The Waterbury-based Green Mountain Coffee Roasters announced that Brian Kelley, a former executive with Coca-Cola Refreshments, will replace retiring president and CEO Lawrence Blanford.
Blanford has been president and CEO since 2007 when he took over for Green Mountain Coffee’s founder, Bob Stiller. He announced in February that he would retire from Green Mountain Coffee.
In a brief statement from GMCR, Kelley highlighted the company’s Keurig brewing technology, which he described as “truly disruptive.”
“GMCR is a company with strong character and compelling purpose, coupled with strong brands and products about which consumers are passionate,” Kelley said.
Kelley said the company had “accomplished something unique in the world of consumer products: it is changing consumer behavior by changing the way we brew and enjoy coffee.”
Kelley acted as chief product supply officer for Coca-Cola Refreshments since October 2010, and was tapped to become president of the Atlanta-based firm starting on Jan. 1, 2013. Instead, he’ll take over as GMCR president and CEO on Dec. 3. Kelley has also worked in executive management at SIRVA Inc., a company relocation service, the Ford Motor Co., and General Electric.
According to an SEC filing detailing the major employee change, Kelley will serve for four years, with an annual base salary of $900,000, and a potential annual bonus of up to $900,000.
Kelley will also receive a one-time bonus of $600,000 for signing on with the company, along with $3 million in performance shares and $3 million in restricted stock units. He’ll also receive $500,000 to relocate to Vermont.
Although Blanford won’t receive any severance pay, he will stay on as a salaried employee until March 4, 2013, to help Kelley with the leadership transition.
Hinda Miller, a retiring Democratic state senator from Burlington, headed the search for a new CEO. She praised former CEO Blanford’s leadership, saying he “really grew the company into a super company.” She added that the company is now aiming for 15 percent to 20 percent sales growth.
She highlighted Kelley’s background in the beverage industry and with packaged goods. “He has been a public CEO, of SIRVA, so he knows how to deal with the ‘Street’. … Plus many of his jobs have been in the development of systems,” Miller said. “GMCR is a very large company now. System reorganization is always something that’s pertinent to support growth,” she said, speaking of evolving supply and sales systems at the company.
Founded in 1981 as a small cafe in Waitsfield, Green Mountain Coffee went public in 1993, and acquired Keurig brewing systems in 2006. Now it employees nearly 6,000 employees in California, Tennessee and Vermont. At one point, it was considered one of the fastest growing companies in the nation.
Miller wouldn’t comment on company founder Stiller’s leadership and Blanford’s more recent leadership, saying that each led the company appropriately at different stages in its development.
Seven Days reported in May that Stiller sold his company stock to the tune of $176.9 million, in an ill-timed sale that was inconsistent with insider trading policy set by the board of directors. As a result he lost his board chair position.
Seven Days also reported that hedge fund investor David Einhorn of Greenlight Capital said in an October 2011 presentation that GMCR had spent too much, disclosed too little about its business, and had engaged in accounting “shenanigans.”
In a comment on SEC letters and previous controversies at Green Mountain Coffee, company spokesperson Suzanne M. DuLong said, “While GMCR has faced challenges over the last 18 months, we remain confident in the character and integrity of our people and systems, and the strength of our business.”
According to SEC filings, senior assistant chief accountant Brad Skinner sent a letter to the company in April 2012, seeking reassurance that GMCR had fully complied with SEC disclosure regulations, and requesting more information related to the company’s annual report for 2010-2011. Skinner wanted to know if and how the company’s patents, set to expire in September, could significantly impact the company’s financial position.
GMCR replied on May 4 with a letter addressing Skinner’s requests in detail. The letter said the company could make up for losses associated with the expiring patents (for its K-cup portion packs used in Keurig brewers) through other “competitive strengths.”
The letter pointed to new product development which would decrease the importance of the expiring patents. The company said it had sued manufacturers of coffee packs that can be used with Keurig brewers when appropriate.
Skinner’s latest letter said the review was complete, but he reiterated that the commission could take further action in future. He urged that the company remain scrupulous in ensuring that future annual reports maintain accurate and adequate disclosure.
Miller added: “The SEC investigation of Green Mountain has lasted almost two years, and they found nothing whatsoever that was inappropriate.” GMCR released information about a three-year-old bookkeeping error in a September 2010 public document. Later, SEC investigators probed the company’s revenue recognition practices, according to Seven Days. http://www.7dvt.com/2010green-mountain-coffee-lawsuit
According to GMCR’s latest quarterly report, the company made $73.3 million in net income for the three months ending June 23 with net sales of $869 million. That’s up respectively 30 percent and 21 percent from the same period in 2011.
Reuters reported today that Green Mountain Coffee’s market value has increased five-fold since Blanford’s appointment as CEO, but that shares have fallen 41 percent this year.
Shares for the company rose 11 percent on Tuesday, coinciding with Kelley’s appointment.