Green Mountain Coffee Roasters Inc (>> Green Mountain Coffee Roasters Inc.) independent director Douglas Daft resigned from its board this week at a time when concerns of slowing growth and allegations of accounting malpractices have hammered the stock.
Green Mountain, the maker of Keurig one-cup coffee brewers, reported the resignation of the former Coca-Cola Co (>> The Coca-Cola Company) CEO on Thursday in a filing with the U.S. Securities and Exchange Commission.
Green Mountain's board has been under scrutiny after the company's founder and former chairman, Robert Stiller, and a senior director were demoted earlier this month for selling company shares when it was prohibited.
Daft, 69, resigned from the board on May 22 for personal reasons, including "extensive overseas and travel commitments," and not because of any disagreement over the running of the company, Green Mountain said in the filing.
But some said the resignation would be seen as another blow to the company.
"Markets get spooked when board members resign, for whatever reason. If a company is in trouble, having a named director departing very often signals that something is more wrong than we anticipated," Bevmark Consulting CEO Tom Pirko said.
A call to Daft's home was unanswered. Daft was the most recent addition to the company's board, joining in late 2009. Out of the eight current members, five have been on the board since the 1990s.
Daft is also on the board of Wal-Mart Stores Inc (>> Wal-Mart Stores, Inc.), which is facing separate probes by the U.S. and Mexican governments into bribery allegations related to its Mexico business.
"It's always tricky when you're trying to read someone's soul from afar ? but obviously, any changes at such a critical time are going to be looked upon a certain way," said an analyst who did not have clearance to speak to the press and therefore declined to be identified by name.
Green Mountain's once high-flying stock has lost 78 percent of its value since touching a life high of nearly $116 last September after well-known short seller David Einhorn questioned the company's accounting practices and growth potential in an investor presentation.
Two disappointing quarters out of the three that followed Einhorn's presentation further eroded investor confidence in the management.
Green Mountain, which on Thursday said it would cut its board size to eight from nine, has been facing an ongoing SEC inquiry since September 2010 into its revenue recognition practices and the company's relationship with a key distributor.
The company's shares closed at $25.09 on Thursday on the Nasdaq. (Reporting by Mihir Dalal in Bangalore; Editing by Sriraj Kalluvila, Viraj Nair and Bob Burgdorfer)
By Mihir Dalal and Martinne Geller