WINSTON-SALEM, N.C. -- Krispy Kreme Doughnuts Inc. ousted top executive Scott A. Livengood on Tuesday, hoping a turnaround specialist who guided Enron through bankruptcy protection can save another company beset by allegations of corporate deceit.
Shares of Krispy Kreme jumped 10 percent on the news that Livengood, who was at the helm for seven years, would be replaced by Enron Corp. interim chief executive Stephen F. Cooper, who has three decades of experience in corporate restructurings with Enron, Polaroid Corp., Trans World Airlines Inc., Boston Market Corp. and Pegasus Gold Corp.
Krispy Kreme has been hit hard by plummeting profit, a federal securities probe and allegations of padded sales.
(Tannen Maury -- Bloomberg News)
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Livengood's departure came after the once-highflying Krispy Kreme endured months of bad news, including plummeting profit, a federal securities probe and allegations of padded sales that forced the company to restate earnings. Another class-action lawsuit against Krispy Kreme and its management was announced on Tuesday.
Last week, the chain that just a year and a half ago was trading at close to $50 a share dropped to an all-time low of $8.72, and the company warned Tuesday that persistent declines in sales may lead to its third quarterly loss of the fiscal year. The stock closed 10 percent higher Tuesday at $9.61 a share.
Krispy Kreme said Livengood, 52, also retired from his positions as president, chairman of the board and as a director of the company and will become an interim consultant, paid $45,833 a month, his base salary before he was ousted, for the next six months.
The company said Livengood will not receive any severance package, although his departure does trigger an option to purchase 330,125 shares of Krispy Kreme stock; he now has vested options to purchase more than 1.3 million shares.
Livengood made no comment in the news release announcing his departure and did not immediately respond to an attempt to reach him through a speakers bureau.
Both Cooper and newly named Krispy Kreme President Steven G. Panagos are associated with Kroll Zolfo Cooper LLC, which the doughnut maker has retained to be its financial adviser and interim management consultant.
At Enron, Cooper, 58, oversaw a reorganization plan that went into effect in mid-November. Kroll Zolfo Cooper spokeswoman Rebecca Randall said Cooper will continue his role at Enron while he takes on his new duties at Krispy Kreme.
In warning of a possible fourth-quarter loss, Krispy Kreme noted that for the eight weeks ended Dec. 26, average weekly sales per factory store throughout the Krispy Kreme system were down 25 percent.
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