Green Mountain Coffee Roasters, Inc. provider of specialty coffee and coffee makers, announced that its board of directors, has appointed Michael J. Mardy, a director and chair of the company's audit and finance committee, as interim chairman of the board. In addition, Hinda S. Miller, chair of the company's corporate social responsibility committee, has been appointed as chair of the governance and nominating committee, a committee she last chaired in 2010. All appointments are effective immediately. At the direction of the board of directors, Robert P. Stiller no longer serves as chairman of the board and William D. Davis no longer serves as lead director of the board, effective immediately. Additionally, Stiller and Davis will no longer serve on any board committees and will not receive future payment for their service on the board until the board determines otherwise. Both will remain members of the board. The governance and nominating committee will be reviewing appropriate board and committee structure and composition.
These changes are the result of the actions taken by the board to address stock sales by Stiller's and Davis' brokerage firm, which sales were inconsistent with the company's internal trading policies. Specifically, Stiller and Davis had margin call-related stock sales totaling 5.548 million shares, reflected in Form 4 filings filed with the Securities and Exchange Commission. These forced sales were related to margin loans, which were secured by pledges of Stiller's and Davis' GMCR stock and triggered by recent GMCR stock price activity.
On Friday, May 4, 2012, as the result of a margin call on pledged GMCR stock, approximately 400,000 shares and on Monday, May 7, 2012 approximately 148,000 shares of GMCR stock were sold from Davis' brokerage account at a time when the trading window in GMCR stock was closed pursuant to the company's internal trading policy. In addition, during the company's review of the May 4 trade, it learned that, inconsistent with the company's policy, Davis had pledged approximately 204,000 new shares to his margin loan after Jan. 1, 2012.
On Monday, May 7, 2012, as the result of a margin call on pledged GMCR stock, 5 million shares of GMCR stock were sold from Stiller's brokerage account, at a time when the trading window in GMCR stock was closed pursuant to the company's internal trading policy.
It should be noted that Stiller's and Davis' pledged positions as of Jan. 1, 2012 were grandfathered by the board when it amended the company's internal trading policy in December 2011 to prohibit new pledges after Jan. 1, 2012.
As of the close of trading on May 7, 2012, Stiller beneficially owned 8,386,899 million shares of GMCR common stock. If all of Stiller's shares that are held in margin accounts or pledged as collateral to various financial institutions as security for one or more loans were settled as of May 8, 2012, Stiller would beneficially own 1,857,031 million shares of GMCR stock. As of the close of trading on May 7, 2012, Davis beneficially owned 436,786 shares of GMCR common stock. If all of Davis' shares that are held in margin accounts or pledged as collateral to various financial institutions as security for one or more loans were settled as of May 8, 2012, Davis would beneficially own 36,598 shares of GMCR stock.
The board has also mandated that Stiller and Davis settle all outstanding margin loans by the end of calendar year 2012.
In response to these developments, the company issued the following statement:
"Based upon the recent decline in GMCR stock price, Mr. Stiller and Mr. Davis were both faced with margin calls resulting in sales of their GMCR stock. These forced sales are disappointing and beyond the control of the company. Once the board was notified of this trading activity, it moved quickly to investigate and address this matter. The board determined that it was in the best interest of the company and its shareholders for Mr. Stiller and Mr. Davis to relinquish their leadership positions on the board as well as their committee roles."