Green Mountain says no other board margin accounts
WATERBURY, Vermont (Reuters) - Green Mountain Coffee Roasters Inc has concluded that no other senior officials have the sort of margin account that led the company to strip its founder, Robert Stiller, of his role as chairman on Tuesday.
"There has been a review and there is nobody else with similar margin accounts," Suzanne DuLong, a vice president with the company, said in an interview at its Waterbury, Vermont, headquarters on Wednesday.
Stiller and fellow director William Davis were stripped of many of the privileges of directors, including their compensation, but kept their seats, after the company learned that they had sold some of their holdings to cover margin calls, following a 50 percent drop in the company's shares after a disappointing earnings report.
Shares of the maker of Keurig-brand single-serving coffee brewers were little changed on Wednesday, trading down 2 cents at $26.36 on Nasdaq.
The stock has fallen 41 percent so far this year, in response to hedge fund manager David Einhorn's criticism of the company's growth practices and Starbucks Corp's plans to sell its own single-serving machines.
The company's board last year adopted a policy prohibiting directors or executives from using their company shares as collateral for loans - a method investors can use to generate cash from their shares without selling them.
"Mr. Stiller and Mr. Davis were the only ones that had pledge situations, so they were grandfathered in, in that they were allowed to continue those situations they were not at that point as of the first of the year permitted to add to them," DuLong said.
Stiller and Davis ran afoul of the new rule when they sold shares - a move that can be forced by the brokerage that lent money on the shares if they fall in value as Green Mountain's have.
Stiller and Davis have until the end of the year to close the accounts though the board has not determined what it will do if they fail to do so.
"That's an issue the board will visit at that point if it becomes necessary," DuLong said.
Stiller did not immediately respond to a call seeking comment on Wednesday, but told Forbes on Tuesday that he needed to sell shares because he "has no income" and that it had been "very hard to sell some of the shares that I have."