Green Mountain replaces 2 board leaders on trading
PORTLAND, Ore. — Green Mountain Coffee removed its founder and another board member from their leadership roles on Tuesday after they sold company shares in violation of internal policies.
The company’s stock lost roughly half its value last week, and that triggered a margin call for founder Robert Stiller and lead director William Davis that forced them to sell a total of more than 5.5 million shares. They had to meet the call because they’d bought the stock on credit and agreed to sell it back or pony up cash if its value dipped below a certain point.
“These forced sales are disappointing,” the company said in a statement.
Green Mountain, which makes single-cup Keurig coffee machines and the coffee to go with them, said its board decided it would be better for the company and its shareholders if Stiller and Davis were removed as leaders of the board and committees. They remain on Green Mountain’s board, but the company said they won’t be paid until the board “determines otherwise.”
“Once the board was notified of this trading activity, it moved quickly to investigate and address this matter,” the company said.
Board member Michael Mardy will serve as interim chairman. Hinda Miller will lead the board’s governance and nominating committee, which she last led in 2010.
Green Mountain said 148,000 shares were sold from Davis’s brokerage account on Friday during a period when company policies barred him from selling. Davis also pledged 204,000 new shares to his margin loan this year in a separate violation.
Stiller sold 5 million shares on Monday during a prohibited time frame, according to the company.
Green Mountain bars people with inside information — like Davis and Stiller — from trading its stock during certain periods, though it doesn’t generally disclose the timing of those windows. The company said it is requiring Stiller and Davis to settle all their outstanding margin loans by the end of this year.
Stiller owns roughly 8.34 million Green Mountain shares, the company said. If he sold all the stock in his margin accounts — or that he has pledged as collateral — his stake would shrink to about 1.9 million shares, the company said. Davis owns 436,786 shares, and his stake would shrink to 36,598 in that scenario.
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