Krispy Kreme ousts its CEO

Restructuring specialist to lead troubled company

January 19, 2005|Associated Press

WINSTON-SALEM, N.C. -- Krispy Kreme Doughnuts Inc.'s board ousted its top executive yesterday and replaced him with a turnaround specialist who will try to save another company beset by allegations of corporate deceit.

Shares of Krispy Kreme jumped more than 10 percent on the news that Scott A. Livengood, chief executive for the past seven years, will be replaced by Stephen F. Cooper, who has been overseeing the bankruptcy reorganization of Enron Corp. as interim CEO. Cooper has three decades of experience in restructurings at Enron, Polaroid, TWA, Boston Chicken, and Pegasus Gold.

The company also warned that sales declines for the quarter ending Jan. 30 may lead to its third quarterly loss of the fiscal year. Analysts surveyed by Thomson First Call had forecast fourth-quarter profit of 5 cents per share.

Livengood's departure came after the once-high-flying Krispy Kreme endured months of bad news, including plummeting profits, a federal securities probe, and allegations of padded sales that forced it to restate earnings.

Krispy Kreme said Livengood, 52, also retired from his positions as president, chairman, and director and will become an interim consultant, paid $45,833 a month for the next six months. He will not receive a severance package, although his departure does trigger an option to purchase 330,125 shares of Krispy Kreme stock; he now has vested options to buy more than 1.3 million shares.

Board member James H. Morgan was elected chairman. He heads Morgan Crossroads Funds and previously was CEO of Wachovia Securities Inc.

Both Cooper and new president Stephen Panagos are associated with Kroll Zolfo Cooper LLC, which the doughnut maker retained as its financial adviser and interim management consultant.

At Enron, Cooper, 58, oversaw a reorganization that went into effect in November. The company now expects to begin distributing $12.8 billion to creditors -- 92 percent in cash and 8 percent in stock in Prisma Energy International Inc., a hodgepodge of power plants and pipelines.

A spokeswoman said Cooper will continue his role at Enron while he takes on his Krispy Kreme duties.