* Brian Kelley brings needed product management skills -
* Replaces Lawrence Blanford as competition intensifies
* Green Mountain shares rise as much as 11 percent
By Siddharth Cavale
Nov 20 Green Mountain Coffee Roasters Inc
named Coca-Cola Co executive Brian Kelley as
CEO, betting on a product specialist to see it through
intensifying competition that has eroded its share of the
single-cup coffee market.
Kelley replaces Lawrence Blanford, who grew Green Mountain
from a little-known Vermont-based coffee maker into one of the
fastest-growing U.S. companies, but whose reputation has been
diminished in the past year by sales misses and questions about
the company's business model and accounting practices.
Green Mountain's shares, while up five-fold since Blanford
took over from founder Robert Stiller in 2007, have fallen more
than 66 percent since October 2011 when noted short-seller David
Einhorn first cast doubts on the company's sales figures and
The company's shares rose as much as 11 percent to $30.40 in
trading on the Nasdaq on Tuesday.
Kelley, 51, brings a wealth of experience to Green Mountain,
especially in areas where the company has had problems, such as
product and supply chain management, analysts said.
"We view the announcement favorably as Kelley's operations
experience at Coke is an area of considerable weakness at Green
Mountain," Stifel Nicolaus analyst Mark Astrachan said in a
Green Mountain's growth prospects have moderated since some
of the company's patents related to the design of its K-Cup
refills used in its Keurig brewer expired in September, paving
the way for a wave of new competition from the likes of
Starbucks Inc and Wal-Mart Inc.
The company, whose reputation took a knock when Stiller was
stripped of his chairmanship in May over ill-timed stock sales,
is also the target of a long-running Securities and Exchange
Commission probe into accounting and revenue-recognition
practices including dealings with distributor M. Block & Sons.
Blanford told Reuters last year that the company was
confident in its business practices. Wall Street applauded in
August when the company issued more detailed earnings forecasts
that were considered to be more realistic.
NEW LEASE OF LIFE
SunTrust Robinson Humphrey analyst William Chappell Jr.,
said the new CEO offers the chance for a new lease of life for
"While there have been new entrants (notably Starbucks) into
the brewer category in the past few months, we believe that the
market is still relatively underpenetrated," said Chappell, who
raised his rating on the stock to "buy" from "neutral".
Kelley's appointment, effective Dec. 3, ends an almost
eight-month search since Blanford, 58, told the board in
February that he planned to retire.
Lazard Capital analyst Matthew DiFrisco said Kelley's
background in bottling brings experience with national grocers,
a fast-growing sales channel for Green Mountain.
Kelley will receive an annual base salary of $900,000 and
signing bonus of $600,000, the company said in a regulatory
filing. He is also eligible for an annual cash bonus with a
target of 100 percent of his base salary.
The executive has been the chief product supply officer for
Coca-Cola Refreshments, the unit that represents most of the
company's North American business, since October 2010. He was
slated to take over as president of the unit next January.
Glen Walter will take over as president of Coca-Cola
Refreshments, the company said in an internal memo.
John Sicher, editor of Beverage Digest, said that while
Kelley was a talented executive, Walter would be a strong
replacement. "Coke won't miss a beat," Sicher said.
Green Mountain shares were up 6 percent at $28.93 in
afternoon trading. The stock hit a year high of $71.15 in