Citing fundamental philosophical differences within management, Vie de France Corp. announced yesterday that the company's president, Lloyd J. Faul, will be stepping down by the end of October.
In a terse, two-paragraph announcement, Chairman Jean-Louis Velgrain said that, after a "general review of Vie de France organization and operation," he and Faul agreed that Faul would leave by the company's annual meeting, scheduled for Oct. 21.
Velgrain was in France and unavailable for comment. However, Thomas J. Rowe, director of finance and accounting, said the decision on the departure was reached "professionally," after it became clear there was a "severe difference of opinion, and it was far reaching."
Rowe noted that the 14-year-old specialty baking company, which is based in McLean, had lower sales and earnings so far this year as it tried to expand from a regional bakery into a national chain. For its fiscal year, which ended in June, profits slipped 4.6 percent, despite a gain in sales. For the first three quarters of this year, sales also were down, to $47.7 million from $48.5 million for the same period a year ago. Profits for the first three quarters were $2.8 million, down 38 percent from $4.5 million for the comparable period a year ago.
"Our profits are down and our sales are down," Rowe said. "There has been a rapid increase in selling and general administration expenses. That has become a great concern to the chairman."
Faul has been president for nearly six years. He joined the company in 1975 as manager of the Philadelphia bakery. When he assumed the presidency, the company's sales were $10.5 million, one-sixth of its current size.
Faul's departure "is a major turning point in the company's evolution," said Charles S. Glovsky, a financial analyst with Alex. Brown & Sons Inc. of Baltimore. "Faul was extremely successful in building the company up but, like a lot of entrepreneurs, he couldn't take it beyond a certain point. The company has been struggling and morale is stalled. The company has a very strong future. It needs new blood at the top to bring in new ideas and new enthusiasm."
Faul said there were two key differences between himself and Velgrain. "The number one gnawing problem since we became a public company [two years ago] was the amount of compensation paid to me personally," Faul said. For the past three years, Faul said, his compensation -- based on a formula set when he assumed the presidency -- averaged about $1 million a year. "For a company our size, that's enormous," Faul said.
In addition, Faul said, he and Velgrain disagreed over how far and how fast the company should be decentralized, with Velgrain wanting to move faster than Faul.
No successor to Faul has been named.