ESPP. The company determined it did not effectively design and implement controls to ensure that share purchases and deliveries under the plan did not exceed the authorized and registered amount.
Separately, during the fourth quarter of 2025, CBIZ completed organizational reporting changes that realigned certain reporting units within its Financial Services and Benefits and Insurance Services practice groups. Management subsequently identified a second material weakness concerning the reassignment of goodwill among reporting units for impairment assessment purposes. The company concluded it lacked the necessary accounting expertise to apply the relevant technical guidance and to design effective controls over this non-routine goodwill reassignment.
Neither material weakness resulted in a goodwill impairment charge. However, management concluded that these deficiencies created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.
Non-Reliance on Prior Internal Control Assessments
As a result of the material weaknesses, the Audit Committee of CBIZ’s board determined, in consultation with KPMG LLP, that management’s conclusions on the effectiveness of internal control over financial reporting and disclosure controls as of December 31, 2025 should no longer be relied upon. KPMG’s opinion on internal control effectiveness for that period should also no longer be relied upon, although the firm has not withdrawn its opinion on the company’s consolidated financial statements, which can still be relied upon.
CBIZ intends to file an amendment to its 2025 annual report that will correct management’s previous determinations and include KPMG’s revised adverse opinion on internal control effectiveness.
Immaterial Revisions to Prior Financials
The company also determined that the purchase and delivery of the unregistered shares did not have a material impact on its results of operations or financial position for any historical period. However, immaterial revisions will be made to the condensed consolidated financial statements for the quarter ended March 31, 2026. The adjustments primarily increase other current liabilities, reduce retained earnings, and decrease net income for that period by $8.8 million, with basic and diluted earnings per share revised downward by $0.14 to $2.49.
CBIZ stated it is committed to remediating the material weaknesses and has begun implementing enhanced controls, including redesigning ESPP compliance procedures and ensuring that professionals with appropriate technical accounting expertise are involved in complex, non-routine accounting matters.