The embattled company launched a search Thursday for a new chief executive officer as it confronts problems ranging from declining sales to lawsuits and criminal investigations.
CHARLOTTE, N.C. — Embattled snack maker Krispy Kreme Doughnuts Inc. launched a search Thursday for a new chief executive officer as the once high-flying company confronts problems ranging from declining sales to lawsuits and criminal investigations.
Meanwhile, the company announced that Jeff Jervik has been hired as executive vice president of operations, effective immediately. Jervik will report to Steve Panagos, president and chief operating officer of Krispy Kreme, and will be responsible for all company-owned operations, franchisee operations and wholesale operations, the company said.
The Winston-Salem-based company said an executive search committee is working with James Mead & Co. to find a permanent CEO.
In January, Krispy Kreme’s board of directors forced out longtime CEO Scott Livengood and hired turnaround specialist Stephen Cooper, who led Enron Corp. for almost three years, to run the company.
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Cooper also led the turnaround at Boston Chicken, which declared bankruptcy in 1998.
Jervik is a former national vice president of operations for Pizza Hut Inc. Most recently, he owned a chain of Papa John’s restaurants in Hawaii.
Krispy Kreme also announced that Frank Murphy, the company’s general counsel, will retire on Dec. 1. Murphy will serve as an adviser to the board and the company while a search for his successor is conducted.
Krispy Kreme faces several lawsuits, including one filed this month by two partners in Los Angeles-based Great Circle Family Foods LLC that claims Krispy Kreme tried to force their company into bankruptcy. The largest Krispy Kreme franchisee also claimed company executives misappropriated marketing money and billed for phony charges.
Krispy Kreme has said it would “vigorously” defend itself against the charges.
In October 2004, a special committee of independent directors began investigating issues raised after a Securities and Exchange Commission inquiry and by the company’s auditors about accounting and financial statements.
The committee reported in August that most of the blame for the snack maker’s financial woes fell to Livengood and ex-Chief Operating Officer John Tate, who sought to “manage earnings” to meet Wall Street’s expectations.
The SEC is investigating the company’s repurchase of franchises and the earnings warnings in May 2004 that began the company’s swoon. Krispy Kreme is also the target of a federal criminal inquiry in New York.
Company shares fell 51 cents, or more than 11 percent, to close at $4.05 Thursday on the New York Stock Exchange, matching its 52-week low on Oct. 12.