Industry News | September 16, 2005
Krispy Kreme Exec McAleer to Leave Post
A special committee of the company's independent directors decided the six unnamed company officers should be fired, Krispy Kreme said in June. Five of the executives resigned and one retired.
A Krispy Kreme spokeswoman could not be reached for comment about McAleer's departure.
McAleer's father, Joseph, organized about 20 other franchisees and bought the company from Chicago-based conglomerate Beatrice Food in 1981 in a leveraged buyout. The new managers focused on selling doughnuts in retail stores. The brand caught fire in the 1990s and the company went public in 2000 at $21 a share.
Last month, an internal investigation determined most of the blame for the snack maker's financial woes fell to former CEO Scott Livengood and ex-Chief Operating Officer John Tate, who tried to "manage earnings" to meet Wall Street's expectations, according to a report.
The review by a special committee of independent directors said company officers and other employees who had substantial involvement in a trail of accounting errors have left Krispy Kreme, but also found that the company should not sue any current or former directors or executives.
The committee was appointed in October to investigate issues raised by a Securities and Exchange Commission inquiry and by the company's auditors about accounting and financial statements, as well as claims of negligence in a shareholders' lawsuit filed last year.
The SEC is investigating the company's repurchase of franchises and the earnings warnings in May 2004 that started the company's swoon. Krispy Kreme is also under investigation by the U.S. Attorney's Office for the Southern District of New York, and faces multiple lawsuits.
The company's stock, which traded for $105 in November 2000 before two stock splits, closed Thursday at $6.61, down 9 cents, or 1.3 percent, on the New York Stock Exchange.
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