Green Mountain Coffee Roasters Inc.
(
GMCR
) recently removed two senior members from their positions in the
Board of Directors due to the violation of internal policies.
Robert Stiller, the company's founder and chairman, along with
lead director William Davis were removed from their respective
positions. These board members were sacked after they sold their
shares for margin calls when the trading window was closed as per
the company's internal trading policy.
According to the company, Stiller sold 5 million shares to cover
margin calls and William Davis sold 4,00,000 shares on May 4, 2012,
and another 148,000 on May 7, 2012 when the trading window was
closed due to the company's internal trading policy.
Following the reorganization of the management, the company has
now appointed Michael J. Mardy, who was formerly the head of the
board's audit and finance committee, as interim chairman.
Robert P. Stiller founded Green Mountain in 1981 and served as
its President and Chief Executive Officer until May 2007, after
which he was the company's Chairman of the Board of Directors until
May 2012.
William D. Davis was the President and Chief Executive Officer,
and a Director from July 2002 until September 2010.
After the sell-off, Stiller holds 1,857,031 million shares, and
Davis holds 36,598 shares of Green Mountain stock.
Green Mountain Coffee Roasters is a growing company in an
industry that is expanding fast. The premium coffee industry has
experienced strong growth over the past decade and the company is
targeting the growing consumer demand for the coffee
experience.
Moreover, management's core business model involves the
implementation of a multi-channel geographic penetration strategy,
which entails expanding distribution through multiple channels and
through geographic expansion. The use of multiple distribution
channels increases the presence of the company's coffees.
However, Green Mountain revenue is highly dependent on one-cup
Keurig brew systems and the coffee K-Cup packages that go in them.
However, eventually when the demand for brew systems will slow down
and the explosive growth seen in 2011 will cease.
Moreover, the main patents on the K-Cup will end in September of
2012. Well-known brands and close competitors like
Starbucks
(
SBUX
) and
Caribou Coffee Roasters
(
CBOU
) will have other alternatives, which would hurt the company's
fundamentals.
Currently, Green Mountain holds a Zacks #4 Rank, which
translates into a short-term Sell rating. Over the long term, we
prefer to rate the stock as Neutral.
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