Demotions rock coffee firm
May 8, 2012
Green Mountain Coffee Roasters
demoted its founder and chairman, Robert Stiller, and its lead director,
William Davis, after the high-flying coffee company's share-price plunge forced
the men into emergency stock sales resulting from margin calls.
Mr. Stiller sold 5 million shares
of Green Mountain stock for $123.4 million on Monday, reducing his stake to
5.4% from nearly 10% in March.
The company said Mr. Stiller—who
founded Green Mountain in 1981 as a small cafe in Vermont—will remain on the
board but no longer as chairman. Mr. Davis will be stripped of his lead
director position but will stay on the ... More at WSJ
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The
Precipitous Decline Of Green Mountain Coffee's Founder's Fortune
May 8, 2012
More
trouble has been brewing for Green Mountain Coffee and its founder, former billionaire Robert Stiller. The company disclosed that Stiller sold 5 million
shares, or about 3.2% of shares outstanding, to cover margin calls on loans
taken against his substantial position in Green Mountain. Stiller has
been removed as Chairman of the Board, along with lead director Williams Davis
(who also faced margin calls and sold, breaking Green Mountain’s internal
trading policies), being replaced by current director Michael Mardy.
They say that it
takes a lifetime to build a reputation but only a minute to destroy it.
The same can be said of Robert Stiller’s fortune. Having founded Green Mountain
Coffee in 1981, Stiller took 30 years to reach the Forbes billionaires list,
becoming a member of our Forbes 400 last September, his fortune worth $1.3
billion, mainly on Green Mountain stock.
But, as the company’s
ascent quickly became a roller coaster ride down to reality, so did the value
of Stiller’s stake. The former billionaire sold 5 million shares, worth
$125.5 million according to the SEC, on Monday to cover margin calls on pledged
Green Mountain stock. William Davis, lead director of the board, sold
400,000 shares on Friday May 4 and another 148,000 on Monday to cover a margin
call as well.
Stiller now holds
8.387 million shares of Green Mountain, or about 5.7% of the total, 88% of
which is still pledged as collateral. The value of his current stake,
after the stock fell about 3.2% in after-hours trading to $25.55, stands at
$214.3 million. In the release, the company noted that: “if all of Mr.
Stiller’s shares that are held in margin accounts or pledged as collateral to
various financial institutions as security for one or more loans were settled
as of May 8, 2012, Mr. Stiller would beneficially own 1,857,031
shares of GMCR stock.”
Stiller’s stake, a
mere 1.2% of the company he founded, would be worth $47.45 million. The
former billionaire also had a big stake in Krispy Kreme Doughnuts.
Green Mountain Coffee
came under heavy pressure from short-sellers after an exponential jump in
market value during the first half of 2011. The stock began to drop
around September, the decline precipitated by comments by famed short-sellerDavid Einhorn of Greenlight Capital. News thatStarbucks, a major
partner of Green Mountain, was launching its own single-serve brewer (which
would compete with Green Mountain’s Keurig system), helped pushed the stock
even lower, despite deals with Dunkin’ Brands to expand its K-cup offering.
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Green Mountain
Coffee Roasters, Inc. Announces Interim Chairman and Changes to Board Committee
Composition
May 8,
2012
WATERBURY, Vt., May 08, 2012
(BUSINESS WIRE) -- Green Mountain Coffee Roasters, Inc. (GMCR) GMCR +8.56% ,
a leader in specialty coffee and coffee makers, today announced that its Board
of Directors, has appointed Mr. Michael J. Mardy, a director and chair of the
Company's Audit and Finance Committee, as interim Chairman of the Board. In
addition, Ms. Hinda S. Miller, chair of the Company's Corporate Social
Responsibility Committee, has been appointed as Chair of the Governance and
Nominating Committee, a committee she last chaired in 2010. All appointments
are effective immediately. At the direction of the Board of Directors, Mr.
Robert P. Stiller no longer serves as Chairman of the Board and Mr. William D.
Davis no longer serves as Lead Director of the Board, effective immediately.
Additionally, Mr. Stiller and Mr. Davis will no longer serve on any Board committees
and will not receive future payment for their service on the Board until the
Board determines otherwise. Both will remain members of the Board. The
Governance and Nominating Committee will be reviewing appropriate Board and
committee structure and composition.
These changes are the result of the
actions taken by the Board to address stock sales by Mr. Stiller's and Mr.
Davis' brokerage firm, which sales were inconsistent with the Company's
internal trading policies. Specifically, Mr. Stiller and Mr. Davis had margin
call-related stock sales totaling 5.548 million shares, reflected in Form 4
filings filed with the Securities and Exchange Commission today. These forced
sales were related to margin loans, which were secured by pledges of Mr.
Stiller's and Mr. Davis' GMCR stock and triggered by recent GMCR stock price
activity.
On Friday, May 4, 2012, as the
result of a margin call on pledged GMCR stock, approximately 400,000 shares and
on Monday, May 7, 2012 approximately 148,000 shares of GMCR stock were sold
from Mr. Davis' brokerage account at a time when the trading window in GMCR
stock was closed pursuant to the Company's internal trading policy. In
addition, during the Company's review of the May 4 trade, it learned that,
inconsistent with the Company's policy, Mr. Davis had pledged approximately
204,000 new shares to his margin loan after January 1, 2012.
On Monday, May 7, 2012, as the
result of a margin call on pledged GMCR stock, 5 million shares of GMCR stock
were sold from Mr. Stiller's brokerage account, at a time when the trading
window in GMCR stock was closed pursuant to the Company's internal trading
policy.
It should be noted that Mr.
Stiller's and Mr. Davis' pledged positions as of January 1, 2012 were
grandfathered by the Board when it amended the Company's internal trading
policy in December 2011 to prohibit new pledges after January 1, 2012.
As of the close of trading on May 7,
2012, Mr. Stiller beneficially owned 8,386,899 million shares of GMCR common
stock. If all of Mr. Stiller's shares that are held in margin accounts or
pledged as collateral to various financial institutions as security for one or
more loans were settled as of May 8, 2012, Mr. Stiller would beneficially own
1,857,031 million shares of GMCR stock. As of the close of trading on May 7,
2012, Mr. Davis beneficially owned 436,786 shares of GMCR common stock. If all
of Mr. Davis' shares that are held in margin accounts or pledged as collateral
to various financial institutions as security for one or more loans were settled
as of May 8, 2012, Mr. Davis would beneficially own 36,598 shares of GMCR
stock.
The Board has also mandated that Mr.
Stiller and Mr. Davis settle all outstanding margin loans by the end of
calendar year 2012.
In response to these developments,
the Company issued the following statement:
"Based upon the recent decline
in GMCR stock price, Mr. Stiller and Mr. Davis were both faced with margin
calls resulting in sales of their GMCR stock. These forced sales are
disappointing and beyond the control of the Company. Once the Board was notified
of this trading activity, it moved quickly to investigate and address this
matter. The Board determined that it was in the best interest of the Company
and its shareholders for Mr. Stiller and Mr. Davis to relinquish their
leadership positions on the Board as well as their committee roles."
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