Editor’s note: This story by Tim McQuiston first appeared in Vermont Business Magazine June 20, 2013.
As the story goes, and how legend now has it, Bob Stiller was enjoying a cup of coffee after coming off the slopes at Sugarbush in 1981 when he had a “eureka” moment. The coffee was so good he decided to buy the company. He recently had sold his rolling paper business and had money. The coffee company, of course, became Green Mountain Coffee Roasters based in Waterbury. It is the state’s largest business, with a market cap of $12.07 billion and annual revenues near $4 billion. And Stiller’s story with it has now come full circle. Wednesday, he stepped down from the board, the final shoe to drop in what has been a tumultuous 18 months for both him and GMCR.
Green Mountain Coffee Roasters, Inc (NASDAQ: GMCR) announced June 19 that Stiller and former CEO Lawrence Blanford had retired from the board and that three new directors had been appointed: John D Hayes, executive vice president and chief marketing officer of American Express; Susan Saltzbart Kilsby, senior adviser to Credit Suisse AG; and Robert A Steele, former vice chairman, Healthcare Strategy for the Proctor & Gamble Co. Stiller now becomes chairman emeritus following his retirement.
In a statement, GMCR’s Chairman of the Board of Directors Norm Wesley said, “John, Susan and Rob are terrific individual leaders with prestigious careers and significant global experience. Each will be a tremendous asset to GMCR as we continue to drive single-serve beverage category expansion and pursue growth opportunities leveraging the strength of our Keurig ® brewing technology.”
Wesley continued, “Bob Stiller’s vision for GMCR has been unwavering and as a result of his foresight, GMCR experienced unprecedented growth as it successfully transitioned from a regionally recognized specialty coffee roaster to a leader in the emerging single-serve beverage category in North America. On behalf of many GMCR stakeholders, including our Board and our executive leadership and all our employees, we express our gratitude to Bob and we are very pleased that he will assume the newly created role of Chairman Emeritus.”
Stiller stated, “I believe the time is right to retire from the Board and pursue a variety of personal interests. I am confident that GMCR’s culture of innovation, the breadth and depth of our Board and leadership team, the determination of our employees and the incredible consumer enthusiasm for our brands will continue to drive value for all GMCR stakeholders. It has been the highlight of my business career to serve GMCR and I am enthusiastic to continue to do so in this new role.”
And perhaps Stiller should be confident of the company’s future as its stock surges beyond what anyone would have thought reasonable just a year ago. It was trading over $80 as of the close of business June 19, but it was only last July that the stock had plummeted to $17.11, less than a year after it had been over $100 per share.
Between September 2011 and July 2012, the stock cratered twice, once in November 2011 after a Wall Street “short” investor said the company was over-valued. David Einhorn of hedge fund Greenlight Capital said, among other things, that GMCR had corporate governance problems and, more importantly, that the company would lose its Keurig single-cup brewer patents in September 2012, which would subject GMCR to low -cost competition and a loss of market share. The stock also fell after release GMCR’s second quarter financial report in May 2012, in which neither revenue nor earnings met analyst expectations.
The second quarter report was particularly damaging to Stiller. He had used his prodigious holdings in the company as collateral against what turned out to be bad investments, including in donut maker Krispy Kreme. In a margin call, Stiller was forced to sell 5 million shares worth $125 million in GMCR stock, which contributed to the fall in stock price.
Stiller, who was board chairman at the time, was removed as chairman less than a week after the Q2 report came out and another board member, William Davis, was forced to step down for also using the stock to cover outside investments and having to sell millions of shares at such a critical moment in the company’s history (Davis sold 608,000 shares in May 2012).
Stiller was kept on the board at a lower level. And then things got better.
GMCR weathered the uncertainty of the loss of the Keurig patents; the company continued to grow in both revenues and profits; it signed another big agreement with sometimes-bitter rival Starbucks; its presence in the single-cup market expanded not contracted; it found a new CEO from Coca-Cola before the end of 2012; and now is a Wall Street darling, again.
As of March 2013, Stiller still owned 8.3 million shares, which at $80 per share would be valued at about $664 million.
GMCR President and CEO Brian P. Kelley said, “GMCR has a bright future with growth opportunities in new channels and with new brewer technologies that take the power of Keurig ® to new beverages in large part thanks to the solid foundation and building blocks that Larry Blanford and the GMCR team put in place. Personally, I am grateful for Larry’s guidance during my initial days as GMCR’s CEO and on behalf of the Board, our employees, partners, customers and many other GMCR stakeholders, I thank him for his unwavering dedication to the Company.”
Steele’s appointment is effective June 20, 2013, and Hayes and Kilsby’s appointments will be effective July 1, 2013. Stiller’s retirement was effective June 19, 2013. Blanford’s retirement will be effective June 21, 2013. Upon Hayes and Kilsby’s appointments, GMCR’s board of directors will consist of 11 members, 10 of whom are independent.
In connection with Stiller’s retirement, Stiller and the company entered into a letter agreement, dated June 19, 2013, pursuant to which Stiller will make himself available for a period of one year following his retirement to provide advisory services and general advice to GMCR relating to its corporate social responsibility mission and business innovation strategy. Similarly, in connection with Blanford’s retirement, Blanford and the company entered into a letter agreement, dated June 19, 2013, pursuant to which Blanford will make himself available until December 31, 2013 to provide general advisory services to GMCR.