Kellogg CEO to retire with COO to succeed him
NEW YORK (Reuters) - Kellogg Co (K.N) named Chief Operating Officer John Bryant its new chief executive officer on Monday, replacing David Mackay, who became eligible for retirement in July.
Mackay told the board he planned to retire, effective January 1, 2011, to spend more time with his family, according to company spokeswoman Kris Charles.
"We can't help being surprised by the news today," Stifel Nicolaus analyst Christopher Growe wrote in a note to clients, although he also said speculation about Mackay's retirement preceded the announcement.
The board of the world's largest cereal maker elected Bryant to become CEO on January 2, in accordance with its succession plan.
Bryant was actively involved in setting plans for 2011, so will probably not make any radical adjustments to the business, Growe said.
Mackay, 55, will work on the transition through March 31, the company said.
Morningstar analyst Erin Swanson said the departure may have been prompted by Kellogg's recent struggles in the North American cereal business, where it has suffered from a lack of new products, industry discounting and the recall of 28 million boxes of cereals such as Apple Jacks and Corn Pops after complaints of a waxy smell and flavor in some boxes.
"Despite the fact that they're the leader in the domestic ready-to-eat cereal business, they've been challenged by the intense competitive pressures," Swanson said. "However what has really concerned us is management's seeming inability to get its hands around these issues."
She forecast that, under Bryant, Kellogg will put more emphasis on new products, but that "these investments will (not) yield measurable improvements overnight."
Kellogg's third-quarter North American cereal sales fell 6 percent, while rival General Mills Inc (GIS.N), which makes Cheerios, reported a 4 percent net sales increase for cereals in its most recent quarter.
Mackay is chairman of the Healthy Weight Commitment Foundation, a CEO-led coalition that has pledged to reduce the number of calories in the American diet.
Bryant, 45, will receive a base salary of $1 million, according to a filing with the U.S. Securities and Exchange Commission.
The company also confirmed its outlook for 2010 and 2011. For 2010, it expects sales to dip about 1 percent, operating profit flat and earnings-per-share growing 4 percent to 5 percent. For 2011 it expects low single-digit net sales growth, operating profit flat to down 2 percent and low single-digit earnings-per-share growth.
Kellogg's shares were down 7 cents, or 0.14 percent in midday trading on the New York Stock Exchange.
(Reporting by Helen Chernikoff and Martinne Geller; editing by Lisa Von Ahn and Maureen Bavdek)
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