Hershey (NYSE: HSY) has announced that eight of its eleven board members were on their way out. For a public company to lose so many directors at once is nearly unprecedented. But as MarketWatch points out, "The Hershey Trust, the company's controlling shareholder, asked six directors to resign." Two independent directors left on their own.
"The Hershey Trust, which is obligated to manage its assets solely for the benefit of Milton Hershey School, a school for children in need, has made clear it has not been satisfied with the Company's recent results," said LeRoy S. Zimmerman, chairman of the Hershey Trust board, in a written statement. "We determined to elect new directors to aggressively pursue addressing the company's business challenges," he added.
The resignations are nothing more than window dressing. The company has been doing poorly, but putting the blame on board members elected by a controlling shareholder means little. If the Trust wanted to exert its authority, it should have done so much earlier.
Hershey's stock traded at over $56 last April, but has dropped to just over $41. The company had already announced that it is putting in a new CEO.
Wall Street is not going to buy Hershey because the board is out. The company's results have slipped too far. It is going to have to take the hard road back and improve earnings.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-11-2007 @ 10:25PM
Alex Esguerra said...
It kinda funny. When a company has just surpassed the growing pain stage and went public to get more investors, it is up to the board to dictate a company's way of business.
But when the hard times comes, if the board can give all the problems back to the founder, they would. Hence, privatization sometimes to save a company from closing.
Thus, then the questions arise like, was there a plan of actions described in the company's business plan in terms of crisis.
Sometimes, no matter I asked myself, are we really going to open up to bring the venture capital we need or just stay afloat like this.
In both cases, it is a challenge so an entrepreneur's creativity and strategical common sense will play a role.
11-11-2007 @ 10:31PM
Japippy said...
I am not surprised to see that there are people resigning left and right. I've recently read that Hershey Co. is moving a very large segment of their operations south of the border and into Mexico which will save them Millions of dollars each year going forward. Supposedly there will be only about a quarter of the number of people in this country, remaining at jobs with Hershey while the rest will be laid of or be given early retirement, whether the individuals affected, like it or not.
Wouldn't a situation like this have a rather drastic effect on a company such as Hershey's which is almost and has been almost a household word since long before I was a kid. I don't recall just when Hersey created his world know chocolate company but I seem to think it was close to or over 100 years ago.
11-11-2007 @ 11:13PM
JTScarbrough said...
Attention Hershey management. I will buy American made Hershey chocolate, I will buy Swiss and Belgian chocolate, but I will never ever buy Mexican / Central American made chocolate with your name on it. If you want to increase profits, get your sales force off of their duffs and go sell some CHOCOLATE. Get your R & D dept to come up with some exciting ways to prepare, mold and package CHOCOLATE. Hershey's chocolate is an American institution and Mr. Hershey is spinning in his grave at the thought that the people his beloved creation has been intrusted to are going to sacrifice the American worker as a shortcut to increased profitability.
Ask yourselves this question. Is the increased profit going to outway the loss of goodwill?
11-30-2007 @ 2:27PM
Jerry said...
I will never buy anymore Hersey candy if it is going to Mexico or any other product that Hersey might decided to make. I think it is time that upper managment take a cut in pay and give it back to the workers in the USA. I will give up all CHOCOLATE items if they are made out of the USA.